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YouTube's Multi-channel Networks Worth $20bn

Tim Maytom

zoellaThe rise of the vlogger, the web-series and the viral video have had a massive transformative effect on how the public consumes video content, and traditional media groups have been paying attention.

Brands like Warner Music, Disney, Discovery and RTL have been purchasing YouTube channels covering subjects as diverse as beauty tips, political documentaries and video games, and these Multi-channel Networks (MCNs) are estimated to generate 240bn video views a month, worth $20bn (£12.8bn).

The average MCN is worth 10 cents per monthly view, so an MCN with 1bn monthly views would be worth $100m. There are already 22 MCNs worth this much, and that number is only likely to grow.

In Q1 2015, 42 per cent of all YouTube's video views came from channels that are part of the top 100 MCNs, which collectively are worth around $10bn. Both Disney and Dreamworks have invested in MCNs and seen their value increase by over 240 per cent in just 18 months.

According to research by Ampere Analysis, the gold rush for these MCNs is almost over, with 75 per cent of the MCNs acquired over the past three years bought up by traditional media groups.

This has left some of the major media players who are yet to invest in MCNs eyeing existing ones for acquisition, or considering attempts at consolidating smaller MCNs into a larger, more efficient whole.

"The business model of MCNs is a good fit for many traditional media companies, which understand advertising business models," said Richard Broughton, 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."