LOS ANGELES (AP) — Disney said Monday that it is buying YouTube channel operator Maker Studios for $500 million as the family entertainment giant seeks to stay in front of younger viewers who are increasingly watching short videos online.
It's the latest and largest acquisition of a YouTube channel network by a major Hollywood studio and represents another vote of confidence in the video service as an incubator of talent.
The Walt Disney Co. said it would pay up to $450 million more in bonuses if Maker meets performance targets, the company said. The Maker deal is Disney's biggest acquisition since it bought "Star Wars" creator Lucasfilm Ltd. for $4.06 billion in late 2012.
The purchase will give Disney ownership of 55,000 channels — including Epic Rap Battles of History and makeup expert Amy Pham's The Fashion Statement. Combined, Maker has 380 million subscribers and generates 5.5 billion views per month.
Buying Maker Studios will help Disney reach young audiences, said Kevin Mayer, Disney's executive vice president of corporate strategy, in an interview.
"They have the biggest audience on YouTube. It's very hard to replicate," Mayer said.
He said that while Disney also reaches younger viewers, their habits are changing.
"To the extent that they're finding YouTube, we want to be there too," he said. "We don't want to have any vacuums."
Mayer said that Disney could also find talent for its TV shows and movies in the YouTube stars on Maker Studios' channels.
It wouldn't be the first to attempt to mine YouTube for characters that could be taken mainstream. In 2010, Lions Gate Entertainment Corp. released "Fred: The Movie" in 2010, using the character that Lucas Cruikshank turned into a viral, if annoying, sensation on YouTube.
It also follows other media giants into the space.
Earlier this month, Time Warner Inc.'s Warner Bros. led an $18 million investment into videogamer network Machinima. Last year, DreamWorks Animation SKG Inc. bought the AwesomenessTV network for $33 million, with a bonus potential of $117 million if the studio met earnings targets over two years.