The Walt Disney Co. announced Monday it will buy YouTube channel operator Maker Studios for $500 million.
The deal takes place as Disney looks for a way to keep younger viewers; more kids are watching shorter videos online, according to the Associated Press.
Maker Studios is the top producer and distributor of short videos on YouTube, which are targeted toward millennials. Maker said the company's channels have a total of 5.5 billion views per month, CNN reported.
The increasing number of children and teenagers using YouTube and other video websites for entertainment is expected to help Disney, since Maker has created shows made specifically for the Internet.
"By acquiring Maker Studios, Disney will gain advanced technology and business intelligence capability regarding consumers' discovery and interaction with short-form online videos, including Disney content," the press release about the deal said.
Disney said it would pay up to $450 million more in bonuses if Maker can meet its performance targets, the Associated Press reported. The deal is Disney's biggest purchase since the company bought Lucasfilm Ltd., the creator of "Star Wars", in 2012 for $4.06 billion.
Maker will not be placed in one of Disney's film or television divisions, CNN reported. Executives for the company will instead report directly to Disney's chief financial officer in order to control the amount of time Maker spends working with different divisions.
"Maker's YouTube-centric DNA would give Disney valuable insight into how to extend its star-making machine to the still quite opaque online realm," said Will Richmond, industry analyst and publisher of Videonuze. "But star-making is just half of the equation. The other, equally important half is mastering (and quite possible shaping) how online video distribution works, and what role YouTube will play."
The purchase of Maker puts Disney in competition with other major companies who have made similar deals. Discovery Communications bought the video startup Revision3 for $30 million two years ago, and Dreamworks Animation bought AwesomenessTV, a network of teen-oriented YouTube channels, for $33 million last year. Warner Bros. invested $18 million in the online network Machinima earlier this month, CNN reported.
Bob Iger, the chief executive of Disney, said on Monday that "short-form online video is growing at an astonishing pace and with Maker Studios, Disney will now be at the center of this dynamic industry with an unmatched combination of advanced technology and programming expertise and capabilities."
