How and why M&A is driving the much-awaited convergence of off- and online TV (Episode 5/5)

Closing off this series of blog posts is, in my opinion, the solution for TV companies to survive and remain as successful as they have been for the past decades: undergoing a digital transformation through M&A. I'm personally delighted to have initiated investments for MTG into great online content companies such as Houzz , Mobcrush and Vadio; into video ad-tech companies such as Fuisz Media; taken MTG into the MCN world with investments into the largest Nordic MCN and the 5th largest global MCN; as well as acquiring a premium online content company to build a completely new e-sports business with the recent acquisition of ESL Gaming.

Next-generation TV companies need to acquire more native digital expertise, perhaps even morphing into technology companies themselves. And M&A is a key tool in this. Let’s start examining this convergence trend by taking a short step back in history, to a time when TV used to be simpler.

TV content was on televisions, and digital content was on PCs. It was all bifurcated quite nicely.Then came multiscreen; content partnerships like Disney/Netflix; OTT with Roku and Apple TV; TV Everywhere; and second-screen devices like Airplay and Chromecast. Today we have traditional and digital content providers both doing long and short form, Google fibre and Facebook drones may deliver content soon, and is there really any difference between a television set and a digital screen? There is a complex battle happening for the living room, and mobility is built-in as default, extending your living room to on-the-go.

Instead of the old failed Google TV efforts, forcing the TV to be a clunky web browser without any dedicated native applications, today Google has produced the amazing and attractively priced mobile-enabled Chromecast hardware USB device. Chromecast does just what it says on the tin: it casts an instance of an existing web browser (Chrome) and relevant existing web applications (i.e. applications already built, such as Netflix or Viaplay for your device) from a device to the TV screen.

Users can then use smartphones, tools they already know and are comfortable with, to control the video stream shown on the TV screen. And most smartphones today are powered by Google’s Android as well. “Android TV” is the natural evolution of this vision, with more to come from hardware manufacturers actually delivering a versatile Android-powered smart TV application experience such as recent Sony TVs.

Google today already represents a converged offering, with solutions covering monetisation, devices, Operating Systems, app stores, browsers, OTT delivery channels and content production. Much of this has been gained by M&A. Amazon and Apple and Comcast are following suit in integrating multiple parts of the value chain.

In 2014, we saw M&A deals linking different parts of the value chain. There were content distribution deals such as Amazon/Twitch, and content aggregation transactions such as Disney/Maker. There was MCN consolidation with Rightster/Base 79, and ad-tech consolidation with Yahoo and Telstra acquisitions. We saw content acquisitions such as Fullscreen/Rooster Teeth and Awesomeness/Bigframe, and then there were Vessel’s talent acquisitions.

At the very least, the online video advertising sales technology platform companies should have been investment opportunities for traditional TV companies. The platforms would have had the insights to see the growth of online video monetisation, and were already major customers of these platforms anyway for their own AVOD services.

But unfortunately for traditional TV, they are not the ones driving consolidation or acquisition in this sector. Instead, it’s technology companies or cable/mobile operators grabbing the part of the value chain that’s right in traditional TV companies’ backyard: Telstra (Ooyala, Videoplaza), SingTel/Amobee (Adconion, Kontera), Yahoo (Brightroll), AOL (, Vidible), Comcast (Freewheel), Facebook (Liverail, Atlas) and Blinkx (Rhythm).



So what are traditional TV companies actually acquiring in the digital world? In recent years, they have moved from simply promoting their own content or brands on YT, either directly or indirectly via ContentID, to taking direct ownership of YT-based MCNs. And they have usually done so at hefty valuations. Disney/Maker, RTL/Stylehaul, Pro7/The Collective, MTG/Splay and Chernin/Fullscreen are some of the deals for 2014. It is strategic premiums that are driving these valuations, not financials: remember that 45% YT “tax”.

Disney/Maker was more about Disney wanting to understand the short-form format, leverage YT talent and use Maker’s reach and audience as marketing/distribution for its character-based IPR. Many media company/MCN deals are forward-thinking about moving off YT: They are designed to capture the star talents emerging on YT with large fan/reach bases and bring them through to monetise, with more premium CPMs and without YT’s 45% “tax”, on their own AVOD platforms, in various vertical niches such as gaming or food or fashion.

Traditional TV companies have smart, industry-savvy people, creating content that people love, in a mature and streamlined workflow environment, with large-dollar trusted advertising spend. They owe it to their shareholders and/or family owners to have a 110% focus on transforming their business to digital, and doing so fast. More investments and acquisitions are sure to follow.



It has been my pleasure to share my experience and insights with you throughout the summer. Whether you avidly followed my posts or have just discovered them, in which case it is never too late to read the rest of the story, here are the key ideas you should take away from them:  

  • TV has enjoyed a long resilient hold-out, leveraging a continued strong brand and consumer value proposition
  • But the TV industry is finally at the precipice of disruption
  • “Content is King” is no longer a sufficient mantra to hold on to for the industry
  • It’s not just content distribution that is digitally powered today; all aspects of the business are becoming reliant on technology as a USP– from content creation to monetisation
  • After the shake-up in advertising revenues, the strategically crucial subscription revenue base is increasingly at risk for pay-TV
  • Despite a heritage of pushing the boundaries of consumer entertainment innovation for decades, innovation is now the domain of new online video players not the TV industry
  • The traditional TV industry can still play a role by actively driving Convergence, leveraging the best of both worlds and in the process themselves becoming tech-savvy
  • Aggressive corporate innovation, investment and M&A programmes must be executed now, with strong budgets and strong teams