Digital streaming brands have turned the latest industry ranking by Brand Finance, the world’s leading independent brand valuation consultancy, on its head. Testament to their power to disrupt status quo, digital platforms have claimed 5 out of 25 spots in the league table, with two brands – YouTube and Netflix – jumping straight onto the podium behind Disney – the industry’s unchallenged leader. As a result of the rise in popularity of on-demand streaming, enjoyed by viewers who no longer need to rely on fixed cable television schedules, most traditional network and studios brands have felt the pinch, sliding down the ranks.
Online heavyweights, YouTube and Netflix, have claimed second and third position in the ranking respectively. The last year has seen YouTube’s brand value swell to US$37.9 billion, up 46% from 2018. Meanwhile, Netflix more than doubled its brand valuation reaching US$21.2 billion this year, with its record 105% growth unmatched by any other Western media brand. Alibaba’s Youku (11th) and Baidu’s iQiyi (17th) as well as the Swedish audio-streaming app – Spotify (20th) – have also joined the Brand Finance Media 25 ranking for the first time.
Competition from online providers has had a marked effect on traditional broadcasting outlets, as one in two of the ranking’s incumbents have either lost brand value or seen meagre growth in the past year. The digital revolution has taken its toll on both sides of the Atlantic, with UK-based BBC (brand value down 9%), Sky (up 2%), and ITV (up 5%), as well as ABC (down 41%), Fox (down 6%), and NBC (down 3%) in the US struggling with the challenge posed by new players in the sector.
David Haigh, CEO of Brand Finance, commented:
“Digital streaming platforms have revolutionised home entertainment, as they are better able to adapt to the needs of modern consumers seeking on-demand and advertising-free content. As customer preferences evolve at a faster pace than ever, the new platforms will need to continue to build relationships with consumers to stay ahead of the curve”.
Disney’s dreams come true
Unchallenged by newcomers, Disney maintains its position as the world’s most valuable media brand, following an impressive 40% rise in brand value to US$45.8 billion.
Over the last year, Disney has undertaken several strategic acquisitions in a bid to stay ahead of its competitors. Disney’s acquisition of Star India was an integral move to gain a foothold in the Subcontinent, which is currently the second-largest subscription TV market in Asia. The brand, which already owns a 60% stake in Hulu, is due to take full control of the service imminently, further demonstrating Disney’s pursuit of greater international exposure and dominance within the sector.
In March 2019, Disney acquired 21st Century Fox for an eye-watering US$71 billion, in preparation for the launch of its own streaming service, Disney+, later this year. Disney now holds the rights to Deadpool and the Fox-owned Marvel characters, to add to its ownership of Pixar’s intellectual property and the Star Wars franchise.
These purchases have placed Disney in a strong position within the digital streaming media landscape. At US$7 a month, its Disney+ subscription fee is going to be half the price of HBO Now and cheaper than Netflix, which raised its fee by US$2 in January 2019. These factors are set to place the brand as Netflix’s strongest competitor even before the official launch of Disney+.
US brands dominate ranking
US brands account for 9 out of the top 10 and claim an impressive 18 spots in the Brand Finance Media 25 2019 ranking. Traditionally reliant on the Hollywood powerhouse and the reach of the network giants, the US is now staying ahead of the game thanks to digital players from Silicon Valley.
However, the nature of the technology behind the digital disruption of the media market makes it easier for brands from other countries to break into the market. As the examples of Youku and iQiyi demonstrate, Chinese media brands may give the US monopoly a run for its money in the coming years. A further challenge can come from European start-ups such as Spotify.
iQiyi is fastest-growing
With a whopping brand value growth of 326% to US$4.3 billion, iQiyi is not only the fastest-growing brand in the media sector, but across all categories in the Brand Finance Global 500 2019 report. As China’s answer to Netflix, iQiyi hosts over 500 million monthly active users. Recent reports of the brand setting its sights on China’s US$9 billion box office, suggests further rapid expansion over the next year.
Disney-owned ESPN is strongest
Aside from calculating overall brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. Alongside revenue forecasts, brand strength is a crucial driver of brand value. According to these criteria, Disney-owned sports channel ESPN is the world’s strongest media brand with a Brand Strength Index (BSI) score of 88.9 out of 100 and a corresponding AAA brand strength rating.
Following some instability over the past couple of years, resulting in the brand’s previous President, John Skipper’s, resignation, ESPN’s strength on the global media landscape has once again resurged. The appointment of new President, Jimmy Pitaro, in March 2018 was a clear sign of the brand’s intent to modernise and marked a shift in its operations. Most notably, the brand launched ESPN+, its streaming service, which hit the one million subscribers mark in under six months. More recently, the network has partnered with the National Women’s Soccer League for the FIFA Women’s World Cup, streaming 14 games live on the ESPN app, exposing the network to 25.4 million domestic viewers.
Note to Editors
Every year, Brand Finance values 5,000 of the world’s biggest brands. The 25 most valuable media brands are included in the Brand Finance Media 25 2019 ranking.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.
Additional insights, charts, and more information about the methodology, as well as definitions of key terms are available in the Brand Finance Media 25 2019 report.
Data compiled for the Brand Finance rankings and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.
Communications Director, Brand Finance
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Communications Manager, Brand Finance
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M: +44 (0)7939 118 932
About Brand Finance
Brand Finance is the world’s leading independent brand valuation consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands.
Brand Finance helped craft the internationally recognised standard on Brand Valuation – ISO 10668, and the recently approved standard on Brand Evaluation – ISO 20671.
Brand Finance is a chartered accountancy firm regulated by the Institute of Chartered Accountants in England and Wales (ICAEW), and also the first brand valuation consultancy to join the International Valuation Standards Council (IVSC).
Brand Finance’s brand value rankings have been certified by the Marketing Accountability Standards Board (MASB) through the Marketing Metric Audit Protocol (MMAP), the formal process for validating the relationship between marketing measurement and financial performance.
Definition of Brand
Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines a brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.
Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1. Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2. Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3. Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4. Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5. Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6. Apply the royalty rate to the forecast revenues to derive brand revenues.
7. Brand revenues are discounted post-tax to a net present value which equals the brand value.