Study: YouTube MCNs worth $20bn with 240bn monthly views
New research from Ampere Analysis has revealed how multi-channel networks - the organisations that work with platforms such as YouTube in exchange for a cut of the ad revenue - are being snapped up ahead of likely consolidation of smaller MCNs in the growing market.
Over the past three years, the biggest of MCNs have been purchased for sums ranging from $200m to up to nearly $1bn, mainly by the larger media groups. Now this land grab has ended, some major players are left with the option of acquiring and consolidating smaller MCNs or building their own, according to Ampere.
The study shows that over 75% of the MCNs acquired in the last three years were bought by traditional media groups, whilst the average MCN is worth 10 cents per monthly view. The analysis means an MCN with 1 billion monthly views would be worth $100m and there are 22 MCNs worth at least this much.
Ampere's analysis shows that the combined value of these 22 MCNs is $6.5bn. Collectively the top 100 MCNs receive 100bn views per month, making them worth nearly $10bn.
MCNs build, aggregate and monetise audiences across a variety of OTT video outlets. Content is typically available in short clips of up to 20 minutes, with topics ranging from music and beauty to fashion and documentaries.
Some MCNs create their own material, such as RTL's StyleHaul and Discovery's Revision3, while others sell advertising against videos from third-party content creators.
The monthly audience and ad impressions any single YouTube channel achieves is typically equivalent to a minor broadcast channel, but when aggregated with other YouTube channels by an MCN to reach billions of viewers, there is the potential to capture a share of YouTube's $4.5bn annual advertising revenue.
Wherever they are located, each monthly view adds an average of $0.10 to the valuation of an MCN. On this basis, there are now 22 MCNs worldwide that would command a purchase price of at least $100m.
"The business model of MCNs is a good fit for many traditional media companies, which understand advertising business models," said Richard Broughton, Ampere's research director.
"They are also an extremely effective way for traditional media players to reach a younger audience which is leaving traditional media in droves, as well as to experiment with new programme formats and content types."
Broughton added that in a market with so much M&A activity, valuations and prices might be expected to have spiralled out of proportion, but according to Ampere this is not currently the case.
"Growth rates for MCNs are huge, and early buyers into the sector have seen their acquisitions triple in value within a few short years," he said. "Furthermore, buying an MCN delivers instant global reach, opening up new territories and helping to future-proof businesses in an increasingly unpredictable media sector.
"For those players without a stake in the MCN game, sand is rapidly running through the hourglass. Very few top MCNs remain that don't now have an affiliation to a major media group. And with no apparent decline in valuations over time, those rare MCNs that are still independent are becoming increasingly expensive. Many media companies are playing a waiting game: the million dollar question now is when to stop waiting and start acting."
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