The deal with 10 million-plus subscriber Poolworks Germany is a perfect fit for an acquisitive and already diversified entertainment and direct response marketing company like Momentous Entertainment Group, Inc. (OTC: MMEG). Momentous has an operational footprint spanning unique content production for documentary, film and reality TV, as well as live music events, adult contemporary and faith-based music, and even covers film finance/distribution, and direct response TV marketing. Laying the groundwork for a vibrant synergy longer-term, the July 25 announcement of a binding agreement with this Berlin-based developer of the widely successful social networking platforms for (mostly college) students across Europe, StudiVZ and MeinVZ, represents a solid revenue engine for MMEG.
One of the big valuation gripes by investors about social networking operators in general has always been the absence of clear revenue generation pipeline solutions in the business model. It has always been network first, content and capital later (build it and they will come). Twitter (NYSE:TWTR) might be the most notorious case, with its massive user base and seemingly unimpeachable status as a new cultural norm, combined with an inability to really harness the revenue generation potential of that user base.
Twitter has continued to go the ad route and has had some success in doing so, but it is becoming increasingly obvious to many sector operators that content is indeed still king, and meaningful impressions are driven by original, high-quality video/image content. In order to carve off an ever larger slice of the social network ad spend pie alone, which is on track to hit nearly $36 billion next year (or 16 percent of total global digital ad spend) according to eMarketer analysts, network proprietors and all businesses that use those social networks to engage their customers will be forced to channel high quality and/or original content at users. Symbiosis is required between networks, advertisers and content providers in order to make the chemical equation balance.
Poolworks is an interesting case, as StudiVZ and MeinVZ are more like a Facebook (NASDAQ: FB) geared toward students, with its core user base in Germany, Switzerland and Austria. The platform has seen some bleed in recent years, as have all entrenched social networks, given the continual rise of new entities and other instant messaging environments like Yahoo’s (NASDAQ: YHOO) Flickr, Facebook-acquired Instagram, or sites such as Pinterest and Snapchat. However, Poolworks’ tight rapport with a choice demographic and its core user base being in these highly sought after European markets make it ideal pipeline for a company like Momentous Entertainment Group.
MMEG will funnel Hollywood-quality film and TV via a branded, streaming, end-to-end “internet TV” over-the-top (OTT) content platform, functionally akin to Netflix (NASDAQ: NFLX) or Amazon Prime (NASDAQ: AMZN) streaming. The numerous shared revenue streams enabled by the deal will help to foster a strong relationship between the two companies, coming from sources ranging from ad sales and transactional VOD (video on demand), to monthly subscription fees via the company’s own SVOD (subscription video on demand) service, which looks like it will function in much the same way as Amazon Prime membership in that it will grant subscribers unfettered access to premium streaming content. The deal is also a rapid development vector for the branded SVOD implementation itself, and MMEG intends to take the service worldwide into the aforementioned $36 billion social network ad spend ecosystem.
For more information, visit www.momentousent.com
Let us hear your thoughts: Momentous Entertainment Group. Message Board