Plex Secures $50 Million to Expand Streaming Services

Plex, a prominent streaming media software company, has announced a $50 million growth equity round led by existing investor Intercap. This funding will support the company’s expansion into rentals, purchases, and subscription-based content offerings.

Funding Details and Investor Returns

This marks Plex’s first financing round since 2014. A portion of the capital will be utilized to repurchase shares and options from early seed investors and shareholders from previous acquisitions, providing liquidity to long-term contributors. Approximately $15 million will be allocated as new growth capital.

While the company has not disclosed its valuation, it reports minimal dilution for existing investors, including Kleiner Perkins and Nexstar. Early investors experienced returns of 10x or greater on their initial investments.

Board Changes and Total Funding

As part of this funding round, Jason Chapnik, chairman and CEO of Intercap, has joined Plex’s board of directors as chairman. James Merkur, president of Intercap, has also been appointed to the board. With this latest investment, Plex has now raised over $60 million in total funding.

Profitability and Shift in Strategy

Plex CEO Keith Valory notes that the company historically hadn’t needed to raise capital, having operated profitably. However, recent developments have prompted a strategic shift.

The company initially focused on organizing personal media libraries but began targeting the cord-cutting market in 2017 with a low-cost streaming TV service. Subsequent expansions included free, ad-supported streaming and a live TV service, competing with platforms like Pluto TV.

Current Content Offering

Currently, Plex provides access to over 20,000 free on-demand movies and shows, alongside more than 150 free live TV channels, available in 193 countries. This is in addition to personal media libraries, streaming music, and podcasts.

Plex has streamlined access by removing the account sign-up requirement for its ad-supported video and live linear streaming services, impacting its overall business model.

Marketing and Customer Acquisition

The company is focusing on integrated search capabilities within devices like Roku, Fire TV, and Vizio, alongside search engine marketing and social media campaigns. Valory emphasizes the efficiency and rapid profitability of their paid marketing and customer acquisition strategies.

Expansion into Rentals and Subscriptions

Plex initially discussed offering rentals and purchases in 2020, but plans were delayed due to the COVID-19 pandemic and the need for infrastructure development. The company is now preparing to launch these services this year, potentially starting with a video rental marketplace or a subscription aggregator.

Plex is exploring a unique subscription model that goes beyond simply selling subscriptions like Amazon or Apple. They are considering deep linking technology to connect users with their preferred streaming apps, potentially competing with services like Reelgood.

Becoming a Media Hub

Plex aims to become a comprehensive media hub, eliminating the need for users to navigate multiple apps. Valory states, “You shouldn’t have to go to 20 different apps to get the content you care about. You should be able to go to one place and we should be able to do all that for you.”

Future Investments and Team Growth

The funds will be used to expand Plex’s team, currently at 100 employees, with investments in marketing, monetization, and development teams.

Valory highlights the need to amplify performance and growth marketing efforts, as well as enhance user engagement. The company is focused on building a robust pipeline for its ad-supported video (AVOD) business.

Intercap’s Long-Term Vision

Intercap believes that the increasing fragmentation of the streaming landscape will benefit Plex. Jason Chapnik notes that the industry requires a reliable solution for an enjoyable viewing experience, and positions Plex as “the cable company of the future.”