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A big win for content arbitrage: Rakuten buys Viki for a reported $200 million

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Global TV show platform has been acquired by Japan’s e-commerce giant Rakuten. The deal was first reported by AllThingsD’s Kara Swisher, who pegged the purchase price at a cool $200 million. Both Rakuten and Viki have confirmed the acquisition, but not commented on that figure. Viki had previously raised around $25 million from Greylock, Andreessen Horowitz, SK Planet, Charles River Ventures and others.

I’ve long been fascinated with the business model behind Viki, which can best be described as content arbitrage: The company cheaply licenses TV shows in Turkey, Korea or South America, and then brings them to foreign markets, where the videos are shown with community-contributed subtitles. And we’re not talking about trashy shows that no one wants to see: Viki now has more than 22 million users, 12 million mobile app installs and 40 million video minutes viewed every single day.

Viki’s business model is a win-win for both content owners and the company itself: It opens up markets that would have been otherwise inaccessible, and in turn it gets licensing deals done that would be unthinkable if the site wanted to compete head-to-head with Netflix (s NFLX) and Hulu. Think simple rev-share agreements, as opposed to expensive minimum guarantees (money paid to studios no matter whether someone tunes in or not).

Viki does have a number of competitors, including Dramafever and Crunchyroll, which follow a similar global content licensing strategy. The main difference is that Viki has always concentrated on advertising, whereas some of its competitors put a lot more emphasis on subscription revenue. That being said, I wouldn’t be surprised at all if suitors start knocking on the doors of Crunchyroll and Dramafever after this deal.