Mobile Fix / August 16
Another difficult week for GAFA. Governments seem to be taking action, or at least talking about it; the FTC talks of breaking big tech up if necessary by undoing past mergers. The proposed French digital tax is causing a lot of protests.
Lots of tweets from the Republicans about the ‘left wing bias’ of Twitter and Google and another big story on how the algorithms are apparently messing with political views — this time with YouTube in Brazil.
And the BBC ask; Who will regulate digital political ads? quoting Damian Collins of the DCMS committee; I think we should be looking at emergency legislation to bring our electoral law up to date.At least to establish the basic principles that the same requirements that exist in a poster or a leaflet should exist in an online ad and on Facebook as well.”
It’s not going to end well. But a simple decision to stop taking money for political ads would solve so many problems.
We have mentioned the possible M&A in regional newspapers but a new CEO at Reach suggests this isn’t going to happen. The coverage is a little unfair as the former CEO was pretty digitally savvy — I worked on a clever eBooks idea with him in his HMV days and his team at Reach were pretty good at monetising the digital traffic. The new guys has a good track record too, so worth watching — especially as context is starting to be properly valued.
A veteran Newspaper man David Montgomery (who used to run the key elements of Reach a lifetime ago) has a new venture targeting distressed media companies, so he may end up with the Johnston Press. He is quoted as saying an adtech firm Carbon will be key to improving revenues.
Facebook plan to build a subscription business for some of their Watch shows with partnerships with BritBox, TasteMade and others making their service available through Watch and paying Facebook a cut. They are also funding 2 shows from Buzzfeed to bolster news coverage on Watch and it’s pretty likely they will feature ads.
We mentioned the problems cinema is facing with the rise of streaming but Disney still see it as vitally important — especially as they will account for over a third of all US Box Office revenue in 2019. Netflix is getting questioned by many who wonder if they can keep up their success as so many rivals emerge; rivals for the audience eyeballs and for the talent that attracts those eyeballs. They do keep spending though — $500m on three movies, including a Scorcese one with De Niro, Pacino & Pesce.
But despite all the activity in streaming and the continued decline in eyeballs, the revenue for good old fashioned telly keeps going up. In the US an analysis by Variety suggests the upfronts have raised 5% or 6% more than last year — around $10 billion for primetime. How long before newTV sees that ads can be a better business than subscription?
Comcast have a good new infographic on newTV with lots of good data
Sports & betting
The next big shift in TV is around sports. As we have seen before, live sports drive big audiences and even though these audiences are ageing dramatically, the ad money follows. But new players are emerging here, even if the GAFA encroachment is still relatively modest.
Disney has ESPN, but they have no global footprint and the key player is UK based DAZN. With 4 million subscribers across the US, Brazil, Japan and Europe, and a good set of rights they are the one to watch and must be an acquisition target for GAFA or Netflix. The caution in this space is demonstrated by the new Premier League deal with YouTube — nice idea but the content is limited as the clubs don’t want their valuable rights to be jeopardised.
The value of these rights is supported by the rise in gambling and the increased spend from gambling firms — just look at shirt sponsors to see how dominant they are. The changing rules mean the US is the next frontier and most of the European sports betting firms now have a significant US presence. Google are the last big player to start accepting sports betting ads and the innovation is evidenced by a UK firm licensing Nasdaq technology to create a share index for top players.
Peripherals / Wearables
Snap have announced the 3rd Version of their Camera Sunglasses — at just £330 for the Limited Edition the sales target is much lower than the 200k previously sold. You can preorder here. (I understand version 4 will be the really exciting one)
The photos you take sync wirelessly with your phone — so again it’s a Peripheral. Just like the Apple Watch, although connecting to WiFi does enable some features. This explanation of how the Watch works with both Cellular and WiFi shows that progress is being made.
With the hype around fortnite and the announcement of the Google and Microsoft Cloud gaming platforms, it seems like all change in gaming. But there is a lot of smart thinking suggesting the speed of change is going to be a little slow. The head of XBox thinks Cloud gaming is years and years away — making the point that Netflix is 20 years old.
Of course he would say that. We quoted Matthew Ball a few weeks ago making the point that few games firms had made the transition to new tech platforms and maybe Console games are going to find the transition to Cloud hard?
But Ball has written a lot about Cloud games and a long piece again suggests growth will come from innovation;
But it’s likely some ultra-creative studio with no real gaming history will find a concept that jump-starts this “category” with an idea that feels new and different — just like Niantic did with Pokémon Go, and Mojang with Minecraft. In fact, this is already where Fortnite, or more accurately, Epic Games is heading
A former exec from Social Capital (the VC firm started by Chamath Palihapitiya) has built on this with a great (long) piece on how games are moving to Fandom, where it is about the player rather than the game;
The next great business model of gaming is one where we subscribe to people, not to games. Games will still make lots of money, but in the way that concert venues make money. The future unit economics of video games won’t be Subs x ARPU; it’ll be GTV x Take Rate.
The music industry has seen this for a while — talking of the Handshake Economy in Japan. And looking at Tencent buying a stake in Universal the point is made;
Western streaming is all about monetising consumption; China’s is about monetising fandom
Talking of China, ByteDance ( the firm behind TikTok) are launching a new search engine in China — taking on Baidu who have a 60% market share but recorded their first loss this year
And China is emerging as a major player in Movies. Having long been key to a western film doing well — as they have 60,000 cinema screens — they now produce very successful films for their own market. And in streaming;
China’s top three streaming services are Tencent Video, Alibaba’s Youku and iQiyi, the last of which hit 100 million subscribers in June. Astonishingly, together they account for about 60% of all video-on-demand subscribers in the world, and dwarf broadcast TV in content spending.
A story which I think could lead to a major change in the market. In response to the regulators in Europe Google will soon offer all users a choice of who to have as their default search engine — on the device and in Chrome. To be one of the other search providers offered you need to bid with the amount you are willing to pay for each device where you are selected.
So quite interesting. But what if Apple decides that their Privacy mission is best served by letting users have a similar choice of alternatives? Apple does offer a choice of search providers, but has Google as the default choice in return for $12 billion. Could that be reconsidered? Now Microsoft are showing more interest in ads could they outbid Google for some devices?
And a reminder that not all M&A works. Verizon have sold Tumblr for £3m — 6 years after Marissa Mayer paid $1.1billion during her reign at Yahoo.
Some of the supposed intelligence around AI is artificial — they’re often talking nonsense
The financial adviser to the world’s top-earning YouTube star shares the tips he gives clients to kickstart their businesses
Facebook have a tool you can use to add AR to Instagram
Good (long) read on the relationship between Amazon and Shopify (and Etsy)
The Greek arm of PWC have been fined for breaking GDPR rules. And it seems that GDPR can be used to steal identities The irony.
Mobile payments are blowing up in the US with CashApp becoming a staple in Hip Hop
Good thinking on how DTC brands need to expand to services. More evidence on my Bonsai Brands theory.
Finally…researching the next Fix event — focused on Creativity — I liked this article on adtech turning to Creativity, especially this quote;
“Now that marketers are writing actual predictive models for creative optimization that feed into programmatic bidders, DCO will gather incredible pace,” said Nikki Mendonça, Accenture Interactive’s global president of operations.
Next week I will share the outline for our Unlocking the Value of Creativity event as i think open sourcing may be helpful.
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