The Q3 Netflix results are out and they are not great - US subscribers grew by less than expected whilst international subs grew. But many were expecting worse and the stock price jumped. The shareholders letter from Reed Hastings is a must read - especially his take on all the competition arriving;
We compete broadly for entertainment time. This means there are many competitive activities to Netflix (from watching linear TV to playing video games, for example). But there is also a very large market opportunity; today we believe we’re less than 10% of TV screen time in the US (our most mature market) and much less than that in mobile screen time
The Guardian summarise the key competitors and their flagship programming - and Boston Consulting Group argue there is still plenty of room for growth in payTV Their market map above is a good way to consider the opportunity. I generally agree but question whether subscription will work in isolation - there is a role for ad funded access here too.
YouTube are being smart about how they use windowing - and free ad supported viewing - to build big audiences for their Original shows. Subscribers are able to binge watch but the free episodes are released weekly
The latest next generation of social apps are getting press; Cocoon Yolo, Tyll and Squad are all focused on the young and looking to leverage how that cohort uses their mobiles. Three use the Snap Developer platform, supporting our view that it is in this age group we will see new behaviours develop. But whilst product innovation is hard, scaling is even harder. Without a Bytedance sized user acquisition budget, are we more likely to see these use cases scale through adoption by Snap and Instagram?
Direct payments to talent in the West have grown beyond Patreon. We mentioned how YouTube has a Join Button where fans can pay for additional content, and a smart friend points out that Facebook Watch has introduced subscriptions. In this piece on Hollywood stars choosing to make content for YouTube to build their fanbase it’s not about money. Yet.
DTC can feel a little fringe sometimes; new brands with niche audiences and little scale. But the prize in online retail is huge as Pepsi prove when they talk of $2billion in online sales this year. Not much of that is DTC - most is the traditional supermarkets selling online with a fair bit of Amazon too. But optimising these sales is different to sales support in the stores. Finding ways to have DTC inform this retail - and vice versa - has to be the winning strategy.
Meeting this week with a super smart Machine Learning startup focused on Amazon commerce, we talked about how you can get a real understanding of Lifetime Value from Amazon, because of their range and depth of purchase history.
This is key for every brand as it essentially sets the price at which it is worth acquiring customers. Well it does if you have any plans to make a profit.
Yet many seem delusional as this piece on creative accounting in DTC shows. But it’s not easy to get right and being too conservative will kill you just as effectively as being too optimistic - it just happens sooner. This good Andrew Chen thread on crappy clickthroughs makes the point that your users fall into cohorts and early customers are generally so much better than the later ones.
We keep seeing new ways of dealing with this - from the emergence of holding companies that can amortise backend costs and - crucially - share best practice on marketing to fascinating alliances. Influencer agency Social Chain has merged with a listed German retailers called Lumaland so they can market the stores 50 brands and 3000 private label products
The lure of physical stores continues and pop ups often now turn permanent - or at least they keep extending the lease - Appear Here see a fifth of their clients extend a lease. Iconic New York retailer Barneys (think Harvey Nicholls but better) faces a new direction - after filing for bankruptcy they are subject a bidding war between old school retailers Saks and new DTC success story Kith
The success of any online retail balances great product and logistics with mastering the details of digital platforms. Taking SEO thinking to the Shopify platform for example and knowing which of the many GAFA surfaces make the best sense for your product mix and customer cohorts. The product offerings keep changing - Google have revamped Google Shopping with a role for Google Lens and a whole new set of formats need testing
And more on cashier less stores - some start ups are enjoying the benefit of not being Amazon and getting traction from retailers who do not want to license Amazon technology. One risk of this format - and any cashier less store- is shoplifting but this piece points out the tech saves so much money on staff that higher shrinkage is affordable. So if you are amongst the many who - mistakenly - ring avocados through as carrots you don’t need to feel that guilty.
As Marketers lose confidence in the economy the latest IPA stats show budgets being cut - albeit slightly. Within the figures the share for digital is increasing supporting the new IAB data on digital adspend showing an increase of 13% for the first half of the year
The star format in digital is video, growing at 27% and through our work with Spirable we are seeing how effective it is when you can make video fit with the platform. Taking a 30 second TV ad and breaking it into the 5000 frames gives you the opportunity to remix the video and make it bespoke for the platform and even for each user. This new approach to video works in many ways and YouTube have a novel new approach to sequencing video, backed up with impressive results
Playing with the new tools for Voice is proving fun. Our experiment with an Amazon Polly version of Fix last week was good learning.
The news that the Pixel 4 will have a real time transcription built in shows how this tech is going mainstream. I have been using Otter to record meetings and calls - the real time transcription isn’t quite perfect but it is really good. And Descript has made our podcast prep so much easier - the ability to edit audio by deleting words in the transcript is almost magical.
Google are clearly keen on Voice - another new tool adds captions automatically And one slightly odd thing from the Google launch - a senior exec suggest you should tell visitors to your home if you have a Nest or Alexa.
Whilst the regulators concerns over the Amazon investment in Deliveroo pick up momentum Uber are to take a majority stake in Latam online grocery business Cornerstone. It feels increasingly likely that this last mile space will be a fight between Uber and Amazon. Utilisation of drivers - taxi or delivery - is the key to success and therefore a wider range of packages makes sense
The disadvantage of not owning a phone led Amazon to develop Echo and the Firestick and Facebook are hoping Portal will give them connection to the TV. Now the BBC think a Public Service Broadcasting stick could help them replicate the prominence they have on the current EPGs
I enjoyed speaking at the excellent Kinetic event on 5G this week and we saw some great thinking on what 5G means for consumers and for the OOH industry in particular. This research from China on 5g is interesting.
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