Verizon Communications plans to launch a new video service as part of its Go90 platform, and is jump starting its effort by buying a 24.5% stake in AwesomenessTV, a media company controlled by DreamWorks Animation.
“AwesomenessTV has demonstrated an ability to zero in on programming that Gen Z and millennials want to watch,” said Verizon EVP Marni Walden. “The content AwesomenessTV has produced for Go90 has exceeded all our expectations with shows such as ‘Guidance’ and ‘Top Five Live’. That’s why we want to be in the AwesomenessTV business.”
Verizon said its investment values AwesomenessTV at $650 million, implying a purchase price of $162 million for the 24.5% stake. DreamWorks Animation, which bought the company in 2013, will remain its majority shareholder.
The new video service is set to operate as an independent brand, according to Verizon, and feature “premium transactional content for a variety of audiences on par with the highest-end content seen on television today.” In the U.S., the service will only be available through the Go90 platform, which is available to customers of other wireless carriers, not just to Verizon Wireless customers.
Analyst Jennifer Fritzsche of Wells Fargo said she expects to see more small acquisitions like this one as Verizon hones its mobile video strategy.
“We believe ad-supported video service remains a top strategic focus for Verizon (if not the top focus),” said Fritzsche. “We believe this deal gives another clue where [the company] is going. We continue to expect Verizon to do tuck-in acquisitions and investments to further strengthen this initiative led by Marni Walden.”
DreamWorks CEO Jeffrey Katzenberg said Verizon’s involvement will have a major impact on the evolving mobile video industry. He described the relationship with the carrier as an “incredible opportunity.”
“The creation of this new branded service represents a transformational step, not just for AwesomenessTV, but also for the entire mobile video landscape,” said Katzenberg, who expects AwesomenessTV’s sales to double within the first year of content delivery, but did not share the company’s current revenue.
Last month, UBS analyst John Hodulik said Go90 will have a hard time competing with more established mobile video services, including Netflix, Hulu, YouTube, Instagram, Snapchat and Facebook. Some of those services started as PC-based media, and some started as video delivery services, but none of them are mobile-first, video-first services like Go90.
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