Vice Media originally started back in 1994 by Shane Smith as an indie, counter-culture magazine that pushed the limits of journalism with its controversial social topics and graphic content. In the past 20 years, Vice has been able to bridge the gap between “old-school” media and young millennials, growing internationally, with 36 offices around the world, 11 digital channels, a record label, an in-house ad agency, and the list goes on. Through its gonzo-style journalism, dubbed “immersionism”, Vice aims to be the largest, global network for millennials. The key to Vice’s current success was its early bets on online content and its commercial monetization strategy.
Vice’s business model focuses on an omni-channel strategy ranging across the spectrum from HBO to its own website to YouTube, which has over 6 million subscribers and over 2 billion views. Content is created both in-house and crowdsourced, which has allowed the company a first mover advantage in the digital arena, even being approached by Snapchat to be one of the first in-app Discover channels to spur more user-generated content. Vice has been able to sustain its growth and increase its margins by subsidizing the costs of productions with the licensing and advertising revenue model it has built up over the past several years.
Licensing fees for content make up a large portion of revenue for Vice, along with partnerships with major brands, native/integrated ads, and traditional advertising. In one single program, there are multiple revenue streams that include brand sponsorship, pre-roll ads, banner ads, etc. A brand can fund a project or series for $1-5M, as seen with Vice’s most famous example of its revenue model, Far Out sponsored by Northface:
Other companies in project and content partnerships with Vice include Intel for The Creator Project channel, Dell for Motherboard, Vice’s tech site, and Unilever for the new female-targeted channel, Broadly. This multitude of revenue streams has driven a sales projection of $1B for Vice this year.
To achieve the success across channels as Vice has, it requires lean and agile operations. While traditional media companies, like Disney, have long production cycles and high overhead costs, Vice initially decided to broadcast all its content online, beyond its magazine, given the low cost of digital distribution and the worldwide reach of the internet. CEO Shane Smith early on said, “We just want to shoot stuff that people can see right away. We shoot it, we cut it, it’s up the next day. That was the idea behind VBS.tv.”
This mentality for rapid-decision making and creating stems from the leadership’s appetite for taking risks and lack of fear for getting down and dirty. Quite literally this can be seen most recently with the ISIS documentary (over 15M views on YouTube), and with Dennis Rodman’s recorded visit to North Korea. With international content such as these produced far more rapidly than its traditional competitors, Vice has expanded its global offices not only with the hopes of transforming them into international news bureaus, but also to maintain presence where all their corporate sponsors and partners exist.
Finally, the culture of Vice is not only the core of its business but also its organization. Headquartered in Brooklyn, NY – the location itself speaking to the company’s “alternative” brand – Vice boasts 600 employees (1500 internationally) with average age being 27, that of the company’s target market. Leadership promotes a non-bureaucratic approach, and even weaves Vice’s brand/product into company communications as seen with Smith’s update to employees 3 months ago. It is clear that this is a company that practices what it preaches.
Vice’s Virtuous Future?
As for what’s next for Vice, it looks like Smith and his team will have a lot to celebrate this holiday season. Just on December 8th, Disney doubled its stake to 10% in Vice, valuing the company at $4B with over $500M in funding. Next year, Vice will continue its HBO documentary series, start a news channel for HBO Now, create a Canadian cable-television channel, and partner with A&E for a History channel spin-off in the U.S. Though the question remains as to whether Vice will be able to maintain its grip on advertising and licensing revenue momentum, especially as big players like CNN enter the digital dome, its clear that its steps into the traditional television space may be the best counter-strategy.
- Business Insider: http://www.businessinsider.com/how-vice-will-make-500-million-in-2014-2014-6
- Fast Company: http://www.fastcompany.com/3048629/vice-vs-cnn-the-battle-royale-for-the-future-of-the-news
- The Guardian: http://www.theguardian.com/media/2015/jan/01/virtues-of-vice-magazine-transformed-into-global-giant
- The Hollywood Reporter: http://www.hollywoodreporter.com/news/vice-ceo-shane-smith-touts-823552
- International Business Times: http://www.ibtimes.com/disney-doubles-stake-vice-media-which-somehow-worth-4-billion-2216406
- The New Yorker: http://www.newyorker.com/magazine/2013/04/08/the-bad-boy-brand