Taking on MTV: Vevo plots linear TV channel

Michelle Clancy | 13-03-2013
Online music video powerhouse Vevo has launched a 24-hour music network online that it will expand to traditional pay-TV subscriptions via cable, satellite and IPTV later this year, it said potentially taking MTV and VH1 head-on.
CEO Rio Caraeff told Bloomberg that for now, the linear channel is available via the Web, mobile apps and gaming consoles. It will gradually add more traditional broadcast elements, such as scheduled programming blocks, special concert events and original programmes, and eventually, it will hire on-air hosts. The decision to move away from a classic Web-style model (like that which it runs as a YouTube channel) is geared to viewers' thirst for continued lean-back experiences. "There is still a time and place when you just want to have something programmed," Caraeff said. "You don't want to lean forward every three minutes to pick another video, you just want it to play."

Speaking of YouTube, RTVN previously reported that the online video king is eyeing a $50 million investment in Vevo, which is one of its top partners. Vevo runs a channel on YouTube as part of Google's original online video content initiative, which it kicked off in October 2011.

The report says that the deal would give Google less than a 10% stake in Vevo, suggesting a valuation of $500-$650 million for the site, which is a joint venture between Universal Music and Sony Music Entertainment founded in 2009 to showcase their labels' artists. comScore found that Vevo is the No 3 online video property in the US behind Google/YouTube and Facebook.
The $50 million would also keep Vevo music videos on YouTube after its existing contract runs out in April. But Caraeff said that he doesn't anticipate channel conflict. "The [new Vevo TV] channel will be in all the places you would expect, but it won't be on YouTube," Caraeff said, according to Bloomberg. "We are trying to differentiate our brand and service from YouTube. We're using YouTube as marketing for the channel, not distribution."
With the new channel, Vevo hopes to increase advertising revenue; it will be experimenting with dynamic ad insertion for better viewer targeting. Vevo TV's initial sponsors are State Farm Life Insurance, McDonald's and film studios.
It also is looking forward to opening the door to carriage fees from pay-TV operators as an additional revenue stream. Bloomberg noted that the pay-off could be significant: MTV collects 41 cents a month per subscriber in carriage fees, while VH1 commands 19 cents, according to estimates from SNL Kagan. The networks are available in about 98 million and 97 million US pay-TV homes, respectively. Meanwhile, Fuse receives 6 cents and has 56 million subscribers.