Pluto TV Business Model | How Does Pluto TV Make Money?

Pluto TV is a free-to-use streaming platform that offers live television and on-demand video content.

Pluto TV earns money by displaying advertisements within the video content or when changing channels.

Since its founding in 2013, the company has grown into one of the most popular streaming services. Viacom acquired Pluto TV for $340 million in January 2019.

What Is Pluto TV?

Pluto TV is an over-the-top (OTT) streaming service that lets users watch live television and on-demand content.

Users have unlimited access to the content (instead of paying a monthly subscription fee). Pluto  TV is financed by serving advertisements within its video content.

Users don’t need to create an account to stream the content on Pluto TV. Thus, the experience is comparable to cable television.

Pluto TV Business Model

Pluto TV distributes its ad-supported content through content partnerships with over 200 content providers, including CNN, MTV, and Lionsgate.

More than 100,000 hours of video content are available across hundreds of free television channels.

You can choose from various categories such as news, live sports, movies, reality TV  shows, and documentaries to watch on Pluto TV.

Pluto TV is accessible through the platform’s website, mobile applications (available on Android and iOS devices), and various streaming devices such as Google’s Chromecast, Amazon FireTV, and Roku.

How Does Pluto TV Make Money?

Pluto TV makes money by selling advertisements. Advertising appears at the beginning of the content or when you change channels.

Commercials can be as short as 30 seconds or as long as an hour, depending on the advertisement and the medium used. 

The average length when switching channels is between 30 and 60 seconds, while in-content advertisements (such as those within movies) can last as long as three minutes.

Pluto TV Business Model

Pluto earns money when a user views an advertisement (also known as an impression). The money is then distributed to the owner of the content.

The actual share of revenue is contingent on the agreement between Pluto TV and the company from which the content was licensed. In context, YouTube creators receive 55% of all revenue, whereas YouTube (or Google) keeps 45%.

Compared to traditional linear TV, Pluto TV’s advertising partners can track their ROI more easily than on traditional television. Pluto TV accounts are trendy since users can quickly sign up and watch.

It had been speculated in the past that additional revenue streams might be generated through anonymized data sales or a subscription service. However, none of these have been confirmed.

Success Story of Pluto TV

Pluto TV was founded in 2013 by Tom Ryan (CEO), Ilya Pozin, and Nick Grouf in Los Angeles, California.

The founders of Pluto TV all held executive positions at established companies and their startups before founding Pluto TV.

The company’s first CEO and founder, Grouf, graduated from Yale and Harvard in the early 1990s.

After stints at McKinsey and Goldman Sachs, he founded Firefly, a company dedicated to developing personalization technology for predicting consumer tastes based on the previously collected information. Microsoft acquired the company in 1998.

Then, he founded PeoplePC, a company that lends electronics products  (mostly desktop PCs) to businesses such as Ford and Delta Airlines. The company went public in 2000 and was acquired by Earthlink two years later.

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In 2003, he founded Spot Runner, a platform that enabled businesses to create and air customized advertisements in local television markets. After leaving Spot Runner in 2011, he founded his venture capital firm, Clementine Capital, which invested in Pluto TV early on.

Thomas Ryan, on the other hand, had years of experience managing other people’s businesses. Before co-founding Pluto TV, he served as CEO of Virgin Mobile, EMI Music, and Threadless.

A member of the strong founding team, Ilya Pozin, emigrated to the U.S. from Russia aged eight. In 1999, while still in high school, Pozin founded his first business, Ciplex.

Pozin relocated to Los Angeles in 2005 after graduating from college to focus solely on  Ciplex. He developed websites and mobile applications for other businesses at Ciplex. The company eventually reached a revenue of over $5 million and was sold.

Next, he founded Open Me, a social greeting and gifting company backed by Ryan’s Threadless. Eventually, Pozin sold the business to Rowl for $6 million.

He developed Pluto TV when he couldn’t entertain his 2-year-old daughter one day, so he did what any responsible parent would do: he went to YouTube.

When he tried to find Elmo videos suitable for her, he quickly realized that it was challenging to locate clips suitable for her. He wondered why there isn’t a service that aggregates content and displays it without requiring users to waste time searching for it?

Pluto TV was launched in 2013 after raising some funding from Nas’  Queensbridge Venture Partners, UTA CEO Jeremy Zimmer, and Omnicom Digital CEO  Jonathan Nelson. As a result of the cash injection, 30 full-time employees were hired.

A year later, Pluto TV was finally unveiled to the public in March 2014. At launch, there were more than 100 channels and 15 full-time employees curating the content manually. 

Pluto’s curators would spend their days watching videos and selecting the best ones to display on the live TV channels.

A month after launching the platform, the company appointed Tom Ryan as CEO and Vibol Hou as CTO. Vibol Hou was previously responsible for engineering at Spin Media.

The Pluto TV company raised venture capital funding in 2014, the company’s first significant round. USVP, United Talent Agency, Sky, and Chicago Ventures all contributed $13 million to the firm’s Series A round.

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Over the months and years that followed, the momentum of the company continued to grow. Through the addition of channels and content, and capital to its balance sheet, the company significantly expanded its platform.

Pluto TV added on-demand videos to its offering in May 2017. Previously, it served only live television content. With this feature, customers will watch movies, TV shows, and other content on demand.

As a result of Pluto’s continued growth, it was acquired by Pluto in January 2019. As part of its acquisition of Pluto TV, Viacom paid $340 million in cash. 

Viacom, which had trouble transitioning its content assets online (and, consequently, suffered from declining viewership), saw the acquisition as a strategic move.

Following Pluto TV’s acquisition by a large media conglomerate, dozens of new channels were added to its platform, including BET Pluto TV, Comedy Central Pluto TV, MTV Pluto TV,  and Nick Pluto TV, among others.

Moreover, it would create ‘pop-up channels’ that would feature exclusive content for a limited time, such as MTV’s The Hills.

It was another important milestone when Pluto launched in Latin America. In April 2020, it will launch Spanish television content in 17 Latin American countries, including Argentina, Chile, Columbia, and Peru.

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In October 2020, Ryan was named CEO of Streaming for ViacomCBS (a role that includes oversight of the launch of  Paramount+ in 2021). In December 2019, CBS and Viacom merged, forming one of the world’s largest media conglomerates.

The future strategy for Pluto TV will continue to be focused on expanding the platform’s content and markets. In France, it recently launched 40 channels and makes its Italian debut in 2021.

Pluto TV is now available in 24 countries. Each month, more than 40 million people access the service.

Who Owns Pluto TV?

ViacomCBS owns Pluto TV 100%. In January 2019, Viacom announced it would acquire Pluto TV for $340 million.

Pluto TV’s market capitalization is less than 1% of ViacomCBS’s, currently valued at $58  billion. However, Pluto’s value has been expected to increase significantly since then.

Also read, The Chime Business Model.

What is the Funding, Valuation, and Revenue of Pluto TV?

Pluto TV has raised $51.8 million in venture capital funding across six rounds, according to Crunchbase.

ProSiebenSat.1 Media SE and Samsung Ventures are among the notable investors. LionTree Partners, Luminari Capital, and Third Wave Digital are also among the investors.

Pluto’s valuation was disclosed during its acquisition by Viacom for a combined $340 million cash sum.

At the moment, Viacom is not disclosing specific revenue figures for Pluto TV, although it had previously stated that revenue for 2020 is expected to double compared to 2019.

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