NEW YORK—As streaming media companies struggle to produce profits, private equity investments in the sector have also slumped, with private equity and venture capital firms investing only $370 million into streaming media companies worldwide in 2022, down 73% from $1.38 billion of investments in 2021, S&P Global Market Intelligence data shows.

That marks a significant fall from the $7.5 billion invested in the sector by private equity and venture capital at the height of the streaming boom in 2019, according to S&P Global Market Intelligence. 

The number of private equity-backed transactions involving companies that provide video streaming service, audio streaming and television shows fell to 29 in 2022 from 35 in 2021. 

So far in 2023, there have only been three such deals announced or completed, explained Joyce Guevarra, a S&P Global Market Intelligence contributor in a blog post.  These were funding rounds that involved Rarefied Atmosphere Inc. and Bluestack Systems Inc. in February and Sensei Ltd. in April.

Texas-based Rarefied Atmosphere, a streaming platform for businesses, raised $65 million from investors including Valor Management Corp., Sageview Capital LP and S3 Ventures, the report found. 

California's Bluestack raised an undisclosed amount of funding with new investor NTT Docomo Ventures Inc. from Japan and South Korea's Megazone Cloud Corp. Sensei raised $18 million from a group of investors including BITKRAFT Ventures Management LLC, HashKey Capital, Lattice Capital and M13 Ventures Management LLC.

The $83 million in investments year to date through May 15 fell far below the $193.1 million that private equity firms poured into the streaming sector in the first quarter of 2022 and could mean a further year-over-year decline for 2023, according to S&P Global Intelligence. 

The slowdown reflects the fact that many streamers today face growth and profitability challenges amid inflation and rising competition, according to a report from Kagan, a media research group within Market Intelligence. 

"In the post-pandemic world, some subscription video on demand players now face customer retention issues and often incur operating losses," the report said, adding that the streaming industry is shifting out of growth mode to target profitability.

The report found that deal activity in the global streaming industry last peaked in 2019 with the completion of two blockbuster deals each worth at least $3 billion. In one transaction, the largest in at least the last five years, Bain Capital Pvt. Equity LP acquired 60% of the UK's The Kantar Group Ltd. from WPP PLC for $3.33 billion.

China had the second-largest deal, the completion of a $3 billion funding round for Shanghai Youdu Broadband Technology Co. Ltd. with investors including Tencent Holdings Ltd., Boyu Capital Consultancy Co. Ltd., Sequoia China Investment Management LLP, Temasek Holdings (Pvt.) Ltd. and Yunfeng Capital, the report said. 

Streaming providers based in Asia-Pacific have received the largest chunk of private equity and venture capital in the last five years. The region accounted for over 50% of the $10.72 billion of investments in the sector globally since 2019, according to S&P Global Market Intelligence. 

MONTREAL—Grass Valley has announced that venture capital company Black Dragon Capital is acquiring GV from Belden Inc. The deal, which will be finalized during Q1 2020, will transfer full control of all Grass Valley assets to Black Dragon, which says it plans to leverage Grass Valley’s intellectual property and talent to drive innovation and lead the industry’s migration to a software-based future.

Belden announced last fall that it was selling Grass Valley, citing that a sale would "will simplify Belden’s portfolio and improve organic growth and revenue visibility.” Today, Grass said there woud be "no immediate changes" planned to the company’s operational management structure and Tim Shoulders will continue in his role as president.

Black Dragon is led by Louis Hernandez, Jr., former CEO of Avid.

“We see tremendous opportunity for transformation in the media technology market and believe that Grass Valley is in an ideal situation to lead the market through these changes, Hernandez said. “Under Belden’s leadership, the Grass Valley solutions portfolio has expanded and the business has developed a discipline that puts them in the upper quartile of the market in profitability. Black Dragon’s experience leading companies through digital transitions will allow Grass Valley to accelerate the next step in its evolution, bringing more innovative products to market faster.”

Black Dragon said it, sees Grass Valley as a platform to accelerate the industry’s move toward its digital future, increasing investment in technologies and systems that enable new software-based services and pay-as-you-go business models.

Black Dragon said it takes an “advisory approach” to the companies in which it invests, and delivers a series of proprietary tools, such as The Black Dragon Playbook, a set of guidelines to create sustainable, market-leading companies. Additionally, the firm has an extensive roster of advisors with a combined century-plus of experience in engineering, content creation, business management and technology leadership in the media space.

“Grass Valley has led the market in the transition from SDI to IP and has been diligently pivoting our product lines to cloud-based and SaaS solutions,” said Tim Shoulders, Grass Valley’s president. “Black Dragon brings the expertise and vision that will allow us to accelerate this transition to the benefit of our customers who are looking for more robust and flexible models for content production and delivery. We’re excited to bring our customers along with us on this journey.”

Grass Valley said its customers who are invested in current product lines will experience a seamless transition and that it maintains full control of the supply chain and operational systems to enable on-going support without disruption.