Why Disney's Betting $500M on Maker Studios

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March 25 (Bloomberg) - Bloomberg’s Paul Sweeney and Jon Erlichman examine Walt Disney’s focus on online video with its $500 million purchase of Maker Studios on Bloomberg Television’s “Market Makers.”

Consumers are going more and more online.

They're watching more video online.

If you look at the internet and internet advertising, what are fastest-growing areas is online video.

They are saying that their customers are going there.

They know the ad dollars are going there and we have to have a play there.

They buy maker studios.

There are over 380 million subscribers.

This is a great way to step into this business.

Is youtube a success?

It is making more money than god.

They have $6 billion in revenue for google.

There are a lot of users in revenue.

There are no real profits.

Maker studios is one of the largest layers in terms of youtube.

It is not making money.

It is losing money.

Amazon is building revenue and has little profit.

One day there will be profit.

Maker studio will be housed in a disney.

Youtube is part of google.

Dreamworks made a similar investment as well.

Tell us about that and how fits into a disney is doing.

They bought awesomeness tv.

There is similar thinking.

Youtube is a massive place.

Let's make a destination on youtube so anybody who is making some random video somewhere in brazil or europe or texas can all find a home and we can find a way to brand all that.

They have similarities on that front.

You have layers from inside awesomeness they're having some influence in dreamworks.

The deal is about how this works as well as the economics of the business.

I love the idea of figuring this out.

Paul sweeney, does the media industry have time to figure all this out?

You spend billions of dollars and you don't know where the payback is?

These companies are walking a fine line.

They want to preserve their existing business which is extraordinarily profitable.

Everybody is making money.

They need to preserve that but they need to recognize that consumers are shifting their habits.

Are all the youtube watchers teenagers?

These may be the people who are not paying comcast.

They are consuming their video in different places.

I am sold.

How will disney use maker studios?

Will use it as a brand extension?

Will create content for youtube?

I think the marketing is the biggest opportunity for them.

When you think about the star system and what they have been able to do over the years with disney channel.

If you can find talent through maker in get excited about it through that platform and bring it to other disney channels, that is a potential when.

You have star wars at disney.

There is great marketing opportunity.

Disney may focus more on that as opposed to the economics of this business.

You can share the advertising dollars with youtube.

There is a trend of video advertising.

Companies like maker struggled to get paid big ad bucks for every single video.

Before we go, who is ben sherwood?

Is going to be the new head of abc television reduction.

It is a huge job.

They come set of abc news where he had a nice and successful run.

He turned around good morning america.

It is another example of a strong bench.

He would make good morning america and younger and hipper.

They did.

Today has owned the morning.

We have to get 14 mentions of "bloomberg surveillance." does this mean that been sure what is being groomed for the c suite later on?

He is in the running.

Disney loves playing it this way.

You have all these potential players.

It you can keep his name in that hat for sure.

Thank you, jon erlichman.

This text has been automatically generated. It may not be 100% accurate.

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