Shutterstock announced today that it has entered into an agreement with Meta to buy Giphy for $53 million. Meta acquired the GIF engine in 2020 for $400 million, meaning that it will recoup about 13 percent of the original investment. That’s a big write down for the social giant but there’s more to it.
Specifically, this deal was driven more by antitrust enforcement than any market factors. The U.K. Competition and Markets Authority (CMA) ordered Meta to divest Giphy, stating that the acquisition reduces dynamic competition. It also imposed strict conditions, including the right to approve the buyer.
After a failed first appeal, Meta has conceded to the order, leading up to this week’s deal with Shutterstock, which appears to come out on top of the deal. For one thing, the outside pressure for Meta to sell Giphy created a certain amount of leverage for any buyer – hence the fire-sale price.
GIF a Damn
Beyond the price, Shutterstock seems to get an asset that fits right into its product roadmap. The company has previously expressed that it needs to expand into more functions and use cases beyond the traditional role of a stock photo library. And it intends to reach those ends through M&A.
So what is that “traditional role?” Most stock photo libraries generate revenue by providing brands with marketing images. With Giphy, Shutterstock can expand into more casual and social use cases for image and multimedia assets. This expands its addressable market to entertainment and publishing customers.
Beyond having GIFs in the mix, Shutterstock’s next big conquest will be similar to that of nearly every enterprise on the planet: AI. In fact, we’ve discussed on Localogy’s This Week in Local podcast that one of the most obvious disrupted parties from generative AI is traditional stock photo libraries.
The thought is that brands, publishers, and media companies previously relying on stock photos for their websites and other visual channels could instead turn to generative AI. Instead of tapping into an existing library for images that fit a specific theme, they could simply generate custom images on the fly.
The GIF that Keeps Giving
For Shutterstock, that AI goal also aligns well with the Giphy acquisition. Put another way, its integration will require deliberate planning. And the ability for users to search for a given visual asset across multiple formats – photos, videos, and now GIFs – could benefit from Chat GPT-like conversational AI.
On another level, the ability to compete with generative AI tools such as Midjourney – again, the biggest threat to stock libraries like Shutterstock – will require fighting fire with fire. In that sense, a more robust library of visual assets, a la Giphy, will give Shutterstock a more robust training set for any AI efforts.
This is mostly speculation on our part in terms of how all the pieces fit together. But it’s likely in the same ballpark as Shutterstock’s thought process to future-proof itself. In the nearer-term the outcome is much simpler: Shutterstock has acquired a complementary multimedia engine at a fire-sale price.
We’ll see if there’s more to it as Shutterstock integrates Giphy and any other upcoming acquisitions. Meanwhile, Shutterstock says the deal will close next month. And it’s not all bad news for Meta: It will retain commercial rights to continue accessing Giphy GIFs across Facebook, Instagram, and WhatsApp.
