Joe Ravitch, a financier and media advisor, said that there will be more turmoil in the media industry as the world moves out of COVID and into possible recession.
“A lot of trends are now being reversed,”Ravitch, Raine group partner and co-founder, said. Ravitch was speaking at the APOS conference held in Singapore. Raine, a U.S.-based company, recently opened a local office.
People were kept indoors and online during the pandemic, but since the loosening health restrictions, theatres, concerts, theaters, and other in-person sports and music events have recovered. People’s online behavior has also been altered.
“Traditional media is losing ground,”Ravitch agreed. Ravitch said that there is a little bubble in new media. It is becoming a battle for share in a shrinking market, not a growing market.”
He explained that while some countries have laws that prohibit certain sports from being broadcast on television, more and more sports are shifting to direct-to consumer platforms. That is the beginning of a new era. “Sports is the last thing holding the legacy structure together,”He warned.
He predicted that sports rights prices would continue to surge higher and said that leagues, team owners and media would find new ways – gaming, NFTs and short form video – to monetize sports rights.
He said that Asia is moving ahead of the U.S. in certain ways because it doesn’t have to be tied down by legacy cable or pay-TV businesses. Examples of these include livestreaming and social commerce. “Livestreaming will come into the west having been developed in Asia,”He stated.
Asian media firms may face challenges from global consortia (mostly U.S.-based), even in something as small as local TV. “We are getting to a new level. Local broadcasters don’t have the balance sheets to compete. They also don’t have the direct customer access [that the giant tech firms now possess,” he said.
Ravitch’s most uncomfortable prediction was that a “good recession” may be coming. “Interest rates are rising. Equity markets are not open. There’s going to be less M&A. Capital is going to be scarce. No more IPOs through 2023,” he said, suggesting that this will lead to more thoughtfulness and an end of crazy money. “Unprecedented changes are coming to the industry. Asia is not exempt,” he warned. “[There will be] too many players chasing a shrinking monetization pool in a recessionary environment.”
Michael Nathanson (financial analyst at MoffettNathanson), was trying to explain to APOS why Wall Street had turned against this sector.
In the United States, cord cutting has reached a record of 5 million subscribers per year. This means that the ecosystem is shrinking and TV ratings are declining. He predicted that 2019 would be a landmark year for the theatre industry. Netflix is now facing maturation issues, as Asia-Pacific is its only growth market.
Natanson warned streamers that binge-watching is very costly. Netflix’s best year in terms of cash flow was 2020, when production tumbled.
He predicted a time of greater media sanity with an emphasis on monetization, fiscal responsibility, and greater media sanity. His examples included Netflix and Disney’s moves to introduce ad-supported tiers, Disney’s decision not to chase all the Indian Premier League rights in the recent auction and tech giant Apple becoming the front-runner in certain upcoming sport rights rounds.
Nathanson, like Ravitch, expects that sports rights valuations will continue to rise as new entrants enter the market.
Nathanson predicted that streaming would see re-bundling. That could be driven by the need to simplify functionality and improve consumers’ choices, while also reflecting pressure on consumer wallets. You could re-bundle using a technical solution like Google TV, Amazon Channels, Roku, or further corporate consolidation.