To woo younger generations of viewers who watch videos online and on mobile devices, traditional television studios are rapidly snatching up venture capital-backed online video startups, known as multichannel networks (MCNs). Warner Bros. Entertainment Inc., a division of Time Warner Inc. (NYSE: TWX), has already made a purchase, and Walt Disney Co. (NYSE: DIS) is closing in on a target.
MCNs are the latest step in the evolution of online video, first popularized by quirky user-generated clips on YouTube, which Google Inc. (Nasdaq: GOOG) bought for $1.65 billion 2006. The demographics of the audience are clearly attractive to TV advertisers too. Hit shows on MCNs have millions of Generation Y and Z viewers.