Yahoo is in talks to buy a 75% stake in Dailymotion, one of the world’s top video sites, from France Telecom at a $300 valuation, according to a Wall Street Journal report. The move would give Yahoo a stronger foothold in the online video market in Europe and Asia, where Dailymotion draws most of its audience.
In a research note about the potential deal today, Brian Wieser, senior research analyst at Pivotal Research Group, suggested Yahoo may be after more than picking up a smaller-scale version of YouTube, with Dailymotion featuring a heavy volume of user-generated content supported by advertising.
He points out that the “French YouTube” last year introduced a cloud-based service allowing publishers to manage their live and streaming video content online. It’s also launched a publisher network with thousands of partners. “Such an initiative may also present Yahoo with some unique competency,” he wrote.
Still, Wieser questions the value of Dailymotion’s legacy business to Yahoo. “225 million towards a video hosting and streaming service does not seem worthwhile by itself, as we presume that investing further in Yahoo's existing capabilities would be a more efficient use of capital.,” he stated.
In the U.S., Dailymotion hasn’t gained much traction as a video hub, not even cracking the top 10 video sites, according to comScore. Its value for Yahoo would lie in global markets where it commands a larger audience. Worldwide, it has 116 million unique viewers monthly and more than 2 billion videos viewed.
The deal would the largest for Yahoo under CEO Marissa Mayer, who so far has pursued the acquisition of several smaller mobile and online startups since taking over last year.