Five Media Investment Themes for 2019
- On March 6, 2019
- By GrowthInvest Admin
To kick off the third series of the award-winning GrowthInvest Adviser Hour, we gathered a panel of leading industry players to talk about the biggest opportunities and challenges in the media investment space. Chaired by Lawrence Gosling, the line-up included Dan Perkins from Great Point Media, Simon Fawcett from Atlantic Screen Media and Dr Simon Radford from MJ Hudson Allenbridge.
If you missed the live show, you can still catch up on-demand here – or read on, for some of the media investing trends that came to light.
1. A New Investment Model for a Netflix Era
With the industry still adapting to the new regulations set in place by the Patient Capital Review, the media sector has had to move away from its roots in asset-backed investments and focus instead on equity based investing in growth-oriented businesses.
“These models are no longer sustainable,” commented Dr Simon Radford, “as more capital needs to be put at risk to merit the tax breaks from the government and the potential upside of these investments. We’re now in a great position to see the changes and new offerings that have come through into the media sector as a result.”
Dan Perkins, Commercial Director at Great Point Media agreed: “This new investment model is a natural evolution for Great Point, as we’ve always done fairly substantial amount of seed investing at the micro-levels and have always been involved in early-stage development. Working with early-stage companies is highly risky, but if you get it right, it has the potential to be highly lucrative.”
2. Take A Global, Multi-Platform View
As appetite increases for on-demand media services from the Far East and Chinese middle classes, investors across the media market should now be looking for content that appeals globally, including an international audience. Not only this, but investors should be seeking out opportunities to span multiple platforms: with the ideal being films that can adapt to TV shows, TV shows being reworked into video games – or even games themselves being launched as films. Tomb Raider is a prime example of this.
For investors, owning IP across multiple platforms means that royalties are generated with every film, TV show, score or game, giving the potential for ongoing returns. The panel closed by summing it up: “Simple fact – if you’re producing high quality content fit for a global audience across multiple platforms, that’s an excellent place to be investing and owning IP going forward.”
3. Not Just Film: Gaming and Comics Take The Stage
Media investing doesn’t just stop with film and TV: a 2018 report from the British Film Institute found that the UK games industry is worth nearly £3bn to the UK economy and employs over 47,000 people, making it the fifth largest video game market in the world. In 2018, a record £5.11bn was spent in the UK on gaming, making this a prime market for media investors.
Hot on its heels, comic book IP was responsible for 60% of the global box office revenue in 2018, carving a path for media investors. Simon Fawcett of Atlantic Screen Media commented: “It’s difficult to compete with Marvel in the comic space, but you can offer attractive deals to talent such as illustrators and writers, so the talent can get shared around.”
4. Don’t Overlook New Talent in Favour of Track Records
As the sector continues to change and adapt, generations of new British media talent are continuing to rise up through the ranks. But with investors focusing on track record and past performance, what does it take to ensure that new talent is nurtured?
Dan Perkins commented: “We shouldn’t discount up and coming youth for the sake of ‘track record’. While it’s always risky to invest in new talent, there are certain ways to give you confidence about future successes, such as working with early support schemes like those operated by the British Film Institute.” One case in point is Lady Macbeth, a joint venture between Great Point, BFI, BBC Films and Creative England, which helped to launch the career of British actress Florence Pugh.
Dan continued: “These schemes seed up and coming talent and push them to a place where they’re ready to create something that could be really valuable.”
5. Look Beyond The Blockbusters
The panel finished by busting a common myth around media investing: the idea that backing the blockbusters and Box Office winners guarantees success. Dr Simon Radford pointed out that “most people see the Harry Potter films and think that’s a benchmark for success – but actually, that scheme technically made a loss. If you were an equity investor in the Harry Potter films, most of the money would have been drained into expenses and priority returns.”
Radford continues: “You really need to get under the bonnet of offers and work out what IP is being created and what control you have over certain elements.” Click here for MJ Hudson Allenbridge’s sector report with more information on this.
Key learnings as we look to the future of media investing: the visible impact and popularity of mainstream media (e.g. whether your children are watching a show) doesn’t necessarily correlate with investor returns, because of the way deals are structured. It’s clear that being a consumer of media is very different to being an investor in media, but for both audiences, the sector will continue to innovate and evolve.
For live panel webinars like this one, click here to register for the award-winning GrowthInvest Adviser Hour webinar series.
For media investment opportunities on the GrowthInvest platform, please click here or contact our dedicated Client Services team on firstname.lastname@example.org or 020 7071 3945.
For more information about the Great Point Ventures EIS Fund, please click here.
For more information about the Atlantic Screen Media EIS Fund, please click here.
For more information about MJ Hudson Allenbridge, please click here.
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