Vice Media

Product Model






Vice Media is a global leader in the creation and distribution of of high-impact news content, primarily targeted at a Millennial audience. Vice distributes its video and text content to users for free via its website, social media accounts, YouTube channel, and traditional broadcasting channels. As such, the content can be consumed on any device.

Vice operates a portfolio of three business models: the lion share of its revenues is generated by its product business model, whereby it creates and sells high-quality television content to broadcasters and distributes the latter in several European countries. It has previously sought to break into the UK television market via a partnership with Channel 4 News, but is now preparing to launch its own channel. [1]

Where Vice broadcasts videos itself and collects revenues from advertisers, it employs a multi-sided business model. It has been a pioneer in ‘branded content;’ its advertiser-customers, such as the microchip giant Intel, pay Vice to create and publish content that promotes their brands to its young target audience on its own media channels. [2] Content is free-of-charge and cross-subsidized by the revenues collected from advertisers. The viewer-customers and advertiser-customers are kept separate, as the latter target and reach the former using Vice’s advertising algorithms. Where Vice creates the advertising content in and of itself – and receives additional revenues in doing so – it also operates a solution business model, which complements its multi-sided business model.

History

Vice Media was founded by Shane Smith and Suroosh Alvi in 1994, initially as a punk magazine. Vice gained notoriety in 2013 by creating Vice News, an online news network which pledged to focus on issues that the mainstream media would typically consider to be too dangerous or too controversial to cover. Infamously, Vice has had correspondents reporting from some of the most dangerous areas in the world, including North Korea and Syria, and has interviewed wanted fugitives on the run. Since 2013, Vice has exploded in popularity thanks to its weekly Vice News show on HBO, which attracts around 2.8 million viewers per episode.[3]

To date, the company has raised more than $770 million in private equity capital from 21st Century Fox, A&E Networks, Disney Interactive, and Technology Crossover Ventures (TCV), valuing the firm at $2.5 billion.[4]

Customers – Who They Are

Vice Media caters to three customer groups: its primary customers are broadcasters, who pay Vice for the license to air its unique and compelling news content. It also serves end-viewers, typically part of the Millenial generational cohort, who seek offbeat news content. It also accounts for an advertiser-customer group, who wish to reach Vice’s end-viewers and efficiently promote their brands to the target audience.

Customer Engagement – Value Proposition

Vice Media has consistently thrilled audiences with on-the-ground coverage of unusual or controversial topics like melting glaciers, the so-called Islamic State, and escapes from North Korea. Vice journalists often take significant risk to their own lives to report from the most extreme conflict zones, which makes the Vice Media news product unique and a compelling offering both for broadcasters and end-viewers. Its ability to source interviews with controversial figures enables it to produce high-quality content about topics that generally receive little coverage in mainstream media. In doing so, it has attracted a loyal pool of users, which increases the attractiveness of the Vice content for advertiser-customers. Due to the quality of the content, broadcasters have opted to commission content from Vice to air on their networks.

Delivery – The Value Chain

Vice has expanded to include more than 30 news bureaus and 1,500 employees around the world, most of whom are journalists. Vice Media has made content and distribution deals with seven groups across Asia, Africa and the Middle East. It has also partnered with the Times Group of India to launch online, mobile and TV content in the country, with plans to hire hundreds of local journalists, producers and filmmakers at a new production headquarters in Mumbai. [5]

Vice Media distributes its content through its own website and through all major social media outlets, via global broadcast on HBO, and via regional broadcasters in some countries, including Canada’s Rogers Communications. Vice has been able to effectively distribute its content through existing platforms and networks, meeting its customers in their preferred venue for content consumption.

Monetization - Value Capture

Vice Media does not disclose financial statements and therefore its revenue breakdown not known. However, the company expected to generate around $915 million in revenues in 2015, and has stated that a majority of its revenues stems from content sales to broadcasters.[6]

Database

Number of Users: Traffic across Vice's web properties grew to 96 million unique visitors in August, according to measurement firm comScore. http://www.hollywoodreporter.com/news/vice-ceo-sha...

Company Homepage: http://www.vice.com/en_uk

References

[1] Christopher Williams,. (2015). Vice plans UK television channel. Available: http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/media/11932031/Vice-plans-UK-television-channel.html. Last accessed 15th August 2016.

[1] Christopher Williams. (2014). Vice Media valued at more than $2.5bn. Available: http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/digital-media/11074572/Vice-Media-valued-at-more-than-2.5bn-after-500m-cash-injection.html. Last accessed 15th August 2016

[1] Crunchbase.com. (2016). Vice Media | CrunchBase. [online] Available at: https://www.crunchbase.com/organization/vice#/enti... Accessed 4 May 2016.

[1] Flint, L. (2016). HBO, Vice Media Announce News Programming Deal. [online] WSJ. Available at: http://www.wsj.com/articles/hbo-vice-media-announc... Accessed 4 May 2016.

[1] Nicolaou, Anna. (2016). Vice Media expands in Asia, Africa and Middle East . Available: http://www.ft.com/cms/s/0/ff91c1da-37f3-11e6-9a05-82a9b15a8ee7.html#axzz4GgWD8xtf. Last accessed 7th August 2016.

[1] Sorkin, S. (2015). As Vice Moves More to TV, It Tries to Keep Brash Voice. [online] Nytimes.com. Available at: http://www.nytimes.com/2015/05/04/business/media/a... Accessed 4 May 2016.

Disclaimer

Written by Halima Begum and edited by Danielle Reza under the direction of Prof Charles Baden-Fuller, Cass Business School, in September 2016. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2016


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