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Why Did Yahoo Shut Down Yahoo Screen?

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Yahoo spent more than $100 million

After making hefty attempts at investments in online videos, advertising technology, and mobile software, Marissa Mayer, Yahoo’s (YHOO) chief executive officer, failed to achieve the desired results. The departure of top executives and pressure from investors led the company to spin off Yahoo from Alibaba (BABA) and other companies’ assets.

The company’s recent move to shut down Yahoo Screen follows Mayer’s commitment to focus on fewer areas after disappointing results.

In 2013, Yahoo started the service Yahoo Screen, an on-demand streaming service for TV-Shows, movies, and webisodes. Yahoo tied-up with different media partners such as Disney (DIS), ABC, and Live Nation (LYV) to merge their content with its original programming.

According to the Wall Street Journal, over the past two years, Yahoo spent more than $100 million to produce its original content, but failed to convert it into revenue.

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Screen visitors fall

Yahoo’s move did not come as a surprise, according to the Wall Street Journal. In 3Q15, Yahoo announced its decision to cut its expenses of $42 million from its video series. Moreover, in October 2015, Yahoo devalued its video business by $42 million to reduce the associated cost after its original programming failed to gain traction with viewers.

Yahoo failed to gain popularity in comparison to Google’s (GOOG) YouTube. Yahoo Screen’s unique visitors showed a fall of 28% between October 2013 and October 2015, coming in at 15 million unique visitors in November 2015, according to comScore.

The concept of the video-oriented site, wherein users search for digital content in portals such as YouTube and Yahoo, has long been outdated. Now, the content finds users where they spend most of the time online, on social media networks such as Facebook and Twitter.

Yahoo constitutes 0.62% of the PowerShares QQQ ETF (QQQ).

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