2007 has definitely turned out to be an interesting year, what does 2008 have in store? Let’s see:
January
- UGC will waver in interest and hype. Users realize there’s actually very little in it for them to upload low-quality videos of their most recent [insert crap here] on [insert YouTube clone site here]. Invariably, the file sharing platforms will leverage their traffic to dump the UGC in favor of higher quality content.
February
- Privacy becomes the big thing: everything from protecting user data on social networks to creating aliases online becomes the latest fad.
March
- Web video advertising confuses the pundits: 30-second pre-rolls go the way of pop-ups, instead, banner display ads alongside video players rise sharply in value… and the 5 second pre-roll becomes the pop-under, the evolution of the pop-up. More and more, a 2 second animated banner introduces the clip as the clip buffers, users embrace it and video ads shift ever faster online. The ad overlay becomes more and more prevalent, and accepted.
April
- On April 1, Google throws in the towel on its efforts to acquire Doubleclick. Bloggers initially think that it’s an April Fool’s Joke, until an announcement is made that it has instead bought a video ad network. Initially, the market thinks it’s Broadband Enterprises or Tremor Networks, but turns out the seller was Video Egg. In the process, Video Egg drops its pending lawsuit against Google.
May
- With Hi5, Bebo and many others using Video Egg, and Google owning YouTube, Google becomes far and away the most dominating force in search and video advertising. As a result, video ad networks will go through a period of self-discovery as Google/YouTube/VideoEgg sucks out more and more audience and revenue.
June
- Brightcove changes its business model 12 more times, finally gets acquired by Hulu, News Corp. and NBC’s joint venture, files lawsuit against Google claiming Video Egg violated its patent on the overlay ad.
July
- TV networks begin to feel the heat of shift of dollars online. As a result, GE’s NBC and News Corp. tag team and make Yahoo! a leveraged, all-cash offer for $40 Billion, giving each media company 50% of the world’s largest portal.
Microsoft counters with a $50B cash and stock deal. Ultimately, private bankers prevail with a $60B deal. HipMojo.com is asked to handle the M&A transaction.
The next day, Yahoo! sells its search business to MSFT for $25B and 50% of future revenues. MSFT’s market share in search shoots up to from 8% to roughly 30%, according to Hitwise. Google remains king with 72%, up from 65% in August 2007.
The sale of Yahoo!’s search business to MSFT puts $25B back into the private equity bankers’ pockets, Rupert Murdoch fumes over the financial engineering and calls for an investigation into the matter.
The sale also saves Yahoo! over $2B in R&D spending. Subsequently, Yahoo! proceeds to fire 5,000 employees, reducing headcount from 12,000 to 7,000 staffers, saving some $500M per year.
Yahoo!’s 2008 revenues hit $8B, up from $6.4B in 2006.
The cost savings reduce expenses substantially, Yahoo! nets $3B in profits for 2008. Relying on its old P/E of 50 (when it was a publicly traded company), Yahoo! is rumored to be worth $150B, within striking distance of Google, who by 2008 is worth $200B.
The private equity bankers begin to mull an IPO for 2009, once again, they hire HipMojo.com to explore strategic options.
August - Google breaks 75% market share in search by August, 2008. Yahoo!, now technically with 0% market share, is approached by Google to explore a merger of equals, with Google getting 55% of the combined firm and Yahoo! 45%.
September
- MSFT immediately raises anti-trust objections, pointing out that “GooHoo” would in fact command 85-90% market share in search. Behind the scenes, MSFT - still worth $275B - offers YHOO shareholders a 1 MSFT share for every 2 shares of YHOO. Private equity banks accept. Their deal for YHOO ends up making them $102.5B in 1 year:
Acquisition Cost = -$60B
Recovered from MSFT Deal = + 25B
Net Acquisition Cost = - $35B
Revenues in 2008 = + $8B
Total Costs = - $5B
Net Income = +$3B
Capital Gain = 50% x $275B = $137.5B
Net Gain from Transaction = $102.5B
October
- Unscripted programming (news, sports and reality TV) drastically surpasses scripted programming on TV networks and cable channels. Viewers don’t blink, don’t notice and don’t care. Disney’s ABC brings back “Oldies TV” with “Stars from the grave” thanks to CGI. Frank Sinatra has his own late night show, sans smokes.
November
- Third-tier social networks and file sharing sites start to die out as VCs refuse to continue funding losses. This ushers a rapid period of consolidation.
December
- Just over a year after its Series A round, WatchMojo.com raises $100M in Series B funding, acquires 5 properties to close the year, increases its traffic to 30M unique users per month, injects them with its library of original programming, drastically scales revenues and files for an IPO on the London Stock Exchange for 2009.
Give or take a few items, that seems pretty plausible, no?
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