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Mobile Fix - March 29

Apple Services

The Apple event this week left many underwhelmed. After the all the hype it was quite strong on product announcements (most of which were expected) but weak on detail. And as details did emerge, they tended to tarnish the story.

Yes AppleTV is coming - but it looks like a modern bundle of channels - with noticeable omissions. The budget for their own shows isn’t close to what Netflix and Amazon spend. The FT damns with faint praise saying the strategy is close to that which Sony tried a couple of decades ago.

Apple News is interesting but Apple asking for 50% seems to have reduced what’s actually included; the Wall Street Journal on Apple News gives you a subset of what a direct subscription offers.

And the Card? Apple Pay has been a disrupter, but this card doesn’t add much - and the rates have provoked comment.

But a Billion pockets y’all. Our concept of Anchors makes some sense here - products designed to keep you in the Apple ecosystem. The Watch, Airpods, Pay - even iTunes - make it hard to switch to Android as the equivalent products just aren’t equivalent.

Does Apple TV, Apple News and the Card make a switch to Android unthinkable? Not really. And if the desire for services revenue outweighs the desire to Anchor people in Apple hardware, the logic about distribution doesn’t seem to make sense. If Apple TV is available on Roku, Amazon Firestick and Samsung Smart TVs why isn’t Apple News available on Android?

As the details emerge the story will get clearer but the views of seasoned Apple watchers Stratechery and DaringFireball are worth reading. Neither seem convinced.

newTV

Still on the TV tip, Barrons make the point we made last week - it’s all too complicated and someone will come along and sort it out. It’s either Amazon or Apple. But discovery still feels the missing element. Who is going to make it easy to find that show you really want to watch? A Fix reader last week pointed out how she had been scalped by Amazon Prime to watch Game of Thrones, then found out it was on NowTV much cheaper.

Another Fix reader pointed out this piece reminding us that,in TV at least, content is king. The must watch shows still tend to be from traditional TV firms. The future of ITV and the BBC is about producing great IP, whilst the distribution of these shows migrates to new platforms like Netflix, Amazon and Apple TV.

As competition heats up Bloomberg reported YouTube are pulling back on expensive content but a senor YouTube exec at an an event I attended this week was bullish about their plans, and the story has been denied

Getting the revenue to pay for IP is still hard. DAZN is a big success story but are rethinking pricing to better meet customer needs.

DTC

As in any gold rush selling picks and shovels can be a great business. Shopify is the go to platform for anyone setting up shop online and their share price has doubled in the last year.

Their partnership with Stripe works well for both parties, but Square obviously feel they are missing out and are now revamping their Online Shop service

With every DTC player having a pretty good shopping experience we are still wondering quite what the attraction of the Instagram new checkout feature is. This Drum article features someone making a comparison with Line and WeChat - pointing out that in the East the data stays with the brand. Yet Instagram confirm they “only pass along the necessary information for the seller to complete the fulfillment” like contact information and the delivery address.

I would continue to be very happy to pay Instagram to reach customers but I would be loathe to let them own the transaction. The benefit of Direct to Consumer is nicely captured in the name.

But it is easy to get lost in the details and a good interview with VC Lerer Hippeau argues that some DTC brands are over capitalised - spending too much VC money chasing unprofitable customers. This issue is also captured in the Bonobos Curve - the journey an early DTC brand has been through to evolve to become a modern retail brand - and acquired by Walmart. This video of founders of Warby Parker talking about their journey at a Goldman Sachs event is also worth watching;

Walmart are fighting back against Amazon and their JetBlack personal shopping service is interesting.

Dark Kitchens & Delivery

Our piece last week on dark kitchens and the switch from Platform to Operator prompted some interesting conversations. But the pace of change is astounding - we read that Berlin based Dark Kitchen firm Keatz had rased $12m then we saw former Uber boss Travis Kalanick has bought a UK based Dark Kitchen firm - started by a former Uber exec.

Dark Kitchens are the picks and shovels of the food delivery gold rush, but you don’t invest for that reason. Owning the customer data on what they eat and where - and taking a margin all the way along - is where the real money is made.

As is so often the case, we can learn lots from China. Meituan is the big player in food delivery and heavily subsidises meals to acquire customers. But it monetises those customers through lots of other products and services.

Asia Super Apps

The multi purpose offer from Meituan epitomises the Asian Super Apps - almost the polar opposite of the western approach of individual apps for every service or purpose. These Super Apps tend to wage ongoing, expensive battles with competitors and that model has spread to other Asian markets. Grab from Malaysia and GoJek from Indonesia clash in a number of South Asian markets and their services range from Uber style rides to food delivery In fact Uber sold their business in the region to Grab in return for a quarter of the company

The go to person for smart thinking on Mobile in China is Connie Chan of A16Z and this profile is a good read.

On a more modest level we have celebrated opening a Shanghai office with an occasional newsletter on China. Read the latest here and subscribe.

Amazon

But they have one weakness - they know what you buy at Amazon but not what you buy elsewhere. So they keep returning to payments. The latest version of Amazon Pay is designed to integrate with leading US payments provider Worldpay, who are in over 1 million US retail stores. The data Amazon get is quite limited but still really valuable. It only collects the final payment amount, or total order value (including date and time), which is necessary to process the transaction, a company spokesperson said

As we keep seeing, the data is where the value lies and everyone wants to own it.

Adtech

As we see the effects of the latest privacy initiatives, Fix friend Joe Root of Permutive walks us through how publishers are using 1st party data to make up for the demise of 3rd party data. Joe talks of seeing 50% of traffic is in browsers that block 3rd party cookies - with a dramatic effect on ad volume and rates. But the ability to use publisher set segments is pricing successful. Good news for smart publishers - and an opportunity to rethink the value of context and capture that in PMP deals

As cookies reduce in reach and role, Adtech legend Paul Gubbins has floated the controversial idea that GAFA could work together to find a solution for identity. We are now seeing some signs of interoperability between Google and Facebook , so maybe this isn’t so fanciful after all.

Quick Reads

The new Apple Airpods were announced without much fanfare a couple of weeks ago, which is odd given how well they are liked. We even know some people who use them with Android phones. This Wired piece gets into why people love them so much

The smart people at BBH point out the value of difference - citing the sameness of so many digital brand ads. I notice it at Bethnal Green tube station - loads of cross track ads that look the same.

Narrow but deep Media businesses are thriving - Skift is a great example

Really interesting look at the challenges faced by FMCGs and how many CEOs are coming and going

A smart client take on inhousing and the challenge of getting agile dynamic creative. Our friends at Spirable are highlighted as part of this solution - with really impressive results.

With Google launching cloud gaming with Stadia, Tencent respond with their own cloud gaming service

Finally…. out and about a lot this week and lots of fascinating conversations. A breakfast at VC First Minute Capital was great with two panels of Media CEOs talking about their challenges. Key takes out were the need for multiple ways of monetising - as no single one is enough. And interesting to note that many have ecommerce businesses of one type or another. The other take out was how the next wave of growth is coming from Asia and sub Saharan Africa.

And then the Digiday Media Buying Forum where inhousing kept coming up. Good summary here.

The bottom line is the old rules don’t apply anymore and every business needs to embrace change.

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