New TV

Like everyone else we went to see Avengers last weekend. The biggest opening ever and the fastest to make $1bn - 5 days. I think the Disney acquisition of Marvel will go down as one of the best deals ever.

And it is central to much of newTV. Disney has the best content roster and is going to give Netflix a real run for its money. It throws off cash from other distribution - like cinema openings - when Netflix is having to sell junk bonds to raise money.

This research suggests there will be quite of a lot of trial but few think they will definitely switch But no-one really knows how to compare them, yet. By launch it seems likely that Disney will own most if not all of Hulu - who just announced a series of Marvel TV shows. How these services get bundled will be key.

There is lots going on at a smaller scale too - 3 year old OTT news brand Cheddar is being bought for $200m. Walmart is making movies in an attempt to revitalise Vudu the streaming service they bought in 2010. Remember Tesco used to fund movies so they had exclusive to sell. With huge customer reach (selling half of all TVs in the US) Walmart has muscle in this game; again how they bundle their service with other will be critical.

In a world of AppTV there will not be one winner, but smart bundles and models like NowTV (where i can pay for the bits of content i want) can do well. But will Apple and Amazon be the gatekeepers by selling the bundles?

Smart moves in advertising too - because people are not to go to subscribe to all this content. Hulu are testing Binge Advertising along with Pause ads - new formats that fit with the way the viewer is using the content. The much anticipated mobile streaming service from industry legend Jeffrey Katzenberg is pitching to advertisers too - with two subscription levels; one with ads and one without. We’ll see much more of that.

F8

The latest Facebook developer event this week majored on privacy and it is clear that all product is being re-thought through that lens. This is a good summary of many announcements.

For GAFA balancing privacy with the ways they harness data to drive their business is a key challenge and the moves by Apple are getting a reaction. But Facebook has always flexed and changed as it grew and this long piece looks at they recovered from early missteps in mobile. And how they are preparing for AR and the next phase

Dealing with the bad actors is another enormous challenge and this New Yorker piece on the Facebook team that dealt with the Christchurch shooting shows just how hard it.

Taking political ads is a challenge too and in Australia the Guardian is scrutinising political ads and finding the authorisation system isn’t working that well. And in the US the ads for the 2020 election have already started. I cannot see any upside in running political ads and I think we all know the downsides

Dollar Dollar

More Q1 Results and more evidence that things are still in flux. Google met earning expectations but their growth was down year on year - ad sales grew at lowest rate since 2015 - and that has thrown the market. The reasons given - currency and some product changes - haven’t convinced analysts and numerous theories are being shared. Now, bad news is relative - they made over $30bn this quarter versus just under $27bn a year ago. $3bn extra in revenue isn’t bad. And it does seem that the combination of good new products last year boosted that quarter.

Apple shares went up, as their results were not as bad as expected. Even though iPhone sales were down 17%. Services revenue keeps growing and they are more confident about China.

European adtech firm Criteo had fairly flat results and they seem to be the canary in the privacy colamine. With a business that was until recently very focused on cookie based retargeting, can they reinvent their business model? They managed to weather GDPR but the Apple changes and the expectations over Google following suit have analysts pessimistic. The company claim to working hand in hand withGoogle - so worth watching.

DTC

Another Q1 story this week was Shopify - with revenue up by almost 50% year on year. And as more and more brands expand into the real world with stores, new products from Shopify let them run the same system on and off line.

The old story about selling picks and shovels to hopeful gold minders applies here as Shopify is essentially a tax on DTC brands. A smart VC friend of Fix makes the case for Shopify and others as a clever way to invest in the growth of DTC. There have been so few big exits for DTC - other than Dollar Shave - some wonder why the sector isn’t seeing more big win?

Whilst all the tools needed to launch a DYC brand are available off the shelf, the creativity is not. Creativity in product, user experience and customer acquisition remains the difference between the winners and the also rans.

We look for signs of this creativity. Ideas like the Dote live shopping parties are promising and the customer experience tactics being tried in selling diamonds are interesting too. As more and more brands max out on social, the move to TV is accelerating but the best brains are looking for ways to do this that keep the best of digital and add the potential scale. Rather than just adopting the old model the challenge is how do you measure the impact and contribution.

When we talk about DTC we always major on Drops and DePop - how young people are changing shopping; both in the way they buy but also in the secondary market where its common to be selling some clothes to fund some new ones.

With two teenage sons I know this world pretty well but this article is a good insight into Depop. And so too is their CMO, talking about how they see the value of brand, at a Balderton event

Retail

Smart DTC brands are learning what smart retailers have known for a while. It’s not about online version offline - it’s about blending the best of both worlds. A new study in the US tells us that Gen Z like shopping malls. But the most interesting part of the story is how retailers are using mobile to drive traffic instore.

Some innovation though, feels like it risks missing the mark. Sainsbury are testing their latest version of till free shopping. Customers walk around the store collecting the things they want and scanning them on a Sainsbury app. Then they scan a code with Apple or Google Pay and off they go. A similar trial took place a few years ago in Sainsbury Farringdon, with the difference that you ‘weighed’ your basket as a rough check you just had the items scanned.

Do I want the role of checkout operator outsourcing to me? The supermarket get the benefit of needing less staff but what’s really in it for the customer? The great increase in carrot sales as a way to nick avocados shows the problems with these innovations.

As I mentioned last week we are seeing brands using messenger based services to put people back into customer service. I come back to this at the end of todays Fix.

Audio

Spotify now has 100m paid customers - double the latest Apple number ( no new figures released by Apple in their results). Revenue is up 33% year on year. But as we talked about last week the new free services from Amazon and Google will keep the pressure on Spotify. And if Apple find a way to bundle their music with their TV and News - and even the devices - that could hit Spotify hard.

Spotify has the best product in terms of customer service but, given the content is essentially the same for all the players, is that enough? They have the best distribution too. Whilst the competition is more likely to be on just their devices (Apple on iPhones, Amazon on Alexa and Google on Android and Home) Spotify is everywhere,

Their moves to own IP in podcasts is really smart but in music the Tidal exclusives seem to be coming to an end. Beyonce released Lemonade only on Tidal 3 years ago but her latest album is available everywhere. And a couple of days ago - exactly 3 years after premiering on Tidal - she made Lemonade available anywhere and the 3 year old album has already charted. Bear in mind Tidal is ran by Mr Carter - JayZ - so music exclusives look to be over as a means of driving subscriptions.

The latest figures for smart speaker sales put them at 200m by the end of this year. So Spotify just need to keep working on that distribution. And keep pushing back on Apple using the app store manipulate the market.

Quick Reads

Coder finds the secrets of the big App firms - first to spot Facebook dating for example.

Amazon launch in the Middle East by rebranding Souq - they bought it in 2017 for $580m

And still on China the suspicion over Chinese and Saudi money in Tech is becoming a big issue. Will this slow down BAT ( and Bytedance) as they expand into the West?

Finally.. Building on my point about business outsourcing jobs to their users; we now do what bank clerks, travel agents etc and it’s fine because these apps make our life easier.

But one coming tech trend I struggle with is autonomous cars. What’s the customer benefit?

I can see why Uber and logistics firms like the idea - less people needed and more profit. And I totally get the logic of no longer owning a car; living in Victoria Park we have finally gone car less and now rely on DriveNow, Zipcar and Uber. And walking and cycling.

But does removing the driver from these services have any real benefit? Other than maybe allowing Uber to make a profit? A FT article looks into the economics of autonomous cars and finds them questionable.

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