In January 2011, Orange acquired 49% of French company DailyMotion for $78 million. Last month, it paid $80.6 million for the remaining 51%. While the $168 million total consideration is a tenth of what Google paid for YouTube, it does mark the largest video deal in a while: Aol/5Min, Discovery/Revision3, Google/Next New Networks, Collective Digital Studios/Metacafe all cost far less.
You can't have your croissant and eat it too
Wisely, Orange is looking for partners to expand into the U.S. Reportedly “Orange is currently looking for an American investor to buy out a small stake,” writes Romain Dillet in TechCrunch. Does small connote minority? Probablement.
While there are countless would-be interested parties, we won't speculate on that here. Instead, we'll ask what DailyMotion's path to relevance, survival, and victory will be, in a world where YouTube is so far ahead of everyone else.
While it's easy to be cynical about any video company not named YouTube, the truth is DailyMotion deserves credit for having survived against YouTube when, frankly, very few others did. The path of carnage includes Guba, Revver, LiveVideo, GoFish, MySpace TV, etc. Along with Break and Metacafe, DailyMotion survived. But none of those sites crack the comScore top 10.s
As YouTube went from pariah to the belle of the ball, it's clear to marketers why they need to spend their ad dollars on YouTube (or number two player Hulu).
Just as DailyMotion must explain its raison d'être to marketers, Orange needs to do the same for DailyMotion to would-be partners.
In business, the answers aren't always as important as knowing what questions to ask.
DailyMotion's asset could very well be its liability: "Considered as the platform of choice in France, Dailymotion is very strong in other markets as well,” writes Dillet. “In 2011, only 15% of its users were French. The U.S., Turkey, Japan and other countries are important markets as well."
The problem is, according to comScore, DailyMotion isn't among the top 10 largest video sites in the U.S. Its attractiveness as a pure-play video competitor comes into question, since any one of the would-be American partners Orange would be eyeing could already be larger than DailyMotion.
Then again, where some see weakness, others see strength; adding to DailyMotion's heft -- regardless of what it is -- can shift the rankings overnight (though reach alone is useless).
While DailyMotion could play the global card, YouTube's won that race: for purposes of illustration, less than 40% of our viewers on YouTube.com are based in the U.S. It's certainly true that YouTube multichannel networks have leveraged YouTube's awesome international reach to build massive global vertical media businesses. But the jury is out on the efficacy of that strategy, since the biggest media companies in the U.S. still only largely care about U.S. markets and the marketers who try to reach them. This isn't implying that there aren't advertisers who are seeking global audiences, or marketers who think in a "boundaryless" way (to borrow Jack Welch's term), it's just that the kind of partners that Orange would want to seek out in the U.S. market may not see the benefits of DailyMotion's non-U.S. audience, valuing DailyMotion at a discount as a result.
Clearly some would value the global nature of DailyMotion's audience – and presumably Orange is targeting those strategists.
If DailyMotion cannot defeat YouTube through geography, can it do so via platform? That's an even more uphill battle. Slowly but surely, the share of views that come from mobile devices is reaching 30% on YouTube. Before long, more people will watch videos on YouTube's mobile app/website than on the desktop version. With billions of daily streams already, this translates to massive mobile reach for YouTube. While mobile's the future, presently it's a pain to monetize.
Which takes us to content.
Does Orange need to position DailyMotion's value to a strategic partner through a content lens (be it as producer or distributor)? At a time when Netflix, Hulu and YouTube are morphing into content creators, that's not a bad approach per se. Production isn't in DailyMotion's DNA, but judging by Orange's own experiences with DailyMotion -- "our partnership with Dailymotion is an excellent illustration of the pertinence of our content strategy," says a spokesperson -- then it might be a path worth considering.