Looking ahead to 2024 and the trends to watch out for in Media & Entertainment
Bambos Eracleous, Partner for Sports, Media & Entertainment, on major trends in Media & Entertainment, from M&A activity to exciting new opportunities in gaming.
There’s a tendency at this time of the year to look back and review the last 12 months and/or predict what will happen in the future. Our world is all about looking ahead rather than behind, but sometimes I feel I should give up trying to predict anything anymore. Maybe that can be a New Year’s resolution.
That said, I’m in a fortunate position that I get to see and hear things on a whole range of fronts, from various interesting organisations and individuals. I’ve also been lucky enough to work on some great roles this year, and a changing/transforming landscape is key to almost every interim assignment that I’m invited to work on
With that in mind, here are some themes that I think will continue to grow and develop within the world of Media & Entertainment during 2024. Whether you’re an organisation/hiring-manager looking to bring on an interim executive to work on these challenges or a prospective candidate keeping an eye-out for what opportunities may arise, hopefully they make for interesting reading and provide food-for-thought.
If 2023 was quiet on the consolidation front, chances are that 2024 won’t be
Economic conditions and other industry challenges meant there was not much in the way of high-profile M&A activity over the last 12 months but it’s likely that will change at some point over the next year.
8 April 2024 is set to be a significant date – even if nothing momentous happens on the day itself. Why? Because as IndieWire reports, it marks two years since Discovery completed its acquisition of WarnerMedia from AT&T and as a result frees Warner Bros. Discovery to undertake M&A activity again without getting hammered on taxes.
Quite how that will play out remains to be seen but given that several media companies are struggling with large debt piles, some consolidation is inevitable. This will mean uncertainty for some, opportunities for others.
As we have seen in the past, whenever change occurs there is high demand for senior interim executives with experience of similar transitions. Pre-and-post-M&A assignments are likely and could cover many areas – finance, HR, organisational development work, systems, processes, efficiency savings etc.
The strikes are over, but what now?
Although an important and emotive issue, the Hollywood strikes were a diversion from the main challenges facing the majority of the sector – the cost of producing content, improving content quality, the ongoing ad market downturn, resetting a ‘broken’ streaming business model, and the eradication of several traditional revenue streams.
Media companies must address all of these issues urgently. Indeed, as Variety pointed out, “The strikes waged by the Writers Guild of America and SAG-AFTRA were a short-term financial gift to studio conglomerates that had already been listing because of streaming losses. The dual strikes gave the studios cover to hit the reset button on business plans that had already been scaled back.” Indeed, in 2023 Disney and Warner Bros. Discovery alone cut almost 10,000 jobs and slashed billions of dollars in production and marketing costs.
Of course, numerous halted productions are now up-and-running again and the industry will work hard to wade through the blocked pipeline caused by the strikes. This could result in a post-covid style bump. However, that will come with similar risks: overworked employees, strain on mental health/work-life balance; inflated costs in some areas, deflated pay in others.
In a recent speech at Content London, Beatrice Springborn, President of Universal International Studios, revealed that productions such as “Apples Never Fall” and “Day of the Jackal” are back up and running, while new packages such as the TV reboot of “Cape Fear” are attracting offers. Indeed, “Cape Fear” has been subject to a bidding war.
Platforms, she said, are looking for returning, glossy stories but want more grounded storytelling rather than soap-style content. Half-jokingly she referred to a new sub-genre that defines this category: prestigural (a portmanteau of “prestige drama” and “procedural”). Perhaps that will become a widely accepted term within the industry.
What will the evolution of sports fandom mean for TV rights and broadcasters?
As fan behaviours and audiences change, they will look to non-traditional channels to consume sports content (on-demand, direct-to-consumer channels, highlights on social media etc). The Premier League may be seen as an outlier given its new record £6.7bn TV rights deal with Sky and TNT Sports, although it should be noted that this represents a lower price per game than the previous deal.
What we are seeing is not fewer fans, but a shift in fan engagement. Forward thinking leagues and brands will adapt to this new reality and the rise of the ‘on-demand’ fan. One aspect of this could entail partnering more with fans to co-author storylines rather than asking them to just consume a league or sports brand’s content.
It’s interesting that Amazon stepped away from the EPL rights in the UK against a backdrop of stagnating subscription TV revenues in Western Europe. This situation has had an impact on Europe’s Big Five football leagues as broadcasters have been forced to take a tougher negotiating stance. Aurelio De Laurentiis, owner of current Italian league champions Napoli, slammed the recent Serie A broadcast rights deal as a “total defeat”. As for those media owners who have secured broadcast rights, how will they maximise their ROI through pricing strategies, partnerships and sales?
Everyone will still want to talk about AI
For a few months this year all anyone wanted to talk about was AI and the impact it will have on their business and job. No doubt this will continue through 2024.
My main takeaway from this year however is, don’t ignore it. Don’t make fear your default setting, instead look for the opportunities, both from a personal and business perspective. There’s more chance that someone who has embraced and uses AI will take your job than AI making it redundant altogether!
There will no doubt be disruption and change but that’s a constant of the M&E industry anyway. AI may also be beneficial to the evolution of the creative industries. Music is a prime example. Forbes described singer-songwriter Grimes as “the first self-replicating pop star” after she invited fans to share in her persona by “creating new music using generative AI and her IP”.
Forrester’s Principal Analyst Kelsey Chickering has stuck her neck out in predicting that big media will get its mojo back in 2024, driven by the rise of generative AI and stabilising ad revenues. She argues that media giants such as Google, Meta, and TikTok are poised for a strong 2024, with Google sustaining its dominance as the number one search engine by harnessing AI, and TikTok gaining at the expense of linear TV by taking the lion’s share of ad budgets from brands targeting a Gen Z audience.
Gaming will continue to innovate, others will continue to follow
Google has enjoyed far less success with on-demand gaming. After three years, it pulled the plug on cloud gaming service Stadia in January 2023. Yet as a whole, there are high expectations for on-demand gaming next year and further out. Amazon and Netflix have come into a market in which Nvidia (GeForce Now) and Microsoft’s Xbox are established players. Globally, the market is projected to grow at a compound annual growth rate (CAGR) of 45.5% to 2030.
Virtual and augmented reality will get a shot in the arm with the release of a new generation of headsets, including the Apple Vision Pro and Meta’s Quest 3. More powerful and versatile hardware will drive innovation in gaming and experiences across various settings.
In March 2023, Syracuse University announced it was launching a new degree in Esports Communications and Management – a signifier that esports has come of age. But that’s hardly the end of the story. Strong growth is sure to continue on the back of rising viewership through live streaming and greater investment in the category.
October 2023 finally saw the closure of Microsoft’s mega $67.8 billion deal to acquire Activision Blizzard, publisher of games such as “Call of Duty” after 20 months of wrangling with regulators. While we won’t see another deal of that scale next year, tech-focused M&A and corporate finance advisory firm Drake Star expects a steady increase in consolidation activity in 2024. “Tencent, Sony, Take-Two, Savvy/Scopely are expected to be the most active buyers while Embracer will likely complete the divestiture of some of its studios. Several other strategics also started to participate in M&A discussions again after a pause for several quarters,” Drake Star noted in its recent Global Gaming Report.
To reiterate my earlier point about M&A, a wave of transactions will stoke demand for senior interim executives with the necessary skills and experience to help make such deals a success. Game on!
If you would like to discuss any of the above in more detail, Bambos can be reached on 020 7529 1038 or at email@example.com.
On behalf of everyone at Odgers Interim, have a great Christmas and a happy, healthy and prosperous New Year!