Consolidation and retention How D2C is now driving video M&A strategy
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The 20,000 foot view: The big bang moment of opened up a new offensive front for media majors as they competed with the communications and tech majors for streaming audience market share, which was previously lost to the SVOD insurgents. Pureplay media players responded via defensive consolidation and / or selling themselves to more motivated competitors. With peak stream approaching, the key players are now looking to consolidate subscriber acquisition by deepening and broadening their content portfolios. Video streaming being mainstream, alongside the return of inflation, is forcing a shakeout of underfunded and library-lite propositions. This will lead to market consolidation among the non-core players over the next two years.
- Video M&A over the previous decade was defined by time-specific responses to external market pressures, and were thus reactionary rather than proactive
- TV network media majors saw Netflix as a source of found revenue, transforming Netflix into the Spotify of the TV industry – a too-big-to-fail streaming frenemy
- The result for previous stalwarts of the TV industry was to sell assets that directly competed with Netflix (film studios, and non-news and sports TV networks)
- New competitors now focus on the areas where Netflix is not competing – news and sports 2019 was the inflection point where streaming went mainstream, with of consumers having video subscriptions (MIDiA 2019 consumer survey, US, UK, Canada, Australia, sample size of
- While Covid lockdowns were the tipping point, the catalyst was the big bang moment of
- The biggest driver behind the big bang moment was relentless competitive pressure being placed on TV networks and operators by SVOD insurgents
- M&A video activity is fundamentally driven by competitive pressure
- M&A success will be driven by the successful service delivery of Genres, Originals, Library, and Formats
**Note - MIDiA defines majors as the following:
Media majors: majority of revenues derived from media monetisation
Communications majors: majority of revenues derived from communication monetisation
Tech majors: majority of revenues derived from tech monetisation
Companies and brands mentioned in this report: Apple, Apple TV, Amazon, Amazon Prime Video, AT&T, Comcast, Disney, Disney+, HBO Max, MGM, Netflix, Peacock, ViacomCBS