by Steve Fisher, Special to CTC
For owners of tech companies, Verizon’s recent buy of a 24.5 percent stake in AwesomenessTV for $162 million reveals a heightened appreciation for what companies represent in our volatile world of technology. Sure, this deal represents big interests like Verizon, DreamWorks and Hearst. But it’s good for every man and woman working in our industry, here’s why.
Disruption Is A Good Thing
Most high tech products and services are again being seen (and now highly valued) as catalyst for growth. Smaller firms have traditionally executed building a better mousetrap, but to fully mature, companies with “disruptive” offerings still need stable companies with ample cash. Sometimes, when big corporations sense disruptive forces, the fear of exclusion kicks in. In other words, they’re willing to pay top dollar to insure they stay “hip” and aren’t left in the dust.
Young At Heart
To ultimately succeed, high tech needs the support of early adopters in order to fuel growth. In other words, we need money from young people. Often criticized and overlooked by today’s media, Millennials offer our only hope to spur innovation. The world has finally acknowledged that tech companies cannot march to glory without Millennials. Looking closely at the Verizon deal, the wireless company saw value in reaching this under-appreciated demographic with 24/7/365 content via digital device (read smartphone and iPad). Respecting and courting young adults is IN again. It can make us all rich. The last guy to truly appreciate the buying power of young people was Sir Richard Branson of Virgin fame. He didn’t even have to reinvent the wheel to become a billionaire; he just respected the needs and desires of 18-34 year olds.
Big Data, Big Money
Verizon’s recent purchase sets the bar and will lift the valuation of every new media company. I did some research, using all the big data available to me via the Internet. Verizon saw value in reaching Millennials and was willing to pay big bucks for entry into the digital space. I checked AwesomenessTV’s comScore numbers. comScore is a marketing analytics company many analysts depend on for tracking the world’s largest media. For January, Awesomeness delivered 27 million unique viewers to its online content. Going back to comScore, I looked deeper at the data. At the next position in terms of reaching Millennials is a company called VidaPrimo. They delivered almost 24 million unique viewers worldwide by engaging Latin Millennials, the fasting growing and most digitally savvy demographic, representing one in five of all US Millennials or 22.7 million people.
Higher Valuations Generate Needed Capital
So, if AwesomenessTV is now worth $650 million because of Verizon’s 24.5 percent stake, what is VidaPrimo’s new valuation based on viewership numbers only 5 percent below? $500 million? $100 million? I bring up VidaPrimo as an example because I have worked with one of its shareholders, Jason Peterson. Peterson heads up several tech companies, and bought a stake in VidaPrimo last year. He likens the increased valuation to the real estate market. “When a house in the neighborhood sells and sets a new high, it makes every home’s value go up,” says Peterson. “The important thing is that valuation is relative, but increased valuation makes it easier for us to get the backing we all need to grow our businesses.”
Bottom line, was Verizon’s $162 million venture into digital media worth it? I think that’s the wrong question. Only time will tell if AwesomenessTV can monetize itself enough to cover costs and return value to stakeholders. Only time will tell if a company like VidaPrimo gets higher valuation in the eyes of venture capitalists. What I do know is that people doubling down on technology helps us all to continue in our quest to develop life-changing products and services.
Steve Fisher is president of RPG Los Angeles, a public relations and marketing firm that handles numerous tech and entertainment clients. RPG is a proud member of CTC.