Disney Strikes a Video Deal with YouTube

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Can’t beat ‘em? Join them. Disney and YouTube have reportedly struck a deal that helps both companies gain better traction in the online market.

The two companies have agreed to spend a combined $10-15 million producing an original video series that will be distributed on a co-branded channel on Disney and YouTube. Disney, who will be producing the shorts, has had trouble attracting an audience online on its own Disney.com website.

(MORE: YouTube Drops $100 Million to Add Original Content)

According to web analytics firm ComScore, Disney Interactive has lost significant online traffic since the beginning of the summer. On top of that, the division has lost over $300 million in the last four quarters. By partnering with YouTube, the company would gain YouTube credibility (generally perceived as being “cooler”) with its younger viewers.

Disney Interactive’s co-president, James A. Pitaro, told The New York Times that “It’s imperative to go where our audience is. [We want to] bring Disney’s legacy of storytelling to a new generation of families and Disney enthusiasts on the platforms they prefer.”

(MORE: Three Studios Say No to YouTube’s Movie Rental Plan)

The deal also benefits YouTube. The video service wants to further its reputation with parents while simultaneously adding professional videos to enhance its online advertising profitability. Indeed, the company has been making a big push—back in April, YouTube dropped $100 million to create original content. Thus, teaming up with Disney would help serve YouTube’s own needs as well.

[via The New York Times]

Erica Ho is a reporter at TIME. Find her on Twitter at @ericamho and Google+. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.