Video #1:
In this clip we hit up the GDGT Launch Meetup party to find out what the coolest tech and gadget gifts are for 2009, and chat briefly with company founders Peter Rojas and Ryan Block.
Video #2:
In this clip we get a peek at the latest in the Blackberry Curve family with a look at the new 8520 smartphone. I also asked Blackberry about the Apple iPhone rivalry is affecting them, though it’s worth noting Blackberry’s sales since the iPhone launched have soared exponentially.
Video #3:
In this clip we check out the 2009 GDGT Launch Meetup to get up to date on the latest tech gadgets including head-mounted HD camera (Contour HD), printers and portable TV.
Video #4:
In this clip we talk with a Playstation fanatic for his top 5 games and Al De Leon from Sony Playstation to find out whats in store for the PSP in 2010.
09/09/09 is finally here, and theme du jour is Beatles: with lots of coverage around the world, here is a video from WatchMojo.com on 7 things you didn’t know about Beatles Rock Band.
When IGN Entertainment bought my old company AskMen, it was to consolidate the men’s 18-34 market. They owned the #1 site in gaming (IGN.com) and had merged with the #2 Gamespy. They followed that merger up with the acquisition of Rotten Tomatoes to own the movie vertical, too.
When they approached us, we knew it was to own the lifestyle category, too. But maybe it was also because the average gamer was [allegedly] “fat, old and depressed”? Read more.
But jokes aside, this might explain why the hype surrounding in-game advertising has waned, at least a bit off its peak, no?
In-game advertising, widely seen earlier this decade as the next big thing for marketers, has predictably felt the pinch of the recession.
But while other forms of advertising have seen retraction in sales volume, and in some cases historic reductions, in-game advertising has experienced a slower but still existent growth curve.
Estimates of the size of the developing market for in-game advertising vary widely depending on individual measurement agencies; there exists no de facto industry standard system of measurement. Consensus figures point to the market being worth $120 million to $150 million per year, up from $80 million two years ago. The meteoric projections of growing to $1 billion in total revenue by the 2010-12 time frame, however, are being scaled back.
Barack Obama’s use of ads in video games brought extra attention to the industry.
“The category continues to grow, but the clock is definitely being set back a bit on hitting that $1 billion mark. It may be another couple years beyond [2012],” said Jonathan Epstein, president and chief executive of Double Fusion, a San Francisco-based agency working extensively in in-game advertising. “But sports in particular still lends itself very strongly to in-game advertising given what’s happening out in the real world with sports and advertising.”
Read more (subscription required).
In 4 years, video game advertising will be as big as online video advertising will be this year.
Huh?
Via Paid Content, video game advertising will grow to be a $1B segment by 2012, yet in 2008 alone, online video ads will cross $1B in the US, with $7.1B projected by 2012.
So in 4 years, web video advertising will be 7.1x larger than video game advertising.
Makes you wonder if the big media companies - Viacom, IAC, of note - are focusing in the right areas by investing in video games these days.
Paid Content reported today that GameTrust sold for less than $50M, after raising $20M over 3 rounds, over the past 5 years. That does not seem like a healthy exit for the numerous VCs, which include: TWJ Capital, NJTC Venture Fund, Patriot Capital, CSK Ventures, Topspin Partners, Silicon Alley Venture Partners, Draper Associates and investor Elon Musk.
So why did this deal happen? VCs supposedly want 5x or 10x on their investments… this was probably not anything close to that, I’d guesstimate. Here’s my take:
Lesson #1 - Just Build It
This supports my belief that if you build something of value, even if VCs don’t see an incentive to invest more money at a higher round (which I presume was the case here), you always have the option to sell… instead of doing a down round, which no one wants to do.
Lesson # 2 - Demand and Supply
A second thing to note, is the demand and supply dynamics in Gametrust’s space, I can name 10 companies off the top of my head who do exactly the same thing. I can’t for my life imagine any leverage in discussions. I can envision Real Networks acknowledging that the investors did not want to lose money and they made them a low-ball offer: $50M on $20M invested ultimately boils down to 2.5x return.
How Much did VCs get?
I know it’s not only a 2.5x return, especially for the first round investors, because investors in the Series A round could have done an investment at a lower valuation, such as $5M, and that would be 10x return.
But the company’s Series B in 2005 was for $9M. Series B, $9M, “oversubscribed”? Add those variables up and Series B was at a steep value… meaning those who came in the second round did not get more than 3x, I’d bet.
The round was led by TWJ Capital and NJTC Venture Fund, and was joined by Patriot Capital. First round investors, including CSK Ventures, Topspin Partners, Silicon Alley Venture Partners, Draper Associates and investor Elon Musk, also participated in the round.
All of those investors seem to be middle market or late stage investors who demand to see sizable revenues. If that is the case, they came in late, at higher valuations indeed.
When you add everything up, I suppose the first rounders CSK Ventures, Topspin Partners, Silicon Alley Venture Partners, Draper Associates and investor Elon Musk got in at a valuation close to $10M - meaning they got 5x - while Series B did 2-3x and Series C probably got just enough not to lose money.
Any way you dice it, the company took in $20M and exited at $50M, that’s not very impressive. In my old company, we exited at $13.5M off $500K in capital. Different market, but still.
Give me $20M and I’ll turn water to wine, then build you a $1B business.
In light of the following report:
OVER A THIRD (34%) OF U.S. adult Internet users play online games weekly, according to Parks Associates, with games trumping social networking and online video as the most popular Web-based entertainment activity.
Online video came in as the second most popular activity, with some 29% of users watching short clips weekly, while social networking rounded out the top three at 19%. The market research company, compiling data from two studies for its new Casual Gaming Market Update, surveyed nearly 2,000 Web users over age 18.
“Despite the growing popularity of YouTube, MySpace, and Facebook, gaming remains the king of online entertainment, driven largely by casual gaming activities,” said James Kuai, research analyst, Parks Associates.
Casual games–loosely defined as easy-to-play online games targeted at a mass audience–typically have low production and distribution costs. Parks forecasts that the industry will rake in $400-$500 million this year, with a significant portion of the revenue coming from advertising.
As a result, Mojo Supreme’s Board of Directors has decided to shut down all of WatchMojo.com’s operations, effective immediately, and move aggressively into gaming.
Yes, I’m kidding, just a couple of things though:
- it’s worth noting that video watching is relatively new, and yet, “Online video came in as the second most popular activity, with some 29% of users watching short clips weekly.”
- considering that this comes from the “Casual Gaming Market Update” will invariably be skewed to demonstrate just how much traction gaming has…
All to say, read more.
In admitting that Google might have over-hired, Eric Schmidt made me think that Google was in some ways becoming like Yahoo!, who itself went on a hiring binge that pushed up its headcount to over 12,000.
Of course, with the government looking to block Google’s $3.1B deal for Doubleclick, Google is also becoming reminiscent of Microsoft…
Yahoo!, is today sounding a lot of like Microsoft, who wants to defend its software business and take on:
- Google in search
- Yahoo! in web portals
- Sony and Nintendo in video games
- Apple and Sandisk in digital music players…
How so? Today Yahoo! said it was going to make one more run at YouTube in video, while it continues to make dents in Google’s search business. Oh, it’s also trying to become relevant in social networking, after being turned down by Facebook last year, rumors crept up that it was eyeing Bebo, UK’s largest social network, but no Facebook.
Ah, the more things change…
Ok, stop laughing.
When I read that MSFT will launch three products in one day, I can’t help but wonder.
I’ve owned MSFT back in the day and sold my shares. I’m actually considering getting into the stock again, here’s why:
- MSFT launched a competitor to Salesforce.com, I had long ago written that Google could bundle a bunch of its apps and launch a Salesforce.com killer. It didn’t, and in fact partnered up with Salesforce.com.
- MSFT’s Silverlight is also a promising platform to take on Adobe and Flash (probably more, too). The thing is, Flash video became ubiquituous largely via YouTube. When we launched WatchMojo.com we adopted flash as our publishing format, and as late as summer 2006 it was not an obvious choice. Today it is. But we’ve consistently seen a) early platforms fizzle out to an alternative platform and b) MSFT catch up a competitor. Could Silverlight suck out some value out of Adobe?
Of course, I myself might want to lay off the MSFT koolaid, I’ve criticized Redmond for being too envious of others:
- Video games vs. Sony, Nintendo
- Music players vs. Apple, Sandisk
- Portals vs. Yahoo!
- Search vs. Google.
And, oh yes, Google is also trying to eat away at MSFT’s software business by making it free and taking it online.
I’m not saying I suddenly have become bullish on MSFT, but I think that with Google at $165B and Yahoo! being somewhat comatose, MSFT at $292B seems like a growth oppoortunity.
All right, that’s the fatigue kicking in…
Forbes’ Bratt Nelson has a very interesting take on Brash Entertainment’s $400M financing round from ABRY Partners LLC, and including New York Life Capital Partners III, LP, Northwestern Mutual Life Insurance, PPM America Private Equity Fund II, LLP.
Background:
The folks at Brash Entertainment are anything but typical. In late May, the 4-month-old brainchild of Mitch Davis and Nicholas Longano–co-founders of gaming company Massive, which was later bought by Microsoft –scared up a whopping $400 million from a group of private equity firms led by ABRY Partners, which invests in media and communications companies.
Reinventing the Wheel, according to IGN:
Brash Entertainment today announced its launch as a new video game company focused solely on the creation of high-quality games based on tent-pole movie releases, television, and music properties.
(…)
Brash will transform the way great film creativity is brought to life in games. Brash’s innovative business model relies on matching each licensed project with the skills of the best independent development studios, top writers and creative talent. This collaboration is guided by an internal team of experienced producers, under the leadership of video game industry veterans. Brash currently has more than 40 licenses through partnerships with five major film studios, and twelve games in production.
“Brash is founded on the simple premise that top Hollywood creativity plus top game talent should equal great games,” said Brash Co-Founder, Chairman, and CEO Mitch Davis. “We are laser focused on delivering high-quality games. The other aspects of our business are left to the experts— best of breed partners we’ve tapped for their specific expertise.”
Jaw-Dropping Factor, from Forbes:
That’s an extraordinary sum for investors who tend to shop for proven companies with the hopes of making them better and unloading at a handsome profit down the road. As one ABRY partner put it: “This was definitely earlier-stage [for us]. We don’t take business-model risk.”
Dilemma:
The Brash transaction highlights a critical challenge for all entrepreneurs. The specifics of the deal are under lock and key, but Brash management undoubtedly gave up a healthy heap of equity for access to that largesse. Result: a smaller payday if and when Brash sells out to a strategic investor or floats shares in an initial public offering.
Result:
Why trade upside for a cash cushion? Raising money is difficult and distracting, and most small businesses fail because they run out of cash. Raising additional funds in smaller chunks at higher “implied” valuations might let you keep more equity along the way; then again, if you cut it too close, you could end up begging for money at far less favorable terms.
Rationale:
Brash chose to cut out financing risk and focus instead on execution. Its niche: videogames based on other media properties such as movies, television shows and music.
(…)
Brash aims to compete by poaching creative talent from bigger outfits; farming out the coding of the games to smaller, entrepreneurial software shops; and by letting Time Warner’s Warner Bros. handle the tangled logistics of distribution.
Brash will coordinate with the studios to secure licenses to the content and ensure that the story lines translate into games that people will play. “They are thinking story; we are thinking game play,” says Brash’s Longano.
Big is Beautiful?
Once you clear those hurdles, you can start to think about how much money you need–and how much you’re willing to give up to get it. As for ABRY and company, it was go big or go home. “We weren’t going to raise something that wasn’t fully funded,” says the ABRY partner. “It reduces the risk of execution. We would have not invested had they only wanted $100 million.”
Forbes’ Conclusion:
Bottom line: Money in hand today is better than a dream dashed tomorrow. So when it comes to raising early-stage financing, get brash.
Why this is Crazy Talk:
I appreciate Nelson and Forbes trying to rationalize this, but this is crazy talk. For one, since when are private equity financiers the patient kind? $400M is a lot of money, even for a firm that has billions to invest.
One reason why Rupert Murdoch’s $60 per share offer for Dow Jones was so high was that it was intended to scare away both media companies (who could not generate enough efficiencies after paying such a premium) and private equity firms (who are, well, impatient and want a quick payoff).
Investor Expectations:
The simple problem is that $400M in financing ends up doing just the opposite. Didn’t we just last week learn a valuable lesson in Amp’d burning through $360M? I know, Amp’d is restructuring. Sure, so it can burn through more money. That’s madness.
When it comes to financing, and growth in general, you want time to be on your side. And when you raise $400M in financing, you are behind the eight ball quite a bit.
That’s a general advice you can bank on. But in this case it’s even more nutty because, to quote the venerable Forbes once again:
Collectively, movie-based games have not been as popular as Electronic Arts’ sports-based titles or role-playing titans like World of Warcraft, made by Blizzard Entertainment, a unit of Vivendi. One reason: Movie-based game publishers tend to cut corners in development, counting instead on a movie’s popularity to drive demand.
All right, so let me get this straight, the system is broken, the consumers are all wrong, and Brash is going to change the consumers’ behavior. Nice, we’ve seen this before.
Comparables:
Just some food for thought in the game space, let’s look at the major players and their respective market caps:
- Electronic Arts = $15B with 2006 revenues of $3B and Net Income of $76M.
- THQI = $2.26B with 2006 revenues of $1B and Net Income of $68M.
- Take Two Interactive = $1.39B with 2006 revenues of $1B and Net Loss of $185M.
- ATVI = $5.5B with revenues of $1.5B and EBITDA of $85M
- MyWay = $500M with 2006 revenues of $165M and Net Loss of $77M.
On small financing rounds, some VCs like to get say 10 times their investment.
I know, ABRY is a private investor, the major nuance is that they’ll make less, but larger bets. So let’s say that ABRY would be ecstatic with a 3 times return; which is roughly what Hellman & Friedman got after plunking $1.1B for Doubleclick, shedding some assets and then selling a leaner and meaner DCLK to Google for $3.1B.
So if Brash raised $400M and the investors got 51% of the company, that means a valuation of about $800M. Assume that’s pre-money, I’m no investment guru, but in my talks with private bankers, I’ve seen that they usually want control so 51% is - in my humble opinion - low but a conservative estimate for this analysis.
Bear in mind Microsoft bought the founders’ former company Massive for $200-400M so a valuation of a pie-in-the-sky business at $800M is pretty massive. In fact, it could be a post-money valuation of $800M, whereby the company was valued at say $399M, the investors put in $400M and got 51% - but I’m really guessing here.
So if the valuation was in the $800M range, then 3 times that implies a value of $2.4B. Billion. That’s more than 3 of the 5 gaming sites we listed.
My Experience:
Conventional wisdom notwithstanding, my experience says this is not the way to build a company. You want freedom to make decisions, you don’t want investors getting angsty, and with $400M at risk, they will. My last company had 1/34th of the funding of our larger competitor, and we crushed them partially because they were probably more worried with investors than customers (be it individual users/visitors or corporate aadvertisers)…
My Take:
Point is, judging by those publicly traded companies, Brash would have to grow, and grow quickly, otherwise, ABRY will get brash and become a massive pain where you least wish to get a rash.
Related:
- If I had a Billion Dollars: The Private Equity Funded Billion Dollar Conglomerate I’d Build.
Just a week ago, we published our Top 10 Storylines of 2006. We were going to avoid the Top 10 Trends or Predictions of 2007 and instead do something else (we still will do that, expect it on January 1st).
But then Pete Cashmore of Mashable.com challenged us to suggest some predictions for 2007, you know our saying: “Ash and you shall receive” (though we already somewhat covered this back in October here):
To see our trends, scroll down to after the Indented portion (for an imagination run wild scroll down to #6 - 6 - ACQUISITIONS & MANAGEMENT SHUFFLE, or course, take the scenic route).
Our philosophy for trendspotting is:
It’s important to note that every year, something that is adopted by early adopters online in the previous year takes off with mainstream masses the ensuing year; while something that was already very much in vogue with mainstream audiences the previous year takes off and crystalizes.
A look back at history reveals a familiar pattern:
We’ll start from 2004. After all, 2003 can be viewed as the turning point and renaissance of the Web.
2001 was the abyss, no doubt. In 2002, things began to stabilize, and 2003 marked the turnaround. This was confirmed and highlighted with Google’s IPO in 2004, which left no doubt that the Web had shaken its hangover off and would go on to become a viable medium, and a very viable one at that.
In 2004, blogs were the buzz word (even though these were around for years). The macro-level phenomena to draw blogs into the pop culture lexicon were clearly the escalation of troubles in Iraq (and the mainstream media’s reluctance to cover them) as well as the Presidential Elections. For example, as the mainstream media sugarcoated Iraq, bloggers covered the facts as they were, or rather, as they viewed it.
In 2005, it was social networks that became hot while blogs became more and more mainstream. Think of how many more people started blogging in 2005. The reason why social networking took off, frankly, had to do both with demographics and technology. Social networks like Tribe, Friendster and MySpace had been around before 2005 of course. Demographically, the so-called trend-setting 16-17 year old crowd had entered high school at a time when the Web was part of the curriculum and de rigueur in classrooms. Technologically, broadband had taken off, camcorders and cell phones made digital media commonplace; the two were a match made in heaven and social networks like MySpace took off.
2006 will surely go down as the year of online video, partially due to broadband becoming prevalent in more than 50% of homes and the falling price of hosting. Similarly, the adoption of social networks became very commonplace. Today, for example, it was noted that the average age of someone with a profile on MySpace was much older than expected: over 50% are 35 and older, up from under 40% last year. I know, not exactly fossile-status, mind you, but you get the point. In the meantime, every one now has a blog, even the President of Iran… (he’s even set up with RSS feed and all!)
But of course, that was October, 2006, before YouTube sold to Google, before Yahoo! announced its shake-up. All right, not mich of a shakeup, but you know what I mean.
So if:
2004 marked Blogs
2005 marked Social Networks
2006 marked Video
Then 2007 will see the following:
1 - VIDEO
a) FLIGHT TO QUALITY IN CONTENT
As a result of a regression to the mean, users will demand some more quality in the video found online. We’ve gone a bit too far to one end of the spectrum in terms of, well, having too much crap online. Folks, America’s Funniest Home Videos was one (albeit popular) show, but it was not the only show, on for 24/7, and one that spawned stars.
Yet, somehow every media company wants to make funny home videos the cornerstone of their digital video strategy. It’s lame, it’s enough. Move on.
For the love of all things holy, the folks at WatchMojo.com seem to put more time, energy and effort in the Web TV strategy that some major media companies do and let’s face it, that ain’t right.
b) CONSOLIDATION IN TECHNOLOGY
Way too many platforms, way too many formats etc., as an industry we need a sweeping determination of standards (imagine where online advertising would be if there was no standard ad sizes!)
We also will see a lot of companies merge due to a shortage of talent at the top (you simply can’t take an old media executive and parachute him at a Guba, for example, it will not succeed… but take Revver and Guba, and you might have a match of senior management strengths, of course, there is ego matters, but that’s not our problem) or technology and content (say Revver has the “business model” but lacks content, and Metacafe has boatloads of content but no model - I have no idea if they do, just using as example), these could merge and will have to because…
The bottom line is that for most online video sites that are merely technology platforms, VCs will simply not fund more money. The technology alone is not impenetrable. The audience is fickle. Heavy.com is a video site that just raised more money, but it’s a content aggregation and publishing site.
Read: Online Video: It was the best of time, It was the worst of times | Tough Times Ahead After GooTube Deal.
2 - PERSONALIZATION
For a few years now, we’ve seen developers, programmers, engineers, des
ers (can you tell I don’t know who does what - I’m kidding, well…) create fantastic tools, features and applications that streamline and faciliate the content creation and aggregation process. Blogging software is just one example.
We’ve seen publishers - old and new - increasingly harness and master these tools to better manage and distribute content.
We’ve also seen individual users pull up a seat at the big boys’ table and create compelling content. Rafat Ali has more influence that most if not all writers at the New York Times to web audiences, mind you. Along with the regression to the mean, these two will converge. But you get our point.
Lower along the totem pole, some of the content is crap, some of it is ok, some of it is wonderful (like my nugget of wisdom says: “there’s hot girls in all countries!”).
Point is, people who want content will be able to pick and choose what they want (through RSS, newsletters, etc.) and people who create content can push it out by customizing what and how they produce content. Think My.Yahoo on a large scale.
The main challenge we face now is noise - pure and simple. Too many blogs all blogging about the same thing to get linked, too many image-sharing sites, too many video file-sharing sites… but this will start to “clean up” in 2007 and become a reality in 2008. One reason why to follow below.
3 - INTERMEDIATION
When Bear Stearns Cable and Satellite analyst Spencer Wang published: “Why Aggregation & Context and Not (Necessarily) Content are King in Entertainment,” he was not saying anything new to legions of web-wannabe-analysts (the WWA baby!). And yes, yours truly is definitely included amongst the WWA.
Content has evolved online, we won’t see new portals per se, but we will see vertical portals, or countless niche sites, some of which produce niche, contextual content along verticals and others who do not create any content but simply aggregate it.
As a direct result of intermediation and personalization, a lot of people will drop Digging (I’m using the term here for what Digg represents: the good, bad and ugly of Web 2.0 and not only contributors to Digg) and the like and start doing similar things for themselves.
We have a social bookmarking tool ready and go that cost very little to create. There’s nothing defensible about that, and the system to duplicate it is somewhat easy.
As per Digg’s users: people are inherently greedy. Remember: “Greed is good…” and people will realize that toiling away to generate content for Digg while a select few laugh all the way to the bank is not a fair system, especially when the community is asked to clean up spammers and Digg gamers and the CEO says “what problem?”
Being a top Digger does not get you laid after all, getting paid does.
Combine that with the fact that a lot of these diggers will hit puberty and they realize that they’d rather own a tiny space online instead of, well, you know what: nothing of Digg.
Social media will not disappear, but it will change. People will take ownership back. I edited a few posts to Wikipedia about two topics I know more of than the average person: Def Leppard and Alexander the Great (did I just admit that?). Yet the Wikimafia deleted it. So I built two sites to showcase my interest in Def Leppard and Alexander the Great.
4 - THE RETURN OF EMAIL
It won’t make large waves, but with CAN-SPAM having cleaned up the spam situation, and with more and more people signing up to feeds and what not, we see email marketing making a slow but sure return to the landscape in 2007.
5 - VERTICAL RISING
The rise of vertical communities will continue. You will have large vertical sites, you will have people maintaining tiny vertical sites. The point is, this is something that started in 2004 and 2005, rose to prominence thanks to things like Mr. Wang’s study and will only accelerate in 2007 and beyond.
6 - ACQUISITIONS & MANAGEMENT SHUFFLE
CNET for sale? Perhaps. With Shelby Bonnie gone - nothing against Mr. Ashe - we see CNET being acquired. We also think it’s possible that CNET makes one or two small, somewhat medium-sized deals to bolster itself for an acquisition.
Yahoo! and AOL? We think Google will block that like the tease they are. Read more on that here.
MSFT won’t make a huge acquisition. It’s not in their culture. But we do see it buying an online ad company like Blue Lithium, aQuantive or Valueclick. Read our analysis here.
But eBay will probably make a major move, maybe even with InterActive Corp. Together, they’ll have more bargaining power with advertisers, since both are traditionally weak there and mainly e-Commerce powerhouses. With e-Commerce gaining prominence, this will position them for growth over time.
Barry Diller will be needed as Meg Whitman will leave eBay. Where to? Keep reading.
Peter Levinsohn - who replaced Ross Levinsohn - will prove to be great in many ways but in the end Mr. Murdoch will begin to ask for immediate returns (as in, in addition to Google’s $900 million deal, which we think they overpaid for in a defensive move against Yahoo! and MSN) and a series of events will mark changes atop FIM.
While we put MySpace atop our Top 10 Best Web Acquisitions of All Time, in 2007 Mr. Murdoch will ask for more tangible results. After all, News Corp.’s stock rose 30% in 2006 due to the giddiness over MySpace, so investors will ask to see financial results from FIM in 2007. Disney too rose 30% but it was powered on financial metrics, hence why we made Disney the media stock of 2007.
What are these events?
Rupert Murdoch is clever and wise and for a few years will not not tinker with MySpace. But in May 2007, it will be two years and Mr. Murdoch will get impatient.
He’ll push Levinsohn to make changes at MySpace, who will in turn push Chris DeWolfe and Tom Anderson (MySpace founders) for changes. DeWolfe and Anderson will push back and grumblings from these two about their discontent over the Intermix deal, where they feel they got jipped.
To quiet the potential mutiny, Murdoch will side with the MySpace guys, which in turn makes the job impossible for Levinsohn. News Corp. will begin to tweak with MySpace in subtle ways. Ultimately, by mid-year, Murdoch openly asks why not enough Fortune 500 advertisers are on the site “with the most pageviews” and as a result, will push to clean the site. The result: the users will migrate elsewhere… adding to the rise of the verticals.
After MySpace fails with advertisers, Rupert Murdoch will turn to eBay’s Meg Whitman and lure her to run FIM/MySpace. Between her experiences at Disney and eBay, Mr. Murdoch views her as perfect for the new and improved e-Commerce fueled MySpace. Peter Levinsohn will focus on other areas of FIM, notably, IGN’s Digital Distribution platform.
Over time, IGN will look like the crown jewel as more and more media companies slowly but surely move to embrace IGN’s digital distribution platform. IGN’s in-game advertising continues to grow as video game companies hire IGN to plug away advertisers in their games. Meanwhile, IGN’s media properties continue to grow. Rumors begin to swirl that IGN is worth $6 billion (investors and analysts wonder where they have heard this before) and Mr. Murdoch is planning an IPO while Mark Jung, who has been sitting idle since leaving the firm, is rumored to have Great Hill Partners finance a potential buyout.
CBS Digital and the NYT will get into a slugfest over Rafat Ali of PaidContent.org. In the end, Ali prefers to walk to the beat of his own drums and Paidcontent.org remains independent. Neither company makes a deal. Quincy Smith wonders what his next career move will be when he sees few news takeover targets that will move the needle. He joins Montgomery Securities.
Viacom’s Philip Dauman will go insane and pull 3 deals: one for less than $200 million in Q1, but the Street will say it’s not enough, so he’ll pull a $500 million and one massive one for $1 billion by year’s end.
Facebook will not sell. That ship has sailed. Of course, never say never, this could be the massive $1B+ deal Viacom finally pulls but we doubt it. Investor Peter Thiel’s mega successful hedge fund is making so much money that the notion of a modest Facebook exit of $1B is not worth his time. Zuckerberg graces cover after cover, while the MySpace guys’ jealousy raise to the point of rage.
Disney will grow organically online, we called it the stock of 2007 in media and it will simply look internally and test the waters by adding content from Disney, ABC and ESPN online. It’s squeaky clean image will help it with F500 advertisers online.
Disney will be even more successful in 2007 than in 2006.
7 - OLD MEDIA TO TAKE ON OLD, NEW MEDIA; RESURGE
After many failed attemtps, old media wake up and realize that Google is worth much more than they are combined and they try to collude to take on Google. They continue to think defensively and ask Google to cease indexing their sites, Google refuses; things get ugly and they ask all video file sharing sites to take down videos. Google pays off one media company to play one against the others.
The charade ends when Google buys a media company: either a newspaper company, a magazine company or a radio company. The notion of a fat, juicy premium from Google makes the more diversified media companies calm down.
However, no offensive gameplan: no successor to Napster or AllofMP3, no successor to or YouTube Killer.
All right, so they won’t ask Google not to index their content. But it would be a pretty amazing showdown.
The Street wonders where Yahoo!’s Terry Semel will fare… more on this below.
2006 marked a year when many old media companies fared well: Disney, News Corp, Time Warner and even Clear Channel did well. We expect this to continue as many shed underperforming assets and expect more from faster growing divisions.
Which leads us to…
8 - OUTDOOR TAKES OFF
Clear Channel begins to integrate Wifi billboards, Viacom (or is it CBS Outdoors now?) enables digital outdoor signs to allow for audio and video ads, time-targeted and weather-targeted ads.
9 - SATELLITE RADIO CRASHES
Crash is too strong of a word, but we don’t see satellite radio getting stronger. For more details, click here. Sirius’ Mel Karmazin resigns… and joins Yahoo! as CEO. Terry Semel hands off the baton, looking like a genius and joins an old media company’s board.
10 - WIRELESS HYPE
We’re big believers in wireless, who isn’t. But it’s still 75% hype and 25% substance. There will be some common sense injected in this market: companies raising $100 million in financing? Give me a break.
So, there you have it.
DISCLOSURE: I think all disclosures are in there. Please note that as a writer and entrepreneur, some of these “so-called” trends I believe in so much that I am also trying to capitalize on. It’s not the other way around.
Otherwise, of the companies mentioned above I only own shares in Yahoo!
In the spirit of how I was asked to pontificate on the matter, let’s go with Podtech’s John Furrier (podcasting/entrepreneurship), Henry “Da Bull” Blodget (the analyst), Howard Lindzon (the investor/entrepreneur), Nitin (Software/search), Emergic (Global perspective) and Marshall Kirkpatrick (formerly of Tech Crunch and who joined a new video startup recently).
PLAY
