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Digital Media Opportunities
We believe opportunities in this segment include:
Premium Content. We believe that opportunities exist to establish industry-specific publications and media platforms for both the business-to-business and business-to-consumer markets that are viewed as the legitimate voices of the industry.
Mobile Applications. E-commerce and digital media applications are well positioned for mobile deployment within the cannabis industry. We expect a proliferation of mobile applications, even in the early stages of the industry.
Enabling Technology. Continued development of core and shared technology platforms remains an opportunity for digital media companies seeking to provide a better user experience. Technologies that provide targeted experiences should enable digital media companies to realize greater returns on investments.
Digital Media Challenges
Challenges in this segment include:
Limited Number of Advertisers. Broad, general-market advertisers are not commonly participating in the cannabis industry due to concerns about legal compliance and mass-market perception. As a result, companies are currently competing for limited advertising revenue targeted at the cannabis-user demographic.
Venues. Established digital media companies—such as Facebook, Google, Twitter and Yelp—limit the activities of cannabis-focused media companies on their sites in accordance with company policies. This creates opportunities for niche publishers in the near term, but we believe that, ultimately, large media companies will view cannabis as a mainstream industry.
Digital Media Outlook
The opportunity for cannabis-oriented digital media is substantial. We believe that companies with well-executed strategies will emerge as the recognized voices of the industry and will be relied on by consumers for a wealth of information from product recommendations to industry news. As regulatory constraints relax, we expect the currently disparate and fragmented digital media services segment to consolidate into integrated publishing, mobile and e-commerce offerings. However, as stated previ- ously, we believe that digital media companies focused solely on the cannabis industry will eventually face considerable competition from—but may be logical acquisition targets for—traditional media companies.
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