The Walt Disney Co. jumped into the short-form online video business by agreeing to buy Maker Studios for $500 million.
Maker Studios is the leading source of online content on YouTube, where it gets 5.5 billion views per month. It has 55,000 channels, 380 million subscribers and 5.5 billion views per month.
If Maker Studios makes the performance benchmarks spelled out in the buyout agreement, its shareholders can earn as much as $450 million on top of the base purchase price.
"Short-form online video is growing at an astonishing pace and with Maker Studios, Disney will now be at the center of this dynamic industry with an unmatched combination of advanced technology and programming expertise and capabilities," said Bob Iger, chairman and CEO of Disney, in a statement.
The deal gives Disney advanced technology and business intelligence regarding the way consumers discover and interact with short form video, the company said.
"Disney is synonymous with the best entertainment and is the ideal partner for us, strengthening our position as the leading player in online video," said Ynon Kreiz, executive chairman and CEO of Maker Studios.
Maker Studios will report to Disney CFO Jay Rasulo, and will remain headquartered in Culver City, Calif., with operations in New York and London.