Bloomberg Family Office Media Conference - Media Venture Network
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Investing in media & entertainment in the age of digital disruption. *** Please view speaker notes via the "notes" link on the right below this description *** This presentation was given to a group of family offices interested in making investments in media & entertainment at Bloomberg's New York offices in October 2016, and focused on sustainable business investment strategies, including: • Content creation and distribution platforms • Emerging technology (e.g. TVE, OTT, AR, MxR, VR, etc.) • Monetization (subscription, PPV, advertising, commerce) • Data analytics and support systems
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Bloomberg Family Office Media Conference - Media Venture Network
- 1. Entertainment Investing in the Age of Digital Disruption Family Office Media Conference | October 24, 2016 ROBERT LASKY | Founder & CEO
- 2. The past two decades have brought change and disruption, not doom & gloom
- 3. Content is King Sumner Redstone Circa 1994
- 5. Bill Gates
- 6. The age of enablement
- 8. 2015 RIAA Shipment and Revenue Statistics Music purchasing preferences • Total streaming revenues exceeded $2 billion • Streaming and digital download accounted for 68% of US revenue Digital Download s 34.0% Streaming 34.3% Physical Media 28.8% Synch 2.9%
- 9. The music industry is going big data • Full stack music conglomerates are forming across distribution, radio, live and rights PANDORA LIBERTY GLOBAL ACCESS INDUSTRIES KAKAO CORP DISTRIBUTION RIGHTS RADIO LIVE 2016 MIDIA Research
- 11. 2015 Accenture Digital Consumer Survey TV and movie device preferences COMPUTER 38% 8% 8% 52% +9% +3% +4% -13% MOBILE TABLET TELEVISION
- 15. One more thing…
Notes de l'éditeur
- Slide 1: Entertainment Investing in the Age of Digital Disruption Before we get started, I’d like to thank Bloomberg, Favara, and Wendy Craft for the opportunity to speak with all of you today. There's a possibility I’m going to be a bit of a fly in the ointment but, considering the pace of change in media & entertainment, I believe a non-traditional lens is important in developing a forward thinking investment strategy.
- Slide 2: The past two decades have brought change and disruption, not doom & gloom In reality, to some degree, this has been an ongoing thing over the past century • Movies didn’t kill theater • TV didn’t kill radio or movies • Video didn’t kill the radio star • The Internet didn’t kill music, movies or television But the Internet is continuing to change all three.
- Slide 3: Content is king We’ve all heard it. This phrase has been a mantra of the industry since the mid-1990s when Sumner Redstone first coined it… and it’s true. Content is the backbone of the Media & Entertainment industry.
- Slide 4: Content builds audiences… And audiences drive revenue, whether it’s by ticket sales, subscriptions, advertising, etc.
- Slide 5: Content is king counterpoint Although Sumner Redstone is credited with coining the phrase, approximately 2 years after his proclamation, Bill Gates followed with a different perspective: “One of the exciting things about the Internet is that anyone with a PC and a modem can publish whatever content they can create.” The web promptly exploded in popularity and now, 20 years later, every one of us has the tool to create whatever we can dream up… the smart phone right in our pockets and purses. Add to that the Internet that provides the means to distribute those dreams, and we’re living in a very different world.
- Slide 6: The age of enablement With ever more powerful consumer hardware and software, not to mention the Internet, content creation and distribution continues to be democratized. This has and continues to happen. First music, then home video, television and movies. So an important question to ask is “how can content be a wise investment strategy?”
- Slide 7: Content consumption Digital download and subscription music streaming services have all but replaced physical media. Subscription video streaming and over-the-top (OTT) services are becoming a norm, and are increasingly replacing linear broadcasting and cable, especially for younger demographics. Programming is increasingly being released online in parallel, and sometimes even ahead of premieres, forcing changes to the decades old tiered distribution system. And tools and platforms have improved to the point that nearly anyone can create and distribute their own, high (production) quality, content.
- Slide 8: Music purchasing preferences In 2015, total streaming revenues exceeded $2 billion. Streaming and digital download accounted for ~68% of US revenue. Full stack music conglomerates are forming across distribution, radio, live and rights.
- Slide 9: The music industry is going big data From an industry perspective, we’re beginning to see full-stack music with consolidation across distribution, radio, live and rights. This big data play combines several powerful things: • Streaming services know what you’re listening to, and where you are • This can inform artists where their fans are so they can target their tours • Services can alert fans when artists they listen to are touring in their area • Consumers can one-click ticket sales to events while listening to music Further consolidation could create a company that covers the entire industry spectrum, and may usher the “new record label” era.
- Slide 10: Music content creation From a creation standpoint, musicians can create, distribute and build their own fan bases right from their home studio, which may be little more than a laptop. Production can be completed with high-quality, but free tools like GarageBand or industry standards such as Pro Tools. The results can be distributed via platforms such as SoundCloud to build fan bases and reach the world.
- Slide 11: TV and movie device preferences Television is still the most popular screen for consumers watching television and movies, but digital devices are steadily gaining as television simultaneously loses ground. Continuing to build market share over traditional broadcast and cable, streaming services are expected to have grown by 31% to 6.7B from 2015 to 2016 (Business Insider).
- Slide 12: Movie production More powerful consumer hardware, software and the Internet continues to democratize creation and distribution. Tangerine was shot on an iPhone 5s with FILMIC Pro, an $8 camera app, clip-on lenses, and a steadicam. The movie received critical acclaim at Sundance. Total budget of $100,000 led to box office take of $794,202.
- Slide 13: Movie financing In financing, platforms like Kickstarter that enable the creation of content via “gifting” have become a very popular and viable for music, film and video creators to get their projects funded: • 40% of all projects on Kickstarter are music, film or video • 12% of projects raising over $100K are music, film, video • 4% of projects raising over $1M are music, film or video The documentary film “Inocente” raised $52,527 on Kickstarter and went on to win an Oscar.
- Slide 14: Netflix, the rise of over-the-top OTT, and the Silicon Valley approach to content Bridging from film to television, Netflix recently struck a deal to bring their original movies into theaters. In addition to potentially eroding the tiered release model even further, this qualifies them for Oscars in addition to Emmys. And then there’s the broader over-the-top space… Pluto TV already has more than 5 million monthly active users for its ad-supported service which includes TV networks, movie studios, publishers and digital media companies. The service is available on the web, for mobile devices and connected-TV devices including Roku, Apple TV, Android TV, Sony PlayStation and Microsoft Xbox. Startups like Feldspar Studios are taking a Silicon Valley approach to series creation (Internet centric, bet small, fail fast and move on). Their first venture, Poppycock TV garnered 180k views in its first 3 weeks, and was creating and publishing satirical content live during the Presidential debates the week of October 17.
- Slide 15: A humble nod to Steve Jobs As if that’s all not enough to digest, there’s a world of new competition…
- Slide 16: Launching channels is now available to anyone Arguably closest in, everyone from broadcast and cable networks to more organized independent creators can take advantage of numerous Platforms-as-a-Service (PaaS) that enable anyone with content to package and distribute their own branded channels across the web, mobile and OTT devices without any technical skills or resources. Some of these platforms, like Campfyre, are free to set up and launch so that, marketing aside, technical operating expenses are limited to storage and bandwidth. Others, like Ooyala follow a more traditional PaaS licensing model.
- Slide 17: Augmented reality Augmented reality is rapidly becoming available. There are already numerous games and messaging apps appearing in the mobile app stores, perhaps most notably, Pokemon Go. There are also platforms emerging that seek to augment live entertainment and events, as well as everyday life with branding, time-sensitive information, transactional capabilities, and more.
- Slide 18: Virtual and mixed realities Virtual and mixed realities are in their infancy, but will likely reach critical mass quickly as Facebook, Samsung, Sony and others make heavy bets on hardware. On the content side, creative companies are being funded, and are developing both mixed and virtual reality experiences from linear narrative to games to theme park attractions and more. And then there’s Google, approaching the space from the bottom up. Beginning with Google Cardboard at less than $20, and following with the more sophisticated Daydream View at $80 that incorporates a headset with a wireless handheld controller, they are bringing VR to anyone with a smart phone, and consumers can already create their own content for free… As easy as this… Live demo of Google Cardboard Camera.
- Slide 19: Teenagers The generation that so diligently records themselves accomplishing so little… But for them, studio created content is consumed right alongside UGC. This has enabled consistent growth of content platforms like Snapchat, Instagram and, more recently, Musical.ly. And while it might be tempting to write them all off as a trend, social media is already accounting for 20% of time spent online and, as a result, brands and content creators are looking at ways to reach audiences on these new channels. Last week, Fox and Snapchat partnered in the first live TV activation program. During The Rocky Horror Picture Show, viewers could use their smart phones to capture on-screen snapcodes to unlock Rocky Horror branded filters.
- Slide 20: Media Venture Network Media Venture Network has a very particular view about traditional content, whether it’s a movie, TV series, or an album. They are projects, not sustainable businesses. They are great for passion… which is being demonstrated over and over again on platforms like Kickstarter… where gift oriented, “donor / investors” whose passion for “wanting” a project to exist is enough ROI to support it. It’s awesome that this channel exists for creators and, personally, I’m very happy this outlet exists. But it’s not really on target with an investment strategy. As a targeted equity platform in Media & Entertainment, here’s how Media Venture Network looks at the industry for in investments and why. VCs are increasingly looking for unicorns that need to be in market with traction and revenue for investment consideration. In part, this created an opportunity for crowdfunding platforms like Kickstarter on the gifting side, and equity platforms that tend to be open platforms for any company seeking capital using a “let the crowd decide” filter for determining which opportunities fund. Our strategy is to match early-stage business-focused founders who are looking to disrupt the media & entertainment industry with sustainable business models with investors interested in the sector. Following are a few examples.
- Slide 21: “Television” Content A founder / filmmaker who has identified an underserved content category AND has figured out a way to produce the content and get it distributed while maintaining ownership and all sponsor revenue (essentially free marketing that generates advertising revenue). This is being done to create and market the brand while simultaneously repackaging the content as a standalone ad-supported OTT service.
- Slide 22: Virtual and Mixed Reality (VR and MxR) Former studio execs who founded a content studio to create virtual and mixed reality experiences, who have already inked a large theme park partnership. This mixed reality image is from a demo created by Magic Leap, a pre-product, stealth-stage startup that has already raised $1.39B.
- Slide 23: Augmented Reality (AR) A founder with IP and a market ready and tested platform that uses a smartphone’s camera and geolocation to display the proximity of people, products and services at events.
- Slide 24: Monetization A founder and career industry executive with a platform that enables networks and studios to convert all of their social media marketing, posts and articles into immediate calls-to-action to consume content in a single click, creating marketing to viewer ROI.
- Slide 25: Media Venture Network summary To sum up, from a category perspective, the kinds of opportunities we look for are sustainable businesses that can be • Content creation and distribution platforms • Emerging technology (e.g. TVE, OTT, VR, etc.) • Monetization (subscription, PPV, advertising, commerce) • Data analytics and support systems Thank you.