QYOU Media (TSXV: QYOU) (OTCQB: QYOUF) is a business that aims to blend entertainment and social media stars. You might have heard about them in our latest podcast episode featuring QYOU Media co-founder and CEO Curt Marvis.
Want to listen? Click Here to subscribe on your favourite podcast platform!
How does QYOU Media work?
The bulk of the company’s operations is focused on India, which QYOU has identified as a market with high potential due to its vast and young population, growing middle class and increasing exposure to technology and social media.
Here, the business has launched several TV channels, available through traditional network television and online or smart TV applications, featuring influencer-led content for viewers to enjoy. Meanwhile, it also operates influencer marketing campaigns in both India and the United States, running campaigns for major brands, film studios, game publishers, and brands.
The first episode of The Investing Intel Podcast saw Curt cover some interesting topics which are relevant to the QYOU business and more generally for retail investors looking at media and entertainment stocks.
Entertainment in India
Curt Marvis characterized India as a major growth opportunity for media and entertainment companies, and it’s not difficult to see why.
First off, there’s the fact that the Indian government has set a growth target for the media and entertainment sector of over $100bn by the year 2030. When Ministry of Information and Broadcasting Secretary, Apurva Chandra, set this target back in September 2022, he said it currently stood at just $23bn.
This, coupled with the ministry’s assertion that it “will do whatever it takes to support the M&E sector and help it grow”, certainly seems to point to real opportunity.
There are also many signs that digital media is already undergoing significant expansion in the nation.
According to Invest India, the nation’s digital media segment expanded by 29% to reach $5.2bn in 2021, while rapid adoption of new technology by the nation’s expanding middle class is expected to see the number of SmartTVs quadruple between 2021 and 2025.
As detailed in our analyst brief for the media and entertainment space, expansion into emerging markets is a major opportunity for businesses in this arena. As such, retail investors would do well to pay attention to what kind of geographic expansion efforts companies are launching.
The Rise of the Influencer
Another key topic discussed was the power of influencer marketing and the way in which advertisers are adapting their strategies to incorporate this new method of reaching out to prospective customers.
Research from influential business intelligence outfit Morning Consult found that just under three-quarters (72%) of Gen Z and Millennials follow at least one influencer on social media. The same research found that 50% of Millennials trusted the influencers they followed when it came to product recommendations, compared to just 38% for their favorite celebrities.
Meanwhile, Hubspot’s 2023 report into consumer trends found that 33% of Gen Z had purchased a product based on an influencer recommendation in the last three months. The same report noted that even Generation X is getting in on the act, with 18% of respondents in the age bracket having bought based on influencer advice in the past three months.
With this much apparent power, it’s no wonder that Influencer Marketing Hub claims that 93% of marketers have worked with influencers for campaigns.
Therefore, it seems likely that influencers will be increasingly active in the advertising landscape, creating serious opportunities for companies like QYOU Media.
What can retail investors take from this lesson?
Primarily, the shift towards influencers is an illustration of the rapidly changing way in which media and entertainment companies have to operate. It's a wake-up call to investors about the importance of businesses being at the cutting edge of both technological and societal change.
Of course, influencer power isn't the only change gripping the industry right now. New technologies like virtual and augmented reality are keeping companies on their toes, while 5G offers increased prospects for connectivity.
Stocks that fail to keep up with the times run the risk of failing to maintain a healthy share price!
Make sure to keep an eye on news stories, press releases and earnings updates in order to ensure the media and entertainment companies you're backing are not reluctant to innovate.
Diversification Situation
Diversification was another key topic within the media and entertainment industry, as far as Curt Marvis was concerned.
You only have to look at some of the industry’s biggest names to see that diversification is clearly a key practice.
Take Disney (NYSE: DIS), for example.
The company has expanded from an animation studio to a business that incorporates broadcast networks, direct-to-consumer offerings, leisure parks, merchandise and more. There’s even diversification within these categories, with TV channels including The Disney Channel, ABC News, National Geographic, FX and others.
There are a wide array of strategies for media and entertainment companies looking to diversify. Major players like Disney can look to snap up a variety of media organisations and pump money into branding and merchandise, but other outfits may look elsewhere.
For example, streaming companies might look to adopt ad-supported models as they find that relying on subscription fees alone leaves them too open to macroeconomic ructions. TV and film outfits might stray into the world of video games, looking to capitalize on what is now the highest-grossing segment of the entertainment industry.
Forward-thinking outfits are even looking for ways to use NFTs and play-to-earn concepts to bolster their revenues.
Either way, there are certainly plenty of opportunities for media and entertainment companies to ensure their fingers are in many different pies. The problem for investors is identifying which efforts will be successful!
The important thing to note here is that diversification can cushion media and entertainment stocks against disaster, as well as create new opportunities for growth. Companies in the space often use mergers and acquisitions or strategic partnerships in order to expand their reach, diversify their content offering or strengthen their competitive positioning.
This is why diversification is an important thing to consider when evaluating a potential investment in the space, or when learning about M&A action in the industry. For example, some specifics to consider include:
Whether a proposed deal or new direction offers access to a new audience.
How valuable is this new market? Is it valuable now, or projected to grow in the future?
How competitive is the new market?
Is a newly acquired business growing or profitable? When will it be?
What new technological capabilities does a deal or project provide? Will it mean there are new options for content or content distribution?
If you can look at diversification with probing questions like these, you are on the way to evaluating a stock's potential and finding your next investing idea!
Want to find out more? Click Here to subscribe to The Investing Intel Podcast on your favourite podcast platform!
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