Vice, valued at over $4 billion dollars, has some pretty poor ratings on its new cable channel. They are 51% worse than the channel's previous incarnation, History's H2. But to CEO Shane Smith, the poor viewer ratings don't matter. Instead of playing the ratings game, Vice is playing the brand game.
Smith is confident and takes advantage of brands who feel they are out of touch with the modern media landscape. He sells them on Vice's ability to boost their brand recognition. One such example is when Vice was paid $40 million to make a video series for Intel about contemporary artists. The program launched as a cross-platform promotion, with Intel's logo modestly applied so as to not mislead audiences. That program, entitled the "Creators Project" paved the way for even larger deals on native advertising. Vice learned that it could make more money on sponsored content than banner ads, and shifted their focus away from hard viewer metrics. The perception that Vice was helping a brand proved to be extremely important.
Vice learned that it could make more money on sponsored content than banner ads, and shifted their focus away from hard viewer metrics. The perception that Vice was helping a brand proved to be extremely important. Vice soon became a media giant in its own right, with a cable TV network, HBO programming, and deals with other media brands. Last year, Disney invested a massive $400 million in Vice, and now owns 18% of the company. While no merger or acquisition has happened, Smith predicts a major consolidation sometime next year.
Their publishing strategy is not uncommon for digital publishers in the modern era. Perhaps the most classic example is Buzzfeed, which relies almost entirely on branded content for its revenue. Other digital publications like Mashable also use branded content, and even legacy media outlets such as the New York Times and Wall Street Journal have in-house custom content shops.
Smith recently gave a lecture arguing that big media needs to continue to create meaningful content for young viewers. Instead of being an exclusive club, he feels media needs to open up and break the old rules. To follow its audience, Vice was forced to evolve into a brand that covers news events, human rights, LGBT issues, and more. To do this, Smith feels that old media and new media need to merge and consolidate.