Horizons Newsletter – week 22 // 2021

Horizons Newsletter – week 22 // 2021

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.
Do you have a question about the digitalization of consumer’s daily lives? As a research-driven investment company, we want to be relevant to you, so please provide us with your questions and remarks. Your feedback will help us to drive our research agenda.

Card companies face multiple threats of disintermediation

Traditionally, card companies Visa and Mastercard have had a strong position, providing the payment rails for debit and credit card transactions worldwide. Nevertheless, this duopoly is facing headwinds from the global rollout of open banking and the rise of “buy now, pay later” (BNPL) providers. Open banking enables account-based payments, i.e. direct credit transfer from the consumer bank account to the merchant bank account, bypassing the card networks altogether. In addition, open banking has provided a new intermediary role for data or API aggregators (e.g. Plaid, TrueLayer). Similar to the role the card networks perform in payments, aggregators function as the linking pin between third party providers and banks. Meanwhile, BNPL companies such as Klarna, Afterpay and Affirm are posing another emerging threat. With online shopping surging amid the pandemic, money-conscious shoppers are increasingly turning to the seamless delayed payment alternatives that bypass the fees imposed by the credit card companies. If the card network providers want to stay relevant in the future, they will have to secure their position in open banking and respond to the BNPL model effectively.

Broaden your horizon? 

In this section we share content that may be of interest to you:

  • Midia research has launched a podcast series on how to survive the attention recession, discussing how post-pandemic consumers are shifting their attention to match the saturated environment. The five episodes are available on several podcast platforms (Apple, Amazon, Spotify, Acast) or through the Midia website.
  • PwC’s Global Private Equity Responsible Investment Survey shows that 72% of private equity investors and managers always screen potential portfolio companies for environmental, social and corporate governance risks and opportunities before making the investment.
  • A new Bloomberg Economics study maps out the changing role of the top 50 companies by value. After trawling through 30 years of data they come to the conclusion that the world-dominating, superstar firms get bigger, techier and more Chinese.

Dumped media becomes the belle

This month, Verizon agreed to sell its media division to Apollo for $5 billion and AT&T announced the spin-off of its media business to merge it with Discovery. Owning the programming distributed over your networks may sound like a match made in heaven, but as history has taught us (and Verizon and AT&T can now attest), vertical telecom-media integrations come at great costs and hardly ever work out. NBCU owner Comcast is the one company still holding out. On both sides of the Atlantic, telcos and cablecos are shifting their media ownership strategy to an aggregator model, where they act as a neutral platform connecting their customers to a broad array of content. Nevertheless, the market for media is hot as companies search for unique content to create scale and capitalize on the growth opportunities in the international streaming market. It is the reasoning behind the Discovery-WarnerMedia combination, Disney’s acquisition of Fox, and Amazon’s acquisition of film studio MGM. Moreover, Apple and Comcast-owned NBCU were also interested in MGM, so more transactions might be in the air.