Last summer, both Viacom and Snapchat became instant partners over MTV’s Video Music Awards: 5 million people tuned into MTV to watch the show on cable television; 12 million watched highlights on the social media app.
The estimated figures depict a clear cut picture: in order to occupy larger target group, TV shows need to be where their audience is, i.e. smartphones.
As per the announced deal, traditional media giant, Viacom Inc. will be lending its advertisement relationships and larger TV shows’ portfolio to new comer Snapchat Inc – keeping in view their financial future. Privately held Snapchat is valued at $16 billion; more than Viacom’s US$ 13 billion market capitalization, but the Venice Company has yet to figure out how to turn a profit.
Viacom is among the many media companies refusing to be left behind. Competitors including Walt Disney Co., NBCUniversal, 21st Century Fox and Warner Bros. are investing millions of dollars and partnering with start-ups to try to gain new insights in viewership patterns of people younger than 35. It laid forward uninspiring fiscal first Q earnings alongside complex challenges – particularly due to age factor of its viewers; individuals less than 35 years incline more towards online video options i.e. YouTube, Facebook or Netflix.A report from consulting firm PwC forecasting 2016 media trends noted that people spend 71% of their time on mobile devices using apps, which are increasingly influencing how users consume entertainment.
This deal has been made to share focus on young audience specifically:
“We believe we are a great fit. I don’t want to toot our own horn, but I think they saw in us one of the most-forward-looking ad sales organizations out there.”– Viacom Chairman and Chief Executive Philippe Dauman
In short, The Snapchat-Viacom deal offers more options for both companies as they fight for their share of the nearly US$200 billion spent on TV ads worldwide annually.
