It’s a new year for the tech industry in Barcelona, and we have high expectations for the future of our founders and our startups, but we wanted to hear the opinion from two people having their finger on the pulse of the city’s tech industry every day.

Aleix Valls, director of Mobile World Capital and CEO of 4YFN is organizing the fourth edition of the city’s biggest startup event, 4 Years From Now, that this year will attract 20.000 people from all over the world:

The biggest change in 2017 will be how the big corporates starts to interact with the startup scene. We’ll definitely see it at 4YFN, but also in general.

Scott Mackin, editor of Barcinno, Barcelona’s community driven tech blog agrees with Valls:

The giant corporates has awakened, and they recognize that they move too slowly, and that there’s new faster companies out there that can compliment their business. This will change the game in the years to come.

The Champions League of tech hubs

Both Mackin and Valls interact with Barcelona startups every single week.

Valls explains how he believe that the next 4–5 years Europe will establish several hubs for technology and innovation, each for their own sector or technology.

He tells itnig that the race to become a specialized tech hub in Europe has already started, and that Barcelona has positioned itself well for the e-commerce sector:

The next years will be the Champions League of becoming the main tech hubs on the continent. Because of this trend, I think we’ll see more and more local startups moving away from consumer facing products, and focus on B2B business models where they’ll get revenue in from day one.

Mackin says there has been many impressive B2B startups coming out of Barcelona the last year:

We’ve been needing the involvement of the corporate sector in Barcelona for a while, and hopefully it will attract more talent, and also raise salaries. To mention one of the startups bringing a lot of buzz to the B2B sector right now, I have to say Travelperk, aiming at changing corporate travel. I hope we see more of these companies, bringing in revenue from day one.

Desperately needs exits

As Valls compares Barcelona to other European startup hubs, one of the main needs he points to, is more exits.

Both London, and especially Berlin with Rocket Internet has these big tech companies both acquiring and exiting startups, and stimulates the whole tech ecosystem. We need that in Barcelona as well.

Valls also underlines that he thinks Barcelona needs more PR, not only to attract tourists, but to show the world how big and vibrant the tech ecosystem really is.

Mackin says that a lot of good things are happening in Barcelona right now, but there’s still a lot of unleashed potential:

We’re starting to build hubs, especially with Pier 01 with over 1.000 professionals gathered under the same roof. What we need now is more events, content and socializing to create an even stronger community

https://upscri.be/285782-2

The biggest challenges

Valls points to several things Barcelona needs to improve to foster more startups.

There’s tons of positive development in Spanish startup ecosystem, but there are also challenges.

Valls points to new tax regulations for business angels as something that could help attract more investment. Another thing is stock options, as you often can’t offer the best salaries in startups and stock options in the company is what keeps the talent in house for years:

In Spain you tax on stock options that hasn’t been cashed out yet, and that’s terrible for startups. A good idea could be to regulate stock options in technology startups differently than in regular businesses.

The 4YFN director also wants to see better VISA opportunities for entrepreneurs.

Editor Mackin, who is American, says he’s grateful for the entrepreneurial VISA that already exists in Spain, but says that it should be much easier to obtain, than it is today:

I think we need to learn from our European neighbors, France for instance has more incentives for startups and young companies than in Spain, and the same goes for other countries such as in the Nordics and in Germany.

As the last question of the podcast, the guys were to answer the question what Barcelona based startup they saw as most promising in 2017.

Valls looks to Typeform:

Through MWC we invest in many startups, but if I would say a company where I’m not biased, I would say Typeform is this kind of B2B company, that will do great things in 2017.

Mackin has his own favorite:

I would point to Kompyte, also a B2B company with a very impressive product. They’re growing fast, and now they’ve gotten into 500 Startups as well, so I think we’ll be hearing more from them in 2017.


If you missed our last podcast, take a look here:


This post and podcast was produced by @sindre hopland, media manager at itnig.

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T.

The reasons why Disney will dominate the media industry

The perception that Disney is only a producer of children’s content is long gone. The company has managed to multiply by 10 its market capitalization in 10 years and I believe it will do it again in the next 10 years based on 3 factors: content, the entry in new businesses and spillover effects on current businesses.

CONTENT

Disney has been making movies for almost a hundred years. They have been movies for all the family but targeted to kids, which are the ultimate decision-makers when going to the movies. This is an example of the classical content they were producing up until the last 10 years.

Found in Pinterest https://www.pinterest.es/pin/129548926755761740/

Despite having a powerful content library, Disney has amassed the most impressive collection of content in the world via acquisitions:

  • 21st Century Fox: 71B
  • Lucasfilm (2012): 4B
  • Marvel (2009): 4B
  • Pixar (2006): 7B
  • Hulu (2009): ??. They acquired 30% and an additional 30% with the acquisition of Fox

With the recent acquisition of Fox, there are only big four other movie studios left in the market: SonyWarner BrosUniversal, and Paramount.

Just to give perspective. This is the list of the top 3 grossing movies for the last 3 years. Spoiler, they are all from Disney:

  • 2017: Star Wars The Last Jedi (rubbish if you ask me), Guardians of the Galaxy 2 (not great) and Beauty and the Beast.
  • 2018: Black Panther, Avengers: Infinity War and Incredibles 2.
  • 2019: Avengers: Endgame, Captain Marvel and Aladdin (Still not counting with Toy Story 4, Spiderman, The Lion King, Frozen 2 and Star Wars: The rise of Skywalker)

Having content as an asset in the movie industry is relevant because of the fact that over 90% of every year’s Top Box Office Hits are not original. Notice that the 9 hits mentioned above are not original content, including Captain Marvel which is a character well known despite debuting in theaters. Moviegoers are risk-averse and showing characters the public is familiar with is synonymous of success in a market where the production of a movie can cost hundreds of millions of dollars.

Another essential part of the content are the actors. They give credibility to a movie and top talent can’t wait to appear on a superhero movie. Just look at the roster of Avengers Endgame with cameos from the likes of Robert Redford, Rene Russo, Michelle Pfeiffer, Michael Douglas, Natalie Portman, William Hurt, Samuel L Jackson or Ken Jeong, the Asian character on The Hangover. All of this without accounting for the main characters. Where else can you see this?

Source: https://www.editorchoice.com/avengers-endgame-cast/

NEW BUSINESS

One of the acquisitions mentioned is Hulu, a streaming platform in the US which also allows watching live content. I believe this is the future. Cable TV operators are doomed. The number of subscriber to Cable TV in the US has declined over the past years.

Source https://www.statista.com/statistics/536356/cable-shopping-networks-revenue-usa/

It’s clear the consumers are opting in to streaming on-demand platforms such as Netflix, HBO, Hulu, and Amazon Prime. That’s why Disney is launching Disney +.

This is a global trend. People across the world may not own a TV, but they have smartphones and internet connection. Netflix has launched a 3$ monthly cell-only subscription in India. Check this relentless growth of subscribers by Netflix.

Take a look at the last Shareholders report by Netflix, a public company that is burning billions every year -3,5B$ in 2019- and is expected to invest 15B$ in 2019 alone in new content. In my humble opinion, Netflix has by far the best streaming platform and the content is remarkably good, just look at the masterpiece Stranger Things season 3.

Source: https://s22.q4cdn.com/959853165/files/doc_financials/quarterly_reports/2019/q2/Q2-19-Shareholder-Letter-FINAL.pdf

Netflix will be the main competitor of Disney, who will claw back its content from other platforms over the next years, reducing the earnings of licensing rights, but attracting customers to their platform. I believe there will be a time where platforms won’t share much content, but eventually, this will rise opportunities for multiplatform viewing apps and some years from now, platforms will reshare content once they settled a loyal customer base. Users will be subscribed to multiple platforms and they would still like to watch what’s best in every one of them. It’s not a winner take it all market.

My final bet is that there’s another big piece of content that is currently slipping away from streaming platforms, live sports. This is the last resort of traditional TV and cable TV operators who have been able to tell customers when and where to watch TV. This is no more, TV is dead.

SPILLOVER EFFECTS

Let’s get some perspective here. Disney is a corporation that currently (2019) has annual revenues of around 70B$ and a net income of around 13B$ (15–20%). Where do they make money from? This is a comparison YoY between the fiscal years ended on September 30th. of 2018 vs 2017. All areas grow except for merchandising. Figures in B$.

Source: company reports

MEDIA

The main source of income is Media Network, which comes from ESPN, Disney Channel, ABC… Here’s the evolution of this revenue stream fro the last decade.

Source: https://www.statista.com/statistics/193211/revenue-of-walt-disneys-media-network-business-since-2008/

With the acquisition of Fox, this chart is going to experience a huge vertical shift.

PARKS AND RESORTS

Parks and resorts are the second biggest revenue stream of the Mickey Mouse company.

Walt Disney World Resort (Flick: Atiq Nazri)

This is a chart with the number (in millions) of yearly by visitors by each park. Around 150 million people go to a venue managed by Disney somewhere on the planet. This can only be achieved by a great hospitality experience and the best content:

Source: https://www.statista.com/statistics/194247/worldwide-attendance-at-theme-and-amusement-parks-since-2010/

STUDIO

This is the revenue that comes from the distribution of movies and music.

The chart below displays the Box Office market share evolution. Disney has managed to multiply by 2,5 in ten years, and now with the inclusion of Fox, the market share could get just shy of 50%, which is ridiculous. This is a major spillover effect from the massive content acquisition.

Source: https://www.cnbc.com/2019/06/14/disney-on-pace-to-earn-9-billion-at-the-global-box-office-in-2019.html

DIRECT TO CONSUMER

This is where the new platform Disney + will come into play. Disney + is a SVOD (Subscription Video on Demand) as far as we know. Other alternatives are AVOD (Advertising Video on Demand) where the users access for free but get adds (Youtube) and TVOD (Transactional Video on Demand) which is what Google is doing among others.

One of the first screenshots Disney shared for Disney +

So far they have had Hulu in this category, but with the introduction of Disney +, this will become of the main revenue streams for Disney. Eventually, the main one if you ask me. My guess is that in one year, Disney + can produce revenues of about 20B$ and grow from there. This is what Netflix is doing right now.

The advantage of Disney + is that they already have the content and they would only need to produce specific content for the platform such as The Mandalorian or the Marvel spinoff series with Black Widow and more. That would imply big operating profits since most content has already been amortized. The downside, however, will be the loss of the licensing revenue they get from streaming onto other platforms included in the Studio section. I’m betting this will be a money-printing machine.

CONCLUSION

Disney is a company that has endured through decades and over the last years has taken on a path of content acquisition and generation that pays off very well. This is why I am “hodling” on its stock.

Disney’s stock price evolution over the years