MediaTech Radar
July – 2nd edition
MediaTech Radar is a bi-weekly newsletter put together by IABM’s Head of Knowledge Lorenzo Zanni. 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 Streaming Maturity (Part 2).
MediaTech Spotlight: Streaming Maturity (Part 2)
A spotlight topic in MediaTech.
- In our last newsletter, I shared some research on streaming maturity. In this newsletter, I wanted to add some thoughts on this topic, focusing on future business models in the streaming industry as well as the potential impact of its maturity on MediaTech.
- Recent research by Comscore showed that AVOD is growing more significantly than SVOD in the US market. This is a consequence of inflation hitting consumers’ purchasing power, as highlighted by James Muldrow, VP of Product Management at Comscore: “While both ad-supported and subscription-based streaming services are growing in the US, we’re seeing that consumers are being more mindful of their budgets and leaning towards ad-supported services.”
- Research by The NPD Group is consistent with inflation tilting consumers’ media spending preferences. From October 2021 to April 2022, cost went from the fourth reason for cancelling SVOD services to second according to the research.
- From a consumer standpoint, inflation of necessities ranging from foods to energy is leading to a rethinking of budget allocation which is inevitably pushing SVOD churn and favoring advertising-based models. The impact of these macroeconomic trends on advertising spend by businesses is less clear-cut. While recessions generally lead to reduced advertising revenues, inflation often has the opposite effect. Insiders have reported an unprecedented price inflation in TV advertising, with the growth of AVOD being one of the factors behind this trend. As a result, price inflation may contribute to making AVOD more attractive to pure SVOD players.
- Globalization is also a key growth driver for streaming services. Content investment is part of this as demonstrated by increasing spending on local programming – most streaming services are raising their investment in foreign content. For example, Paramount+ has announced that it plans to commission 150 international originals by 2025. We analyzed the importance of media globalization in a Briefing published last year.
- Demand for localization is not only affecting content, but also other areas such as SVOD payments. Netflix announced plans to include alternative payment methods such as Unified Payments Interface (UPI), digital wallet and direct carrier billing in June 2022. This is to make SVOD payments easier in geographical areas with less developed financial infrastructures.
- How will these trends shape MediaTech investment? AVOD growth is set to drive increasing investment in content monetization solutions ranging from advertising platforms to data analytics services – this was already growing according to IABM research. Technology that is more closely related to SVOD growth such as subscription management solutions may experience a slowdown in spending. On the content front, investment in localization is bound to continue to rise as globalization remains a key strategic driver of growth for streaming services.
MediaTech Watchlist: Virtual Events, ITV, Avid and more…
A watchlist of selected past, present and future business developments in MediaTech.
- According to research carried out by EventsX, virtual events are here to stay. The research says that: “young business decision makers were 70% more likely to “dial-in” to an online event in place of attending in-person,” and “62% expressed a desire to host or attend more internal company events.” The latter insight shows that internal communications might have become a strategic priority for non-media organizations as well, which will have an impact on demand patterns in MediaTech as previously reported by this newsletter.
- In June 2022, ITV acquired a majority interest in Plimsoll Productions, a major producer of producer of natural history content. This is consistent with ITV’s long-standing push into production to diversify its revenue away from advertising. ITV is also diversifying its production portfolio as it increases its presence in unscripted content. ITV paid £103.5 to acquire a 79.5% stake in the production business.
- IABM CEO Peter White interviewed Avid CEO Jeff Rosica in June 2022. In the interview, Rosica announced his company’s return to IBC 2022, albeit in a smaller capacity than before the pandemic. The interview includes some nice gems on the future of marketing and sales investment, and of trade shows, in MediaTech, as well as on the impact of inflation on the sector.
- Albert, a sustainability organization focused on the film and television market, launched an interesting tool to assess the “planet-friendliness” of programming. I have tried the tool, which works in a game-like fashion, and found it quite educational. As highlighted by the linked IBC 365 article, programming can have a profound impact on society, including our attitudes towards sustainability. The article cites a recent example: “The most recent series of Succession featured a storyline with someone giving a portion of their money away to Greenpeace in their will. In real life this led to tenfold surge in traffic to Greenpeace’s legacy page.”
- I have also tried “The Climate Game” created by the Financial Times in partnership with Infosys: “Infosys and FT are collaborating to deliver creative and immersive journalism on the issues that matter… The Climate Game is the first among these initiatives, placing the reader at the heart of crucial decision-making in a data-driven simulation that explores the pathways to alter our shared future on the planet.” This was a very clever game (and was a lot of fun) and really shows how publishers can use gaming to their own advantage.
- Pixellot raised $161m in Series D funding led by growth equity firm PSG in June 2022. This TVBEurope article shares some interesting insights on the growth of Pixellot reflecting the adoption of automated camera operations in live sports. Gal Oz, CTO and Founder at Pixellot, said in the article: “If you look at all the sports leagues, tournaments in the world less than 1% is currently being televised. We are mainly focused on the 99% which is not televised… So, I don’t think that there are many camera operators who will lose their job because of us.” This confirms that fully automated content creation is being mostly deployed to capture lower-tier sports programming.
- Netflix chose Microsoft as technology partner to launch its AVOD offering. This happens a month after Microsoft bought Xandr from AT&T to grow its digital advertising presence.
- Private equity (PE) investment in MediaTech is continuing to grow, as shown by a recent report by PwC, despite the turbulence in financial markets – PE acquisitions have increased from 24% in 2018 to 42% in the 12 months to June 2022. In June 2022, Bain Capital and Nextalia SGR acquired MediaTech business Deltatre from Bruin Capital.
Thank you for reading this newsletter. If there are topics you would like me to cover, or have information/ideas you’d like to share, please get in touch with me.
Lorenzo Zanni
Head of Knowledge
IABM
