YouTube has recently terminated content hosting services agreement with three Yeah1 subsidiaries from March 31.
The axe falls on SpringMe Pte. Ltd., Yeah1 Network Pte Ltd and ScaleLab LLC which act as third parties to provide video channels allowing publishers to serve advertisements. The advertising revenue will be divided between these companies and publishers.
YouTube claimed that Thailand-based company SPRINGme of which Yeah1 indirectly owned 16.93 per cent had violated its policies in some of channel management activities. YouTube also made the same claim about other Yeah1's companies related to YouTube Adsense.
Yeah1 is dominating Asia in the YouTube Multi-Channel Network with over 3,000 YouTube channels, 610 million users and over 6.9 billion monthly views.
The company owns a large community in Vietnam when accounting for 25 per cent of all YouTube views in the country.
YouTube's termination is said to have immediate impacts on Yeah1 as YouTube AdSense is one of its main businesses and contributes nearly 13 per cent of the group's after-tax profit, or nearly $1 million last year.
Yeah1's reliance on YouTube and Facebook is said to pose high risks to its business. Although both popular digital platforms support the rapid development of Yeah1, the group will be affected when they change their policies.
In Yeah1 ecosystem, the multi-channel network is not a separate business sector but has a strong impact on both advertisement and output of Yeah1 products.
Founded in 2006, Yeah1 is Vietnam's largest multi-channel media ecosystem, operating TV channels, movie studios, Youtube networks and digital news.
In 2018, Yeah1 actively expanded its digital segment to other markets through M&A to achieve the ambition of becoming No.1 multi-channel network on YouTube.
The latest deal is the acquisition of ScaleLab which has 1,750 channels with over three billion monthly views and is among the top 10 global multi-channel networks.
Year1 share prices have tumbled following YouTube's action. Its shares have reduced 21 per cent in three consecutive days to VND197,200 on March 6. The company's market capitalization has evaporated $65.2 million since the incident broke out.
Yeah1 is reported to be working with YouTube retain content hosting services agreement after March 31.