After a series of major blows, Vice is currently on life support provided by George Soros. The supposed savior of Millennial media was once valued at $5.7 billion. How, and why, did Vice fall so far?
The long way down
The hits just keep coming.
Monday, HBO axed Vice News Tonight. It was the second Vice project HBO has cancelled. The first, the weekly show Vice, lasted 7 years.
A more recent Vice project, “Vice Live,” made it less than 2 months.
Last year, Vice laid off 15% and froze hiring. In February, it let another 10% go.
In May, Disney “wrote off” its $353 million investment in Vice. The previous fall, it “wrote down” $157 million of the same.
What write off means
“Writing down” an investment means devaluing it. “Writing off” an investment means cutting ties. Disney thinks Vice will never be worth anything.
In other words, the coup de grâce.
Bailed out by Soros
But the company is not dead yet. In a desperate move, it took on $250 million of debt from a group of investors led by George Soros.
Vice says the investment will help execute a new vision to accelerate growth. The way things are going, that would be a miracle.
Vice and Buzzfeed grew because of social media. Their models were built on knowing how to use Facebook effectively. Investors assumed they would figure out how to convert their popular social media presences into ad dollars.
But that never happened. Instead, Facebook drank their milkshakes. Vice thought it was using a distribution platform. As it turned out, it was giving free content to a competitor. Vice failed because the vast majority of Vice’s engagement never happened on Vice. It happened on Facebook.
The Future. Betting on hot media companies without real revenue, or at least innovative plans for generating it, is officially a thing of past. Social media popularity means little without a path to conversion. Investors will be more cautious. And media companies will chase revenue, not engagement.