With the rise of smartphones, digital content has quickly become a growth segment for content providers around the world. With the market for digital content anticipated to grow at an annual rate of 10% per year, the market segment is set to expand by US$283 billion over the next four years. As a result, media creators have been forced to adjust their means of delivery to accommodate that changing nature of content consumption by consumers.
One such company that is focused on the new norm in terms of media consumption, is QYOU Media (TSXV: QYOU). QYOU is a media platform that curates, packages, and markets premium video content across multi screen and multi platform distribution lines, as well as providing influencer focused marketing campaigns for clientele. QYOU creates and licenses made-for-web original content, which is then repackaged into several formats for consumers. With a global footprint, the firms content is available across several countries and is found in linear media (i.e. traditional television channels), mobile apps, over the top (OTT) and video-on-demand services.
Having recently realigned its business strategy, QYOU has focused in on three target markets. While heavily focused on millennials, a traditionally under served market when it comes to media content, QYOU has honed in on the markets of India, Poland, and the US as three desirable markets to succeed in.
These markets were selected based on growth projections for digital content consumption over the next several years. Current industry estimates suggest that 41% of future growth will come from the Asia Pacific (APAC) market space alone as more individuals attain middle class status and obtain access to smartphones and other viewing devices. The youthfulness of this region further contributes to the target market that QYOU has elected to pursue, a segment that is also heavily impacted by social media influencers.
Within India, QYOU has partnered with SonyLIV, the leading over the top media provider in the country to develop The Q India. The Q India is a 24/7 linear channel the brings digital first media to Indian homes. The channel has partnered with some of the most influential content creators within the country, and has developed a number of original shows for its viewers.
With respect to the Polish market, YouTube is now reportedly the most popular digital content provider within the country. This accomplishment reflects the short form nature of modern media consumption, which is exactly what QYOU has capitalized on via its curated on demand and linear television services.
QYOU has partnered with two firms in the country, Player.pl and Toya, to provide its content to viewers. In the case of Player.pl, the platform is now the most popular over-the-top (OTT) services in the country, offering both live and on-demand shows for its five million monthly viewers. QYOU has been selected to provide eight original shows to the platform, with content created from some of the most popular YouTube channels in the country. With respect to Toya, the firm is one of the top five cable networks within Poland. QYOU has been selected to provide a linear television channel to Toya, which will feature curated digital content. The channel will also be made available via Toya’s mobile app, in addition to QYOU’s content being made available via the firms video on demand service.
While QYOU Media has admittedly had two poor quarters recently, the declining revenue was a result of losing major client Sinclair Digital Group in September 2018. In the most recent quarter, on a year over year basis, revenues were down 66% due to the impact that this single client had on top line revenue. The company has released material information however that suggests the fourth quarter will provide some revenue recovery for the fiscal year.
Specifically, on June 3, the company released that it was on track to reach $1.3 million in segment revenues for influencer marketing alone for Q4 2019, which is a 270% increase over the third quarter for the segment. In terms of top line revenue growth, on a quarter over quarter basis it represents growth of 116%, and year over year an increase of 78%. While annual revenue is likely to remain down on a year over year basis, the fourth quarter is expected to provide significant revenue recovery for the year.
QYOU Media closed Friday’s session at $0.08, flat on the day.
FULL DISCLOSURE: QYOU Media is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover QYOU Media on The Deep Dive, with The Deep Dive having full editorial control. Additionally, the author personally holds shares of the company. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
