2016 Year in Review

Mansha Daswani reflects on some of the industry’s highlights from last year, which saw a plethora of mergers and acquisitions.

The year started with Netflix announcing its full global rollout and ended with Amazon switching its Prime Video platform on in some 200-plus countries. While 2016 may have been marked by on-demand services exerting their ever more powerful presence, we all spent a lot of time this year watching live TV—on lots of different screens. We watched athletes at their finest at Euro 2016 and the Summer Olympics. We cringed or celebrated—depending on your political leanings—as Britain voted to leave the EU and America went for Team Trump. We watched terrorist attacks in horror and marveled as people came together to support each other. And we watched loads of jaw-dropping, awe-inspiring drama (and proceeded to tweet about it).

People do still want to watch TV live, and 2016 proved that in spades. But they don’t necessarily want to be tied down to a cable or satellite provider, hence the emergence of linear OTT options like Sling TV, DIRECTV NOW and, soon, one from Hulu. It was also the year that operators began embracing the skinny bundle, recognizing that a lot of consumers don’t want to pay for 200 channels when they only watch 10.

At the same time, on-demand platforms continued to pop up across the globe, while some called it quits, among them Yahoo! Screen. And there were even some new linear channel launches, perhaps the most notable being VICELAND, which has been steadily building its international presence as VICE Media bets big on global growth.

Meanwhile, channels and content owners spent a lot of time in 2016 figuring out how to best tap into opportunities provided by social media. The National Football League (NFL) enlisted Twitter to deliver a live, worldwide OTT stream of Thursday Night Football. Globo partnered with Snapchat on Olympics-related content, while NBCUniversal and Disney/ABC both inked deals to produce original shows for the platform.

Merger and acquisition activity happened at a brisk pace last year, at every level. Zodiak and Banijay completed their merger. 21st Century Fox sealed a deal to take control of Sky. AT&T clinched an agreement to buy Time Warner. NBCUniversal snapped up DreamWorks Animation. Lionsgate acquired Starz. China’s Wanda took control of Legendary Entertainment and dick clark productions. beIN Media Group bought Miramax and Digiturk. Liberty Media acquired Formula One. Corus Entertainment merged with Shaw Media. Viacom bought Telefe. ITV upped its stake in Cirkus and attempted—and then abandoned—an Entertainment One takeover. Vivendi took a stake in Mediaset (amid a continued legal dispute between the two companies), prompting fears by the Italian outfit of a hostile takeover. National Amusements floated, and then dropped, a CBS-Viacom merger (while the boardroom drama there resulted in the axing of Philippe Dauman and a short run for interim chief Tom Dooley before Bob Bakish was installed as president and CEO). FremantleMedia, Endemol Shine, All3Media, Entertainment One, Sony Pictures Television, BBC Worldwide, Red Arrow Entertainment Group, STUDIOCANAL and Sky Vision, among others, grew their production networks and aligned with talent. Digital was also a key investment area for a slew of content owners positioning themselves for changes still to come in the years ahead. The latest edition of EY’s Media & Entertainment Capital Confidence Barometer (CCB), released at the end of 2016, found that increased merger and acquisition activity in the sector will be led by digital disruption and convergence this year.

“Unprecedented, unrelenting advances in technology and the swift emergence of new platforms and services are driving change in consumer behaviors, upending long-standing media ecosystems and blurring sector lines,” said John Harrison, EY’s global media and entertainment leader for transaction advisory services. “Companies are aggressively seeking the innovation needed to position for future success and are looking to acquisitions, alliances and joint ventures to catalyze transformation. The pace of change is accelerating as media, entertainment, tech and telecom merge into a single ‘super sector’ of competitors and collaborators. Standing still is not an option.”

VR, in particular, is attracting a lot of investment, both from venture-capital firms and media companies. Surveys indicate that interest is high, but thus far the availability of VR content has been limited. That should change in 2017, with the likes of National Geographic, Discovery, the BBC, Sky, Chinese platform iQIYI and others having announced major VR initiatives in 2016.

We’ll also be keeping an eye on the shifts taking place in the Asian media business against a backdrop of improved broadband and smartphone access. Digital is expected to drive new AsiaPac media revenues over the next few years and China, with its booming OTT market, will continue to dominate the region’s online video market.

The eSports market is also likely to be a busy one in the year ahead, having seen plenty of activity in 2016 with new channels from MTG, Astro and Ginx TV. The sports market, in general, is in a state of flux, with newer players, among them beIN and Discovery Communications-owned Eurosport, making aggressive plays for top-tier events.

In Europe, all eyes will be focused on the EU’s single-market plans and what that means for rights’ owners, and what proposed content quotas would mean for Amazon and Netflix in the region.

On the heels of all the upheaval of 2016, forecasts for ad revenues this year are surprisingly bullish, and TV still dominates in most markets—but online is gaining quickly. PwC, in its Global Entertainment and Media Outlook 2016-2020 report released last summer, indicated that online advertising would overtake television in the U.S. this year. PwC identified other fundamental shifts in the landscape that companies need to be aware of. They include that younger consumers (under-35s) are driving global growth; content tastes are still highly local, even as the industry becomes more global; consumers want to “design and curate their own media diet;” and companies must realize that in addition to fast-growing developing markets, they need to continue to focus on territories with the greatest absolute dollar growth, such as the U.S. and China.

“Entertainment and media companies are facing an ever more complex global environment—one in which every market has its own unique growth dynamics, shaped by local factors ranging from demographics to content tastes to infrastructure to regulation,” said Deborah Bothun, PwC’s global entertainment and media leader. “To see through the apparent chaos and pinpoint value opportunities, companies need a more intimate understanding than ever before of the forces at play at a local level. Armed with such insights, both established and emerging players are well-positioned to capitalize on the industry shifts and lead the next phase of growth.”