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Consolidation and retention How D2C is now driving video M&A strategy

Report by Tim Mulligan

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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.

Key Insights

  • 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

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