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Viacom's Pluto TV, BBC Come Together for a Content Deal

Zacks Equity Research

Per Variety, Viacom’s VIAB Pluto TV recently entered into a new content licensing deal with BBC Studios.

The deal includes about 700 content hours featuring approximately 1,000 episodes including Doctor Who, Robin Hood, Antiques Roadshow, Primeval, Being Erica and Bedlam. Additionally, Doctor Who and Antiques Roadshow will have separate channels on the free streaming service.

BBC Studios content will be available on Pluto TV from May for users only in the United States.

Notably, Discovery DISCA is the other company that recently inked a 10-year deal with BBC in its efforts to launch its own streaming service. While Discovery acquired non-fictional content, Viacom tapped fictional content, thereby eliminating competition for BBC content.

Viacom Inc. Revenue (TTM)

Viacom Inc. Revenue (TTM) | Viacom Inc. Quote

Acquisitions, Deals Expand Viacom’s Customer Base

Viacom is expected to benefit from the fast growing user base of Pluto TV. Notably, the company agreed to buy Pluto TV, a free ad-supported streaming service in the United States, for an all-cash deal worth $340 million this January.

The ad-supported free streaming service currently has more than 15 million monthly active users (MAUs), per Variety, up from 12 million MAUs this January.

Pluto TV’s varied content offering coupled with its content deal with about 130 media houses, film and TV studios including Lionsgate and Warner Bros. is likely the reason behind MAU growth.

Notably, Pluto TV has more than 100 channels that showcase content across categories like movies, sports, comedy, gaming, lifestyle and TV shows, among others.

Moreover, Viacom recently entered into a content distribution agreement with T-Mobile US TMUS to support the latter’s over-the-top (OTT) service with Viacom’s live and on-demand content. The deal will help Viacom’s brands including MTV and Nickelodeon to reach about 80 million T-Mobile US customers, per Reuters.

We believe the above deals are perfect opportunities for Viacom to attract new users.

Rise in Free Streaming Players Intensifies Competition

The fast-growing streaming market, which is expected to reach $124.57 billion by 2025 per Grand View Research, is attracting companies looking to provide both paid and free services.

Netflix NFLX and Amazon, the dominant players in the streaming market, are ramping up content spend to attract subscribers. Per Variety, Netflix is expected to spend $15 billion in 2019 alone.

Apart from this, upcoming paid/free services from Disney, Apple and Comcast and free streaming service from Sinclair Broadcast pose a threat to Viacom’s growth strategies in the streaming market. Moreover, Amazon launched a free streaming service, IMDb Freedive, for its U.S. customers.

Thus, Viacom is expected to face stiff competition in the streaming space.

Viacom currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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