Market Insight

Poland’s TVN acquires majority stake in games MCN, Gamellot

November 03, 2016  | Subscribers Only

Steve Bailey Steve Bailey Principal Senior Analyst, Games

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Scripps Networks-owned, Polish TV broadcaster, TVN has bought a majority stake in Gamellot, a Polish-grown, games-dedicated Multi-Channel Network (MCN) launched in 2012, for an undisclosed amount. In their four years of operation, Gamellot has built a YouTube audience of 19 million subscribers, which generates 150 million views a month, across their 90+ YouTube channels. This is the first acquisition in the MCN space by a Polish broadcaster and strengthens TVN’s digital proposition. 

Our Analysis

Falling TV ratings in Poland have led broadcasters to accelerate their digital strategies and launch numerous digital platforms to accommodate their audiences moving to online and mobile platforms. The TV audience shift is also reflected in the advertising market; in 2016 IHS predicts that online net advertising revenue (NAR) will grow by 15.2% year-on-year; TVN NAR (which remains the largest ad medium in Poland with 45.9% share in 2016) will grow only 1.8%.

Polish broadcasters have focused their online strategies on launching their own OTT players and creating their own online content. This is the first MCN acquisition by a Polish broadcaster and it follows that of some other Western broadcasters, including TVN’s parent company, Scripps Networks. Scripps has primarily invested in the food sector with Tastemade (MCN) and FOOD52 (online food community) over the last two years. Scripps has invested in both MCN and thematic pay TV channels (and online communities) gaining access to all platforms to reach TV and online audiences.

The acquisition by TVN comes in the space of games content which is associated with the highly targeted specific young audience in the Polish market. The games audience is regarded as very active because consumers have high purchase power and are open to new product propositions from advertisers in a gaming environment.

According to IHS estimates, a full acquisition of an MCN with the number of views recorded by Gamellot would be in the range of $30m-$40m in a Western European market. This value will be lower in the CEE region where ad spend per capita is also significantly lower. IHS tracks the activity of the broadcaster investment in the MCN space in the M&A Market Monitor and recorded 58 acquisitions by European broadcasters in the last four years.

There has been a deepening relationship between game content and video coverage (whether streamed or on-demand) over the past few years. From 2013 onward, the games industry began to recognise the sizeable marketing value presented by this emerging media channel, wherein streamers (or ‘YouTubers’) could connect directly – and credibly – to large audiences of consumers.

The main benefits of the acquisition for Gamellot are the scale and access to TVN’s relationships with advertisers and agencies.  However, as Gamellot videos are monetised on YouTube it implies that TVN will still have to rely on the Google ad servers for generating ad revenues on the popular MCN. Moreover, disengaging from YouTube on the ad sell side is very difficult, as the gained audience is primarily attached to the online video platform rather than the MCN itself. So moving the audience from YouTube to the broadcaster online TV platform for own monetisation control can be difficult - as was similarly the case with game publishers trying to move their Facebook-gaming audiences away from the social network.

Therefore the win for Gamellot investment is also a win for YouTube, at least for the time being. As broadcasters expand their ownership of MCNs, YouTube also gains from the new advertisers gained and strengthens its position as an integral part of the online TV sector. 

Scripps TVN TVN Group
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