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Making money in Digital Media - are we there yet? - Digital Futures 2025

• 10 years of YouTube – winners and losers • The digital “tax” – is it too high? • Cross platform content – does it exist? • Digital platforms – friend or foe? Matt Heiman, CEO and Founder, Diagonal View

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Making money in Digital Media - are we there yet? - Digital Futures 2025

  1. 1. Digital Profits- Are we there yet?
  2. 2. The big winner Clearly- YouTube, an $80 Billion Company “The deal of the decade” - The FT, December 12, 2015 Bear in mind, Netflix is “only” a $50B company, as is Time Warner
  3. 3. Other opportunities: The value chain The value chain is collapsing- but not before a lot of money was made… Content Creator (YouTube Star, IP Owner) Agent (Merchandise, books, tours) MCN (ad-sales, TV sales, branded content) YouTube/Platform (ad-sales, branded content)
  4. 4. Where has the money gone? Timing is everything- MCNs- $150-160MM invested, $1B+ out The Sum of; Awesomeness- investment capital= $3.5MM, exit $33-117MM (2013) Broadband TV- investment capital= exit $36MM (for 51%, 2013) Maker Studios- investment capital= $70MM, exit $450MM (2014) Fullscreen- investment capital= $30MM, exit $200-300MM (2014) StyleHaul- investment capital= $17MM, exit $150-200MM (2014) Broadband TV- investment capital= exit $36MM (for 51%, 2013) CDS- merged in to a $240MM entity with ProSieben Digital (now called Studio71) Is there another YouTube type return in this pack? Likely not…: $150MM >$1B exit
  5. 5. Indeed- where HAS the money gone? Rightster share price, since IPO: This is the only public market MCN indicator but likely this is the norm rather than the exception A 90% decrease in share price
  6. 6. So- is the aggregation model dead? In a word- yes. But why? 1) YT is no longer a spotty adolescent- it has grown up and grown in to a large part of the value chain. Ie: every MCN said- we will sell higher-priced pre-roll, today they rarely do 2) Emperors new clothes- MCNs really added little value, that has now been found-out 1) The internet is super-efficient, the speed of collapse in the value chain has been incredibly quick
  7. 7. And now what? Facebook is coming- in earnest: 1) Viewcount is now on-par with YouTube, engagement is rapidly increasing (FB controls your feed so “Good” content is promoted 1) All users are logged-in, this is hugely significant for a bespoke viewing experience and much better targeted advertising/yields 2) Click-through from Facebook to website/advertiser is very powerful
  8. 8. And now what? (Part 2) IP Owners/Producers are profitable (or re-investing for growth) In addition to YouTube revenue, incremental revenue streams are substantial- 1. Branded content campaigns are contributing to a 100-150% increase in revenue 2. YouTube Red (subscription service) is contributing new revenue (in just the first 45-days) 3. Facebook and other competing platforms are adding significant incremental revenue Selected examples of businesses valued at >$500MM:
  9. 9. And a quick set of predictions More digital producers/IP owners will enter the market- • At the moment, there are only 4-5 companies of reasonable size (over 200M views per month of owned IP) • MCNs are transforming into producers (not sure how that will go) Brands/agencies will aggressively target the space (this is already happening with an dramatic increase in branded content and branded merchandise) And… VR just might blow all of us and all of this away
  10. 10. END_

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  • PrayankSwaroop

    May. 16, 2016

• 10 years of YouTube – winners and losers • The digital “tax” – is it too high? • Cross platform content – does it exist? • Digital platforms – friend or foe? Matt Heiman, CEO and Founder, Diagonal View

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