Vimeo is giving one of YouTube's top talent studios the chance to sell its content. Disney-owned Maker Studios said Thursday it will enable its deep pool of creators to sell their work using Vimeo's video-on-demand platform. Vimeo will invest in the marketing and production of some of Maker Studios' content as well.
The deal helps build the IAC-owned Vimeo's on-demand library. The company, which predates YouTube having launched in 2004, established itself early on as the go-to service for high-end Web video auteurs. The question is whether it can find a profitable model while resisting both advertising and subscriptions, the two current prevailing models for Web video. Right now, Vimeo is forging ahead without either of these things, even though it has been talking about a subscription service for months.
“I can’t say we’ve fully nailed it as far as what it will look like,” Sam Toles, the company’s head of content strategy and vice president of business development, told International Business Times. “It is a topic of almost constant conversation here.”
This push to grow Vimeo’s catalog comes at a time when Americans are spending more and more money to purchase videos digitally. According to a year-end report released by the Digital Entertainment Group trade association, U.S. spending on digital movies shot up more than 30 percent, to $1.5 billion. That actually outpaced the growth of spending on subscriptions, which rose 25 percent to a little over $1 billion.
Though the bulk of that revenue came from Americans purchasing well-known blockbuster titles like “The Hobbit,” Vimeo’s titles are getting watched as well. In his most recent call with investment analysts, IAC Chief Financial Officer Jeff Kip highlighted on-demand videos that have generated six-figure revenues for their owners in the space of a single month.
So far, Vimeo is leaving other two main sources of revenue -- advertising and subscriptions -- on the table. Subscription-based streaming providers like Netflix, Amazon and HBO (if you count HBO Go) are all enjoying strong growth and critical acclaim (even if they have no interest in making a profit). The market for Web video advertising is skyrocketing, with global revenues projected to grow 30 percent to $7.7 billion in 2015, and with Facebook mounting an aggressive challenge to YouTube for a share of that growing market.
Ever since it launched, most of Vimeo’s innovations have been driven by users' needs, from increasing resolution (Vimeo was the first to offer HD video) to adding editing tools to cleaning up its user interface. When Vimeo launched its on-demand platform in 2013, the company decided that, instead of a rigid price structure like the ones found on other digital content hubs, it would allow creators to charge whatever they liked for their wares, from 99 cents to $15, with Vimeo taking a 10 percent cut, compared to the 30 percent, for example, that Apple takes on iTunes store purchases.
What Vimeo has built is growing healthily. At the end of 2013, Vimeo’s video-on-demand catalog included more than 4,000 pieces of content. By the end of 2014, that number had risen past 15,000, and Toles said he expects to maintain a similar pace of growth this year.
“I think we’ll probably be at least double, if not triple the number of titles on the service [by the end of the year],” he said.
Leveraging bigger names
Toles said the company isn't relying on its amateur talent community alone to drive that growth. Since arriving at Vimeo 10 months ago, Toles has pushed to bring more well-known works onto the video-on-demand platform, and his work has borne fruit. Earlier this week, Spike Lee’s newest film, “Da Sweet Blood of Jesus,” debuted on the platform for sale one month ahead of the film’s theatrical release.
The deals Toles and his team have closed are all part of the same strategy: building a suite of content that not only attracts new customers, but also exposes people to the content that already exists in Vimeo’s VOD catalog.
“I think the holy grail of all creators is to have their content be discoverable,” Toles explained. “By bringing on this higher commercial profile content and have it relate to content that is surfaced from our creation team creates an interesting balance.”
It's possible that video on demand is Vimeo’s last, best chance to succeed in this current iteration. The company has said it's profitable, and there were rumors that IAC tried to sell Vimeo in 2012 before the video-on-demand platform launched.
In the meantime, the company will continue to build the offering out, taking learnings as it goes.
"There's a lot of touch and feel as we go," Toles said.