As the digital ecosystem expands, traditional studios are seeing an opportunity to diversify their tech and content strategies.The potential overlap in animation capabilities with Illumination Entertainment is complicated, but could help Universal compete against Disney’s formidable one-two punch of Pixar and Walt Disney Animation Studios (if managed correctly). Comcast and NBCU also now have access to AwesomenessTV’s target demographic, production capabilities and original IP. The key to this transaction will be the extent to which they successfully integrate their content cross-platform. Virtual reality/augmented reality (VR/AR) investment has ramped up in “the year of VR,” taking in $1.1 billion through February alone. Most of that investment was Magic Leap’s Series C round of funding at almost $800 million, but other companies involved included MindMaze with a $100 million round and Wevr with a $25 million round. While consumer products are still in the early phases, the overall excitement and wide-ranging applications for VR and AR are driving investment for those who want to get involved early. Following Baobab Studios’ $6 million round in December, Penrose Studios raised $8.5 million in March, highlighting a competitive race to become the go-to VR content creator for immersive animated content. Comcast Ventures recently led a $6.8 million investment in Felix & Paul Studios, producers of cinematic VR experiences. Investors see this industry as a tremendous growth opportunity, with projected industry potential revenue of $120 billion by 2020, according to Digi-Capital. It doesn’t appear that investment and M&A will slow down anytime soon. The NFL gets to broaden its distribution, experiment with alternative revenue streams, target a younger demographic and, ultimately, create more competition for the NFL’s overall rights when they expire in 2022. It is very possible that the future of NFL broadcasts may lie with a digital-first platform like Netflix, Amazon, Facebook, Google or Twitter, each of whom has deep enough pockets to bid for the opportunity to capture the most valuable must-see live content in the United States. Expect the other professional sports leagues to watch this development closely.
The rest of 2016 should continue to see plenty of activity across the media and entertainment space as companies brace for the future of mobile and digital consumption trends.Based on activity in 2016 thus far, it’s clear we haven’t seen the end of key transactions. Paramount Pictures is looking for a strategic investor to build out its international and digital capabilities, which would provide key content and IP access to the investor (although this process has become very muddled recently). Yahoo is fielding multibillion-dollar offers for its core business, and Anonymous Content, creators of Oscar darlings Spotlight and The Revenant, as well as TV hits True Detective and Mr. Robot, is reportedly looking for a minority investor.