The four-day NAB conference attracts media, entertainment and technology professionals who have a passion for digital storytelling.
As we walked the floor at NAB, our discussions centered less around what these new broadcast and media technologies are, and more around how they will be positioned as core elements of the future media technology stack. We left thinking: how can technology vendors stay relevant while their customer’s core business goes through major change?
To answer this question, let’s delve into the shift in customer buying patterns, and the impacts on M&A in the media space.
In today’s digital media landscape, content is king. We are seeing budgets reallocated to content development in larger proportions than ever before. For example, Netflix is estimating a $15 billion original content development budget in 2020 – up 25% from their $12 billion spend in 2018!
OTT services are relatively new and already rewriting the rules in how to win market share over traditional broadcasters. It's now clear that original as well as coveted digital rights are what media providers need to stay alive.
As more capital is allocated toward content, the amount allocated to technology is often reduced. With less capital for technology, buying cycles have become longer as customers are no longer looking for incremental improvements on existing systems. Instead, they tend to wait for the next milestone innovation before spending the capital and tying themselves into longer term contracts.
With an industry in flux, we’re all waiting to see what the next big innovation will be. Think about how different your lean-back media experience was even a decade ago. Media companies want to lead the next wave of innovation and are turning to technology vendors to solve their challenges. The problem with this approach is that technology vendors are also unsure of the future, which is causing them to throw real dollars behind challenges that have not yet emerged for their customers. This typically ends up a losing battle for small to medium-sized tech firms who are trying to survive a long sales cycle with their customers.
At Volaris, we help navigate technological change with our customers by prioritizing customer intimacy. Our portfolio companies work in tandem with our largest customers to develop the products they need. We want to develop products that companies will use now and in the future. This level of insight only comes from being close to your customers. (One of our Portfolio Leaders spoke about this more here.)
During NAB, we got a look into the future of broadcast media. Hearing from the industry inspired us to think about how the nature of our businesses will look in the years ahead. At a time where it feels like a real turning point in the industry, we left the tradeshow floor inspired to be innovative, and prioritize customer relationships in order to be at the forefront of change.
April 23, 2019
Elliot Yunger serves as the Director of Business Development of the Communications & Media Portfolio. Before joining Volaris Group, Elliot worked for Cyhawk Ventures, a Tel Aviv based Venture Capital firm in sales organization for multiple businesses. Once returning to Toronto, he joined up with the Volaris Group to help accelerate growth across multiple verticals before specializing within the Communications & Media portfolio. Elliot has helped to lead multiple acquisitions and integrations for Volaris Group and has worked in Singapore, India and Tel Aviv.