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Disney's purchase of Maker is a boon for L.A. startups

The purchase price could hit $950 million if the startup hits performance targets.
By RYAN NAKASHIMA, Associated Press Published: March 26, 2014
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Disney’s $500 million purchase of YouTube video producer Maker Studios is a sign that the entertainment industry’s content and technology startups are coming of age and proving to be as valuable to Hollywood as app makers are to the giants of Silicon Valley.

The deal announced Monday also signals Hollywood’s new openness to technological innovation, an acknowledgement that media giants don’t have all the answers. The acquisition comes a month after The Walt Disney Co. launched a technology startup incubator called Disney Accelerator, which promises to seed 10 companies with $120,000 each to develop ideas that’ll have a big impact on entertainment and technology.

Disney’s purchase price — which could hit $950 million if Maker hits performance targets — also validates the increasing value of so-called “multichannel networks.” Those are the mini media empires that provide funding and support to video creators while taking a cut of ad revenue generated from views on YouTube.

When people subscribe to these channels, they’re notified when new videos are available.

That helps networks generate regular views on multiple devices and enables them to deliver video ads on a massive scale.

Only a handful of such networks have reached the size of Maker, which went from startup status in 2009 to a network with 55,000 channels that generate 5.5 billion views a month, the vast majority from people age 13-34.

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