Riches in Niches and the 40% of Non-Whites (2022 Prediction)

We’re in the midst of not one, but two, once-in-a-generation paradigm shifts: the “Streaming Wars” and the “Audio Wars”. And industry players are spending big on "land grab" strategies to own tomorrow's consumer. But in 2022, we expect the deal flow to evolve, where streaming and podcast platforms will:

1. Expand their audience acquisition efforts beyond “core” consumers and into underserved communities (e.g. BIPOC, LatinX, AAPI, Women, Gen-Z, etc)
2. Generate incremental audience reach, while increasing platform stickiness and deepening monetization by onboarding passionate affinity-groups (e.g. sports fans, true crime fans, kids & families, etc.)

These two goals share one solution: specialized content creators dedicated to valuable niche verticals. There’s a lot to break down here, so we've split up this analysis into a 2-part episode.  

Today we walk through how the next phase of the “IP Wars” -- across both video and audio -- will be impacted by a renewed emphasis on studios and production companies that cater to underserved / multicultural audiences. Then on our next episode, we’ll break down the role of creators that cater to passionate affinity-groups.

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EPISODE TRANSCRIPT:

Chris Erwin:

So Andrew, you just wrote a beast of a piece that is our first 2022 prediction. And that is that the IP wars will evolve to prioritize specialized creators that super serve distinct communities. I will say, look, the feedback I got from some of our readers is how long did it take to write this thing?

Andrew Cohen:

Well, we wrote a long one about the IP wars and M&A in the fall. And I guess had a lot more to say. There's a lot going on. So excited to get into it.

Chris Erwin:

It's funny, every time you and I talk about an outline for our predictions, we're like, all right, let's try and get this down to two pages. And then it comes out five times the size and we're okay with it because it's good content.

Andrew Cohen:

I appreciate the leeway.

Chris Erwin:

All right. So let's set this up for our listeners. We are in the midst of not one, but two once in a generation paradigm shifts, right? The streaming wars and the audio wars, which we've written extensively about in 2021. Both markets are undergoing transformational growth. So for example, the OTT video market is projected to be worth 218 billion by 2026, that's a 19% CAGR from 2020. And then in terms of audio, monthly podcast listenership is expected to hit 164 million by 2023. That's a 41% increase from 2021. So as a result, both industries are undergoing land grab spending sprees, operating on a similar principle, spend aggressively on IP and talent that will attract and retain audiences in an effort to win market share today while each market is in its formative stage, and consumers are developing their routine. Those who do this successfully will become the default destination for generations to come when the market is fully matured.

Chris Erwin:

So there's a few different deal examples I'll quickly walk through here. I think we had initial like 30 deals on this list, but we got it down to four. So on the video side, we're seeing studio and production company M&A, we saw Candle Media acquire Moonbug Entertainment for three billion in November of last year. And then we've also seen interesting IP and talent deals on the video side as well. So I think ViacomCBS paid $900 million to expand and the uni