The Future Of Digital Media In 2015

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Editor’s Note: Peter Csathy is the chief executive officer and an investor for the business accelerator and development firm Manatt Digital Media.The firm is an investor in DanceOn and advises Whistle Sports.

2014 proved to be a transformational year for content-driven digital media and investment (a new “golden age” of content I predicted for TechCrunch at the beginning of this year).

For the first time, that investment (much of it SoCal-based) finally took its rightful place in the sun –even in the eyes of ever-skeptical NorCal venture capitalists.

It was easy to see why, given mega–deals like Disney Studios buying leading multi-channel network (MCN) Maker Studios for up to $1 billion, Facebook buying virtual-reality company Oculus VR  for $2 billion, Microsoft uploading Minecraft maker Mojang for $2.5 billion, Apple buying Dr. Dre’s Beats for nearly $3 billion, and Amazon snatching up live gamer site Twitch for $1 billion. Five deals totaling roughly $10 billion.

What does this portend for 2015? Certainly, accelerating digital media activity and a continued investor focus –- meaning billions of dollars of new bets placed by VCs, strategic investors and acquirers on content-driven opportunities.

Beyond that, here are a few specific thoughts on what’s in store for the content landscape over the next year:

(1) The mobile-driven, premium, short-form video economy “grows up,” and traditional media companies take notice on a mass scale.

Shell-shocked studio executives internalize that digital-first platforms are where they must be to reach smartphone-obsessed millennials. MCN acquisitions will quicken as more studios jump into the M&A game rather than try to figure out this new content platform themselves.

Some leading MCNs ripe for acquisition include foodie-focused Tastemade, dance-focused DanceOn, Latino-focused Mitu, sports-focused Whistle Sports, and Collective Digital Studio.

International also becomes a major new battleground for these borderless video opportunities (European media company RTL Group’s $150-$200 million acquisition of U.S.-based fashion-focused MCN StyleHaul is a recent indicator of more to come).

(2) Major consumer brands follow suit and act in earnest.

Massive marketing dollars shift from traditional media to more measurable digital platforms in the form of branded content (not just ads), cannibalizing the former for the first time. Major investments are placed on ad-tech companies to maximize and measure those spends.

We see a number of significant ad-tech exits like Yahoo’s recent acquisition of BrightRoll for $640 million. Several brands go further and invest big to become digital-first lifestyle media companies themselves a la Red Bull, developing and aggregating content. GoPro, Pepsi and Marriott have proudly announced such ambitions.

(3) YouTube comes under siege from competing video platforms like Facebook and Vessel.

These “off YouTube” platforms lure content creators away with promises of more compelling care, feeding and economics (including the tantalizing prospect of real subscription revenues).

(4) Traditional pay TV packages likewise come under fire in the “Great Unbundling” that began in 2014.

What was unthinkable just one year ago (even 6 months ago!) became reality as HBO, CBS, Starz and others announced stand-alone over-the-top (OTT) services. A parade of others follow suit in 2015 (which is not all bad for cable companies that benefit from the thirst for larger pipes).

(5) Media and tech companies will literally converge.

Facing these tectonic shifts in long-established business models traditional media companies  and major tech companies, which find content increasingly critical to fuel their own businesses, take M&A seriously. One will pull the trigger on a big deal.

(6) On the music side, businesses move away from stand-alone services. 

Massive moves are made away from business model-challenged stand-alone services (Spotify and Pandora both still operate at a loss). Like Apple buying Beats (which was never about the economics of Beats Music), numerous potential behemoth buyers exist.

(7) Gamers see real action too.

App developers increasingly focus on story-telling and compelling characters to build multi-platform media companies a la Rovio with Angry Birds. Rather than take traditional media properties and “gamify” them, these companies flip the model with an Apps-first approach.

Finnish-based Silvermile and Seriously are two companies with Rovio roots to take … well … seriously. VR also enters the ring with gamers en masse in 2015.

(8) Gamers take to wearables.

We see an Oculus under every hard core gamer’s tree next year, alongside their parents’ new digital health and fitness watches.

Featured Image: Hartwig HKD/Flickr UNDER A CC BY-ND 2.0 LICENSE