#Retrace2021: How streaming wars re-shaped the global M&E industry in 2021

#Retrace2021: How streaming wars re-shaped the global M&E industry in 2021

The transformation is being led by the staggering demand for content

M&E industry

Mumbai: Beginning with the blockbuster M&A deal between Discovery and AT&T in May which created the world’s second-largest media company by revenue after Disney, intensifying streaming wars reshaped the global media and entertainment industry through 2021. At the heart of this transformation was the mindboggling demand for content.

According to research led by European economic consultancy Frontier Economics manager Clive Kenny, OCC (Online Curated Content) providers directly invested $25.7bn (Rs 1.8trn) in OCC content worldwide in 2019, including original and licensed titles. This sum is likely to soar to $61bn (Rs 4.3trn) by 2024. Significant increase in content investment in the pipeline includes: The Walt Disney Company’s plans to invest $14bn-16bn (Rs 985bn-1,126bn) per year in global OCC content by 2024; ViacomCBS’s plans to ramp up investment in OCC content to $5bn (Rs 352bn) in 2024; WarnerMedia’s parent company, AT&T’s, pledge to invest $4bn (Rs 282bn) in HBO Max in the three years through 2022; and, Netflix will spend $28bn (Rs 1.97trn) a year by 2028.

Driven by tech, worldwide changes in viewers’ media consumption habits in the context of more genres, newer formats, and platform choices are here to stay and grow further, and the scope for this growth is immense. The importance, as well as the urgency of sourcing content to satiate this rather ravenous appetite for entertainment, will continue effecting similar shifts in the sector going ahead. The equation will balance out between global giants wanting to create worldwide media behemoths and (comparatively) ‘local’ players striving to maintain their individuality and independence in the market.

Here’s a look back at some of the biggest industry deals that made news in 2021. Even though not driven by the streaming wars, the $5 bn acquisition of Yahoo (formerly Verizon Media) by Apollo Global Management finds a place in this list for being the culmination of Verizon’s persistent efforts to establish itself in the online media space.

AT&T and Discovery: Announced in May 2021 through an all-stock transaction called the Reverse Morris Trust, the AT&T, and Discovery merger deal aimed at giving rise to a content powerhouse to be led by Discovery president and CEO David Zaslav. The merged entity will bring together brands like Warner Bros., HBO, Discovery, DC Comics, CNN, Cartoon Network, HGTV, Food Network, the Turner Networks, TNT, TBS, Eurosport, Magnolia, TLC, Animal Planet, and ID.

The emphasis on the D2C aspect of the business was clearly spelled out in the official statement which read “the new company will compete globally in the fast-growing direct-to-consumer business, bringing compelling content to D2C subscribers across its portfolio, including HBO Max and the recently launched discovery+.”

Televisa and Univision: In April, Mexican and Latin American media giant Televisa and US Hispanic network Univison merged their media, content, and production assets to create a global Spanish-language powerhouse. The combined entity Televisa-Univision will be led by Univision CEO Wade Davis. It will have the largest Spanish-language library of owned content, serving two of the world’s largest Spanish-speaking markets the US and Mexico.

According to the Television Business International, the “merger was designed to enable the new company to address what it believes is the relatively nascent global Spanish-language streaming market. The pair said that the Spanish-language market, which represents around 600 million people globally, and an aggregate GDP of about $7 trillion, is significantly underserved from a streaming perspective relative to other major markets. They cited the stat that fewer than 10 per cent of the Spanish speaking population currently use an OTT video product, compared with the English language market where nearly 70 per cent of the population has at least one streaming service.”

The deal brought together Televisa’s four free-to-air channels, 27 pay-TV networks channels and stations, Videocine movie studio, Blim TV SVOD service, and the Televisa trademark with Univision’s assets in the US including the Univision and UniMás broadcast networks, nine Spanish-language cable networks, 61 television stations, 58 radio stations in major US Hispanic markets and Puerto Rico, and digital assets, notably the recently launched AVOD streaming service PrendeTV.

TF1 and M6: With a view to providing a “French response to the challenges from global platforms” Groupe Bouygues and RTL Group announced the $4bn merger of leading French commercial broadcasters TF1 and M6 to form a new “French total video champion” in May. The resulting entity will bring together the strengths of the companies’ D2C streaming businesses operating under the brand names MyTF1 and 6play.

Said the companies, “This market where linear TV remains a powerful media is undergoing a structural transformation with a strong shift towards on-demand consumption. The combination of these two players, of the know-how of their employees and of their strong brands, would allow the new group to invest more and to step-up innovation. The proposed merger is critical to ensure the long-term independence of French content creation and to continue to offer diversified and premium local content to the benefit of all viewers.”

Amazon acquires MGM: In the same month, global tech giant Amazon acquired Hollywood studio MGM for $8.45 Bn. MGM is behind classics such as ‘Gone with the Wind’, and ‘Rocky’, the famous Bond franchise, ‘Singin’ in the Rain’, ‘12 Angry Men’,  as well as popular reality TV shows like ‘The Voice’ and ‘Shark Tank’.

Amazon has been ramping up its content spend to stay competitive amidst the fare being churned out by Netflix and Disney. “The real financial value behind this deal is the treasure trove of IP in the deep catalogue that we plan to re-imagine and develop together with MGM’s talented team,” said Amazon Studios and Prime Video SVP Mike Hopkins. 

Fox Entertainment buys MarVista: With an aim to develop content for its digital outlets including the ad-supported streaming platform Tubi, Fox Entertainment closed the year with acquiring MarVista Entertainment in December. Founded in 2003, MarVista specialises in production for digital platforms. Having created an average of 80 titles across different genres, the studio boasts a content catalogue of over 2500 programming hours.

“With these key strategic advantages, acquiring and investing in MarVista aligns perfectly with Fox Entertainment’s long-term vision for streaming and diversifying our in-house capabilities and infrastructure, as we expand our portfolio,” said CEO of Fox Entertainment Charlie Collier.

The deal was most recently in the series of Fox’s attempts this year to bolster its streaming and digital capabilities. It follows the September acquisition of celebrity-focused news outlet TMZ from WarnerMedia and the launch of Studio Ramsay Global, a production entity focused on culinary and lifestyle programming with restaurateur Gordon Ramsay.

RTL Group and Talpa Network: The merger of RTL Nederland and Talpa Network assets was announced in June this year with the intention of creating a strong Dutch cross-media group across TV, streaming, radio, print, and digital, as well as to the benefit of audiences and the Dutch creative industry. The plan spelled out a “clear ambition to further expand Videoland” -  the leading Dutch streaming service with one million paying subscribers.

According to the agreements, Talpa Network will contribute its TV, radio, print, digital, e-commerce, and other assets to RTL Nederland and will receive a 30 per cent stake in the enlarged RTL Nederland in return.

In addition, Talpa Network’s content units (Talpa Concepts, Talpa Entertainment Producties) – which are not part of the deal – and RTL Nederland will enter into a content agreement for newly developed formats for linear TV channels and for the streaming service Videoland.
The annual content spend of the combined group amounts to more than €400 million.

ZEEL-SPNI merger: The Zee Entertainment Enterprises Ltd (Zeel) and Sony Pictures Networks India (SPNI) mega-merger announced in September combined the two media giants’ linear networks, digital assets, production operations, and programme libraries to create one of India’s largest media and entertainment entities (close to $2 billion in revenue) in terms of market share.

In an investor call, Punit Goenka, managing director, and chief executive officer of the merged entity, revealed that it will target overall growth with a focus on sports and digital. As part of the deal, Sony agreed to infuse $1.6 billion cash which will enable the merged entity to accelerate its digital platform and significantly invest in premium content including sports.

Both SPNI and Zeel had been on the lookout for a partner that could bring in mutual synergies, while minimising clashes, to fend off competition amid growing consolidation in the media and entertainment industry.  With this, the Zeel-Sony merged entity will compete in the market with market leader DisneyStar India, Viacom18-RIL, and the only standalone, player Sun TV Network. Given their relative strengths in scripted, factual, and sports programming, respective distribution footprints across India, and iconic entertainment brands, the combined company will try to meet the growing consumer demand for premium content across entertainment touchpoints and platforms.

Under the terms of the definitive agreements, SPNI will have cash balance of $1.5 billion closing, including through infusion by the current shareholders of SPNI and the promoters (founders) of Zeel, to enable the combined company to drive sharper content creation across platforms, strengthen its footprint in the rapidly evolving digital ecosystem, bid for media rights in the fast-growing sports landscape and pursue other growth opportunities.

Content Partnerships: While there were fewer major acquisitions happening in India, multi-year content partnerships between streaming platforms and mainstream production houses emerged as a significant trend through 2021. Under the Netflix India and Excel Entertainment deal inked in September, the Ritesh Sidhwani and Farhan Akhtar-owned production house will produce a variety of stories under its series banner Excel Media & Entertainment for Netflix members in over 190 countries.

More recently streaming platform Zee5 entered into a strategic partnership with content and IP studio Applause Entertainment, a venture of Aditya Birla Group for a multi-show association. The two content companies will collaborate to create a robust original content slate of new Zee5 originals in Hindi to entertain viewers across the globe.

Apollo acquires Yahoo (formerly Verizon Media): The $5 bn deal involving Private equity firm Apollo Global Management’s complete acquisition of Yahoo (formerly Verizon Media) from Verizon was announced in September this year. The group’s assets including titular Yahoo properties and the TechCrunch, AOL, Engadget, and RYOT brands encompass around 900 million monthly active users globally under the umbrella brand which is currently the third-largest internet property, per Apollo’s figures.

Even though not driven by the streaming wars, the acquisition is significant for being the culmination of Verizon’s years-long strive to establish itself in online media, specifically adtech. It was preceded by the telco’s $4.4 bn acquisition of AOL in 2015 and Yahoo in 2017 for $4.5 bn.