Media cos to invest in new technology, mergers in 2010
According to Ernst & Young's media and entertainment clients, web TV and mobile will swallow a large chunk of new investments in 2010. The revenue models for both, says M2 Universal's Peter Vaz, will prove themselves sound this year.
The most attractive investment opportunity this year for media and entertainment companies is in mobile technology and digital interactive TV, according to global investment firm Ernst & Young.
In a survey published last week citing more than 1,000 of the company’s media clients and member firms – including advertisers, publishers, broadcasters and major film studios – 29% said new mobile and interactive technology was the most attractive for investment; 19% said they will put their money in new content; and 19% cited merger and acquisition opportunities were ideal for 2010.
Neal Clarance, leader of Ernst & Young’s Vancouver-based Canadian media and entertainment division, tells MiC that some digital mediums, mobile TV for instance, are expected to hit the ‘tipping point’ this year, becoming profitable and popular enough for advertisers and content creators to get more involved.
Peter Vaz, VP, director, M2 Universal Digital, agrees. He says web TV, in the vein of Hulu.com, will make its major Canadian debut this year. ‘It’s not just buzz at this stage, this is reality,’ he tells MiC. ‘There is a revenue model in that stream based on what I’ve seen from initial soft launches.’
Mobile technology has also firmed itself as a sound business model – Vaz says in the last two years clients have made mobile as much a part of their investment plan as online and search engine executions. Clients like GM have entered the mobile realm, and they’re there to stay, he says.
‘We’ve already seen some initial growth numbers in some of the revenue being generated from advertising,’ he says. According to the Interactive Advertising Bureau, in 2008 ad revenue doubled from the previous year to about $5.2 million. But this year that is number is again expected to rise significantly, says Vaz. ‘It could be as high as $15 million for 2010, potentially,’ he says.
But both media experts caution against rushing into non-strategic, expensive investments. Clarance says buzz in the form of user-generated content and social networking is not the same as profit, and now is not the time to take non-strategic risks. Vaz says he couldn’t agree more.
‘We learned our lessons,’ from the past decade, he says. ‘There needs to be a business plan for any venture, first of all to pay for itself, or potentially part of a larger strategy – especially if you’re talking about a new broadcaster or a publisher,’ he tells MiC.