April 2016 – Solganick & Co. has issued its latest Digital Media industry M&A Update for Q1 2016. Below are the key highlights of the report:
- Overall M&A activity across the digital media industry remains robust YTD 2016. Several notable billion dollar deals were announced in Q1 2016, encompassing entertainment, media, and advertising industries, etc.
- In Q1 2016, the largest transaction in the Digital Media sector recorded for a total deal value of $3.5 bn was Dalian Wanda’s acquisition of Legendary Entertainment. It’s the largest cross border culture acquisition in history. Other prominent billion dollar acquisitions include Comscore’s acquisition of Rentrak, which reached a post money valuation of $1.2B.
- Within AdTech and Digital Marketing, the M&A environment remained favorable. In Q1, AdTech totaled 131 deals, capital invested amount to close to 3 billion in this sector alone. and in Digital Marketing, a total of 169 deals were recorded for a total deal value of 2.4 Billion, for a median deal size of $25.27 mm.
Digital Media M&A Drivers 2016
As the culmination of most of the trends of the past 5 years, there are several big trends that are happening this year in digital media.
Global Mobile: The rapid adoption of mobile devices and changes in communication and messaging is altering the shape of traditional business models. These new forms of communication and messaging are bringing new types of multichannel and multimedia content. For example, in the print market business model is changing because of the growing adoption of mobile devices, they are moving into creating new print requirement and opportunities such as mobile print solution and loud printing services. (source: Gartner) Mobile is everywhere and has bypassed desktop/laptops all together. Companies are starting to project brand DNA in mobile applications, and user experience has never been more critical.
Content Distribution: While content is still vitally important, content distribution becomes more critical than ever. Getting content onto the mobile devices of your audiences has become the next big frontier. Brands are experimenting new distribution platfoms like Snapchat, while other distribution platforms like Netflix is getting into content business. Such trends will continue grow in 2016, as music, video, movies, TV, photos, long-form articles, advertising will rise and fall with effective and efficient distribution.
Big Data Big Intelligence: Big data can be a big mess without an intelligence plan. Data needs to be turned into actionable business insights in order to truly aid decision-making. In addition to providing insights, such intelligence can drive content and distribution.
Virtual Reality: VR is becoming this year’s digital media headline story. We know Facebook acquired Oculus for $2 billion in 2014, but Oculus is not alone. Virtually all major consumer electronics giants will flood the market with millions of permium VR headset at price points that will drive adoption akin to the early days of game consoles. For major studios and the creative community in general, VR presents a tantalizing new mega-commercial opportunity to thrill consumers with new forms of story-telling, such as Jaunt, a bay-area company that closed a massive $65 million round of financing in 2015 from the likes of media giants Disney and ProSeiben, made the biggest splash on the creator side.
Over-the-Top Content and Multi-Platform Networks: Last year, NBC invested $200 million into Vox media and another $200 million in Buzzfeed, it went all-in with OTT. It also announced a stand-alone subscription service, Seeso in Jan, 2016. Another trend to look for is media companies move beyond YouTube into the land of Facebook and Snapchat. There’s gold in those mobile-first vertical hills populated by a particularly rabid and underserved digital-native customer base.
You can download the complete report here: Digital Media M&A Update (Q1 2016)
Solganick & Co. is a leading investment bank and M&A advisory firm focused exclusively on the technology and digital media industry sectors. For more information go to: www.solganickco.com
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