Japan’s Rakuten Acquires Singapore-Based Viki Video Site for $200 Million

Kara Swisher

Exclusive: Japan’s Rakuten Acquires Viki Video Site for $200 Million

SEPTEMBER 1, 2013 AT 6:44 PM PT

The deal was set to be announced next week, but after I queried the company about it, its CEO, Hiroshi Mikitani (whose nickname is Mickey), confirmed the transaction, although he declined to give the price. That would be $200 million, according to sources with knowledge of the situation. “Our foundation is not only limited to e-commerce, but an intention to strengthen our ecosystem in Japan and worldwide,” he said in an interview. “We have been looking into finding a global solution for video.”It is, in my humble estimation, an exciting and innovative purchase by Rakuten, which has been aggressively expanding globally over the last two years to compete with Amazon and others. It is currently in 13 markets worldwide.

That includes a big investment in social bookmarking phenom Pinterest, as well as the$315 million purchase of the Kobo e-book business.

Viki — a combo of “video” and “wiki” — is a fascinating addition to these, a startup that began in Singapore, offering premium television, movies and music videos that are made globally accessible via crowdsourced subtitling via PCs and over mobile devices.

“Community members subtitle their favorite videos into their preferred languages under a Creative Commons license using Viki’s subtitling technology, which enables thousands of fans around the world to collaborate in dozens of languages at once,” said Viki on its website.

Viki’s videos have been translated into close to 170 languages, or about 500 million words. It is growing fast in Southeast Asia, but is currently aiming at expanding into Latin America and Europe.

For example, I am currently enjoying “Amaya” from the Philippines, which has his can’t-miss come-on: “Can a young princess raised in secrecy rise to fulfill her prophesy as the most powerful woman in Philippine history?”

(Well, can she?!?)

Viki makes its money much like Hulu does, with in-stream advertising revenue that it shares with content producers. There is a subscription and data play there, too, but a non-paid content model powers its business for now.

Investors have poured only about $25 million into Viki; theu include Andreessen Horowitz, Greylock Partners, Omidyar Network, Charles River Ventures and Neoteny Labs. Neoteny’s Joi Ito, who also heads MIT’s Media Lab, is on its board.

The most recent additions to that Silicon Valley power group are Microsoft exec and Sling Media founder Blake Krikorian and Survey Monkey CEO Dave Goldberg — both of whom have much digital entertainment experience — who put an undisclosed amount into Viki in late July.

Viki has offices in San Francisco, Singapore and Seoul, and describes itself as “born as a joint class project between Harvard and Stanford graduate students who wanted to remove barriers to popular entertainment, regardless of language or country of origin. Today, our team is as diverse as Viki itself — entrepreneurs, technologists and pop-culture fans from Canada, China, Egypt, England, Hungary, India, Indonesia, Japan, Korea, Mongolia, Philippines, Singapore, Spain, Taiwan, Thailand, Ukraine, Venezuela, Vietnam and the United States.”

“We look at this as a hybrid of social network and a digital content distribution network that is unique and different from others … in a country-by-country approach,” said Mikitani. “A multi-language video offering is one of smartest ways for us to expand.”

And he said, after he saw it: “I basically fell in love with the service.”

September 2, 2013, 4:25 a.m. ET

Rakuten Acquires Foreign Language Video Service Viki

Japanese online retailer seeks to expand its platforms for distributing content

DAISUKE WAKABAYASHI AND SHIBANI MAHTANI

TOKYO—Japan’s Rakuten Inc. 4755.TO -1.57% said it acquired a Singapore-based startup called Viki, an online video-on-demand provider for foreign-language television programming, as the Japanese e-commerce giant continues to expand its platforms for distributing content.

Rakuten generates about ¥400 billion ($4.06 billion) in annual revenue from its online shopping mall with tens of thousands of merchants, a Web-based travel service and an Internet bank. It is often called the Amazon.com AMZN -1.06% of Japan—not to be confused with Amazon’s actual operations in Japan—because of its dominant hold over the country’s e-commerce market.

Like Amazon, Rakuten is trying to expand its sales of digital content. It acquired Canadian e-book reading platform Kobo in 2011 for $315 million. Last year, Rakuten released the Kobo digital reader for the Japanese market.

Neither Rakuten nor Viki would disclose the size of the transaction. Breaking news of the deal, AllThingsD, a news outlet that like The Wall Street Journal is owned by News Corp, said Rakuten paid about $200 million for Viki.

For years, Rakuten has been looking to extend its reach beyond Japan. It acquired U.S. online retailer Buy.com for $250 million and French Internet marketplace PriceMinister SA for €200 million in 2010, while it made a major investment in online scrapbooking site Pinterest.

“Viki is a one-of-kind company with an entirely unique approach to video streaming that is truly global and truly engaging,” said Rakuten Chief Executive Hiroshi Mikitani in a statement.

Viki relies on its users to provide and edit subtitles for foreign programming in much the same way Wikipedia’s users collaboratively create and police its content. Its programs have been subtitled into more than 160 languages by this community of fans. For example, the subtitles for Korean romantic comedy “He Was Cool” have been translated into 29 languages including English, Vietnamese and Bulgarian.

By bridging the language gap of local-language programming, Viki aims to create a global audience for non-English speaking shows. Viki has more than 22 million viewers across 200 countries, who watch more 40 million minutes of programming a day.

Speaking to The Wall Street Journal, Viki chief executive and co-founder Razmig Hovaghimian said the company will “continue to be run independently” from Rakuten and will keep Singapore as the base for its headquarters, with the same team that runs and develops the television site currently.

“This is the next phase of growth for us,” said Mr. Hovaghimian. “Running a venture capital-funded company is exhausting. This will allow me to keep developing” Viki’s product offerings, he added.

Founded in 2010, the company is considered one of Singapore’s most successful startups. It was named Technology Pioneer 2014 by the World Economic Forum, an award previously won by the likes of Google and PayPal.

While much of the content is from Asia, Viki has only two programs from Japan. Rakuten may be betting that it can help convince Japanese content providers, which have held the Internet at arm’s length, to buy into the opportunities rather than focus on the dangers of making its video programming more widely available online.

Viki has raised about $25 million from investors including Greylock Partners, Andreessen Horowitz, Charles River Ventures, Neoteny Labs and SK Planet, a subsidiary of SK Telecom.