After appearing on “The Strategy Session” Monday, Aryeh Bourkoff, head of investment banking for the Americas at UBS, continued the discussion off-air with David Faber about why the real winner in the battle between media content and distribution is likely a third, completely different competitor.
"There's always a tension between the content models and the distribution models,” explained Bourkoff. Whether a company is in the telecommunications or cable or satellite industry, consumers are still paying for access so the distribution models.
When the content companies—that have the programming people want to watch—start to move into the digital realm via the Internet and social media, Bourkoff acknowledged, “it becomes much trickier to monetize."
As a result neither will emerge as the winner, said Bourkoff, who sees strong competitors in new online distribution models that don’t fit into either the traditional content or distribution category, such as Google's YouTube, Facebook, Netflixand LinkedIn.
“These are the new platform players,” he went on to say. “They use content generated by traditional media companies and user-generated content and social networking to create platforms that they believe will be used to layer in other services in the future.”
With the hundreds of millions of users that engage on these platforms every day, “a YouTube or a Facebook or a Netflix could become the video company of the future, and the platform is being set right now,” added Bourkoff.
The endless potential for how these platforms can be used justifies the high valuations they have earned, he said, in what many have warned might be a new bubble of recent and highly anticipated Internet tech IPOs.
But traditional cable and distribution companies still have their place, Bourkoff added. "Where cable's place is, is on the broadband infrastructure because when you watch Facebook or Netflix or use those platforms you need a lot of bandwidth."