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Vimeo acquires VHX as it looks to build out business models for indie creators

Vimeo acquires VHX as it looks to build out business models for indie creators


The merger puts Vimeo's scale together with the monetization tools of VHX

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One of the biggest trends in media over the past year has been the move from free, ad-supported models to premium options like Netflix, Hulu, and commercial-free deals like YouTube Red. Smaller independent creators have also begun to tap into this demand, selling episodes, seasons, and subscriptions to their loyal fans through services like VHX. Today Vimeo, long a bastion of ad-free online video, announced it is acquiring VHX, bringing the small New York startup's monetization toolkit to a much bigger pool of 280 million creators and consumers.

"Online video is expanding from a few, mainstream subscription services into a flourishing world of interest-based streaming channels, much like the evolution from broadcast to cable television," said Kerry Trainor, Vimeo CEO. "As the video universe continues to unbundle, Vimeo offers the ideal home for the next generation of premium video channels serving passionate global audiences."

An opportunity to steal dollars from cable

VHX has been working with video creators for years to sell content on the web. More recently it moved to creating apps for mobile devices, and earlier this year, began helping its clients build a presence on the new Apple TV, giving operations with small budgets the chance to reach consumers on the the most valuable piece of real estate in the living room.

"There is a lot of opportunity these days for small content creators to steal a piece of money we used to spend on cable," says Rich Greenfield, an analyst with research firm BTIG. "People will consume on lots of different devices, but if you can get onto the biggest screen in the house, there is a much better chance people will pay for your content."

Compared with the audiences on rival marketplaces like YouTube or iTunes, Vimeo is small, but it's pitching itself to creators as a place where they will get to keep more of the money and data generated by the sale of their videos — Vimeo itself plans to keep just 10 percent of all proceeds, a far lower cut than what's taken by Apple or YouTube. And it will share information on people who purchase the videos, something creators wouldn't get with Netflix or Hulu. For a few hundred dollars anyone can stand up a channel and reach a global audience. The biggest question left for Vimeo is, after it hosts a successful video series that people are willing to pay for, can it keep them around long enough to really reap the rewards?