2021-12-20-GP_Bullhound-2021年Q3网络媒体报告（英）_28页_1mb

Digital Media Sector Update - Q3 2021 Summary

Core Content

This document provides an overview of the digital media sector during Q3 2021, highlighting key trends, valuations, and notable transactions and investments.

Main Trends and Insights

Mobile Gameplay on the Decline

• The global video game industry is expected to decrease in value for the first time since 2012, with mobile gaming facing significant challenges.
• The decline is attributed to the easing of social restrictions and the industry's shift away from IDFA (Identifier for Advertisers) and the ongoing semiconductor chip shortage.
• The decline is considered a temporary blip, with growth expected to resume by 2025, surpassing $200bn.

Adtech Companies Return to Public Markets

• Adtech transactions and public offerings have increased significantly, with some companies seeing mixed results post-IPO.
• The resurgence is attributed to the rebound in advertising spend due to the pandemic and the innovation in cookie-less tracking solutions.
• Notable examples:
  • Outbrain: Trading 22.2% below IPO price
  • Integral Ad Science: Up 18% since IPO
  • DoubleVerify: Up 15% since IPO
  • Viant: Down 50% since IPO
  • Taboola: Trading relatively flat at a 7% decline

Chinese EdTech and Gaming Adapt to Regulations

• The Chinese government has increased regulation on profit-making after-class K-12 tutoring companies, leading to a decline in their market position.
• This has created opportunities for in-class content EdTech companies and non-exam-oriented education providers.
• Some companies are expanding overseas:
  • New Oriental Education launched Blingo for overseas Chinese kids
  • Meishubao expanded its international team
  • CodeMao plans Asian-European expansion

Key Transactions and Investments

Acquisitions

• Pinkbike acquired by Outside
• SpeedTree acquired by Unity
• 7NXT acquired by Oakley Capital
• GameRefinery acquired by Vungle
• Fnatic invested by Lv1 Group
• Photon acquired by Skillz for $50M
• Voodoo acquired by GBL for $312M
• STARLINK acquired by Zynga for $525M
• PARSEC acquired by Unity
• Frame.io acquired by Adobe
• KALTURA acquired by EPIC GAMES for $128M

Investments

• Lingoda invested by Summit Partners for $68M
• Fnatic invested by Lv1 Group for $19M
• 1047 GAMES invested by Lightspeed for $100M
• JAMGITY invested by Netmarble for $350M
• Sorare invested by SoftBank for $680M

IPOs

• Integral Ad Science (NASDAQ: IAS) IPO in July 2021, with a market cap of $816M
• KALTURA (NASDAQ: KLTR) IPO in July 2021, with a market cap of $1.2bn
• Taboola (NASDAQ: TBLA) SPAC IPO in June 2021, with a market cap of $2bn
• The Beachbody Company (NYSE: BODY) SPAC IPO in June 2021, with a market cap of $300m

GP Bullhound Digital Media Indices

• Diversified online content and social media indices saw a 10% increase in market cap for Snapchat, while others declined.
• Music, video, photos indices declined by 10%.
• Western gaming indices declined by 14.6%.
• Asian gaming indices declined by 4.7%.
• Rule of 60 analysis shows that 30% of selected consumer internet companies closed above 60, with Tencent, Roku, and Pinterest leading the way.

Industry Analysis and Outlook

Gaming

• The gaming industry is becoming more mainstream, requiring accessibility across various devices and geographies.
• Gamebench is a leader in game performance management, with a CAGR of close to 50% for cloud gaming by 2025.
• The shift to networks as the primary playing field for gaming experience is a significant trend.

Adtech

• Adtech companies are adapting to the cookie-less world, with some seeing positive performance and others experiencing declines.
• The sector is undergoing fundamental disruption, and adapting to new tracking technologies is crucial for long-term success.

Key Players and Quotes

George Petrov, CEO, Coherent Labs

• Emphasizes the need for accessible and scalable game development tools.
• Highlights the importance of reducing development costs and improving player experience through web technologies and open standards.

Robin Thurston, CEO & Chairman, Outside Inc.

• Advocates for a balanced approach between subscription and advertising revenue.
• Stresses the importance of thoughtful bundling and customer-centric strategies in the digital media industry.

Conclusion

The digital media sector in Q3 2021 experienced a mix of challenges and opportunities. Mobile gaming faced headwinds due to regulatory changes and technological shifts, while Adtech companies rebounded with increased transactions and IPO activity. The Chinese EdTech and gaming sectors are adapting to new regulations, creating new opportunities for in-class content and non-exam-oriented education. GP Bullhound's activity highlights the ongoing consolidation and innovation in the space, with a focus on scalable and customer-centric models.