What Drew Viacom to Pluto TV Takeover?

Pluto gives Viacom access to a young audience

Viacom (VIAB) (VIA) announced in January a plan to acquire Pluto TV for $340 million in cash. Pluto TV is a streaming video provider. Its service is free with ads. Pluto has been around for six years and has attracted 12 million monthly active users, the majority of which are young people between 18 and 34 years of age.

Pluto fits Viacom’s strategy on a number of levels, Viacom CEO Bob Bakish said in an interview with CNBC shortly after announcing the deal. Viacom is planning to leverage Pluto’s expanding young user base to grow its advertising business. Viacom particularly sees Pluto helping it grow its business of delivering targeted advertisements. At the same time, Pluto provides Viacom an avenue to monetize its archives of old films and shows.

What Drew Viacom to Pluto TV Takeover?

Viacom joining a crowded market with huge opportunity

With Pluto, Viacom will be stepping up its pursuit of revenue in the digital video advertising market. In the United States, spending on digital video ads reached $27.8 billion in 2018, an increase of nearly 30% from 2017 levels, according to eMarketer estimates. Facebook (FB), Google (GOOGL), Twitter (TWTR), and Snap (SNAP) are also chasing this revenue opportunity.

Facebook captured 24.5% of digital video advertising dollars in the United States in 2018 compared to 12.1% for Google’s YouTube, 2.3% for Twitter, and 1.4% for Snap.

Comcast (CMCSA) is also preparing to join Viacom in the pursuit of digital video advertising dollars. Comcast is planning to launch an ad-supported streaming video early next year.