Professional Investors Eager to Call “Action!” on Media & Entertainment

The Demographics of Media's Future

Less than two decades ago, Netflix changed the Media & Entertainment industry forever while the CEOs of the Media Majors were sleeping at their desks.  Are we about to watch a similar disruption unfold?  Professional Investors seem to think so.

In 2007, the Media Majors of the time could not imagine the effect Netflix would have on the industry.  Then, as now, the Media & Entertainment industry was doing well.  The Media Majors were in control of who enjoyed the content they released, and when.  They knew exactly what it took to deliver films to cinemas and tv shows to the airwaves.

What they didn’t understand was the audience, and what the audience really wanted.  But they didn’t need to.  Not really.  They were making money hand over fist and shareholders were happy.

Of course, that was then.  In 2007, Netflix gave the audience choice.  When to watch.  Netflix gave the world the power to binge.  And it did.  As global population grew past 8 billion humans, with an estimated 5.8 billion having broadband internet access, consumption of entertainment content exploded.  The Media & Entertainment industry has been trying to catch up ever since.

The Founders of Netflix
The Founders of Netflix, Marc Randolph (left) and Reed Hastings (right).

As the industry continues to expand and evolve, Professional Investors have increased their allocation of capital to it substantially.  This has been a quietly growing trend across all allocators, from Sovereign Wealth Funds and other Institutional Investors to Private Family Offices and High Net Worth Individuals.  The entire spectrum of private capital has now taken a long-term positive outlook on Media & Entertainment.

But the Media C-Suite’s continuing survey of Professional Investors indicate a growing concern for the value proposition of the large, publicly-listed media conglomerates in the medium term.  The reasons why are telling.

“Quiet on Set!”

Out of 122 Professional Investors who were surveyed, each of which are increasing total allocation to Media & Entertainment this year, 58% reported being prepared to hold but not add to positions in publicly-listed media companies as portfolio assets.  Twenty-one percent reported a planned reduction in their holdings of public media companies. 

However, 92% of those surveyed reported an increase in risk capital allocation for private companies within Media & Entertainment.  Of those, the majority (53%) are most attracted to media companies with strong technology components.  This is not surprising given that the vast majority of all Professional Investors surveyed by the Media C-Suite so far (91%) expect their investment experience with technology companies to inform their assessment of opportunities in Media & Entertainment. 

The link between technology and audience appetites has not been lost on Professional Investors either. 

Age groups have demonstrated distinct consumer spending habits with respect to entertainment and the expenditure of leisure time.  Older audiences tend to maintain the momentum that has built the careers of most of the senior management at most of the Media Majors with an absolute focus on cinema and television.   But these baby boomers and millennials represent a rapidly declining share of the global market for entertainment content. 

Younger audiences are seeking less passive entertainment options and more engagement across multiple platforms.   In this respect, demographics become a key indicator for the future of an industry on track to surpass projections of US$2.5 trillion in revenues this year alone. 

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As the “streaming wars” continue, competition between subscriber-based Video on Demand, or SVOD, has focused on “original” productions and battling to license other producers’ film and television shows to build exclusive title libraries and attract paying subscribers.  But ease of cancelation and a decided lack of truly original titles have made retention of subscribers an existential issue for some of the highest paid executives on Earth.

Alternatives to SVOD, including the growing number of Free Ad-Supported Television channels, or FAST, are increasing each month.  Other forms of leisure time activity are also competing for the attention of SVOD subscribers, including video games, professional sports, music concerts and a consistent return of consumers to the Box Office.  For the publicly-listed media conglomerates who invested massive sums of corporate wealth into streaming, the “churn” rate among subscribers is a growing concern for shareholders.

According to data from Statista, 37% of consumers in the U.S. stated that they had cancelled a subscription to an SVOD service in 2022.  Their global survey found similar trends internationally, but most telling was the data on age groups.

“The churn rate was significantly higher with Generation Z and millennials than with boomers and Gen X, “ wrote Statista’s Julia Stoll.  “In Germany, for instance, the share of consumers in the Gen Z and millennials generation cancelling an SVOD subscription was about four times higher than for boomers or matures.”

Content Consumption

Motion pictures, as movies or television shows, have been the predominant form of entertainment content for well over a hundred years.  For consumers of content, the question of:  ‘What to watch?’ generally shifted between a film or a television show.  The operative question was:  “What was on?”

‘Where to watch?’ was devoted to the ‘What’ element of an equation.  There were two choices: the cinema or at home.

The shift to digital distribution and VOD changed this.  Today, the operative question is:  “When to watch?” or even “How long to watch?”.  Film and TV shows are now generally consumed on internet-connected devices anywhere and at any time desired, with the option to watch certain “films” in the cinema as a consideration influenced primarily by a preference for social experience (impacted directly the Covid-19 Pandemic).  However, consumers who are engaged increasingly on-line are also confronted with on-line choices other than motion pictures. 

The “What to watch?” question is trending increasingly toward a choice between passive viewing and more inter-active experiences.  Who watches, passively or interactively is statistically a question of age.  Content consumption is now distinctly measurable by generation. 

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A 2021 study by Deloitte found that 39% of baby boomers (people born between 1947 & 1965), chose watching films and television at home to be their favourite leisure time activity (relative to playing video games, listening to music, browsing the internet or engaging on social media).  For Gen Z (those people born between 1997 & 2007), that number falls to 10%. 

The number one on-line activity for Gen Z is video games followed closely by short-form video via interactive social media platforms such as TikTok. 

The general shift in content consumption from a passive viewing denoted by ‘What?’ and then to ‘Where’ is now converging with the more active, socially participatory consumption habits of the emerging generations.

Today, ‘How?’ to consume content has become the number one choice for an increasing percentage of the  world’s consumer audiences. 

Follow the Money

Emerging media companies embracing technologies that initially sparked video game publishing and social media platforms are coming into their own.  Data management, predictive algorithms and generative AI are transforming the quality, efficiency and speed to market for media companies seeking to offer more than what Disney, Paramount or even Netflix seem capable of.  

The vast majority of these emerging media companies fall loosely into the category of Web3, which is attracting the attention of Professional Investors eager to identify the coming disruptors.

Web3 companies, strictly speaking, are those that utilise blockchain technology within their product or service.  This includes financing content production and enabling the emerging ‘creator economy’.  However, Web3 has a wider definition that continues to expand.  Media companies that build dedicated audience communities, with or without direct blockchain applications, are often included within the investment category of Web3. 

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These companies may offer active participation in scripted storytelling, curation of content libraries and input from fans on how the intellectual property of a great story is developed further.  This emerging generation of media companies also offers greater interaction with brand marketing initiatives and direct interaction with content-sponsors and advertisers, opening revenue channels that are deeper and wider than passive VOD can sustain. 

What emerging media companies are offering is a new way of experiencing entertainment content.  More involvement.  More interaction.  More experience.

When Netflix began offering audiences a new way of experiencing films and television shows, it shook the Media Majors to their foundations and opened a new era of growth for a global Media & Entertainment industry.  Now, as then, a new generation of media companies is set to offer what the Media Majors simply can’t imagine.

This is exactly what Professional Investors have been waiting for. 


  1. I’m focused on this particular paragraph of your article namely:
    “What emerging media companies are offering is a new way of experiencing entertainment content. More involvement. More interaction. More experience.”
    For some time, I have been actively involved in the potential of creating product/content, within the metaverse, for the metaverse and for other platforms.
    I cannot think of any more fun activity and a new way of experiencing content than in the metaverse.
    How and when will this come to fruition?

  2. I think Gavin and InvestX make a good point: intellectual property rights are the foundation of the industry’s revenue streams.

    Traditional distributors have a reputation as a bottleneck on content volume AND for being quite restrictive on new voices AND for treating creatives quite badly in how value is shared. Creatives simply have no choice; sign or no one sees your content.

    I think what investors are looking for are companies exploiting technology to offer audiences a wider and deeper choice of content that traditional distributors are simply not offering.

    Investors are looking at how the IP is being exploited; of course they are. That IP comes from creatives, not distributors.

    These new companies may just tap into new, larger audiences that traditional distribution isn’t serving. That seems to be what the data is showing.

    But, if creatives get a better deal with these new companies, traditional distributors are in serious trouble. That is the disruption I see coming.

  3. Investors may want content to be wrapped somehow in tech, but the content itself remains the piece of the pie that has real value. Tech is simply the newest version of gatekeeping/ ticketing. And the investors who make the most money from content will, as in the past, be the ones who invest in owning the content itself.

    • I fully agree with Gavin. Also Tech allows the content to be consumed in places where this was not possible before. Tech however has not solved all problems. Anyone who regularly travels will tell you that consuming entertainment is not always as easy as thought. The dreaded ‘This video is not available in your region’ has not changed since region coded DVD’s appeared. it devalues the content as the consumer may try to access this content instead from a less than legal source. New contracts are needed throughout the industry to make sure that everyone who invests in the product gets paid and every customer can get access.

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