Weekly Digest from the West
Jean-Baptiste Piron
Cultural Attaché I Attaché culturel I Québec Office Los Angeles
-Media and Telecom Sector Taking $30 Billion Virus Hit So Far, Analyst Estimates: "The Cost of COVID-19 So Far? $30 billion of Earnings Before Interest, Taxes, Depreciation and Amortization in 2020." That is the title of a Tuesday report from Credit Suisse analyst Douglas Mitchelson. "Cumulatively, since the start of the COVID crisis, we have taken $19 billion, or 35 percent, out of our media earnings before interest, taxes, depreciation and amortization [estimate for the year]" to $35.8 billion, he explained. That includes such companies as Walt Disney, whose theme parks have been hit hard by the pandemic, Fox Corp. and ViacomCBS. « While we have media EBITDA rebounding 26 percent in 2021, even after this performance it would still be 18 percent below 2019 levels," the analyst said. Meanwhile, his earnings estimates for telecom companies, which include the likes of Comcast, AT&T, Dish and Charter, have dropped by $11 billion to $157.5 billion, which would be down 5 percent from 2019. But he noted: « Telecom is holding up relatively quite well: we forecast EBITDA growing 5 percent in 2021, rebounding to 99 percent of 2019’s levels." With earnings season for the stocks he tracks complete, Mitchelson shared this summary: "The star takeaway from first-quarter results was confirmation of the many early data points suggesting that COVID and social distancing were accelerating the shift to streaming. This includes record streaming subscriber growth and usage and record U.S. cord cutting (which was a clear positive for Netflix, and a clear negative for linear media). » And he highlighted one clear open issue, writing: « The key advertising debate remains whether TV advertising will rebound post-crisis, or whether TV is the next print advertising, losing share to digital this recession just as newspaper did during the Great Recession." So what stocks does Mitchelson recommend? "We remain in the broadband 'stronger-for-longer' cable bull camp with 'outperforms' on Charter (our top pick), Altice U.S. and Comcast," he wrote. "Verizon and AT&T remain 'neutral' given the potential for increased competition in an already mature industry, in addition to AT&T’s exposure to satellite TV and media. For media, we believe Fox’s and Discovery’s high margins, lack of studio exposure, free cash flow generation and valuations present interesting relative value opportunities. » Meanwhile, ‘neutral'-rated "Disney remains the most heavily debated company in our coverage, and we sympathize with the long-term bull case that its theme parks will eventually recover post-COVID and its pivot to streaming (Disney+) will outstrip challenges to its linear networks, but also the bear case that the next 12-18 months could prove quite challenging and consensus expectations remain too high," Mitchelson said.
-Volume of New Broadcast Series Orders Poised to Crater Amid Coronavirus Pandemic: Viewers shouldn’t expect much new fare during the 2020-2021 broadcast season. Last year, the broadcast networks collectively ordered 36 new series out of pilot season, on par with the historic lows of years past. This year, the number of series ordered is on track to be a fraction of that, likely somewhere between 10 and 20. With networks and studios still largely unable to produce any shows under the coronavirus production shutdown — including their pilots ordered this pilot season — broadcasters are largely going to be renewing vast swaths of their existing schedules rather than ordering new shows, sources say. CBS and Fox have already given a glimpse of what next season will look like. Last week, CBS announced series pick ups for the “Equalizer” reboot starring Queen Latifah, a drama about “The Silence of the Lambs” character Clarice Starling, and the multi-cam comedy “B Positive” from Chuck Lorre. The network also announced it had renewed 23 shows for next season. Fox, in unveiling its fall schedule on Monday, announced a series pick up for the Mayim Bialik-led multi-cam “Call Me Kat.” That show joins the previously announced series order for the animated comedy “Housebroken.” Both series will be held until midseason along with fellow animated comedy “The Great North,” which was originally ordered in May 2019. Fox had already renewed the hit dramas “9-1-1” and “9-1-1: Lone Star,” as well as perennial network favorites like “The Simpsons” and “Family Guy” ahead of the schedule announcement. “Bob’s Burgers” was also picked up for another season.
-Jeffrey Katzenberg: Coronavirus to Blame for « Everything That Has Gone Wrong » With Quibi: Jeffrey Katzenberg is copping to the disappointment that has been Quibi’s soft launch into entertainment's coronavirus-era ecosystem. The shortform video app, which gained 1.7 million views in its first week, quickly departed the Apple Store's 50 most downloaded free iPhone apps after and is currently ranked at No. 125. Quibi features a 90-day free trial and costs $4.99 a month with ads and $7.99 a month after that period. "I attribute everything that has gone wrong to coronavirus,” Katzenberg said in an interview with The New York Times published Monday. “Everything. But we own it.” TV According to the service, it has been downloaded 3.5 million times, and 1.3 million of those who downloaded the app are « active users." Given those figures, Katzenberg told the Times, "Is it the avalanche of people that we wanted and were going for out of launch? The answer is no. It’s not up to what we wanted. It’s not close to what we wanted.” (Quibi had projected 7 million users in its first year.) With all of its shows’ episodes shorter than 10 minutes, Quibi (short for "Quick Bites") was designed to entertain viewers on the subway, in line or before appointments, a plan that was entirely upended by the coronavirus crisis unfolding during the app's launch on April 6. Though time spent on streaming platforms has rocketed as consumers social distance from each other, many find themselves with too much time on their hands at home, rather than only a few moments to enjoy shows between engagements. However, Katzenberg, who launched the app with former Hewlett Packard CEO Meg Whitman, said that he didn't regret launching the app during the coronavirus. “If we knew on March 1, which is when we had to make the call, what we know today, you would say that is not a good idea,” he told the Times. “The answer is, it’s regrettable. But we are making enough gold out of hay here that I don’t regret it.” He added, « My hope, my belief was that there would still be many in-between moments while sheltering in place. ... There are still those moments, but it’s not the same. It’s out of sync." (Still, he noted, 80 percent of users are finishing episodes they start.) On social media, where Quibi has become something of a meme, users have criticized the fact that they cannot share the clips on social platforms or watch the shows on their TVs. (Some critics have also panned a few of the platform's initial offerings.) Quibi is now allowing iPhone users to watch the shows on their bigger screens, while the same update will also come to Android users soon. Following user feedback, the app is also developing a sharing function for social media platforms. Notably, Katzenberg shared with the Times another update: Users don't seem to be viewing as much news content as the platform assumed. Its events-driven shows, called « Daily Essentials," "are not that essential," he said. Katzenberg added that the company is working on new revenue projections and decreasing its marketing budget given the new COVID-19 entertainment landscape. When asked about the success of TikTok, a social platform that is also premised on short videos, Katzenberg gave a testy reply. "That’s like comparing apples to submarines," he told the Times. "I don’t know what people are expecting from us. What did Netflix look like 30 days after it launched? To tell me about a company that has a billion users and is doing great in the past six weeks, I’m happy for them, but what the hell does it have to do with me?"
-Netflix and Google Are Poised to Dominate L.A. After the Pandemic: In the next few years, as the world emerges from the novel coronavirus, Netflix will lay claim to nearly as big a footprint in Los Angeles as the most iconic of the city's entertainment companies, Disney. Google, another Silicon Valley implant, will not be far behind. The pandemic will delay some expansion but likely not diminish it because increased time at home is only increasing the popularity of streaming, and the crisis is expected to make tech giants even more dominant. Though it is officially headquartered in Los Gatos, Netflix is increasingly -- for all intents and purposes -- an L.A. company, a quick rise considering it had little presence in the city before 2017. The streaming giant has already signed commitments for an additional 826,000 square feet of office space and sound stages in Hollywood, meaning that it will have twice the footprint in L.A. as in the Bay Area. Already, Netflix has more than 3,000 employees here, considerably more than it has at headquarters, according to someone familiar with the company. All together, the so-called FAANG companies – Facebook, Apple, Amazon, Netflix, and Alphabet (formerly known as Google) plus Hulu – will occupy nearly six million square feet of office space on the Westside by 2023, gobbling up 10% of all commercial real estate there. The figures come from a review compiled for dot.LA by the tech office broker HelloOffice, which uses proprietary data to track real estate listings and trends in real time. (None of the companies would comment on their real estate activity.) The analysis reveals that a city known globally as the movie capital of the world for the last century has rapidly transformed itself in just the few years to be the streaming capital. They also show the increasing influence of the biggest tech behemoths in L.A. and the extent to which scores of smaller but still significant players are forming an expansive reach over the area; almost half the tenant base on the Westside is made up of companies combining technology and entertainment. "Tech has now become the bedrock of Los Angeles," said Petra Durnin, head of market analytics at HelloOffice. « Every kind of industry has a tech component." It might seem incongruous to be talking about office space at a time when nearly every workplace sits empty as employees stay quarantined at home. But while more work will be remote, experts predict most people will return to the office, eventually. A recent study by the University of Chicago found only a third of work could be done remotely. « We will get back to business but with necessary adjustments," Durnin said. FAANGs are expected to come out stronger on the other side of the crisis as many less-capitalized businesses go under. Meanwhile, stuck at home with little else to watch with sports and live events on hold, people are binging shows like Tiger King and Ozark at record rates. « Like other home entertainment services, we're seeing temporarily higher viewing and increased membership growth," Netflix recently told shareholders, after announcing 15.8 million new subscribers in the last quarter, more than double what it expected.
https://dot.la/netflix-google-los-angeles-2645965570.html
-Nintendo and PlayStation lead as TV ad spend dips in April — even during pandemic: The gaming industry’s TV advertising spend saw an overall decrease in April compared to March, to an estimated $16.3 million from $17.3 million. Nintendo, which accounted for over 84% of industry spend in March, drastically reduced its budget (although it kept its first-place position), while PlayStation burst back onto the ranking after being absent in previous months. GamesBeat has partnered with iSpot.tv, the always-on TV ad measurement and attribution platform, to bring you a monthly report on how gaming brands are spending. The results below are for the top five gaming-industry brands in April, ranked by estimated national TV ad spend. Nintendo leads with an estimated spend of $6.5 million, down from March’s $14.6 million. The brand ran 14 spots over 3,500 times, generating 518.3 million TV ad impressions. The commercial with the biggest placement budget (estimated at $834,641) was “My Way to Play: Gaming Together.” Nick, Cartoon Network, and Nick Toons were three of the networks with the biggest spend, while top programming included SpongeBob SquarePants, The Loud House, and the 2020 NFL Draft.
-AMC Theatres’ Stock Soars on Amazon Acquisition Speculation: hares of AMC Entertainment surged Monday amid speculation that the country’s largest exhibition chain could be an acquisition target for Amazon. Both companies did not immediately return requests for comment, and the report in the Daily Mail that goosed share prices indicated that Amazon’s interest may have waned. It noted, for instance, that it was unclear if talks between the companies were still active. No matter. Even the hint that the world’s largest theater chain could be snapped up by the e-commerce giant was enough to leave investors salivating. Shares of AMC rocketed roughly 45% in early trading, topping out at more than $5.80. For Amazon, which has had intermittent success in backing and releasing original films such as “Manchester by the Sea” and “The Big Sick,” owning AMC would give it a showcase for its major releases. Last year, the company started moving away from a traditional theatrical release strategy of screening films in cinemas exclusively for 90 days before debuting them on its streaming service, Amazon Prime. That limited the number of venues that were willing to show movies such as “The Report” and “The Aeronauts.” In the past, Amazon has explored buying a theater chain such as the Landmark, which ultimately was sold to billionaire Charles S. Cohen. Analyst Eric Wold noted that buying AMC would have strategic advantages for Amazon, but also expressed some skepticism that a deal would take place, noting that the exhibition chain’s stock has been hammered by coronavirus closures.
-How Walmart uses AI to enable two-hour Express Delivery: Last month, Walmart launched Express Delivery, a service that allows customers to receive orders in two hours or less. Pilot tests began across 100 U.S. stores on April 16, and Walmart plans to expand Express Delivery to nearly 1,000 stores tomorrow and about 2,000 later this month. Express Delivery, which offers more than 160,000 items across Walmart’s inventory, wasn’t motivated strictly by the pandemic. But Walmart says the timing “pushed forward” development as the retailer experienced a surge in delivery demand correlated with shelter-in-place orders. Its engineering teams completed a minimum viable product and deployed it to a store in Phoenix, Arizona within two weeks, after which it was brought to 100 stores. As tests in those stores began, the teams behind Express Delivery worked on a scalable successor, optimizing it in real time for larger store deployment.
Walmart spoke with VentureBeat about the AI systems underlying Express Delivery, which range from a logistics algorithm that accounts for conditions to an alerting platform that prioritizes orders for a network of over 74,000 personal shoppers. While some systems were in place prior to Express Delivery’s development, others had to be architected from scratch.
-The Best New Shows on Netflix in May 2020: You just really can’t seem to slow Netflix down. New month? Well that means there’s a whole heap of new content for you to watch, whether you’re looking for a binge-watch-worthy show for the whole family, or something a little spicier for after the kids go to bed. Either way, we’ve got you covered with our picks for the 11 best new shows on Netflix in May, from returning favorites to breakout hits in the making. So what’s on the docket this month? May brings Ryan Murphy‘s latest glamp series, the alt-history Hollywood, the Belgian apocalypse thriller Into the Night, and the Damien Chazzelle produced and co-directed series The Eddy, which is about — you guessed it — jazz. Oh and Steve Carell is re-teaming with his The Office boss Greg Daniels for a new workplace comedy, Space Force. In the realm of returning favorites, there’s Season 2 of the animated adventure The Hollow, Season 2 of the dark and twisty thriller Dead to Me, Check out what’s ahead for all those and the rest of our picks for what to watch on Netflix this month below, and for more, you can see all the new movies and TV shows on Netflix in May 2020 right here.
-NBCU Won’t Take Ads From Rival Streamers on Peacock: Hollywood’s streaming wars are growing more intense. Months after Walt Disney blocked Netflix from advertising on entertainment-focused outlets like ABC and FX, NBCUniversal said Monday that it would not accept commercials “at this time” from rival streaming services on Peacock, its own subscription-based streaming-video outlet. Laura Molen, a president of NBCUniversal’s ad sales and partnerships, indicated the company could be open to taking those commercials in the future. NBCU has launched Peacock slowly, making it available to Comcast subscribers and is getting to launch it more widely in July. As part of that process, NBCU solicited early ad support from a limited number of sponsors, including Capital One, L’Oreal, Molson Coors, Subaru, Verizon, State Farm, Target, Unilever, and Eli Lilly, and has vowed not to run more than five minutes of advertising per hour on the service. Even so, ads from streamers and the technology and entertainment giants behind them have become one of TV’s biggest categories in recent months. The Super Bowl, the Emmys and the Oscars have been filled with hard-to-miss ads from Netflix, HBO and Amazon. As AT&T readies the launch of its HBOMax and other services jockey to get consumers to subscribe, that activity is likely to increase. Molen did not indicate the company won’t run ads from streaming services on NBCUniversal’s TV networks. In October of last year, Walt Disney stopped accepting commercials from Netflix on its non-ESPN networks, citing a policy that required streaming-video rivals to have a broader relationship that might go beyond advertising in order to gain acceptance.
-Twitter is now letting employees work from home indefinitely: Twitter will now let its employees work from home indefinitely, which was first reported by BuzzFeed News. CEO Jack Dorsey reportedly informed employees of the new policy in an email sent on Tuesday. “If our employees are in a role and situation that enables them to work from home and they want to continue to do so forever, we will make that happen,” a Twitter spokesperson said in a statement to The Verge. “If not, our offices will be their warm and welcoming selves, with some additional precautions, when we feel it’s safe to return.”
-Uber is reportedly in talks to buy Grubhub: Uber is in talks to buy Grubhub in an all-stock deal, The Wall Street Journal reports. According to the WSJ’s sources, Grubhub wants 2.15 Uber shares for each Grubhub share. Uber first approached Grubhhub earlier this year with an offer, but the two companies are still in talks, according to the WSJ. A Bloomberg report says the deal could be finalized sometime this month. This comes a few months after reports emerged that Grubhub was looking to sell Uber, DoorDash and others. Amid the COVID-19 pandemic, food delivery has been hot. In Q1, Uber Eats experienced major growth with gross bookings of $4.68 billion, up 52% from that same quarter one year ago. Grubhub, meanwhile, saw gross food sales increase to $1.6 billion, up from $1.5 billion in the same period last year. Still, Uber Eats had just 20% of the market share and Grubhub had 28% in March 2020, while DoorDash accounted for 42% of it, according to Second Measure. A merger of Uber Eats and Grubhub would undoubtedly help Uber gain more dominance in the on-demand food delivery space.
-Netflix Starts To Lift Its Coronavirus Streaming Restrictions: Back in March, Netflix revealed that it was throttling its streaming speeds across Europe in response to a request from an EU commissioner who was (unnecessarily) concerned about the Coronavirus lockdown putting strain on broadband delivery systems. Inevitably all the other big video streaming platforms swiftly followed suit, leaving European households with clearly reduced streaming picture quality as they tried to fill the hours stuck in their homes. Happily, Netflix, at least, appears to have started reversing its streaming bandwidth limitations. I’ve heard from multiple contacts in Germany that they are now seeing streaming speeds for 4K Netflix content routinely hitting 15.25Mbps - the same maximum rate they used to hit before the Coronavirus limits were imposed. Previously, Netflix’s throttling process had seen these streams limited to 7.62Mbps - the bare minimum speed required to provide a (compressed-looking) 4K stream. This is great news for German AV fans - especially as some European Netflix users had been concerned that Netflix and the other streaming services might never return streaming bandwidths to their pre-Coronavirus levels.
-Apple Acquires Startup NextVR that Broadcasts VR Content: Apple Inc. confirmed it acquired NextVR, a startup that provides sports and other content for virtual-reality headsets. The acquisition may help Apple’s development of VR and AR headsets with accompanying software and content. NextVR supplies content to several existing VR headsets, including Facebook Inc.’s Oculus and devices from Sony Corp., HTC Corp. and Lenovo. NextVR has deals with sports leagues including the National Basketball Association and entertainment networks such as Fox Sports. The startup also has expertise in live streaming in virtual reality, which could also be useful for live concerts and games. The Newport Beach, California-based startup officially shut down this week, saying on its website that it is “heading in a new direction.” Apple said it buys smaller technology companies from time to time, and generally does not discuss its purpose or plans. It didn’t disclose a purchase price, but website 9to5Mac reported in April that Apple was in talks to buy NextVR for about $100 million. The deal is at least the third for Apple this year, following the purchase of Voysis, an Irish startup that focuses on voice technology, and Dark Sky, a popular weather app.
-HBO partners with Scener so you can have watch parties with remote friends: For anyone sheltering in place during the pandemic, Scener has built a virtual movie theater where you can interact with friends remotely over video chat while watching your favorite programs. Today, the company is announcing it has partnered with HBO to enable co-watching features for HBO Now and HBO Go viewers. Using Google Chrome, you can turn on the Scener Virtual Movie Theater app and watch your favorite shows while your friends appear in video chat windows. Scener cofounder Joe Braidwood said in an interview with VentureBeat that this lets people enjoy their favorite pastime of watching TV together from a safe distance. “I don’t know of an example [in] the history of the entertainment industry where a company like HBO partnered with a startup like ours to enable a new way of viewing,” Braidwood said. “I think it’s a big moment in history, and we are very excited.” HBO Now and HBO Go subscribers can create their own private theaters on Windows, Mac, or Chromebook devices in seconds by downloading Scener’s free extension from the Chrome Web Store. “Your host friend can select a show, press play, and then all the friends can be in the same part of the movie together,” Braidwood said. “It was great in the past year, when we supported Scener on Netflix, for people in long-distance relationships. But since the pandemic, this has become more mainstream.”
-Sports TV networks bracing for unprecedented broadcasts in coronavirus age: As sports slowly return to action during the coronavirus pandemic, some aspects of networks’ presentation will look the same, while others could see a fundamental shift. A historic show like ESPN’s “College GameDay” in the fall already is being forced to consider whether it will have the atmosphere of students and fans, who have fueled passion into its telecasts for decades. Meanwhile, TV sports producers are using Zoom video calls to discuss how they should present fan-less stadiums, which is leading to creative and perhaps previously unthinkable possibilities. ESPN, Fox, NBC, CBS and Turner Sports, according to sources, have experimented with the idea of using virtual reality to enhance the at-home viewing experience, by superimposing realistic-looking fans onto screens. The idea is in its infancy and there is a mixture of opinions toward it, but it is something the networks are playing with as fan-less games appear to be the immediate reality. It is all part of the reimagining of how to broadcast potential games during the COVID-19 health crisis. Games likely will start without fans in attendance, as the overriding goal is to provide a safe environment for everyone working within the sporting events. Sports are slowly starting to re-emerge on television, with NASCAR returning to Fox on Sunday from Darlington Raceway in South Carolina. NBC will present a charity golf Skins Game on Sunday in Florida, while ESPN this past weekend held a UFC production on Saturday. Sports TV will also follow the same social distancing guidelines that will be present in all workplaces as the country continues to gradually reopen. For the last four decades, networks have scaled up or down the same basic broadcasting model, depending on the size of the events, Fox Sports executive vice president Brad Zager said.
-Why ‘as-a-service’ models will reign in a post-pandemic world: It’s hard to think ahead when we are up to our necks in the misery and fear of a pandemic, but every CEO should be focused not just on how to survive, but how to thrive in the COVID-era. I say era because this is not a passing phase, but a new reality COVID is accelerating many societal and technology shifts and reversing others. The COVID-era is a technology-driven era with widespread and often forced adoption of trends like work-from-home, online retail, pickup/delivery services, entertainment-as-a-service, telemedicine (well, tele-you-name-it), and machine-learning. Embodied in this change are deep behavioral shifts that, even given a decade, might never have reached these proportions. Enabling nearly all of these shifts is an “… as-a-service (XaaS)” capability be it data, infrastructure, platform, software, or experience. XaaS was already on it’s way to becoming a juggernaut, with a market value of $93.8 billion in 2018 and projected to triple to $344.3 billion by 2024, but it’s now on a whole new COVID-triggered upswing. These XaaS enabled remote service paradigms are here to stay, maybe not at today’s artificially enforced levels, but to a significant degree all the same. Everyone now knows the perils of work-from-home, but they know the benefits too. As the COVID-era continues to require social distancing for some time, we can’t all go back to the cramped office. And why should we? I hate to see the airline industry in turmoil, but I can’t say that I’ve missed air travel. Now everyone knows just how easy it is to get your groceries or your food delivered, and contactless at that. I miss the big screen, but I’ll settle for great content, 65” TV, and homemade popcorn if I can share the experience with all my friends wherever they are. But the current change is not just a digital transformation to cloud and consumerized applications, it’s also a behavioral transformation. Forward thinking businesses are seizing this unprecedented opportunity to pause the growth/execution treadmill and imagine a new value/ideation opportunity. Whole teams have been liberated from soul-destroying wash-rinse-repeat cycles and are free to think through new ideas. For better or worse, companies are also leaner and more agile, having been forced to transform their business in order to thrive.
Doer...
4yThanks a lot Jean-Baptiste