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Chart of the Week – Update | Despite Raising Over $2B in Capital, Digital Media Darlings Sputter
Source: Total Capital Raised for each company sourced from Crunchbase; Latest Private Valuation for each company sourced from the following media outlets: Business Insider (Vice Media), Inc. (Vox Media), Fortune (BuzzFeed), and Business Insider (Mashable)
Digital media companies like Vice Media, Vox Media and BuzzFeed wowed investors with their large, young audiences and original content generation. These three companies plus digital publisher Mashable, which sold to Ziff Davis in 2017, have cumulatively raised over $2 billion since inception. Vice Media, one of the most closely watched digital media companies, was able to raise $1.4 billion from notable strategic investors including The Walt Disney Company, A+E Networks and 21st Century Fox. Similarly, Vox Media and BuzzFeed raised approximately $300 million and $500 million, respectively, from media giants like NBCUniversal and seasoned venture capital investors including Andreessen Horowitz, Khosla Ventures and General Atlantic. While raising hundreds of millions of dollars, these companies also attained billion dollar plus valuations, with Vice Media reaching a valuation of $5.7 billion. Before its sale, even Mashable was reportedly valued at $250 million after raising money from Turner Broadcasting and Time Warner Investments.
However, Mashable’s heavily discounted price tag of $50 million in its sale to Ziff Davis was a sign of things to come. In general, digital media companies have stagnated if not struggled throughout the last few years. Vice Media notably missed its 2017 revenue targets by $100 million, and at the end of 2018, the company announced that it is laying off 10% of its workforce, or 250 employees, to cut costs amid a revenue slowdown. BuzzFeed has not been immune to the digital media woes either; after generating more than $300 million in revenue in 2018, Buzzfeed recently announced that it is laying off 15% of its workforce as the company is still unprofitable. Vox has recently stayed out of the spotlight, but in 2018, the company laid off 50 staffers as it curbed its online video initiative. These woes, though, are not unique to digital media startups; for example, Verizon is also laying off 7% of its media group workforce after missing revenue targets.
What explains the swift downturn in the digital media industry? We dig into some potential reasons below:
Other items we’re reading:
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