Content & Connectivity Investing

Gabelli portfolio managers Brett Harriss and Sergey Dluzhevskiy present The Gabelli Global Content & Connectivity Fund.

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Digital technologies are transforming the world, revolutionizing industries, and playing an important role in nearly every aspect of our lives.

Communication, commerce, and culture are moving to the digital world, and we believe ubiquitous connectivity and differentiated content available anytime, anywhere, and on any device will continue to define the 21st century.
That is why the Gabelli Global Content and Connectivity fund puts particular focus on four key investment themes:
Connectivity, Content, Commerce, and Consolidation.

Connectivity is an important investment vertical. As of 2016, there were 7.6 billion mobile subscriptions worldwide. That’s already slightly more than 1 connection for every man, woman, and child in the world. The number of connected devices will continue growing rapidly, as we enter the Internet of Things era, with connected cars, connected homes, and smart cities becoming a reality. The result is an insatiable demand for data and bandwidth. Global IP traffic is expected to nearly triple between 2016 and 2021, while mobile data traffic is expect to grow 7-fold over the same period. We believe that these strong global secular trends should benefit broadband network owners. In the emerging markets, wireless data, social networking, and mobile payment services are increasingly gaining traction. These technologies allow countries to leapfrog several generations of technology and phases of economic development.

With consumers increasingly connected, we have seen a dramatic increase in the demand for content. News, books, music, and video are available on any device in any location. No longer are consumers tied to their television sets. Screen time, whether it be video viewing, music streaming, or social networking, has come to dominate our leisure time. Video streaming now accounts for 70% of broadband usage and continues to increase dramatically. We expect growing demand to benefit content owners and producers across media.

Commerce is also moving online. eCommerce grew now accounts for $1.7 trillion for spending and continues to grow. Mobile commerce accounts for a quarter of ecommerce spending. Consumers and businesses increasingly seek secure access to content and applications at any time, from anywhere in the world, and on any device. More than ever, we buy, sell, bank, and research using connected devices. eCommerce is more than just Amazon and online retailers. It includes cloud based technology solutions, cyber security, and digital payments. Finally, online commerce creates a tremendous amount of data, which can be further monetized by emerging big data companies.

We expect these secular changes to contribute to industry consolidation. Telecom, media, and technology are industries of scale and are still extremely fragmented on a global basis. We expect telecom services companies from all over the world to look for opportunities to gain scale, acquire growth, diversify and improve their service portfolios, obtain scarce resources like wireless spectrum, and transition to new “digital platforms” structured around convergence, proprietary software, or content. As new entrants with large sources of capital come to challenge legacy media companies, we expect content M&A activity to accelerate. Overall, we expect consolidation to remain an important and persistent industry trend over the next decade.

Source: Gabelli TV (via YouTube)
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