Traditional broadcasters are buying up YouTube s MCNs

Ampere Analysis has reviewed the overall market impact, video views and financial worth of the largest Multi-Channel Networks (MCNs) on YouTube including which traditional broadcasters are buying these properties and for how much.

Over the past three years, the biggest of these MCNs have been snapped up for sums ranging from $200 million to nearly $1 billion, mainly by the larger media groups. Now this land grab is all-but over, leaving some major players with the option of acquiring and consolidating smaller MCNs or building their own, according to the latest research by Ampere Analysis.

MCNs build, aggregate and monetise audiences across a variety of OTT video outlets, with the primary one being YouTube. Content is typically available in short clips of up to 20 minutes, covering a huge range of topics. Some MCNs create their own material, while others sell advertising against videos from third-party content creators.

The value of an MCN lies in its audience, similarly to traditional TV channels. 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's the potential to capture a share of YouTube's $4.5 billion (and growing) 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 $100 million.

The business model of MCNs is a good fit for many traditional media companies, which understand advertising business models, commented Richard Broughton (pictured), research director at Ampere analysis. 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.

Research by Ampere Analysis suggests that a typical MCN with 1 billion views per month would be valued at $97 million and make approximately $21 million in gross revenue per year. YouTube's entire audience could be valued on this basis at over $20 billion.

But after YouTube and channel partner shares of an MCN's revenue are shared out, the amount an MCN actually gets to keep can be slim - as little as just a tenth of the overall revenue generated by its advertising sales.

Ampere's research suggests that typical MCN valuations represent a multiple of between 25 times and 35 times their annual revenues - many times higher than a mature broadcasting business.

Broughton conitnued: Growth rates for MCNs are huge, and early buyers into the sector have seen their acquisitions triple in value within a few short years. 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.

www.ampereanalysis.com

LINK:	http://www.tvbeurope.com/traditional-broadcasters-buying-youtubes-mcns...
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