Responding to changing consumption models means a rethink for M&E leaders about new business models and new investments. To better understand where investments are being made, EY conducted an analysis of two groups: today’s leading telecoms, technology and media companies, and the next generation of companies in those sectors.
Some key findings include:
Digital advertising has created a dilemma
- Digital advertising, a top-30 focus area of the industry, has lost as much as US$8 billion in revenues.
- Half of the loss derives from “nonhuman traffic” — fake advertising impressions that are neither generated by real advertisers nor received by actual consumers.
- The other half comes from a variety of factors, including ad blocking and content infringements, such as the sharing of passwords.
Unicorns and decacorns are driving investments
Our analysis focuses on 60 unicorns. These are the world’s most valuable, privately held companies founded in the past 10 years with a market valuation of US$1 billion or greater. Decacorns have a market valuation of US$10 billion or greater.
Across telecoms, technology and media, the 60 represent US$143 billion in value and a broad mix of services, business models and subsectors. They are digital first and adept at scaling new service offerings and at accessing new distribution channels, customer and audience segments.
Incumbents are responding, at least in part, by taking positions in unicorns and creating a tangled web of investments. Of those on our unicorn list, Vice Media has received two rounds of investment from Disney. NBCUniversal holds stakes in BuzzFeed and Vox Media. NBCUniversal’s parent, Comcast, which also has a stake in Vox Media, is an investor in wearable tech company Jawbone, neighborhood social network Nextdoor and fantasy sports provider FanDuel.
M&E executives are conﬁdent in the broader economy
The rise of unicorns illustrates the relentless treadmill of disruption, and yet there is a newfound confidence among M&E executives about the economy and the wider investment climate.
Eighty-one percent of M&E executives say the global economy is improving, compared with 52% who said that a year ago. In the year ahead, the global M&A market is forecast to remain buoyant, with 73% of executives indicating it will improve, up from 49% last year.
The target areas for investment are a mix of emerging market powerhouses, such as China and India, and more mature media markets, such as the UK, Australia and the US.
The Internet of Things (IoT) is coming of age. The connected home, connected car, connected store and wearables already are a reality that will only grow. By 2019, the number of connected cars in the US will almost triple to 60 million. Estimates vary, but 30 billion installed IoT units are forecast to be installed by 2020.
For M&E companies, IoT offers huge potential. In its simplest form, IoT is the proliferation of sensors to capture vast and varied data about customers: their behaviors, emotions, sentiments, physical reactions and well-being. Yet, data is only part of the picture.