By Peter Csathy
2014 proved to be a transformational year for digital-first video and the YouTube economy. The short-form video world essentially “grew up” and traditional media, major brands, and even previously cynical Northern California investors took notice.
It was easy to see why: 2014 introduced the video content-driven mega-deal. Disney bought leading multi-channel network Maker Studios for up to $1 billion, Otter Media uploaded rival MCN Fullscreen in a deal rumored to be up to $300 million, and European-based RTL Group tried on StyleHaul for a deal that values that vertically-focused MCN up to $200 million.
So, with that backdrop, here are my top five predictions for digital video in 2015:
- The pace of MCN acquisitions will accelerate as more studios jump into the M&A game rather than try to figure out this new content platform themselves. Some leading MCNs ripe for acquisition include foodie-focused Tastemade, dance-focused DanceOn, Latino-focused MiTu, sports-focused Whistle Sports, and Collective Digital Studio. (Note: Manatt Venture Fund is an investor in DanceOn and Whistle Sports is a client.)
- But the MCN action won’t be just domestic. International becomes a major new battleground in the borderless digital video world. Companies big and small will extend their reach via major partnerships, investment, and M&A. Notable 2014 deals included RTL’s acquisition of StyleHaul, Sky’s $7 million strategic investment in Whistle Sports, and Fullscreen’s partnership with major Indian MCN Qyuki.
- Major consumer brands follow suit. For the first time, marketing dollars shift in significant scale from traditional media to more measurable digital platforms. This takes the form of branded content — not just ads. As a result, investors place major bets on ad-tech companies to maximize and measure those spends. We will see a number of significant ad-tech exits like Yahoo’s recent acquisition of BrightRoll for $640 million. Several brands will go even further and invest big to become digital-first lifestyle media companies themselves a la Red Bull, developing and aggregating content. GoPro, Pepsi, and Marriott have proudly announced such ambitions.
- Both “traditional” media and YouTube itself are increasingly challenged by this fast-accelerating activity and by new competing video platforms like Facebook and Vessel (which just opened its paid subscription-first MCN kimono). These “off YouTube” platforms will seek to lure content creators with tales of more attention and significantly greater revenues.
- Seeing all this activity, and harboring a FOMO mentality, Silicon Valley investors will increasingly make pilgrimages down to LA — the epicenter of this video content innovation and creativity. After all, even super blue-chip VC Andreessen Horowitz vouched for video via its $50 million investment BuzzFeed. That accelerated pace of investment will only further fan the flames of the vibrant SoCal entrepreneurial scene and the digital-first video revolution.
2014, exciting, transformative times for the media world. And, just a precursor of more (much more!) to come in 2015.
Peter Csathy is CEO of business accelerator and development firm Manatt Digital Media, where he also serves as a venture capitalist. He is a prolific blogger and regular contributor to VideoInk and other leading digital media and technology publications.