Author: Michelle Cheng. Source: Inc
When serial entrepreneur Ilya Pozin and his co-founder Tom Ryan launched Pluto TV in 2014, the idea went against the grain.
The future of online entertainment looked like it would be mostly on-demand, subscription-based, and ad-free--à la Netflix or Hulu. Meanwhile, Pluto TV would stream over 100 channels of live cable TV for free--no sign-up required--and use ads to make money. (The startup later added on-demand content.)
Five years later, Pozin and Ryan's bet is paying off. In January, Viacom agreed to acquire Los Angeles-based Pluto TV for $340 million in cash.
The acquisition will give Pluto TV, which has operated mainly in the U.S., access to Viacom's massive library of content and the opportunity to expand faster internationally, chief growth officer Pozin told Inc. Viacom, composed of networks like Comedy Central, MTV, and Nickelodeon, has more than 700 million subscribers and operates in over 160 countries. Going global while maintaining a lead in the U.S. is not easy, as it requires more resources and unique content, Pozin admits. Pluto TV had raised $50 million in funding to date and has 12 million monthly active users.
"Being a media company, you're up against the big guys that have billion-dollar budgets for original content and things like that," says Pozin. "Being part of a massive company like Viacom, which has amazing resources and content and relationships with distribution partners even stronger than us, we just know it's going to propel the company at a rapid pace."
Pluto generates revenue through targeted ads that are shorter than typical TV commercials, says Pozin. (Traditional TV has about 10 to 16 minutes of ads per hour; Pluto TV has eight to 10 minutes of ads per hour.) More than 140 content partners use Pluto to monetize their libraries of content, and Pluto's app is available via distribution partners like Amazon and Roku.
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Pozin says he was partly inspired to start the company six years ago as he hand-selected YouTube video after YouTube video for his 2-year-old daughter to watch. He found YouTube's recommendations weren't appropriate or very good.
"I always joked like I just learned how to change diapers and now all of a sudden the internet expects me to be an expert in children's videos, which I wasn't," he says. What he wanted was an online TV experience where he could simply set a channel and know it would be kid-friendly.
Pluto isn't the only company that has tried to corner the streaming TV market. The startup competes with services like Crackle, YouTube TV, and Hulu with live TV. And, of course, traditional cable television.
Last spring, Pozin and Ryan approached Viacom for a content deal, which would have made Viacom one of its many content partners, which include Warner Bros. and NBC. Instead, the media conglomerate proposed to acquire the company.
Pluto signed the deal on January 18--Pozin's 36th birthday. The company will continue to operate as an independent subsidiary of Viacom, led by CEO Tom Ryan, the company said. All 150 employees, including Pozin, will be staying on.
"I'm stoked for what's to come," he says. "The outcome of the exit is huge, but the opportunity to see our company turn into a household name, which is really what's right in front of us, is even bigger."
Pozin, an Inc.com columnist, made Inc.'s 30 Under 30 list back in 2012 with his web design company Ciplex, which was acquired in 2016 for $1.5 million. He also founded development studio Open Me, which was acquired by technology company Rowl in 2015 for $6 million.
While Pozin wouldn't disclose what his payout will be from the deal, he did reveal what he plans to do with it: "My priority is my family and their future so once that's been handled, maybe I'll finally take a vacation."