Old Dogs Don’t Need New Tricks, Young Ones Do

Michael Hedges March 3, 2014 Follow on Twitter

Video portal YouTube just had an anniversary. The undisputed global market leader is nine-years old, almost qualifying as an old dog in the media-tech world. What YouTube did for the web, it’s now doing for television. Competitors would like to breath the same air.

Confirmation last week that certain talks have been taking place between French telecom Orange and global tech giant Microsoft about video media portal Dailymotion caused a bit of a stir at the Barcelona World Mobile Congress. “We are having ongoing discussions…which does not mean that we will necessarily achieve an agreement,” said Orange CEO Stéphane Richard to BFM Business (February 24). “For now, Dailymotion or YouTube services are 100 percent free. But tomorrow, the future for these sites will go toward payments for high quality content.” M. Richard also said there are discussions with content producers, some French. A deal with Microsoft, he said, would be “mainly strategic.”

A Yahoo offer last year for a 75% stake in Dailymotion with an option to take it all disintegrated after French Industry Arnaud Montebourg refused permission for the “golden nugget” to be “devoured” by les Américains. The French government holds a 27% stake in Orange, sufficient in itself to kill the deal. Orange bought 49% of Dailymotion from the founders in 2011 and the remainder last year. Microsoft is looking for a 10% stake, according to the Wall Street Journal (February 25), perhaps not big enough to raise the ire of French purists.

Dailymotion is a small potato in the great garden of video file-sharing portals, a mere 112 million monthly unique viewers compared to market leader YouTube’s billion or so. As fortunes in media-tech change with the wind, Dailymotion has considerable growth potential. And growth is necessary to avoid digital disappearance. Others in discussion for a piece of Dailymotion include, allegedly, Canal+ and Singapore Telecom.

For Microsoft the deal is all about potential with very little down-side. Dailymotion could be bundled with the Windows mobile phone operating system. While a 10% stake doesn’t get much more than a front row seat at the big meetings, Microsoft won’t be recreating the dead – remember MSN Soapbox? – and the Dailymotion brand is relatively unknown (read: unblemished) in the US.

Following – lightly – in the footsteps of YouTube and Netflix, six original series programs are in the planning stage at Dailymotion. All, it seems, to target the North American market. “People are looking for a Pepsi to YouTube’s Coke,” said senior vice president for North America Roland Hamilton, quoted by the Wall Street Journal (February 28). Dailymotion’s first original series production is a food show with celebrity chef Mario Batali.

The struggle of Dailymotion’s owners is one of scale. The web and everything therein is global. Protecting a national market, always culturally sensitive in France, comes with obvious limitations. “Well, we have to go slowly,” said Minister Montebourg to tech conference last year, succinctly summing up the illness scale cannot cure. President François Hollande, on mission to Silicon Valley in February, begged French ex-pats in the media-tech sector to come home.

Orange, too, faces scale issues. It is the biggest fixed broadband provider in France, roughly 10 million subscribers ripe for IPTV distribution. Netflix will expand into France later this year, adding yet another video on demand service, possibly jump-started with a partner like Orange. CEO Richard will find out later this month about his contract renewal.

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