Digital Video Companies to Watch -- BDMI Media Summit 2015

[This article was originally posted in VideoInk.]

Earlier this week, I joined the VideoInk team in NYC for the Bertelsmann Media Summit 2015, a showcase for promising digital media-focused companies organized by German media-backed venture capital firm Bertelsman Digital Media Investments (BDMI).  BDMI has invested in a powerful portfolio of leading digital video companies – most of which were featured here, together with a few other select companies with which they are, in the words of Managing Director Urs Cete, “friendly” (translation -- he hopes to invest).

BDMI is no stranger to success in the digital video game.  Two of its portfolio video companies – StyleHaul and Drama Fever – reaped big headlines and investor returns (and those were only 2 of BDMI’s 10 exits last year).  Impressive.  Given this kind of digital video focus and success, it’s good to know who BDMI believes is worthy of their time and money (note: BDMI’s venture fund invests $500K-$4 million; its seed fund invests $50K-$250K). 

Here’s my round-up of yesterday’s video-focused presenting companies:

JUKIN MEDIA

First up – L.A.-based Jukin’ Media -- which, as I recently wrote, is top of mind of most who closely follow the digital video landscape (including many large strategics). The company is, in a word, “hot” – and for good reason.  Authentic and passionate Founder/CEO Jonathan Skogmo bills Jukin’ as being the world’s #1 viral video media company.  And, who can dispute that with 1.5 billion monthly views off a library of 18,000 UGC-powered videos (each of which Jukin’ acquired and owns outright)?

Jukin’s video library is at the center of its stellar monetization universe: (1) clip licensing (think Getty Images for viral videos); (2) digital syndication (monetizing trending clips for both traditional TV partners like Comedy Central and digital partners like Yahoo!); and (3) original programming (such as its successful FailArmy show that has spawned multiple global renditions and lucrative licensing opportunities). 

Jukin’ also has a more conventional “MCN-ian” side to it – streaming its own brands that drive 250 million monthly views (which, Skogmo explains, gives Jukin’ a way to test video success first on digital and then optimize for upstreamed traditional platforms).  But, while others frequently include Jukin’ in MCN round-ups, Jonathan calls his unique multi-pronged revenue model “MCNX” – as in, an MCN on steroids.  Well played, Jonathan, well played.

MITU

Founder & CEO Roy Burstin took center stage to showcase his Latino-focused digital-first video company, LA-based Mitu, that deserves to be featured on that center stage.  Burstin, like Skogmo, distances himself from the traditional “MCN” label, calling Mitu “a media brand powered by technology and fueled by Latinos.”  He emphasized the “underleveraged” global Latino market for media and bemoaned the lack of culturally relevant content for a demographic he calls “super consumers.”  That is Mitu’s focus and vast opportunity – and the company drives the largest community of Latino video creators in the world (3,600). 

Burstin says Mitu’s “secret salsa” (many chuckled as he said it) is its technology – a depth of intelligence that enables creators to reach the right audience with the right content and across the right distribution platforms.  He explained that Mitu produces content natively -- meaning that a creator’s video “story” may be told in 7 seconds on Vine, 90 seconds on YouTube, and longer on other upstreamed platforms. 

Intriguing.  And, like Jukin’, another one to closely watch.  Mitu is one of BDMI’s “friends” – not yet part of its investment family.  Not yet ….

THIRTY LABS

Video incubator Thirty Labs – co-founded by an all-star cast that includes serial media and tech innovator Fred Seibert (who runs leading animation-focused MCN Frederator) – was a decidedly different animal amongst presenting companies.  But, BDMI is an investor – and membership has its privileges.  Thirty Labs’ mission is to find great nascent video-first companies, grow them (fast!), and nurture them with multiple layers of support – strategy, core tech, and capital (of course).  Efficiencies and acceleration are key value propositions here. 

Co-Founder Yoel Flohr showcased several of its portfolio companies, including Tuubi (a native video network for mobile games), Melt (a mobile video creation and sharing network which enables users to create 10-second silent films inspired by a daily prompt), FastCap (which, as the name implies, is focused on capturing videos in the moment), and Crumbles (a messaging app via which users can instantaneously create auto-generated videos from a clip library – seemingly a la Whipclip -- as well as a user’s own clips).

IRIS.TV

CEO Field Garthwaite presented IRIS.TV -- what he calls the “Pandora for video publishers,” programmatically delivering a continuous stream of “the right content to the right person at the right time.”  IRIS is all about deepening engagement and retention (he cited one major customer for which video views increased 54% and customer retention climbed 70%).  IRIS’s can help to maximize the value of a publisher’s video archive.

EPOXY

In a digital/online video world that is inherently multi-platform and social in nature, CEO Juan Bruce explained, Epoxy gives video creators the tools they need to develop, syndicate, and monetize their videos and effectively engage their audience.  That general vision attracted capital from the likes of Time Warner and Greycroft in addition to BDMI.

VHX

CEO Jamie Wilkinson introduced VHX’s direct distribution platform for film, TV and other content (such as workout videos) that previously lived primarily in a DVD world.  He calls VHK a “Wordpress for OTT” – offering a full turn-key solution for video creators, enabling direct-to-fan distribution and direct sales from their own (generating $6+ million to date for creators).  Comedy Central is one major media partner that recently used VHX to launch its own digital comedy hub.  VHX isn’t stopping there -- it operates its own OTT streaming service.  

VICTORIOUS

Victorious is another LA-based company that is on a mission to give mobile video creators robust tools to build superfan-fueled communities around their content.  CEO Sam Rogoway explained the opportunity to fuel deeper engagement via direct fan-to-fan video creation and real-time interaction.  That fan (hyper)active activity leads to a continuous stream of fresh curated content for a “celebrity” video creator (like client Ryan Higa) or even a traditional brand (like a weekly television show).  With more to see, there is more of you to remember.

The company, which officially launched 2 months ago, has launched 10 creator-focused apps to date – and plans to hit 100 by year-end.  Will be interesting to watch those engagement numbers closely.  

All in all – strong class of digital-first video innovators – and strong event (with many of the “usual suspects” observing in the room).

MCN Wars - Who's Next In M&A? (Got It Right With CDS)

Last week's acquisition (of a controlling interest) by German media company ProSieben of leading MCN Collective Digital Studio -- one of 5 MCNs I predicted as being "ripe" for acquisition 6 months back -- woke up the MCN M&A game that had been somewhat quiet for the first six months (after a frenetic pace last year).  So, is this deal a "wake up call" for media companies to move on the remaining independent MCNs with scale?

Signs point to "yes."  As I recently wrote in a lengthy analysis of 2015's top digital media deals and trends to date this year, those leading MCNs "are ripe for M&A down the road -- a road that likely just got shorter [last week] because one of their independent brethren (Collective Digital Studio) has just been taken off the table ...."  Other industry insiders agree, including execs from major media companies with whom I have spoken.  And, several followers/influencers within the industry underscore this point even more emphatically.  Sahil Patel of Digiday -- who covers the space very closely -- writes, "If you're a major media company and you're interested in buying a YouTube network, you better hurry up."

And, even more emphatically, research firm Ampere Analysis concludes: "For those players without a stake in the MCN game, sand is rapidly running through the hourglass ... Many media companies are playing a waiting game: the million dollar question now is when to stop waiting and start acting."  Ampere pegs the top 100 MCNs as having a collective value of an eye-popping near-$10 billion (yes, BILLION!) -- and further concludes that 22 MCNs each justify an acquisition price of "at least $100 million" based on previous M&A comps in the space.

I don't know about that (since Ampere's "treat-all-MCNs-the-same" analysis is rather one-dimensional and apparently doesn't consider other relevant valuation factors, including strategic "fit," specific consumer vertical focus, each MCN's focus on and -- amount of -- licensable original programming, and quality of distribution partners, among others).  But, I certainly do believe that MCN M&A will actively continue in the next several months (NOTE: remember, most majors call themselves MPNs now, as in "multi-platform network").  I call this Phase 2 of expected MCN M&A activity -- which ProSieben/Collective Digital Studio (CDS) sparked last week.

HERE ARE MY PREDICTIONS OF WHO COULD BE NEXT (and for those keeping score, in addition to correctly identifying CDS, I had earlier correctly anticipated M&A for Crunchyroll, Fullscreen and StyleHaul):

(1) TASTEMADE -- the leading food and travel MCN (which counts Scripps, Liberty Media, and Comcast as strategic investors, is known and respected for its original programming and brand, and has secured big wins on the distribution side with Apple and Facebook, among others); here is my exclusive interview of CEO Larry Fitzgibbon from last August;

(2) MACHINIMA -- one of the major MCNs that started it all several years back, is gamer/young male-focus, and still has massive scale (and counts Warner Bros. as a strategic investor);

(3) WHISTLE SPORTS -- the leading sports-focused MCN (which counts BSKYB and Liberty Global as strategic investors, has compelling deals with several major sports leagues -- including the NFL -- and features content that "travels well" internationally); here is my exclusive Q&A with CEO John West (note: Whistle is a client of Manatt Digital Media);

(4) MITU NETWORK -- the leading Latino-focused MCN (which counts AMC Networks as a strategic investor);

(5) DANCEON -- the leading dance/music-focused MCN (which features significant original programming that is ripe for upstream licensing to traditional platforms, and which also counts AMC Networks as a strategic investor); here is my exclusive profile about this MCN (note: Manatt Venture Fund is an investor and DanceOn is a client of Manatt Digital Media);

(6) FREDERATOR -- an animation-focused MCN that is somewhat "under the radar" (similar to Collective Digital Studio prior to its acquisition), and which is lead by media industry pioneer Fred Seibert who helped launch MTV and VH-1 and also served as President of animation legend Hanna-Barbera; in other words, his relationships and partnerships with the creative world are legend; and

(7) OMNIA MEDIA -- another digital-first media company that also is very much "under the radar" and is rumored to be in active discussions on the M&A front right now.

And, these are just some of the leading U.S.-based MCNs.  Remember, it's a big world out there -- with several other major MCNs, including German-based Mediakraft.  Many hungry major international media companies exist (cases in point: ProSieben/CDS and RTL Group/StyleHaul).

BONUS PICKS -- JUKIN' MEDIA -- not really an MCN, but also generally in the short-form digital-first space (and with a unique value proposition and multi-faceted business mode -- and also with a strategic media investor -- Bertelsmann Digital Media Investments).  Here is my profile of this very "hot" company about which many are talking.  It wouldn't surprise me if Jukin' were swallowed up first.  I also like WOVEN, which is a bit like a "less angry" Vice -- and is another company that I previously profiled.

What's the common denominator here?  Virtually all of them count major media companies as strategic investors.  And, as we just saw with ProSieben (which previously already held a 20% stake in CDS), strategic investment frequently leads to outright M&A.  Strategics frequently like to "try" before they "buy."  And, in the prescient words of Yoda (a character now owned by Disney and which, in turn, transformed the MCN M&A world and playbook with its near $1 billion purchase of Maker Studios early last year), "buy, they will!"

Let's start counting them down ....

22 MCNs Justify $100+M Price-Tag - So Says Analyst Firm

Last week's acquisition by ProSieben of leading "under the radar" MCN Collective Digital Studio (CDS) -- one of 5 MCNs I identified 6 months back as being "ripe" for acquisition -- may have jump-started Wave 2 of major MCN M&A .  (NOTE: I will publish a deeper analysis -- with my predictions of "who's next" -- Monday morning).  ProSieben pegged the value of that deal at $240 million (for the combined CDS and Studio71 MCNs, together with $83 million in new cash).

In the wake of that deal, research firm Ampere Analysis concludes:

(1) 22 MCNs each justify an acquisition price of "at least $100 million" based on previous M&A comps (the firm relies primarily upon the metric of 1 billion views/month to define these 22 MCNs and then applies a 25-35 multiple on annual revenues); and

(2) the top 100 MCNs as have a collective value of an eye-popping near-$10 billion.  Yes, that's BILLION with a capital "B."

I don't know about that.  Ampere's "treat-all-MCNs-the-same" analysis is rather simplistic and apparently doesn't consider other relevant valuation factors (including strategic "fit," specific consumer vertical focus, each MCN's focus on -- and amount of -- licensable original programming and quality of distribution partners, among others).  But, I certainly believe the MCN M&A race will heat up over the next several months (after being rather cool for the first half of the year).

Here are Ampere's final thoughts on the topic --

 "For those players without a stake in the MCN game, sand is rapidly running through the hourglass ... Many media companies are playing a waiting game: the million dollar question now is when to stop waiting and start acting."

Digital Media's Top Deals, Developments - Q1/Q2 2015 - Your "Cheat Sheet" (& My Predictions)

[REVISED -- to discuss the significance of yesterday's breaking news about German media giant taking a controlling position in leading "under the radar" MCN Collective Digital Studio and to include today's reports that Facebook is developing its own streaming music service a la Spotify and Apple Music]

Six months ago, in an article titled The Future of Digital Media in 2015, TechCrunch posted several of my predictions for the digital media world in 2015.  I later expanded that article for this blog to discuss my Top 10 Digital Media Predictions for 2015.  It's now time to look back at the first 6 months of the year in digital media -- look at the top deals, developments and trends (top 2 trends so far are (1) the accelerating "off YouTube" video movement, and (2) the industry's justified virtual reality (VR) obsession -- more on both below) -- and see how my earlier predictions stand up.  Consider this your "cheat sheet" of important activity in the digital media eco-system.    

Here are my original Top 10 Predictions below -- juxtaposed against where we stand now.


I.  PREDICTION (1)  --  this one was really a two-parter:

PREDICTION (1) Part 1 -- The mobile-driven premium short-form video YouTube economy “grows up,” and traditional media companies finally 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 ... sports-focused Whistle Sports (in which Manatt Venture Fund is invested). 

THE REALITY FOR PART 1, 6 MONTHS LATER 

Interestingly, for the first 6 months of 2015, the pace of MCN-related M&A had slowed -- and had been replaced by an accelerated pace of more cautious strategic investment as media companies struggle to develop their digital-first video strategies and are too afraid to go "all in."  That "lull" proved to be temporary, punctuated by today's breaking news of German media giant ProSieben acquiring a majority stake in leading MCN Collective Digital Studio (CDS) (an MCN that had been flying somewhat "under the radar").  ProSieben had already owned 20% of CDS, so the deal (which values CDS together with its other MCN Studio71 plus significant new cash at $240 million) is logical.  Strategic investors frequently "try" and then later "buy" if they like what they see. 

I have always been bullish on those still-independent MCNs that had become market leaders and achieved significant scale.  These include (i) Whistle Sports (the leading sports-focused MCN and is also a client), (ii) Tastemade (the leading food and travel MCN), (iii) Mitu (the leading Latino-focused MCN), (iv) Machinima (the leading young male/gamer-focused MCN), (v) DanceOn (the leading dance-focused MCN, also a client), (vi) Frederator (another "under the radar" MCN with an animation focus and strong leadership pedigree), and (vii) Zoomin.tv (a Euro-based "under the radar" MCN that has deep video production roots).  All of these are "ripe" for M&A down the road -- a road that likely just got shorter today because one of their independent brethren (CDS) has just been taken off the table as of today.   

So, given all this activity, I think it's safe to conclude that the YouTube economy has "grown up" significantly in the past 6 months -- so much so that it has outgrown YouTube.  Now, for the first time, multiple powerful "off-YouTube" platforms exist, most notably Facebook (about which I just blogged in a detailed analysis) and Snapchat (which launched its highly strategic Discover video feature in January and later coyly announced its plans for global advertising domination).  That's why most MCNs have shed that moniker (which most never really liked anyway) in favor of MPN -- as in, "multi-platform network,"  And, in another trend worth watching, major media companies began to incubate their own MCN-like sites (e.g., Discovery Communications' women-focused TLCme).  

Here's a list of some of the most interesting related developments:

• Sports-focused Whistle Sports raised $28 million from strategics that included Euro-based media giants BSKYB and Liberty Global (Jan | Venturebeat)
• FremantleMedia increased its stake to become the majority owner of leading European MCN Divimove (Jan | Variety)
• Gamer-focused Machinima closed another $24 million financing led by Warner Bros. (Feb | The Wrap)
• Latino-focused MiTú Raised another $15 million from AMC Networks, among others (Feb | Recode)
• StarMaker Raised $6.5 million to grow its music/video app and talent network from Qualcomm Ventures and others (Mar | VideoInk)
• Otter Media's Fullscreen acquired social media studio McBeard (May | THR)
• Euro-based media giant RTL Group -- a true innovator amongst media companies in the digital-first new world order -- organized its overall MCN/MPN-related holdings (StyleHaul, BroadbandTV, SpotXchange and Clypd) into one central entity RTL Digital Hub (Jun | Broadband TV News)

And, certainly more general digital video-centric mega-M&A and mega-strategic investments multiplied, with some notable examples including:

• Live social streaming innovator Meerkat raised $12 million and Twitter launched competing Periscope to steal some (much?) of its thunder (Mar | TechCrunch)
• Verizon acquired once-giant digital media company AOL for $4.4 billion (May | Variety)
• Layer3 TV, the self-described “next-gen cable company,” raised $51 million from Participant Media and CAA among others (Jun | Multichannel)
• Video ad tech company TubeMogul raised $82.9 million in a secondary market offering (Jun | BI)

PREDICTION (1) Part 2 -- International also becomes a major new battleground for these borderless video opportunities.

THE REALITY FOR PART 2, 6 MONTHS LATER 

Not surprisingly, international has become a major battleground -- and even more intensely perhaps than anticipated only 6 months ago.  Here are some key data points (in addition to today's announced ProSieben/CDS deal -- which underscores this borderless global theme):

• Euro-based media powerhouses BSKYB and Liberty Global, as noted above, significantly invested in Whistle Sports' $28 million round
• Warner Bros., Sony Pictures Television and Asian telco giant SingTel created a new joint venture to launch their own "Netflix-Killer" for Asia (Jan | TechCrunch)
• MTV launched new international over-the-top apps, MTV Play (VOD) and MTV Trax (Music Streaming) in Germany, Switzerland and Romania (Feb | DigitalTVEurope)
• Culture Machine -- a new MCN/MPN focused on international content -- raised $18 million (Feb | VideoInk)
• 20th Century Fox partnered with leading Euro-based MCN Rightster to bolster its YouTube presence abroad -- with MCN Rightster's team managing Fox's YouTube marketing strategy for 35 channels across 17 international markets, including the U.K., Germany and France (Apr | THR)
• Canadian cable giants Rogers Communications and Shaw Communications entered into a joint venture to launch a new Canadian "Netflix Killer" called Shomi (May | THR)
• Chinese juggernaut Alibaba announced it too will soon launch its own "Netflix Killer" called TBO -- for China (Jun | Reuters)
• Netflix is now in 50 countries as of June 2015 (with close to 20 million international subs), with a major strategic push to China and plans to launch next in Italy and Portugal (Jun | THR)
• France media powerhouse Vivendi acquired DailyMotion, the YouTube of Europe, for approximately $240 million -- expect continued significant bold moves by this once-sleeping giant in the latter half of this year (Jun | Variety)

II.  PREDICTION (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.

THE REALITY, 6 MONTHS LATER

Certainly, brand activity has likewise accelerated, as brands begin to fully internalize the digital-focused transformation -- and opportunities -- of the media and entertainment business.  Fewer examples of new Red Bull "wannabes" in the first half of this year, but certainly a proliferation of "branded content studios."  And MCNs/MPNs are increasingly cutting out the middleman and playing the role of ad/creative agencies in the digital video eco-system.  Here are some representative examples:

• Conde Nast unveiled its branded content shop powered by editors (Jan | WSJ)
• Relativity agreed to program and develop digital content for Lexus' L/Studio (Feb | THR)
•  iHeartMedia Launched its own branded content studio (Feb | WSJ)
• Fullscreen launched a new strategic content group with former Chernin Group and Hulu execs  (Feb | Variety)
• Kia partnered with Yahoo! to create new branded series (Apr | Digiday)
• CNN unveiled its new studio to produce content for advertisers (Jun | WSJ)

III.  PREDICTION (3)  -- Seeing all this activity, Silicon Valley investors increasingly make pilgrimages down South to the epicenter of media content – LA.  

THE REALITY, 6 MONTHS LATER -- Few doubt this one.  LA is a serious new VC battleground.  Hale Boggs, Chairman of law and consulting firm Manatt Digital Media and the Manatt Venture Fund (which actively invests in digital media companies), confirmed this trend.  "Many principals from major NoCal VCs are spending more time visiting with companies here, and a lot of the larger funding rounds for LA companies are now being led by those VCs," Boggs said.  Some, like Rothenberg Ventures (a highly connected NoCal-based VC which also opened the first virtual reality accelerator, River), have opened new offices in LA.



IV.  PREDICTION (4) -- YouTube is increasingly under siege by new competing video platforms like Facebook and former Hulu chief Jason Kilar’s 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).

THE REALITY, 6 MONTHS LATER -- Vessel started the year off with a bang.  But, that bang now feels more like a whimper when compared with Facebook's massive growth (and strategic prioritization) of video -- and Snapchat's own accelerating video focus (including its strategically significant Discover feature).  "Off-YouTube" is a mantra chanted increasingly -- and with increasing volume -- across the globe right now.  The threat is real.  I addressed these developments in detail in two separate blog posts: (1) Facebook v. YouTube - Who Wins? 5 Part Test; and (2) YouTube v. Facebook, Amazon & Apple - Clash of the Video Titans (& the Role of DNA).  But, let's also keep in mind that this is not a zero-sum game.  All of this accelerating activity expands the overall video eco-system pie.  So, yes, YouTube ultimately may hold less overall market share.  But, there also will be much more to share.



V.  PREDICTION (5) -- Traditional pay TV packages likewise increasingly are 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.

THE REALITY, 6 MONTHS LATER -- No traditional PayTV bundle is safe anymore.  The "Great Unbundling" is real and comes in two flavors: (1) so-called "Skinny Bundles" --including DISH's Sling TV (which revolutionized the OTT space by giving "must have" ESPN as an add-on option); and Verizon's Custom TV); and (2) stand-alone OTT services (too numerous now to mention, but some of which are identified below).  And, even the kids aren't safe!  Nickelodeon anyone?  Oh yeah, it too launched its own stand-alone OTT subscription service.  In a truly remarkable sign of the times, Cablevision's CEO Kristin Dolan went so far as to speak the previously unspeakable amongst big traditional Pay TV providers -- announcing new "cord cutter" and "cord never" OTT packages.  Well, if you can't beat 'em, join 'em.  That's why Pay TV operators are increasingly willing to partner with SVODs (e.g., Cablevision offering Hulu and HBO Now).  Here are some more important developments and deals:

• MTV launched its new international over-the-top apps, MTV Play and MTV Trax (Feb | DigitalTVEurope)
• Sony launched its $50/month Vue OTT service (Mar | CNN)
• In Canada, government regulators mandated sweeping changes to Pay TV packages, requiring providers to allow customers to "pick and pay" individual TV channels (Mar | Reuters)
• Discovery Digital launched new adventure-focused vertical OTT service, Seeker (Mar | Tubefilter)
• Traditional media grand-daddy NBC jumps on the Netflix-ian "binge viewing" band-wagon for its new show Aquarius (Apr | Variety)
• Levity Entertainment Group, backed by Irving Azoff and Madison Square Garden Entertainment, launched new comedy-focused YouTube channel Wait For It (May | Variety)
• Verizon announced its initial content partners for its upcoming mobile-first OTT service, including media giant Scripps (home to Food Network, Travel Channel, HGTV and more) (Jun | Variety)
• AMC Networks began its invite-only beta test of its new horror-focused OTT video service, Shudder (Jun | Variety)
• Discovery Communications announced it plans to launch its all-access OTT service, Dplay (which includes live sports content) later this year first in Denmark, Sweden and Italy (Jun | Variety)
• Showtime just launched its $10.99/month stand-alone OTT video service with initial distribution partners including Apple TV and Roku (July | TechCrunch)

 
VI.  PREDICTION (6) -- Traditional media companies facing these tectonic shift in long-established business models – and major tech companies (Apple, Google, Amazon, Samsung) for which content is increasingly critical to fuel their own – take M&A seriously and one pulls the trigger as media and tech converges … literally. 

THE REALITY, 6 MONTHS LATER -- No mega-M&A deal has materialized quite yet, but major media moves by the major "tech" players continue unabated.  Some examples include (i) Amazon's ever-increasing investment in original programming (it just recently announced that it is "doubling down" on 2014's $1.3 billion original programming budget), and (ii) Apple's inevitable "coming soon" OTT video service (on top of its recently launched Apple Music).  It may be only a matter of time before one of these tech behemoths -- each of which already cloaks itself with media trappings -- tries to make that full transformation real.  At a minimum, Netflix -- the poster child for new, non-traditional media companies -- is directly in the line of sight.  

And, in a significant related trend, telcos have placed themselves directly into the center of this video vortex.  Cases in point: (i) AT&T and The Chernin Group's $500-$600 million Otter Media joint venture; (ii) Verizon's acquisition $4.4 billion acquisition of AOL; (iii) Dish Network's rumored merger talks with T-Mobile; and (iv) whispers to me from an industry insider that Vodafone may be eyeing Liberty Global. 



VII.  PREDICTION (7) -- On the music side, 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.

THE REALITY, 6 MONTHS LATER --  No M&A yet.  And, while the M&A market waits, Spotify keeps raising boatloads of money -- the latest being a massive $526 million round announced in June at an $8.53 billion valuation.  For its part, Pandora is also continuing its stand alone ways and has been rumored to be looking to acquire a true on-demand streaming service to weather the increasingly turbulent digital music storm.  And while both Spotify and Pandora still operate at a significant loss, Apple finally launched its long-awaited Apple Music Spotify "Killer."  This puts even greater pressure on those two services.  As I recently wrote in a separate detailed analysis ("Spotify's Hangover From Apple's Hard Cider - 5 Daunting Dilemmas"), Apple can do what the stand-alone behemoths can't -- i.e., lose money in order to drive its over-arching multi-faceted business model.  Putting a further exclamation on this point, just today, reports surfaced that Facebook is developing its own streaming music service to rival both Apple Music and Spotify.  Hell, even Microsoft just joined the party more loudly by re-branding Xbox Music, Groove.  

With all this action (particularly Apple Music), other behemoths (like Amazon, Google, Samsung ... perhaps even Facebook before it launches its own) continue to eye Spotify and Pandora ... from the side-lines ... for now.



VIII.  PREDICTION (8) -- Gamers see real action too, as 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 at mass in 2015.

THE REALITY, 6 MONTHS LATER -- Virtual Reality (VR) is the big story of the first 6 months in the digital media world.  VR is absolutely top of mind of virtually everyone in the "industry" now on all sides of the house -- yes, games -- but also movies, education, travel, impact.  On the games front, story-telling in a more strategic, holistic sense, is increasingly the norm with large-scale game developers.  As a result of this frenetic activity, which includes continued massive VR-related investment (that noted futurist and VR thought leader Peter Diamandis already pegs at $5 billion of total invested capital), I have increased my VR-focused writing.  Here are some recent blog posts about the media world's well-placed VR obsession : (i) Virtual Reality Update - Latest Developments; (ii) VR - Power, Potential, Risks ... Thoughts of Leading Innovators In This Immersive Space; (iii) VR - The Engine of Empathy ... And Real Social Change; and (iv) Jaunt, VR & The Future of Media & Entertainment.



IX.  PREDICTION (9)  -- Which leads to wearables, where we see an Oculus under every hard core gamer’s tree next year, alongside their parents’ new digital health/fitness watch.

THE REALITY, 6 MONTHS LATER -- Okay, we now won't see an Oculus under every gamer's tree this XMAS season.  But, I didn't miss it by much.  Oculus just recently announced that it will start selling its first mass consumer headset in early 2016.  That's when things should really take off -- and early stage market leaders like Jaunt and Vantage.TV (a Rothenberg Ventures/River portfolio company) are accelerating content initiatives to meet that capacity -- as are juggernauts like GoPro (which is also harnessing the power of drones -- another major trend to watch -- literally) and Discovery Communications (which recently unveiled Discovery Virtual).  After all, technology isn't holding up mass adoption of VR right now.  Content is.  And, that's changing fast.



X.  PREDICTION (10)  -- All of this leads to the big one – a concept I floated 2 years ago.  Apple buys Tesla and installs Elon Musk as CEO.  Now THAT would be a headline for 2015 … and for the ages!

THE REALITY, 6 MONTHS LATER -- "Hey Elon, it's Tim Cook calling.  Wanna talk?"    



[Special thanks to Manatt Digital Media's Mary Ermitanio for her help assembling much of the data in this article.]