2022-10-20-GP_Bullhound-2022年第二季度网络媒体报告_28页_1mb

Q2 2022 Digital Media Sector Summary

Core Content

The Q2 2022 Digital Media sector update highlights key trends, challenges, and opportunities across advertising, music, and social media. The report also covers recent M&A activity, investment deals, and valuation trends.

Main Trends

Advertising in Video Games

• The video game industry has grown significantly, attracting billions of users and becoming a new advertising channel.
• The shift to free-to-play models has made video games an attractive medium for brands, with the Global In-Game Advertising Market expected to grow from $6.7bn in 2021 to $12.4bn by 2028.
• Advertisers must create engaging content to succeed in this medium, as players are more receptive to ads in free-to-play games.

Music Success in the Age of Streaming

• Streaming has transformed content consumption and created new avenues for music success.
• Viral moments on platforms like TikTok have led to unexpected popularity for older songs, such as "Running up that Hill" by Kate Bush and "Old Town Road" by Lil Nas X.
• However, the pressure to become influencers has taken a toll on artists, who are struggling to balance creative freedom with the demands of the digital landscape.

Social Media Slump

• Social media stocks have experienced a significant decline, losing over half their value in the last 12 months.
• Declining ad spend and a weak macroeconomic environment have contributed to this slump.
• Companies like Snapchat, Meta, and Twitter have faced earnings misses and investor skepticism, with Meta's value dropping by 50% LTM.

Key Deals and Investments

Investment Banking

• AdYouLike acquired by OpenWeb for $100M
• Busuu acquired by Chegg for $436M
• Pinkbike acquired by Outside (undisclosed)
• SpeedTree acquired by Unity (undisclosed)
• Pixly acquired by Acceleration Community of Companies (ACC) (undisclosed)
• Astragon Entertainment acquired by Team17 for €100M
• Venatus invested in by Livingbridge (undisclosed)
• Photon (Exit Games) invested in by Skillz for $50M

Investment Management

• GP Bullhound Fund V invested in Discord (active)
• GP Bullhound Fund IV invested in Unity (active)
• GP Bullhound Fund III invested in Spotify (realised)
• GP Bullhound Fund IV invested in Quixel (realised, acquired by Epic Games)

Notable Digital Media Investments

• Playtika raised $2,228M by JOFFRE CAPITAL
• SS raised $100M by CDH INTERNET (UK)
• RELIGION of SPORTS raised $50M by SHAMROCK CAPITAL
• WR WIN REALITY raised $45M by SPECTRUM EQUITY
• rumble raised $100M by CFAC GOO
• TRIPP raised $11M by alexa fund
• Pixellot AUTOMATIC PRODUCTION raised $161M by PSG
• GritWorld raised $20M by Baidu.ventures
• Hour One. raised $20M by Cerca Partners
• tvScientific raised $20M by NORWEST VENTURE PARTNERS
• gravity sketch raised $33M by Accel
• AQUIRIS acquired by EPIC GAMES
• EPIC GAMES acquired by SONY KIRKBI for $2,000M

Digital Media Indices

• All digital media indices underperformed the broader market, with declines ranging from 50-65%.
• The gaming indices showed better resilience, with losses of 20-40%.
• NTM revenue multiples for content indices dropped by 0.5-0.9x, while gaming indices lost 0.3-0.4x.
• Western gaming had the highest EBITDA margin growth at 20bps, while Asian gaming saw the largest margin decline at 200bps.

Rule of 60 Analysis

• The Rule of 60 evaluates the health of a consumer internet company based on user growth, revenue growth, and profitability.
• All digital media players failed to meet this rule, with the primary issue being low YoY revenue growth.
• Twitter and Facebook were the closest, with Twitter achieving 50% revenue growth and 31% MAU growth.
• Pinterest performed the worst, with a 9% decline in MAUs.

Key Figures and Insights

Jon Rissik, CEO of Dovetail Games

• Dovetail Games provides premium digital simulation experiences for rail and fishing enthusiasts.
• The company has 250,000+ paying monthly active users and aims to grow to 1 million in the next three years.
• The UK is recognized as a center for design and technical innovation in the gaming industry.

Brian Nickerson, CEO & Co-Founder of MagicLinks

• MagicLinks is an influencer marketing platform that connects brands with creators using Match Intelligence™.
• The platform offers CPA/CPC pricing models and has 5,000+ diverse partnerships.
• Influencer marketing is seen as a powerful tool for brands, often outperforming other digital media placements by 2-10x.

Public Comparables

Conclusion

The Q2 2022 Digital Media sector update reveals a mixed landscape, with video games emerging as a promising advertising channel and social media stocks facing a significant downturn. The shift to free-to-play models and the rise of streaming platforms have created new opportunities and challenges for brands and artists. M&A activity and investment deals show continued interest in the sector, but valuations remain under pressure due to macroeconomic factors and declining ad spend.