Finance

One of tech and media’s most influential investment bankers thinks 2020 could see a shakeout in the streaming wars — read the full memo he sent to staff

  • Aryeh B. Bourkoff, a tech, media, and telecom banker who founded LionTree Advisors, said “profitable, scaled businesses” that have survived many new challengers should last for at least the next five to 10 years.
  • Instead of fighting startups, as they did in the last few years, those incumbents will battle each other for market share. 
  • For 2020, Bourkoff said that the streaming wars represent one area where big players are crowding a space that’s also competing with video games and other entertainment.
  • He also highlighted hot areas for young companies, including audio, video gaming, beauty/fashion/luxury, food technology, and health and wellness. 
  • Despite a public-private disconnect, Bourkoff said he expects the IPO market to stay open for private equity-driven companies and exits. 
  • Click here for more BI Prime stories

A top tech banker used a Futurist sculpture that sold last month for a record price – $16.2 million – as a metaphor for how he’s thinking about market tensions right now. 

Aryeh B. Bourkoff, the LionTree founder and renowned tech, media, and telecom banker, said in a letter to staff on Wednesday that Umberto Boccioni’s “Unique Forms of Continuity in Space” sculpture “serves as a metaphor for the tension and synthesis between scale and motion that we are seeing right now.” 

Unique Forms of Continuity in Space

Umberto Boccioni’s “Unique Forms of Continuity in Space”
Creative Commons

Bourkoff wrote that “profitable, scaled businesses” that have survived many new challengers should last for at least the next five to 10 years. In the last few years, fighting startups made these businesses “stronger and more creative.”

Now, established companies’ fight needs to focus on battling peer incumbents for market share and to continuing to innovate internally. Last year, Bourkoff wrote that one of 2019’s hottest issues would be direct-to-consumer video

For 2020, Bourkoff said that the streaming wars represent one area where scale players are crowding a space that’s also competing with video games and other entertainment for consumers’ time and money.

Now, incumbents’ scale across industries could limit startups’ access to capital, making funding more expensive.

“The differentiated cost of capital for scale players relative to smaller companies, driven by more discerning capital markets, bodes well for larger companies. This reality will likely force mergers among sub-scale companies and sharpen distinctions between winners and losers,” Bourkoff wrote. 

Despite those challenges, he highlighted a number of hot sectors for young companies: audio (music and podcasting), video games, beauty/fashion/luxury, food technology, and health and wellness.  

Bourkoff said incumbents will also look to some of those areas for acquisitions. He added that there will be fewer cross-border deals in 2020, with more in-market focus. Because of the ongoing public-private market disconnect, Bourkoff expects to see an uptick in private sales, although the IPO market will remain open for private equity-driven companies and exits. 

Read Bourkoff’s full letter here: 

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Most Popular

To Top