Horizons Newsletter – week 22 // 2019
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
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A boom in submarine internet cables
During the 1990s, telecom companies spent more than $20 billion on submarine communication cables to connect overseas countries. In the beginning, most of these fiber-optic cables were transatlantic, providing digital oxygen from London to New York, but cables also went through the Mediterranean and beyond. The burst of the dot-com bubble, however, halted the expected explosion of internet traffic and discouraged investments for more than a decade. Now, with the emergence of 5G and rising data consumption in emerging markets, the excess capacity is being absorbed, sparking a new investment boom in submarine cables. In 2018, more cables were deployed than in any other year this millennium. Furthermore, the Asia-Pacific region, where consumers are adopting digital lifestyles, will see the fastest growth of submarine connections. Besides a new geography of the submarine internet system, its main investment consortia are also changing, as current investments are driven by big tech companies (Microsoft, Facebook, Amazon, and Google). To enable digital services that need extremely low latency (e.g. autonomous driving, telesurgery), these companies are optimizing their networks.
Biology as a technology
Research by Global Market Insights shows that the global biotechnology market will surpass $775 billion by 2024, linking much of the growth to the increasing spread of chronic diseases. Meanwhile, capital markets have underestimated the potential of biotechnology because they see it is a mere subset of the pharmaceutical industry. However, the fast developments in synthetic biology (the design and construction of new biological entities such as enzymes, genetic circuits, and cells) and the redesign of existing biological systems, are already changing many industrial processes. They enable the manufacture of all sorts of things which used to be hard – or even impossible – to make: fuels, fabrics, foods and fragrances can all be built molecule by molecule. As such, the pharmaceutical industry is just one of many industries that synthetic biology is reinventing. We can expect more signs of synthetic biology innovating different domains. Applications in storage (DNA), food packaging (biomaterial), food safety (enzymes that control gas reactions inside the packaging), or construction (smart concrete), are all examples of innovations where biology as a technology is already on its way.
Sparking Upfront momentum
This month, the annual U.S. TV Upfronts wrapped up where broadcasters are securing advertising deals upfront. Their efforts seem to pay off: overall upfront commitments are predicted to rise 2.4% in 2019, to $21.25 billion. A seemingly counterintuitive trend in a world where linear audiences are dwindling and ad budgets are shifting to digital alternatives. Another dynamic is at play here, however. Advertisers do not buy minutes of ad space; they buy attention in the form of CPMs (cost per mille – the cost of showing an ad to 1,000 people). Since TV inventory is a function of viewers and available minutes, the decline in inventory offsets lower demand, resulting in a stable price. As the diagram below shows, this trend cannot continue and media companies are repositioning their offers for a different world. Last year was transformational, with some of the largest M&A deals in media history. Media companies are betting their new configurations will help them spark momentum by making a brand-safe, measurable and more digital inventory a more important part of their pitch.
