GP.B-2020年第一季度网络媒体行业报告（英文）-2020.6-44页_7mb

Summary of Q1 2020 Digital Media Market Report

Core Content

This Q1 2020 Digital Media Market Report by GP Bullhound provides insights into the evolving landscape of the digital media sector, highlighting both opportunities and challenges brought about by the global impact of the COVID-19 pandemic. The report includes perspectives from industry leaders, analyzes recent transaction trends, and offers a detailed look at public market performance.

Main Points

1. Impact of the Pandemic on Digital Media

• User Growth and Content Consumption: The pandemic led to a significant increase in digital media usage, with more people consuming content from home. This included a rise in TV viewership, video gaming, and internet usage globally.
• Positive and Negative Effects: While the pandemic boosted usage, it also introduced challenges such as content production delays, reduced online advertising rates, and the cancellation of live events and sports betting.
• Examples of Impact:
  • Netflix saw increased user engagement and new subscriber growth, though faced challenges with content production and advertising revenue.
  • Facebook became a primary source of pandemic-related information but also experienced a decline in advertising revenue due to market uncertainty.
• China’s Digital Media Landscape: Chinese users increased their time spent on mobile devices, with a notable rise in online video consumption and gaming activity. Mobile games like Honor of Kings saw a significant surge in daily active users (DAU).

2. Video: AVOD Acquisitions on the Rise

• Trend: Traditional linear TV networks are increasingly acquiring AVOD (Advertising Video on Demand) services to reach younger audiences and retain cord cutters.
• Examples:
  • Fox acquired Tubi, a free ad-supported streaming service, to expand its content offerings.
  • Comcast acquired Xumo, an ad-supported paid-TV streaming service.
  • ViacomCBS acquired Pluto TV, and Amazon launched IMDb TV as an ad-supported alternative to Prime.
• Strategic Rationale: These acquisitions are driven by the need to reach millennials, retain users, and offer differentiated content.

3. Digital Gambling: Growth Amid Challenges

• Market Growth: The digital gambling market is expected to grow at a CAGR of 11.5%, reaching $103 billion by 2025. US online sports betting is projected to become a $15 billion market.
• Legal Changes: The US Supreme Court lifted the federal ban on sports betting in 2018, leading to increased deal activity.
• Recent Deals:
  • Penn National invested in Barstool Sports.
  • DraftKings merged with SBTech and Diamond Eagle Acquisition Corp.
• Challenges: The cancellation of major sports events due to the pandemic negatively impacted sports betting.

4. Audio: Podcasting as a New Battleground

• Podcasting Growth: Podcasting has become a key battleground for streaming audio platforms, with significant growth in both user base and content offerings.
• Spotify’s Strategy: Spotify acquired The Ringer, a sports-focused media company, and continues to invest heavily in podcasting.
• User Behavior: Podcast listeners spend more time on the platforms and are more valuable for monetization through dynamic ad insertion.
• Market Share: Apple and Spotify each have distinct user preferences, with Apple focusing on news and Spotify on comedy.

5. CEO Commentary

• Elsa Hu (Head of Asia @ GP Bullhound): Highlights the role of technology in making life easier during lockdowns and the potential for long-term growth in the OTT video market.
• Michael Lantz (CEO, Accedo): Notes the increased consumption of OTT services and the potential for a step change in the market post-recession.
• Efe Cakarel (Founder & CEO, MUBI): Observes accelerated subscriber growth and a shift in film distribution strategies due to the closure of cinemas.
• Arthur Chow (CO-Founder & CEO, 6waves): Highlights increased user engagement and the anticyclical nature of online entertainment.
• Ebba Ljungerud (CEO, Paradox Interactive): Shares insights on the impact of the pandemic on gaming, noting stable player numbers and potential production delays.

Key Information

• Macro Trends: The pandemic has significantly impacted digital media, both positively and negatively.
• Transaction Activity: Q1 2020 saw strong corporate finance activity across digital video, audio, and gaming sectors.
• Public Market Insights: Companies like Zoom, Netflix, and Spotify saw notable growth and increased user engagement.
• Investment Highlights: GP Bullhound has invested in and advised on several major deals, including Spotify, deltaDNA, and Fnatic.

Recent Transaction Trends

• Notable M&A Deals:
  • Fox acquired Tubi (Mar-20)
  • Comcast acquired Xumo (Feb-20)
  • Epic Games acquired Cubic Motion (Mar-20)
  • Parship Group acquired The Meet Group (Mar-20)
  • Tencent acquired Funcom (Jan-20)
  • Garena acquired Phoenix Labs (Jan-20)
  • Still Front Group acquired Storm8 (Jan-20)
• Investments:
  • Tencent invested in 猿题库 (Mar-20)
  • TigerGlobal invested in 字节跳动 (Mar-20)
  • Benesse invested in Udemy (Feb-20)
  • Redbird invested in Skydance (Feb-20)
  • blisce/ invested in HeadSpace (Feb-20)

Conclusion

The digital media sector has experienced both growth and challenges during the early stages of the pandemic. While increased content consumption and user engagement have been notable, the sector faces hurdles such as reduced advertising revenue, production delays, and market uncertainty. The trend of AVOD acquisitions and the rise of podcasting indicate a shift towards more flexible and engaging digital content delivery models. CEOs from leading digital media companies emphasize the importance of innovation and adaptability in navigating these changes.