The acquisition of Zite by Flipboard suggests that, in today’s world, tech companies are better off buying their smaller rivals than spending time and resources trying to develop new features.
Flipboard’s unique magazine format and cross-platform interoperability turned this piece of software into one of the most popular apps for Android, iOS, Windows Phone 8, Blackberry 10 and Windows 8.1. Now, as a mature company, Flipboard proceeded to making acquisitions, and smaller competitor Zite, previously owned by CNN, seemed to fit the bill perfectly. Besides the $60 million that Flipboard will pay to CNN for Zite, the deal also includes an agreement of including CNN’s content in the mobile app.
KC Estenson, head of CNN’s head of digital, stated that “Flipboard has proven to be one of the biggest drivers of traffic so syndicating our content into Flipboard will see us creating custom magazines for our shows and talent.” Having owned Zite for 3 years, CNN must have figured that they stand no chance against Flipboard in terms of content syndication, so they decided to sell the smaller company to the social-network aggregator for three times the money they spent to acquire it.
Estenson also stated that “With this deal, CNN is invested in the long-term success of Flipboard,” suggesting that even though the tablet magazine startup intends to shut down the Zite service, the bond between the two main sides of the deal remains strong because of the content distribution and joint ad sales CNN and Flipboard agreed upon.
The premium advertising partnership was described by Estenson as “the kind of advertising you see in print magazines.” Given that print magazines will soon be history, I hope that CNN’s head of digital refers to something more durable, the comparison most probably being based on the concept, and not on the format. Either way, advertising will continue to exist no matter what, and the fact that Flipboard is available as a digital product makes things a lot easier.
Unfortunately, the other competitors of Flipboard are not that easy to buy, as they’re being developed by some of the biggest social networks out there. Of course, I’m referring to Facebook’s Paper, an iOS exclusive magazine-style app, and to Pulse, which was acquired by Pulse last year. The mere fact that Facebook’s magazine app is available only on a single platform is a major plus for Flipboard. Also, Pulse got a lot worse, I may say, after being bought by LinkedIn.