Why private equity firms are flocking into digital media investments
Finance - Opinion

Why family offices are investing in digital media

(Last Updated On: October 9, 2023)

The digital media industry has been attracting more investments from family offices and private equity investors. This is largely because of the potential for high returns on investment and growth opportunities in this sector.

In this article, we will explore why digital media companies are attractive to family offices and private equity investors, what factors to consider when investing in digital media companies, and some of the opportunities available for these types of investors.

Middle East Market

The Middle East market is a growing market.

The region has a young and growing population with a high level of internet penetration. The Middle East is also tech-savvy, with more than 60 percent of its population connected to the internet on smartphones or tablets.

This makes it an attractive market for digital media investment, as users are accustomed to accessing content online rather than through traditional means such as newspapers or television channels.

There is also a growing demand for digital content in this region, as more people use smartphones and other mobile devices to access the internet than ever before; they’re hungry for entertainment options that go beyond traditional media formats like TV shows or movies (which often aren’t available locally).

Factors to consider

  • The company’s business model. A digital media company’s business model will determine how it generates revenue and profits, as well as its valuation. Some companies charge consumers to access their content while others rely on advertising revenue. Here are some examples of different digital media business models:
  • Premium subscription service (Netflix) – The consumer pays a monthly fee for access to content that may be exclusive or otherwise unavailable elsewhere; this type of service is also referred to as “OTT” (over-the-top) because it operates outside traditional cable providers such as Comcast or Spectrum (formerly Time Warner Cable), which typically charge customers based on bandwidth consumed rather than per channel accessed by subscribers;
  • Freemium model – Users receive basic services free but must pay extra if they want additional features such as HD quality video or live streaming capabilities;
  • Free-to-play games – These titles allow players unlimited gameplay without paying anything upfront; however, some require additional purchases like coins/gems/bucks etc., which can be purchased from within the game itself using real money rather than being purchased directly from developers themselves through third party marketplaces like iTunes Store where users can purchase apps directly from developers without having any previous contact with them beforehand

Opportunities

The growth of the digital media industry presents a number of opportunities for family offices and PE investors. These investors can gain exposure to this rapidly growing sector by investing in digital media companies, which are often high-growth companies with strong profit margins and low capital requirements.

There are many different ways for family offices and PE investors to invest in digital media companies: direct investment, private equity (PE), venture capital (VC), hedge funds focused on tech-enabled businesses such as Shahid, Watch It or PodU — the list goes on!

Risks

As with any investment, there are risks to consider when investing in digital media companies. Some of the key risks to consider include the volatility of the market, the risk of competition, and technological disruption. The first two may seem obvious but investors should be aware that there are other factors that can impact their investments as well.

For example, companies may have access to venture capital funding or private equity financing but if they choose not to take advantage of these options then their ability will be limited by cash flow constraints or lack thereof (which could lead them down an unsustainable path).

The riskiest part about investing in this sector comes from how fast things change: technology advances rapidly so it’s critical for investors — especially those who invest over longer periods like family offices and PE firms — to keep up as best they can because otherwise they could easily miss out on opportunities while also missing out on potential returns due simply because they were not keeping tabs on developments within an industry closely enough!

Conclusion

The Middle East market is growing, and with it comes opportunities for family offices and PE investors to capitalize on the growth of digital media companies.

There are many risks that must be considered when investing in such companies, but the rewards can be great if you do your research before jumping into any deals.

Ahmed Mousa is CEO of Rubik Advertising, a marketing and advertising agency specializing in digital media and branding. Has over 15 years of experience in marketing, has been featured at The Database of Experts of The Arab League of States, and has worked with luxury brands such as BMW.