Mediatech Radar: GeoTracker

Mediatech Radar: GeoTracker

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Mediatech Radar: GeoTracker

Wed 15, 05 2024

May 2024

MediaTech Radar is a monthly newsletter put together by IABM’s Business Intelligence Unit. It focuses on a spotlight topic in MediaTech and reflects on a series of past, present, and future business developments in the industry. In this edition, our spotlight topic is GeoTracker, the first report in our new tracking research series, which consists of GeoTracker, ChainTracker, TechTracker and SectorTracker to be published in 2024.

MediaTech Spotlight: GeoTracker  

A spotlight topic in MediaTech.

GeoTracker is based on extensive research combining data from our MediaTech Industry Tracker survey, a wide range of expert interviews and a literature review. The report provides a detailed analysis of major regional trends and market fundamentals affecting investment in MediaTech in five different geographies: North America, Latin America, Europe, Asia-Pacific as well as the Middle East and Africa. Below, we have included a selection of insights from the report.

  • North America: Business confidence in MediaTech is clearly down from 2023, due to macroeconomic pressures forcing media companies to “do more with less”, cut costs and staff and prioritize efficiency and automation. This has led to consolidation of networks and accelerated investment in AI. The post-strike “new normal” with fewer productions in the pipeline is expected to stabilize in Q2/2024.
  • Latin America: Hyperinflation and political turbulence in several Latin American countries are adversely affecting the investment outlook. Media businesses – having a strong focus on both linear TV and streaming – are investing in efficiency and automation, but tight technology budgets are slowing down the adoption of major technologies like Cloud and IP.
  • Europe: Business confidence is down due to macroeconomic pressures causing cost concerns, translating into layoffs and reduced spending on content and MediaTech. Public and private broadcasters with tightening budgets are focusing on efficiency and automation while moving to OTT and streaming platforms.
  • Asia-Pacific: Macro headwinds combined with post-pandemic recovery and China’s structural slowdown dampen the economic outlook in Asia-Pacific, even though the region remains a key driver of global growth. Major public cloud service providers are investing heavily in the APAC region, signaling its importance not only as an epicenter of AI chip production but also the vast investments made in IP, cloud, (Gen) AI and 5G that are driving demand for MediaTech.
  • Middle East and Africa: Business confidence in MediaTech is down due to macroeconomic pressures, increasing geopolitical tensions and on-going conflicts in several countries in the region, making media businesses careful in terms of investment and content production (e.g., news). However, massive investments in sports rights and events by the Gulf countries are driving demand for high-end MediaTech and the adoption of IP, Cloud, AI and 5G.​

MediaTech Watchlist: Paramount’s merger talks, Prime Video adds grocery benefits, Q1 Cloud revenues jump…

A watchlist of selected past, present and future business developments in MediaTech.

  • At the end of April, Paramount Global announced that Bob Bakish had stepped down from his role as CEO. The changes in the top management are rumored to be the result of conflicting interests between Shari Redstone – the company’s controlling shareholder – and Bakish during merger talks between Paramount Global and Skydance Media, which collapsed in early May. Bakish was said to have opposed the merger with Skydance. After the expiry date of exclusive M&A negotiations with Skydance in early May, Paramount Global entered talks with Sony Pictures Entertainment and a PE firm, Apollo Global Management, which renewed their bid (now worth $26 billion) to take Paramount Global private in an all-cash buyout. If realized, the deal would make Sony Corp the majority owner of a joint venture between Sony Pictures Entertainment (SPE) and Paramount Global and provide Sony Corp – the last major Hollywood studio without a streaming arm – access to direct-to-consumer studio play. Investors welcomed the news after their disappointment in Paramount Global’s Q1 2024 results, showing streaming losses of $286 million despite its record high ad revenues from Super Bowl LVIII streamed on Paramount+ for the first time ever in February 2024. The on-going bidding battle reflects the growing importance of IP ownership of hit films and premium content compared to licensing IP to others in the streaming space. In 2018, Sony changed its CEO to Kenichiro Yoshida, who has since then shifted the company’s earnings model from electronics to entertainment, including music, movies and games.
  • In late April, Amazon reported record high Q1 ad revenues (+24% YoY) largely thanks to the company’s move to serve ads by default in Prime Video in several markets. In the company’s Q1 2024 earning call, its CEO Andy Jassy said: “Very early days, just launched [Prime Video ads] a few months ago. It’s off to a really good start. I think advertisers are excited about being able to expand their ability to advertise with us in video beyond Twitch and Freevee to Prime video shows, movies. I think they also find that the relevance and the measurability of that type of advertising and Prime Video ads is unique for them.” Commenting on Amazon’s recently launched grocery delivery service for Prime Video subscribers in the US, he continued: “We’ve just launched a Prime benefit for grocery, which is you can get delivery for $9.99 a month, which if you order once from Whole Foods a month, it pays for itself or once from Amazon Fresh for orders under $40, it pays for itself. It’s a very valuable offering for our Prime members, and it’s off to a great start”. Other streaming services are also leveraging grocery retailers to grow their subscriber base and improve engagement. For example, last year Paramount+ entered a partnership with Walmart+ and Peacock teamed up with Instacart+ to provide unlimited free delivery of grocery orders in the US. In January 2024, Netflix and Carrefour announced a partnership to offer low-cost streaming subscriptions for Carrefour’s customers in France, while Disney is said to be in talks with Kroger to form a partnership around grocery delivery program. Retail data is becoming an increasingly valuable asset in attracting advertisers, while member benefits linked to groceries may make subscriptions feel more necessary for viewers optimizing their subscription spend.
  • At the end of April, Microsoft, Google and AWS all reported double-digit growth of their Q1 cloud revenues, driven by demand for Generative AI. In April’s earnings call, Satya Nadella, CEO at Microsoft said: “The number of $100 million plus Azure deals increased over 80% year-over-year, while the number of $10 million plus deals more than doubled…/…it will take time for it [AI becoming accretive to spending] to percolate through the economy, but this is faster diffusion, faster rate of adoption than anything we have seen in the past, as evidenced even by Copilot. It’s faster than any suite we have sold in the past, but it is going to require workflow and process [cultural] change”. In addition to AI, Ruth Porat, CFO at Alphabet, highlighted in the company’s Q1 2024 earnings release that the strong financial results reflect “ongoing efforts to durably reengineer the cost base”. This signals that tech giants will continue to streamline their operations and cut costs, while prioritizing AI investments.
  • At the beginning of May, eight media industry stakeholders – including Fubo, Dish Networks, DirecTV and Newsmax – sent a letter to the US Congress urging Senators to hold hearings on the future competition in US’ Pay-TV market and the recently announced JV between Disney, Fox and Warner Bros. Discovery focusing on sports streaming. The letter – claiming the JV would result in anticompetitive and inflationary contract restrictions on distributors – said: “In addition to controlling 80% of all national live sports broadcasts, the JV will control approximately 55% of all live sports (regional and national)”. The co-signers also warned that the JV will drive out competition by preventing them from offering viewers their own skinny bundles and live sports bundles unless the Congress and regulators intervene. Some industry experts have expressed their worries that the JV between Disney, WBD and Fox would accelerate cord-cutting and vacuum the (last) ad revenues from linear TV networks, of which many are currently using sports to offset losses in other parts of the business. This could lead to mass layoffs and shutdowns of local networks in the short term.

Thank you for reading this newsletter. If there are topics you would like us to cover or have information/ideas you’d like to share, please get in touch with us.

The IABM Business Intelligence Unit

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