As we look to the year ahead, there are some key trends I predict will drive the media sector in 2022 and beyond:
One or more streaming company will adjust their optimistic forecast down, though others may see an uptick
After two years of rapid growth fueled by rising consumer demand and the global pandemic, at least one of the leading streaming companies will reforecast or report results below their lofty expectations. The top 9 streaming services are forecast to account for over 1.3 billion subs by 2025, an increase of roughly 400 million from Q1 20221. As the market continues to shift, others may see sustained growth. Streaming fundamentals are changing due to:
- Streaming reaching saturation in some markets, as well as intense competition amongst newer offerings.
- The end of initial promotion periods that signed up new subscribers in 2021.
- Price increases as companies transfer the cost of content investments to subscribers.
Media companies will continue to rush into the NFT marketplace
As media companies look to monetize their content and IP through NFTs, they need to determine the best approach for capitalizing on the NFT opportunity.
- NFTs are becoming mainstream, with over $15B worth of NFTs sold on OpenSea in 2021 according to DappRadar2.
- Media companies will try to capitalize on the revenue and more importantly, the customer engagement opportunity that NFTs enable.
- Media companies will struggle with the challenges of operationalizing their NFT strategy. Those who emerge as market leaders will need a flexible and scalable approach.
Advertising markets will continue to outperform forecasts
The ongoing strength in ad markets has been surprising, with optimistic forecasts being exceeded, raised, exceeded, and raised again.
- For 2022 Zenith predicts a 12.2% increase in US total ad spending reaching $320.0 billion with digital media composing roughly $200 billion of that figure3.
- There are few signs of consumers reducing their spending. Strong, pent-up consumer demand hasn’t been sated.
- The emergence of legal sports betting, and rising adoption of crypto, continue to fuel growth. Heavy advertising from the sports betting and crypto sectors is likely to continue in 2022.
Video gaming shifts from “play for fun” to “play to earn.”
- Play-to-earn business models, in which players are rewarded with in-game assets, often cryptocurrency they can sell or convert to cash, will expand their mainstream acceptance. According to DappRadar there are now 398 active blockchain games, a 92% increase from the previous year.2
- The use of blockchain technology, including NFTs, is enabling the trade of digital gaming assets with crypto and fiat currencies, and increasing the number of participants.
Movie theaters will prove resilient
I’m less certain about this prediction, in part because COVID-19 will shape how consumers feel about attending in-person screenings. The market will approach, but not quite reach, box-office levels reported in 2019.
- As an optimistic sign for operators, sports and live entertainment attendance has remained high because consumers are eager to experience in-person games and performances. Compared to 2019, NFL attendance increased 1% in 2021 but due to tighter indoor restrictions NBA attendance has yet to surpass pre pandemic levels4.
- Studios have a strong slate of upcoming releases for this year and next, including titles that were delayed from 2021. These releases are bolstering market forecasts, with the return of marquee franchise films and potential box-office drivers.
- Health and safety requirements from government authorities and venue operators provide a degree of risk mitigation that will likely assuage consumer concerns.
Catalog sales drive music industry headlines
Established artists are lining up to sell the rights to their music catalogs for a variety of reasons.
- Investors see music as a compelling source of royalties, licensing, brand deals and other revenue streams, regardless of other economic conditions or trends. Catalog sales were over $5.05 billion in 20215. Musicians see a large payout as more certain than streaming, touring, or ancillary revenue. Catalog sales can also provide tax and estate-planning advantages in some circumstances.
- Strong competition among investors and record labels for lucrative revenue streams is raising prices, prompting once-reluctant artists to consider sales.
While these are just a few of the trends on the horizon, I look forward to seeing how they develop and the media sectors’ developments throughout 2022.
