Viacom says its streaming content business will be worth $1B by 2020

During its earnings call, Viacom also elaborated on its new licensing deal with Fox for its Vantage targeted advertising platform. (Ben Munson/FierceVideo)

Viacom has ramped up its production of content for streaming services and the company has high hopes for the business.

Viacom CEO Bob Bakish said his company’s content production business for third-party video platforms will be worth $1 billion by 2020. Those numbers apply to Viacom media networks plus Paramount studios and for international and domestic production.

Bakish said the streaming content studio initiative is being driven by growing demand from third party for episodic content. He also said Viacom has more intellectual property opportunities than its traditional networks can accommodate.

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“This initiative is about creating new first-run content. It’s not about the wholesale licensing of library product to third parties. We are taking a page from the Paramount TV playbook, which is mine the library for IP, leverage talent relationships in the ecosystem and use a cost-plus model, not deficit financing. We view it as a way to extend the brands to other platforms and generate incremental revenue,” Bakish said.

Right now Viacom’s streaming studio production is based around Nickelodeon, MTV and Viacom International Media Networks. Bakish said that Comedy Central and BET will be added to that list shortly.

In June, Viacom announced that Nickelodeon is licensing an animated series “Pinky Malinky” to Netflix in a multiyear deal for 59 new episdoes. MTV and VIMN Studios also have production deals in the works.

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During its earnings call, Viacom also elaborated on its new licensing deal with Fox for its Vantage targeted advertising platform. Viacom CFO Wade Davis said the deal covers the licensing of the Vantage targeting engine along with a set of managed service agreements that go along with the ongoing operation. The deal does not include any of Viacom’s viewership data.

“This is a really key development for our AMS business and this comes out of the significant investment that we started making in 2015. It’s ultimately an evolution of the creation of the OpenAP partnership, which we in partnership with Fox and Turner, brought to life last year. It’s important to note that OpenAP continues to evolve significantly,” Davis said.

Fox is the first publisher to license the Vantage targeted ad platform and there’s a significant opportunity for Viacom to partner with other publishers in the same way.

“We’re in late stage discussions with a number of other publishers and we’re really excited about the possibility and upside with this business,” Davis said.

Viacom discussed these two points of its business after this morning reporting its fiscal third-quarter earnings, punctuated by a 4% drop in revenues and operating income that remained mostly flat, up just 1% year over year.