×
You will be redirected back to your article in seconds

Vimeo Plans to Spend ‘Tens of Millions’ of Dollars on Content for New Subscription VOD Services

Barry Diller’s IAC has outlined a new strategy for Vimeo to become a major new Netflix-style subscription video-on-demand player — but without spending the kind of dough that Netflix does on original content.

IAC CEO Joey Levin, who is also interim chief executive of Vimeo following the exit of Kerry Trainor this summer, provided broad strokes for Vimeo’s new SVOD strategy as part of the company’s third-quarter 2016 earnings announcement.

“Vimeo has the once-in-a-generation opportunity to, following in Netflix’s footsteps, deliver compelling subscription viewing experiences for consumers in the market for pay TV,” Levin wrote in a letter to IAC shareholders Wednesday. “I believe we can do so at a fraction of the cost of other major competitors by virtue of the audience and content benefits conferred upon Vimeo through our existing marketplace.”

In the past, Vimeo execs have alluded to plans to launch a subscription-video business, leveraging its large community of creators, and now those appear to be getting put into action.

Vimeo will begin to “experiment” with proprietary consumer subscription services, Levin said, supplementing its offerings for creators that let consumers purchase their content or subscribe to their channels. “We will supplement our creators with original and licensed programming, and can fill out a robust slate of programming for tens of millions, not billions, of dollars,” he wrote.

For now, Vimeo isn’t providing details on timing of the new subscription VOD services, or what the pricing and content lineup might look like.

“Ultimately, our goal is for Vimeo to drive millions of subscriptions and transactions for our creators while also growing a proprietary subscriber base with millions of consumers directly,” Levin wrote.

IAC does not break out Vimeo financial results, but the New York-based company said the video-hosting unit ended the quarter with 741,000 paying subscribers, up 13% year over year. In the company’s video segment, which includes Vimeo, CollegeHumor, Electus, IAC Films and Daily Burn, revenue was flat versus the prior year at $60 million. IAC said growth at Vimeo was offset by lower revenue from IAC Films and declines at Electus “due to the timing of certain projects.” Operating loss in the segment decreased 53%, to $2.7 million, due primarily to reduced losses at Vimeo.

According to Levin, “given the still-nascent stage of Vimeo’s business model,” IAC will not start disclosing financials for the unit in the near future. Vimeo has an annual revenue run rate of more than $75 million, “but overall the business loses money and near-term profit is still not our priority,” he added.

Compared with other over-the-top players, Vimeo has a large existing user base that gives it a major head start in the SVOD arena, according to Levin: “If we can convert just a small portion of our audience, we have a very large business.”

Vimeo serves 1 billion monthly video views and has 240 million monthly viewers, of whom over 100 million are on Vimeo properties. “Not bad for approximately $65 million aggregate investment into Vimeo, the vast majority of which built the (software as a service) business,” Levin wrote.

Popular on Variety

More Digital

  • Blockchain Mania

    AFM: Panel to Launch Blockchain Working Group for the Film Industry

    A group of film executives and tech industry entrepreneurs are to establish a working group seeking to plan how blockchain technology should be applied to the creative industries. The call will be made at the American Film Market on Tuesday in Santa Monica by Manuel Badel from Badel Media and Patrice Poujol from The Lumiere [...]

  • Magic Leap Raising Another Funding Round

    Magic Leap Is Raising Another Big Funding Round

    Augmented reality startup Magic Leap is raising even more money. The company is currently in the process of raising its Series E round of funding, a spokesperson told Variety on Monday. Magic Leap previously raised around $2.6 billion, including $280 million from NTT Docomo in April. “Magic Leap is in the midst of a significant [...]

  • hearst logo

    Hearst Magazines Unionizes With Writers Guild of America East

    The Writers Guild of America East has scored a major victory by unionizing Hearst Magazines’ editorial, video, design, photo and social staff across 24 digital and print brands. The New York-based WGA East, which has about 6,000 members in film, television, news and digital media, announced on Monday that a strong majority of the 500-member [...]

  • Apple AR Headset Coming in 2022:

    Apple Said to Prep AR Headset for 2022

    Apple’s augmented reality (AR) headset won’t be arriving on store shelves until at least 2022, according to a new The Information report. The iPhone maker reportedly updated a large number of employees about the project last month, filling the spacious Steve Jobs Theater on its Cupertino, Calif. campus with employees working on AR hardware. Apple [...]

  • Variety Launches New Video Series, 'Daily

    Variety Launches New Video Series, 'Daily Variety'

    Variety has launched a daily video series covering the business of entertainment. Hosted by Audrey Cleo Yap and executive produced by Eva Wong, “Daily Variety” will feature breaking news coverage and analysis from Variety’s award-winning staff as well as in-depth features and interviews with top industry professionals. Each bite-sized segment and featured clip will be [...]

  • Pluto: Vevo Stations Launching on Ad-Supported

    Channeling MTV, Vevo Launches Linear Programming on Pluto

    Music television is back: Major label-owned music video platform Vevo is launching a series of linear channels for leanback viewing on Pluto TV, the ad-supported video service that got acquired by Viacom earlier this year. A first channel, dubbed Vevo Pop, will launch on November 12; additional channels, including a holiday-themed station, are expected to [...]

  • Instagram tests hiding likes

    Instagram Will Begin Hiding Likes in the U.S.: Smart Move or Misguided Fail?

    Instagram is about to launch a test of removing like counts from posts in the U.S. — and, predictably, the idea has been met with a range of reactions ranging from praise and support to concern and mockery. The hope is that the change can reduce anxiety among Instagram users, to make social media less [...]

More From Our Brands

Access exclusive content