Esports Sector Update

Esports Sector Update

Key Takeaways

Gamers and Other Super Users are an Attractive Audience

  • Gamers belong to an attractive demographic: young, affluent, educated, and technologically savvy
  • Gamers are highly aware and proficient in using cutting edge technologies such as NFTs and crypto – the space is an excellent incubator for new tech

Super Users tend to be younger and more affluent than their counterparts, making them more valuable to technology and media companies

Strong secular growth potential

  • The gaming industry has double-digit growth historically and very strong growth prospects going forward
  • Overall strong growth attributable to increases in both: spend (p) and audience (q)

Outperformance through Covid

  • Gaming revenue grew +20.0% (+11.2% outperformance) in 2020
  • 80% of business in esports and gaming see covid as a positive impact on their business, creating a new watermark

COVID has accelerated the capture of prevailing esports audience growth trends furthering the paradigm shift towards interactive digital media consumption

More than games

  • 60% of gamers have participated in a non-gaming activity or event inside a video game engine within the last 12 months
  • Event types include watch parties, concerts, graduations, visiting virtual recreations of real-world locations

Highly attractive business models ripe for investment

  • Gaming and esports businesses have high growth potential and scalable operations
  • High-quality assets are at the critical inflection point of achieving profitability and generating cash flows
  • All stakeholders are looking for partnerships to scale the business to the next level – find the business within the science project

Power of 5: The Power of the Network

“Power of 5”
The Power of the Network

5 Leaders, 5 Questions, 5 Minutes

The Power of the Network: Evolution of the Engagement Model Series

Introducing our latest Power of 5 series. We ask 5 industry leaders 5 questions in 5 minutes to gain insight on how they are succeeding in today’s market.

In this series we explore the evolution of engagement and networking models across the Business Information ecosystem in driving business decision making and how M&A is playing a part in that evolution.

Over 5 weeks we interviewed 5 select executives from leading corporations. Topics of discussion included current challenges facing clients, learnings from 2021, and M&A criteria going forward.

Key Takeaways

  • Engagement and networking models are becoming more complex, and the pace of change is accelerating
  • Trust is the new currency. Businesses that can build that trusted relationship with their clients will create value for their shareholders
  • Winners will be defined by their level of customer intimacy. Companies that can genuinely combine engagement, data and insights to understand customer behavior and build relationships will outperform
  • Increasing importance of simplification and verticalization to be able to offer the in depth, granular business intelligence that corporate decision makers need
  • M&A will continue to play a key role in refocusing and reshaping businesses, both through acquisitions and divestitures

Speakers

Jessica Cole, President & CEO, Becker’s Healthcare
David Wilkie,
CEO, World 50
Gehan Talwatte,
Information/Data Entrepreneur and Non-Executive Chairman
Matt Peckham, VP, Corporate Development, Gartner
Jon Slabaugh, CFO & SVP of Corporate Development, FiscalNote

Full Interviews Below

Jessica Cole speaks with Kathleen Thomas
Gehan Talwatte speaks with San Datta
Jon Slabaugh speaks with Scott Mozarsky
David Wilkie speaks with Kathleen Thomas
Matt Peckham speaks with Adam Gross

Whenever you see a successful business, someone once made a courageous decision.

Peter Drucker

Q3 Public Market Update

Q3 Public Market Update

Key Takeaways

Total equity market value down by 2% since July 2021

Following strong growth through early 2021, the Media, Marketing, Information & Technology equity markets encountered some turbulence towards the end of Q3, leading to a drop in value over the period of 2%, in line with benchmark indices which have fallen by 1-3% over the same period.

2021 revenue growth of 17% across all sectors

2021 forecast revenue growth remains robust across all sectors at 17% vs. 2020, led by +28% growth across e-commerce and digital media, and in particular verticalized e-commerce and publishers & lead generation.

2021 EBITDA growth of 36% across all sectors

Strong outlook for 2021 EBITDA growth continues, with virtually every sector expecting double-digit growth vs. 2020, other than for specific sub-sectors which continue to experience fall-out from Covid-19 (e.g. Events).

Macro-economic growth concerns have led to recent declines in the public equity market, however, Q3 2021 earnings season will provide further sector specific insight into how the wider macroeconomic trends are affecting individual companies across these sectors.

The total market value of the Media, Marketing, Information and Technology Sectors has decreased by 2% since July 2021

Q2 Public Market Update

Q2 Public Market Update

Key Takeaways

Total equity market value up by 7% since April 2021

The Media, Marketing, Information & Technology public equity markets continue to prosper, with the total equity market value up by 7% since April 2021.

2021 revenue growth of 17% across all sectors

Led by +28% growth across the eCommerce and digital media sectors, 2021 forecasted revenue growth remains strong across all sectors at 17% vs 2020. Notably, the Marketing Technology sector is also forecasting strong year on year revenue growth of +20%.

2021 EBITDA growth of 17% across all sectors

Favorable outlook for 2021 EBITDA, with nearly all sectors expecting double digit growth vs. 2020. Very positive outlook for Digital Media vs. 2020 with several sub-sectors including search and social media expecting +30% year on year EBITDA growth.

Valuation environment remains robust with the Media, Marketing, Information & Technology markets having increased by 7% ($975bn) since Q1 2021. This is underpinned by strong forecasted 2021 revenue growth across all sectors, with an average of 17% across the market, representing total incremental revenue across the market of nearly $455bn.


The total market value of the Media, Marketing, Information and Technology Sectors has increased by 7% since April 2021

AdTech and MarTech emerge as leaders of TMV growth in Q2 2022

  • The main drag on TMV growth through Q2 2021 has been eCommerce. While the growth outlook for these sectors remain positive, the sector was able to withstand the decline in Price Comparison and Consumer Verticals and saw TMV growth of 4% in Q2
  • Investor demand for businesses exposed digital transformation solutions and best-in-class CX is similarly reflected in TMV growth in both Tech & Consulting Services (up 7%) and Insights, Data, Analytics (up 12%)
  • The Digital Media sector, led by companies such as Facebook, Snap and Google, also continues to perform, up 7% ($4,015bn of TMV) over the period. The sector benefits from powerful tailwinds, including strong and growing demand  for performance marketing

Forecast 2021 revenue growth of +10% for many sectors

  • Strong 2021 revenue growth is projected by current market forecasts for nearly all sectors. The growth is driven by powerful tailwinds across many sub-sectors and a “bounce-back” in revenues in those sectors most impacted in 2020
  • Total revenue growth is forecast at c.17% from 2020 to 2021, signifying an aggregate increase in revenues across all sectors of close to $455bn, with double-digit percentage growth expected across many sub-sectors

Driving double-digit EBITDA growth for 2021

  • eCommerce is expected to have the strongest revenue growth, increasing by 28% to $997B, showing a limited correlation with the change in TMV
  • With Publishers & Lead Generation being the key sub-sector of growth and benefitting from demand from the eCommerce vertical, the Digital Media sector is forecast as a high performer with growth of 28%

Current market forecasts show that FY21 revenue growth across the Media, Marketing, Information and Technology sectors is expected to be 17% with 17% average EBITDA growth across the sectors in the same period

Market Research Sector Update

Market Research Sector Update

Key Takeaways

Sizable global market at $40B

Increasing to $80B with addition of analytics meaning ample addressable market to chase and capture.

M&A activity in the sector is increasing

Consolidation from existing players and increasing appetite from Private Equity is driving activity in the space.

Spend on research is recovering quickly

Companies need a better understanding of post-2020 markets and how consumers now think and feel.

Marketplace winners will optimize core market research while positioning for success in digital and data

Companies that can provide business leaders with agile, data-backed market analysis across media platforms are expected to be the most successful.

There is a sizable opportunity at the convergence of traditional research advisory, user experience, customer experience, experience management, and digital transformation.


M&A playing an active role

Large scale consolidation is reshaping the landscape as digital agencies, consultancies and SaaS vendors encroach on market research budgets.

Recent sector transactions

As vendors vie for scale, growth, and wallet share – advertising agencies have increasingly acquired market research companies to pursue value added services and new capabilities.


The existing sector landscape is evolving as market players focus on new opportunities

Global agencies and measurement companies are exposed

  • Businesses with flat and declining revenues are looking at cutting costs and resources leading to vulnerable accounts and talent drain.
  • M&A activity is increasing as a result with businesses looking to divest, restructure or hold for sale.

CX technology vendors are taking mind and wallet share

  • SaaS vendors are seeking access to enterprise client relationships and channel partners.
  • These vendors are also able to turn up the M&A where others cannot compete on price.

Large scale consolidation reshaping the landscape

  • Firms looking to return to growth through scale as well as bridging the current gap between research, insights, and marketing.
  • Service set expansion pursued as a way to increase mind and wallet share.

Large cap Private Equity active in the sector

  • Private Equity are being attracted by the sizable, fragmented, and disrupted market.
  • They understand the value of research and are recapitalizing to help re-define the market for a digital era.

Corporate Divestiture Update

Corporate Divestiture Update

Key Highlights

Cash and investments held by US corporations rose 30% to $2.5T in the first half of 2020

34% of divestitures had a Private Equity buyer in 2020

9.7% annual shareholder return for companies with focused divestitures and M&A programs

Companies with active M&A programs continue to outperform inactive companies


Corporate Divestitures Remain a Robust Part of the M&A Market; Trending Back up Post the Pandemic

Organizations tend to review their portfolios and go through corporate divestitures more aggressively post economic crises, as evidenced by strong divestiture activity post the financial crisis during 2008-2009. Given a heightened sense of risk and a desire to focus on growing core parts of their organizations, corporations are already evaluating noncore assets in order to free up cash to pay down debt, leading to uptick in the corporate divestiture activity in Q4 2020 and Q1 2021. 

A heightened sense of risk has caused corporations to evaluate noncore assets in order to free up cash to pay down debt

Companies With Active M&A Programs Outperform Inactives

Based on total shareholder returns generated over comparable periods, companies with focused divestitures and M&A programs tend to outperform organizations that have stayed relatively inactive.

Growing role of Private Equity Players as Buyers

Private Equity firms will continue to play a substantial role in divestitures as they accounted for a record 34% of buyers in 2020. The number of private equity firms focused on carve outs and “complex” deals continues to rise.

Perils Of Holding On To Non-Core Assets For Too Long

In Summary

With Private Equity continuing to be a driving force we anticipate the market for corporate divestment activity to remain buoyant. Equally as we are still in the process of emerging from the pandemic companies will continue to need to assess how they service debt requirements. M&A should be an important part of the discussion around board tables.

Power of 5: The Digital Transformation Series

“Power of 5”
The Digital Transformation Series

5 Leaders, 5 Questions, 5 Minutes

The Digital Transformation Series

Introducing our Power of 5 series. We ask 5 industry leaders 5 questions in 5 minutes to gain insight on how they are succeeding in today’s market.

In this series we focus on Digital Transformation. The rate of technological change is high and constant and global brands are increasingly looking to third party experts to help them keep up. From technology consulting to strategic marketing services, the market continues to grow and continues to focus on all things digital.

Over 5 weeks we interviewed 5 select leaders from global agencies who all serve international brands. Topics of discussion included, current challenges facing clients, learnings from 2020, and M&A criteria going forward.

Key Takeaways

  • 2020 has accelerated digital transformation across all areas of marketing spend and working practices
  • Measurability: performance marketing is increasingly important given the race to digital in all facets of the marketing mix
  • First party data is becoming central to marketing strategies particularly in light of the death of the 3rd party cookie
  • Ecommerce has gone from important to critically important for clients
  • Technology and brand need to be aligned more so now than ever before
  • Cultural fit and strategic alignment remains a key factor for M&A decision making across the board

Speakers

Dan Gilbert, Global CEO, Brainlabs
Rob Pierre,
Co-Founder & CEO, Jellyfish
Zach Morrison,
CEO, Tinuiti
Wendy Clark, Global CEO, Dentsu International
David Jones, Founder & CEO, You & Mr Jones

Full Interviews Below

Dan Gilbert speaks with Jonathan Davis
Wendy Clark speaks with Marcus Anselm
Zach Morrison speaks with Jonathan Davis
Rob Pierre speaks with Marcus Anselm
David Jones speaks with Marcus Anselm

In today’s era of volatility, there is no other way but to re-invent. The only sustainable advantage you can have over others is agility, that’s it. Because nothing else is sustainable, everything else you create, somebody else will replicate.

Jeff Bezos, Executive Chairman, Amazon

Year to Date Market Update

Year to Date Market Update

Key Takeaways

Total equity market value up by 3% since January 2021

The Media, Marketing, Information and Technology public equity markets continue to perform well, with total market value up by 3% since January 2021, albeit against a broader market backdrop which has seen other benchmark indices up by 7 – 12% over the same period.

2021 revenue growth of 17% across all sectors

2021 forecast revenue growth remains robust across all sectors at 17% vs. 2020, led by +27% growth across e-commerce and digital media, and in particular verticalized e-commerce and social media.

2021 EBITDA growth of 18% across all sectors

Strong outlook for 2021 EBITDA, with virtually every sector expecting double digit growth vs. 2020, other than for specific sub-sectors which continue to experience fall-out from Covid-19.

Valuation environment remains robust with the Media, Marketing, Information and Technology markets having increased by 3% ($420bn) since the start of 2021. This is underpinned by strong forecast 2021 revenue growth across all sectors, with an average of 17% across the market, representing total incremental revenue across the market of nearly $450bn


The total market value of the Media, Information and Technology Sectors has increased by 3% since January 2021

Following strong growth in 2020, E-commerce and Software have both seen a slight contraction in total market value (TMV)

  • The main drags on TMV growth through 2021 YTD have been e-commerce and Software. Whilst the growth outlook for these sectors remains positive, both sectors previously saw an exceptionally strong H2 2020, with TMV growth of 30% and 19% respectively
  • Investor demand for businesses exposed digital transformation solutions and best-in-class CX is similarly reflected in TMV growth in both Tech & Consulting Services (up 6%) and Insights (up 10%)
  • The Digital Media sector also continues to benefit from powerful tailwinds, including strong and growing  demand for digital engagement. It has continued to outperform, up 13% ($3,544bn of TMV) over the period

Forecast 2021 revenue growth of +10% for many sectors

  • Current market forecasts show robust 2021 revenue growth across virtually all sectors, driven by powerful tailwinds across many sub-sectors and a “bounce-back” in revenues in those sectors most severely affected in 2020
  • Total revenue growth from 2020 to 2021 is forecast at c.17%, representing an aggregate increase in revenues across all sectors of close to $450bn, with double-digit percentage growth expected across many sub-sectors

Driving double-digit EBITDA growth for 2021

  • The strongest growth of 36% is expected for e-commerce, showing a limited correlation with the change in TMV
  • Digital Media is forecast to be the second highest performer with growth of 32%, with Search and Social Media being the key drivers as both audiences and advertising dollars drive growth in the sector

Current market forecasts show that FY21 revenue growth across the Media, Information and Technology sectors is expected to be 17% fueling an 18% average EBITDA growth across the sectors in the same period

Content and Commerce. A Perfect Storm

Content and Commerce. A Perfect Storm.

Key Highlights

Global E-commerce Market Continues to Grow and Attract Record Investment

27% global e-commerce market growth in 2020 up to $4.3tn total global revenue

$35bn invested globally in 2020 across the e-commerce sector

133% increase in total investment on prior year

e-commerce Content is Becoming Increasingly Vital

The global Product Information Management (PIM) market will be $16bn in 2025, growing at a CAGR of 12.2%

80% of purchasers have abandoned transactions due to poor product content

58% of shoppers place the blame on not having enough information

12-36% increase in shopper conversions with rich product detail pages than those without


E-commerce Growth Outpacing Overall Retail

E-commerce growth continues to far outpace overall retail growth with penetration rates approaching 20% this year aided by  improvements in the quality of online shopping experiences.  These improvements have come about due to record levels of investing across the e-commerce category, massive spending by brand and merchants on e-commerce infrastructure, storefronts and content, and continued innovations in digital and DTC marketing.  

Covid-19 has only served to accelerate e-commerce adoption permanently, further fueling investments in technology, content,  features and functionality. 

99% of Business Leaders believe that quality product content is important to sales growth through digital channels
source: eMarketer

Massive Brand Spend Shifting to e-commerce Execution 

While the e-commerce experience might seem simple and fluid from the consumer perspective, successful e-commerce execution is extremely complex.  Media spending, customer acquisition, offer and inventory management, visual merchandising, payments, CRM, product information, reviews and referrals, fulfillment, reverse logistics, and, of course, site performance … each of these individual areas of e-commerce execution are major pain points for brands and merchants alike.  Each of these elements must connect to others, and many are through third-party vendors.  They all must work in concert, in multiple languages and currencies, with the most up to date and real-time SKUs, pricing, specs and availability across many different e-commerce marketplaces and retailer websites.

Content is King”… Especially In E-commerce

Across the e-commerce journey, there is one critical constant:  the need for accurate, rich and informative product content.  Product content is comprised of many parts from brand compliant product images and logos to rich media such as video to the detailed product information (SKU, specs, descriptions, and other technical identifiers).  The volume and makeup of this content is continuously increasing and must be consistent wherever it appears as a marketing asset – Brand sites,  Search results,  Landing pages,  Comparison shopping sites,  Channel partner catalogues,  Review sites,  Social sharing and  Customer care among others.  All rendered dynamically, often personalized, and always on-demand.   

The largest retailers and online marketplaces require up to date and accurate product info and rich content for their real-time execution. The cost burden is shifting to brands and is requiring significant upfront investment to succeed online.

New Technology Providers Replacing Legacy Solutions

Against this backdrop, an entire ecosystem of Product Content specialists have emerged, spanning high-volume, global creative production studios to purpose built Product Information Management (PIM), Digital Asset Management (DAM) and Content Management Solutions (CMS) providers who aggregate and syndicate millions of product content assets required to keep e-commerce running.

An Active Market With Significant Investment And Consolidation

This sector has been incredibly active from an investing and M&A perspective as brands and merchants further invest in their e-commerce capabilities to meet the ever-increasing demand for flawless e-commerce experiences.

Select Financial Investor Activity

In Summary

As brand spend shifts to e-commerce execution, the wave of investment and consolidation in content technologies and solutions that drive discovery, conversion and retention will continue.  Success will be characterized by players with  the right capabilities to manage and automate delivery across an increasingly fragmented landscape.   


CASE STUDY – CNET Sale to 1WorldSync

  • JEGI CLARITY advised Red Ventures on the sale of CNET Content Solutions (CCS) to 1WorldSync, a portfolio company of Battery Ventures 
  • CCS is a leader in the exchange of product information, rich content and eCommerce solutions that powers ecommerce sites from SMB to Enterprise 
  • Eight weeks from engagement to announcement, commencing several weeks prior to the closing of the acquisition of CNET by Red Ventures 
  • Combines two powerful platforms to provide brands and retailers with end-to-end product content solutions, from supply chain data to rich content that powers e-commerce

Media, Information & Technology: Public Market Perspectives

Media, Information & Technology: Public Market Perspectives

We have conducted analysis on the public international media, information and technology equity markets to explore how the broader segments and underlying sub-sectors have fared in terms of valuation and profitability YTD.

We have also analysed how businesses are viewing 2021 in terms of revenue growth projections and recovery.

Key Takeaways

Total equity market value up by 8% since January 2020
The Media, Information & Technology public equity markets continue to perform strongly, with total market value up by 8% since January 2020 against a backdrop which has seen other  benchmark indices fall 5 – 15%.

2020 EBITDA outlook revised down by aggregate $65bn
This growth in total market value has been achieved despite uncertainty around 2020 outlook which currently shows a material decline in the 2020 earnings; notably current. 2020 EBITDA market estimates have come down by $65bn since January 2020.

Average 12% revenue growth forecast for 2021 across sectors
From a valuation perspective, it feels clear that investors are looking through the 2020 numbers and pricing in strong recovery across virtually all sectors, with 12% total market revenue growth forecast for 2021.

From an M&A perspective, whilst the valuation environment remains opaque, it is clear that the strong stock prices which many corporates have sustained through this period will be highly relevant in terms of deal pricing, consideration, and structure.

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