Media distribution technology diligence

Challenge

A leading investment firm was considering an investment in a company that supported the distribution of digital video through over-the-top (e.g., Netflix) and IPTV (e.g., AT&T U-verse) platforms. While IP video viewership is increasing exponentially, the target company’s growth prospects were more closely tied to growth in the availability of new video content. Therefore, the client was most interested in how different types of media might be distributed through IP platforms in the future.

Solution

We conducted a detailed study of the media market to size the existing libraries and future sources of content from producers. We then evaluated the technical IP video distribution architecture to understand how different types of video files might flow through the various steps along the distribution value chain (e.g., each step between recording video at a production site and video showing up on a user’s screen), depending on distribution sources (e.g., online, IPTV, apps). Through this study, we were able to identify and size the various market demand drivers and turn these drivers into a revenue forecast for the target company.

Results

This study helped the client to better understand the growth potential from the target investment and refine their overall investment thesis to focus on the specific trends that are most relevant to the target’s position. This thesis ultimately led the client and Altman Solon to evaluate several other potential investments to ensure that the fund’s position was aligned with the most attractive market trends.