Viacom: Pluto TV will be a “true game changer”

Viacom’s acquisition of ad-supported OTT TV network Pluto TV will be a “game changer” for the company’s direct-to-consumer strategy, according to the studio’s CEO Bob Bakish, and will play a key role in the company’s direct-to-consumer strategy both domestically and internationally, with the launch of a Spanish-language service planned in the near term.

Speaking to analysts after Viacom turned in mixed fiscal Q1 financial results, Bakish said that Pluto would be “a true game changer in driving the evolution of the company and ultimately creating significant value across our business”.

The Viacom chief said that Pluto “fits squarely” into the company’s strategy of creating a differentiated direct-to-consumer streaming service that could exploit its content library and maximise the value of its advertising capabilities and relationships.

He said the acquisition, which is expected to close next month, would give Viacom “a scale B2C offering” with distribution that added to its existing pay TV relationships and would provide an important marketing tool to acquire and retain customers for targeted SVOD products like Noggin and Comedy Central Now. Bakish said that Pluto would also deliver “billions of addressable advertising impressions per month this year”, mostly on TV screens with a desirable and hard-to-reach young audience.

Bakish said that Pluto would furthermore deliver a valuable additional service for Viacom’s pay TV distribution partners by providing a free, ad-supported service that could be delivered to broadband-only subscribers.

“We see this as a key new offering for our partners that can serve to increase the value of that service to customers and provide a platform from which they can sell additional services, including basic pay TV,” he said, adding that mobile operators would also stand to benefit.

Bakish said that Pluto will also serve as a distribution vehicle for library content to which it has retained the rights rather than licensing to SVOD platforms over the last couple of years. While current programming would remain on its pay TV network, “content that is not currently being monetised” will sit on Pluto TV.

The Viacom boss also said that Pluto TV provided “a significant global opportunity” and that the company would use its reach to expand the OTT TV service internationally. He said there was “a very compelling near-term opportunity” to launch a Spanish language service that would include Spanish-language versions of Viacom Media Networks content and Latin American originals, including from Argentinian channel Telefe. In the Q&A session, Bakish confirmed that the Spanish service would launch this year.

He cited Pluto’s scale in the domestic US market as the starting point that underpinned these claims. He said the service had over 12 million active users at the end of last year, including 7.5 million on connected TVs, and was the second-ranked app on Roku devices. Bakish said that Pluto would be enabled on over 30 million additional devices in the coming months.

Bakish said that he had strong expectations for AVOD as a business, and that Viacom would be able to use its investment in advertising infrastructure to maximise the value of Pluto TV inventory in a way htat had not been done to date.

“Ad-supported free is an important and underserved piece of the [market]. It appeals to the value-conscious consumer and in many respects, these broadband-only homes are kind of the new broadcast-only homes, and that is a fast-growing segment of the marketplace,” he said.

Viacom announced last month that it had offered US$340 million to acquire Scripps Networks and Sky-backed Pluto TV, which was founded in 2013 and offers over 100 free channels.

Bakish also used the Viacom earnings call to unveil that kids channel Nickelodeon had struck a new film deal with Netflix to produce two original animated feature films based on its Loud House and Teenage Mutant Ninja Turtles franchises.

Viacom posted better-than-expected earnings but lower than expected revenue for its Q1. The company posted net earnings of US$318 million down from US$535 million a year ago, while revenue rose 1% to US$3.09 billion.

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