Viacom Building Formidable Ad-Supported Alternative For Hollywood's Digital Future

With its $340 million acquisition of ad-supported streaming service Pluto TV, Viacom has added another important piece to its transformation as a player in the digital world. Importantly, the company is pursuing a very different strategy from most of Hollywood's major traditional media companies.Pluto is one of the biggest of a class of online services that aggregate free, ad-supported video programming from a variety of sources. Others include Tubi, Xumo, the Roku Channel and a planned service from Amazon that appears to largely echo what the Roku Channel does for Amazon's streaming devices and customers.In announcing the deal, Viacom CEO & President Bob Bakish called it "an important step forward in Viacom’s evolution. Pluto TV’s unique and market-leading product, combined with Viacom’s brands, content, advanced advertising capabilities and global scale, creates a great opportunity for consumers, partners and Viacom.”Pluto TV has an estimated 12 million users per month, watching a wide variety of free content from dozens of sources. Its acquisition caps a remarkable year for Viacom, which has made a string of deals to reposition itself far beyond its cable-TV roots.Previous acquisitions have included the big celebrity- and influencer-marketing consultancy WHOSAY, influencer conference company VidCon and online-video studio AwesomenessTV. The company also led a $15 million strategic investment round in Pocket.watch, the kid-focused online service that now is creating content for Viacom's Nickelodeon network.The potential is big for new connections and cross-promotion between Pluto's distribution platform and content from Awesomeness and Pocket.watch as well as Viacom's cable networks, combined with its ad sales and influencer-marketing capabilities.Last month, I talked with WHOSAY founder and CEO Steve Howe about how the Viacom deal had helped supercharge WHOSAY's influencer-marketing work, allowing cross-promotion and -pollination from Viacom's bevy of traditional cable channels, social-media sites  and ad-sales teams to everything that WHOSAY is doing for its corporate clients and the fleets of influencers and celebrities it works.Expect the Pluto deal to redouble those opportunities, helping shove a once-recalcitrant powerhouse of the now-bygone cable era into the streaming world.Importantly, with an ad-supported aggregator in Pluto, Viacom is treading territory that looks a lot more like what it knows, wholesaling content to a lean-back audience.I'm less certain that some of the media competitors getting into subscription video on demand are quite ready for the very different consumer experience, programming expectations and the rest that come with that shift. It's not that they can't figure it out. It's just a very different business.And yes, one need only look at the roughly $1 billion in streaming-related losses that popped up on Disney's balance sheet, as Hulu and BAM.TV continue cost more than they bring in.It's also possible the Pluto deal will further salve wounded sensibilities at Viacom corporate cousin CBS, still bruised from a brutal 2018 filled with proxy wars, boardroom battles, Les Moonves' ejection over sexual-misconduct charges and an uncertain future.The deal suggests that Bakish may shine ever brighter in the eyes of Shari Redstone, whose National Amusements owns controlling stakes in both Viacom and CBS.As Viacom becomes more digital-ready, CBS shareholders and board members may increasingly warm up to Firestone's long-held interest in merging the two. Regardless of what direction CBS takes, Bakish clearly isn't waiting at the altar for a wedding that may not happen.The Pluto TV deal marks another significant move beyond Viacom's pay-TV past. In doing so, Viacom assured its pay-TV partners that it did not plan to shift distribution away from them, but will offer Pluto as another add-on service they can offer to customers.Pluto is one of several sites aggregating free online video sources in an accessible user interface that makes it relatively painless to access a wide array of programming, including movies, news, sports and more.The content is free through apps on most major streaming devices. Pluto also has cut deals with Smart TV manufacturers such as Vizio to build its apps directly into their systems, a smart move that painlessly  allows potential audiences to find the site.In the coming wars over TV viewer attention in a sea of proliferating online-video services, such hardwired positioning will be invaluable. Leveraging its offerings with all that Viacom increasingly has on offer can provide a huge win in a complicated year.