Nothing Like Second Chances: Why Viacom Bought Into Pocket.watch

There may have been no bigger miss on digital video investment by Hollywood networks than pay-TV powerhouse Viacom during Philippe Dauman's unfortunate 10-year run as CEO, which ended in 2016 amid a court fight.But in the two years since Dauman's forced departure, the company has begun catching up with online video and the young audiences there who are spurning cable TV and Viacom brands such as Nickelodeon and MTV.New CEO Bob Bakish refocused company strategy on six core brands, including Nickelodeon, and embarked on a series of acquisitions and expansions. Now Viacom has taken another big step, the latest in several designed to make up for years of neglect in the youth markets Nickelodeon once owned.This year's first big deal came in January with the acquisition of WHOSAY, a digital agency connecting celebrities and online influencers with advertisers to create branded content. As influencer marketing has grown (as have concerns about brand safety and ROI), WHOSAY has boosted Viacom's sales and marketing offerings and expanded the Viacom Velocity unit's branded-content initiatives.Then came the purchase of VidCon, the organization behind the vast annual gathering of online influencers, fans and industry leaders. This year's Anaheim VIdCon drew roughly 30,000 attendees, including about 20,000 intensely engaged young fans and their families. The company also plans further events in locations such as London, Australia and Asia, a chance to connect with young creators and their fan bases in key markets around the globe.Now comes news this week that Viacom led a $15 million Series B fundraising round for Pocket.watch, the online video service targeting audiences ages 2 to 11 that bills itself the "entertainment headquarters that kids have been waiting for."The investment cements an already budding relationship between the two companies, which collaborated on the sketch comedy show "Skoogle," created by and starring SNL comedian (and former Nickelodeon child star) Kenan Thompson. Viacom-owned Paramount Studios also has bought the Pocket.watch pitch for "The Unboxing Movie."Going forward, the companies said they will partner on content, advertising initiatives, including packaging branded content, and identifying up-and-coming talent (WhoSay should be useful for that).Some of Pocket.watch's key creator partners, such as Ryan ToysReview (with 15.2 million subscribers, it has been one of YouTube's most-watched channels the past couple of years), will be incorporated into Viacom live events, an area where the company has put heavy emphasis as it tries to build deeper audience relationships.In all, Pocket.watch's 20 partner channels have more than 1 billion monthly views from a subscriber base of 34 million, the company said. That family of partner channels could partner nicely with what Nickelodeon is now doing online.Nickelodeon is growing online primarily through YouTube, according to social video intelligence company Tubular Labs. Nickelodeon has added 5 million to 7 million views per month over the last few months, with 120 million views for June. In the past 90 days, 10 different videos across YouTube and Facebook have a V30 score (views in the past month) of at least 1 million. Nickelodeon's most popular online video had 3.5 million views over that timeframe.The other Hollywood competitor for children's attention, Disney, has done most of its work through Facebook recently, though its top video appeared on YouTube (tied to the debut of "The Incredibles 2"), according to Tubular. YouTube views rose to 46.8 million last month (up from 33 million), but Facebook subscribers make up about 75 percent of the loyal audience.As Disney prepares to rollout a subscription video-on-demand service next year featuring content from Marvel, Star Wars, Pixar, and its TV channels, doubling down on programming for a younger audience will be crucial.Pocket.watch's executives and other investors include several with connections to Viacom or CBS, the other major media company connected to the Redstone family.The most notable tie is Chief Content Officer Albie Hecht, who formerly headed Nickelodeon Entertainment and HLN, and founded Spike TV.Jon Moonves, a prominent entertainment attorney, is Pocket.watch's chief strategy officer. His brother, CBS CEO and Chairman Les Moonves, was an early investor, as is seemingly omnipresent Los Angeles media investor Allen DeBevoise (DanceOn, Jukin Media, IRIS.TV, Pluto.TV, Machinima, Tubular Labs, Tastemade).Those connections will further increase under the deal, with Viacom Media Networks COO Sarah Levy joining the Pocket.watch board.Other execs include CEO Chris Williams, an early Yahoo employee and Chief Audience Officer at Maker Studios who later headed Disney's online channels after it bought Maker, and David B. Williams, former chief content and tech strategist at Endemol Beyond USA.Pocket.watch launched in March of 2017, backed by a $6 million round led by DeBevoise's Third Wave Digital. Other initial investors included UTA Ventures, producer Jon Landau, actor Robert Downey Jr., and WME partner and head of digital media Chris Jacquemin.