Lightspeed, Union Square Ventures, and other VC firms reveal their media predictions for 2020 and key trends they’re keeping a close eye on
- Investors from five top venture capital firms including Lightspeed, Union Square Ventures, and Comcast Ventures shared their top media predictions for 2020, including the rise of text messaging and mega influencers.
- 2019 was a tumultuous year for text-based news media, but some see opportunity in streaming media, podcasting, and gaming.
- They predicted a strong market for subscription-based services even as more streaming players crowd the market and that text-based advertising would thrive on marketers looking for an alternative to Facebook.
- They also debated whether 2020 would be a tough year for Netflix.
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Digital media just had one of its toughest years ever, with thousands losing their jobs and once-hot content companies shedding billions in value.
Venture capitalists went from hot to cold on these companies after they failed to meet aggressive growth expectations. Some are waiting until the next big platform innovation to come along that will provide the next springboard for media like the iPhone did in 2007.
But some investors still see pockets of opportunity in media. The streaming wars kicked off as media giants try to compete with Netflix; big platform investments in audio present opportunities for content creators and advertisers; and more media companies are finding success charging for subscriptions.
We talked to top investors from five venture capital firms who walked us through their biggest predictions for media in 2020, from the rise of text messaging-based marketing to the explosion of subscription services to the threat facing Netflix.
Comcast Ventures: There’s a fast-growing market for paid audio
Comcast Ventures, the 20-year-old investment arm of media giant Comcast, was an early investor in unicorns like Away and Hippo as well as buzzy media companies The Athletic, Vox Media, and Cheddar. It focuses on consumer and enterprise companies and has been investing in companies earlier in their life stage.
Amy Banse, head of funds and managing director, sees a growing market for audio, particularly paid-for content. Comcast Ventures is an investor in Tune In, an online radio streaming service that was early in putting audio content behind a paywall.
“People have been trained to pay for video, and I think they’ll pay for audio content as well,” Banse said.
Comcast Ventures is also betting on the future of gaming, with the popularity of Fortnite, the launch of Google’s Stadia, and spread of legalized sports betting.
Human Ventures: Email newsletters will (re)gain traction
Investor Heather Hartnett started Human Ventures along with digital media veteran Joe Marchese in 2015. It’s a $50 million fund and startup studio focused on companies that often have a community and wellness bent, such as Girlboss and Tiny Organics.
Hartnett, who is CEO and general partner at Human Ventures, is bullish on podcasting. She sees it as a way to test how an audience will react to a trend, story or person before investing heavily in content creation. But the delivery of audio content is still archaic and hard to measure, so tools to measure its delivery will be crucial.
She also sees daily email newsletters — which were big in the mid-2000s with the rise and exits of companies like Daily Candy — rising again. A few with highly-engaged audiences like Morning Brew, Axios, and theSkimm (a Human Ventures investment) could become springboards for new products and services.
“Effective curation, trust and format is key with these,” she said. “I don’t think people realize how much traction the good newsletters have. Their audiences are sometimes millions strong and very engaged/willing to act and buy.”
Lightspeed: Text messaging will be the new marketing channel
Partner Nicole Quinn focuses on media along with platforms, marketplaces, and ecommerce companies at Lightspeed, where her investments include wedding registry Zola, direct-to-consumer shoe company Rothy’s, and wellness e-commerce site Goop.
While other investors look to newsletters and audio as the next trigger for media innovation, Quinn believes that as it gets more expensive to advertise on Facebook and Google, text messaging will surge as advertisers look for other marketing avenues.
Text messaging is a popular distribution method of one of Quinn’s investments Cameo, which lets people send their friends personalized messages from celebrities.
“Text messaging is really underutilized. Some companies are trying to build up businesses with Groupon-like messages, but text messaging has an open rate that’s double that of email,” Quinn said. “You pay more attention to it. So it could be a new platform for marketing and new media companies to rise off of.”
Quinn also agrees with Wilson that subscription content will take off in 2020 as cord-cutting frees up money for content that people will pay for — provided it fills a need and it’s regularly used. (Meditation app Calm is another of her investments.)
“In media, some subscriptions won’t make sense if they’re not premium enough or people don’t use it enough,” she said. “There’s nice to have and need to have.”
Mastry: Netflix will face pressure
Rudy Cline-Thomas is a sports agent-turned venture capitalist whose investments have included buzzy startups like Casper and Lime.
Cline-Thomas said media startups chased easy venture capital money and it ended up killing many of them (one of his investments is The Players’ Tribune). Now, he sees the remaining venture-funded digital media companies going out of business or being bought, especially in the case of small, niche-focused ones.
He also sees risk to Netflix as the streaming market takes off, predicting that Netflix’s share price will crater as the company faces higher and higher costs to acquire new customers and difficulty pumping out new hit shows.
“All will show growth, but there just aren’t enough eyeballs anymore,” he said. “The new players will dilute [Netflix]. It’s almost impossible to continue their growth rate when you have that kind of competition.”
Union Square Ventures: Unbundling will benefit new streamers
Cofounder and partner Fred Wilson was an early investor in Twitter, Tumblr, Zynga, and Etsy. He’s known for nailing startup trends and taking contrarian stances. Case in point: he just put $5 million in John Heilemann and John Battelle’s media startup, The Recount, and thinks it’s a good time to invest in media companies. Meanwhile, other investors have soured on it.
He also thinks audio will become a bigger deal, citing the success The New York Times is having with its daily news podcast The Daily; and the popularity of Apple’s airpods. He sees digital media embracing traditional models, like Vox Media buying New York Magazine and Netflix investing in a movie theater.
Finally, he believes Netflix won’t have as grim a year as Cline-Thomas. Instead, Wilson thinks Netflix and the rest of the streaming media market will grow with the entry of new companies, as people ditch their cable bundles. (Read more of his predictions here.)
“The market is a lot bigger than anybody thinks, and there will be a dozen big streaming businesses. They can coexist and may even make each other better,” he said. “People are getting rid of their cable and buying internet service. It opens up spending power that’ll get invested in entertainment.”