3i on the future of the media sector given exponential growth in user generated content

01 November 2007

3i, a world leading private equity and venture capital firm, brings together investors and industry formers across the global media sector to discuss the growth of social media and user generated content, its impact on traditional media and advertising models and predict the future direction for successful companies in its latest report “Engage or Die”.

In the first of a series of three 3i sector reports focusing on the transformation of the media industry in the digital age, influential business leaders from 3i’s global network and 3i’s media experts, share their views. Senior commentators include Richard Rosenblatt of 3i backed Demand Media, Jeffrey Revoy of Yahoo!, Jeff Henry of ITV, Heather Hopkins of Hitwise UK, Peter de Monnick of Reed Elsevier (Business). Podcast interviews are available via 3i’s new media microsite at http://media.3i.com/page/podcasts.

According to PWC Global M&E Outlook 2007-2011, the global entertainment & media sector is forecast to be worth $2 trillion in five years time, growing at a compound annual growth rate of 6.4%. Around 50% of this growth is expected to originate online, with forecasts of 540m broadband Internet subscribers driving migration to digital formats and the rise of user generated social media having adverse impact on competing revenue streams and content fragmentation. 

In the report, 3i and business leaders discuss the changing face of the sector in light of the rising influence of user generated content and social networking, the associated challenges and opportunities for traditional media firms and how industry players and advertisers need to adapt their approach and business models for success in the new digital age.

Issues covered in the report include:

• Future of the media sector: where will the next wave of growth come from? How will advertisers and income streams adapt to survive?

• Advertisers cannot ignore the growth of millions of prime audience (users of all ages) congregating online and avidly consuming and contributing text, pictures & film

• Democratisation of Content: Consumers are now creators and editors of content, challenging traditional media industry roles. As the lines blur, who are the experts and who stands to benefit?

• Increasingly creative approaches and deeper engagement with audiences is required for media giants to maintain their leading positions in the sector

3i has a 50-year track record in the media sector and a current investment portfolio worth more than €600m.  3i is a multistage investor, from venture capital to mid market buyouts and quoted private equity investments and in the last 5 years, has made more than 20 investments in the media sector worldwide.

Some of 3i's global media investments include: 

UFO Movies – world’s largest digital cinema chain – India
Demand Media – new generation media company – US
VNU Business Media – B2B magazines, online/offline recruitment classifieds - Netherlands
Sparrowhawk Media–leading multi-channel pay TV provider - UK
Character Group Plc - market leading toy company (Dr Who, Scooby-Doo etc) - UK
Chorion – IP owning, brand creation and management business - UK
Se Loger - real estate web listing services – IPO - France
Shine Ltd - independent TV production - UK
Nimbus Communications – TV and production - India
Sparrowhawk Media International - international channel and library business - UK
Boxer – digital terrestrial TV platform – Sweden
Grupo Presna de Melilla - publisher of free local newspapers - Spain
Total Home Entertainment - wholesale & distribution of home entertainment – UK
1-2-3 TV GmbH - auction TV channel – Germany
Qualiclick.com AG - web advertising agency – Switzerland
Precise Media –leading press cuttings agencies -  sold to Phoenix Equity - UK
Local Press Ltd. – N.Ireland based newspaper group – N. Ireland
Fotolog – world’s largest photo-blogging community – acquired by Hi-Media - US
BlueLithium – online advertising monitoring – acquired by Yahoo! - US
ScreenTonic – the mobile advertising company – acquired by Microsoft - France
FocusMedia Holding Co Ltd - digital media advertising – IPO- China
Magix AG - multimedia education and entertainment software – Germany
YBR (Yellow Brick Road) – pan European directories business – Europe
Sulake (Habbo Hotel) – global virtual community for teenagers