Orange is negotiating to buy almost half of French online video site Dailymotion, a competitor to YouTube. The French network operator hopes to improve the content it offers its mobile and fixed broadband customers, it said on Tuesday.
Orange is offering €58.8 million (£50.7 million) for a 49 percent stake in Dailymotion, and the right move towards full ownership of the company in a number of stages starting in 2013, it said.
Online video content is growing in importance. In the US, web users spend an average of more than 12 hours a month watching video content on the Internet. In France, one out of three smartphone owners watches videos each week, according to Orange.
So, using Dailymotion's technology and content Orange is hoping to attract more subscribers to its services, and is planning to develop integrated services across smartphones, tablets, TVs and PCs, a spokesman said.
An operator investing in an online video company comes with inevitable questions about network neutrality. But Orange wants to allay those fears. From a network point of view, Orange want to ensure that their customers can benefit from online video services in the best possible way, whatever the source, the spokesman said.
Only Google's sites attract more French video viewers than Dailymotion.com, according to market research company comScore. Google's family of sites, including YouTube, also attract the most video viewers in the US, UK and Germany, with Dailymotion.com behind even Facebook for number of video viewers there.
It's in 15th place in the US and in ninth place in the other two countries. ComScore bases its US and UK rankings on content videos viewed, and on all videos viewed, including video ads, in France and Germany.
Investing in Dailymotion isn't just about being able to offer new services. It will also provide a new source of revenue for Orange in the advertising space, as it sees synergies with its ad platform.
This isn't the first time Orange has dabbled in content. It is already working with Deezer, a streaming music service. Recently, Orange announced that the premium version of the service, which is called musique premium Deezer, had attracted over 500,000 subscribers. The service was launched in August last year and accessing it on mobile phones costs from €5 (£4) per month.
A final agreement with Dailymotion should be reached in the coming months, Orange said.