By now you’ve likely heard plenty of opinions about Yahoo! Inc. (NASDAQ:YHOO)‘s purchase of the Tumblr blogging platform. Depending on who you ask, the purchase either has the potential to be a good deal, was a bad deal from the get-go, or was a horrible deal and will just cause more problems for Yahoo! Inc. (NASDAQ:YHOO) down the road. I’m personally in the “wait and see” camp, though I do think that the Tumblr purchase might end up being a smart buy for the company. Similar to when then-new CEO Marissa Mayer tweeted a picture of an “®” peg that had been removed from the company’s logo, if properly utilized (and monetized) then Tumblr could be another sign that Mayer’s Yahoo! is not the Yahoo! of old.
What has my attention about Yahoo!, though, isn’t the purchase of Tumblr or the price paid for it (though that will play a part here in a moment). It’s not even Mayer’s comments, which hint that the company has little problem with adult content on Tumblr blogs. Instead, I’m wondering if all of the attention that’s being placed on the Tumblr purchase isn’t causing some people to overlook a larger strategy that’s at work.
Content is king
According to a recent report from All Things D, Yahoo! has entered the bidding war to acquire the Hulu video streaming service. Hulu has been looking for a new owner since earlier this year, due largely to disagreements between some of its current owners on the direction the future of the company should take. Yahoo! Inc. (NASDAQ:YHOO) would be competing against bids from companies such as DIRECTV (NASDAQ:DTV), Time Warner Cable Inc (NYSE:TWC), Guggenheim Digital, and possibly even Amazon.com, Inc. (NASDAQ:AMZN).
It makes sense that Yahoo! would attempt to purchase Hulu, especially after French officials prevented the company from buying a majority stake in the competing streaming service Dailymotion. Purchasing a well-known video streaming service would give Yahoo! Inc. (NASDAQ:YHOO) access to both digital content and an established platform to distribute it, which comes with a robust user base already attached. In Hulu’s case, it also comes with both advertising and subscription revenue as well.
Bring it home and leave it alone
Some analysts and tech watchers are concerned about new acquisitions by Yahoo! because of how poorly some of the company’s past acquisitions have worked out. In the past, part of Yahoo!’s strategy seemed to be buying companies and trying to force them into the “Yahoo!” mold. Purchased services would get a Yahoo! Inc. (NASDAQ:YHOO)-conforming facelift, new pricing structures, and declining levels of support until the service was either mothballed or simply fell into obscurity. It’s important to remember that it was the Yahoo! of old that did that, though, and now we’re dealing with Mayer’s Yahoo!.
The issue of adult content on Tumblr is a potential example of Yahoo!’s new strategy when it comes to acquisitions. Instead of buying up popular services and forcing them into a Y!-shaped mold, the company seems content to make the purchases and then leave the underlying structure largely untouched. Mayer herself made reference to the differences between Yahoo! and Tumblr and how “edgy” the blogging platform could be, and in a post on her own Tumblr account promised not to “screw it up.” Tumblr’s CEO is remaining in place, allowing the platform to continue operating independently under the Yahoo! umbrella.
A similar strategy seems to be in place for PlayerScale, another recent Yahoo! acquisition that was largely overshadowed by the Tumblr purchase. A cross-platform gaming company that offers connection opportunities for social and mobile gamers as well as tools for game developers, the company’s CEO posted a message to the service’s 150 million users to let them know that the service they know and love wasn’t going anywhere and would only get better from here.
Monetization is key
Yahoo!’s recent (and potential future) acquisitions are significantly different than the company’s core business, and with good reason. Right now Yahoo! Inc. (NASDAQ:YHOO) needs monetization, and there’s only so much that can be done with a business that many people think is a decade or more past its prime. The company needs to be able to compete with Google Inc (NASDAQ:GOOG) for online advertising revenue, and that’s just not going to happen without some fresh platforms to expand onto.