Streaming & Digital News 11/10/17

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DOJ May Make AT&T Ditch All of Turner

The Department of Justice announced today that they will require AT&T to drop either DirectTV or Turner (which includes CNN) from the Time Warner deal. Although there are legitimate concerns from the DOJ concerning how much of the media industry the combined AT&T and Time Warner would dominate, that may not be the case now. Given the pro-business focus of the DOJ and FCC toward other mega-deals during the Trump administration, the demands appear to be politically motivated. In the past President Trump has had a longstanding animus against CNN and has hinted that Time Warner would have to sell CNN in order to close the AT&T deal. AT&T plans to sue to force the DOJ to drop their provision.

This is a major upset to AT&T’s plan to marry its distribution might with Time Warner’s deep library of content. Their plan would create a media titan that could use the end of net neutrality rules to make a massive library of content available cheaply to AT&T subscribers. This encourages lock-in and damages other content creators/distributors, such as Netflix.

Why You Care: This reaction creates a chilling effect on journalism critical of the administration, with media giants being afraid that governmental reprimands will hit unrelated parts of their business. Because of this chilling effect, M&A is now far more uncertain. Given the M&A megatrend currently impacting the media industry due to the paroxysms of the digital transition, a slower M&A cycle could damage many companies’ attempts to remain solvent.

 

Snap Slows, Instagram & WhatsApp Copying Show Results

Snap has had a difficult last few months, with mentions of the company declining since Instagram Stories launched – including mentions talking about downloading Snapchat. Furthermore, despite Snapchat’s daily active user base growing to 173 million, Whatsapp and Instagram Stories users each grew to 300 million users – up from 250 million in July. Snapchat also fell out of the Top 10 downloads in the App Store for the first time in Q3 due to surging downloads from other apps. It has been reported that Snap has 300,000 unsold Spectacles in warehouses in China. FInally, Snap’s VP of Engineering is leaving after major losses.

Snaps’s Q3 earnings report didn’t help matters. The service lost $443 million, 282% more than it lost last year. UBS also expected the service to have 174 million users, not the aforementioned 173. Snap dropped 16 percent in after-hours trading to $11.50, which doesn’t compare well to its IPO price of $17 per share.

The news isn’t all bad. Chinese megacorp Tencent took a 10% stake in Snap, a much-needed boost in confidence that helped the company’s stock rebound from the beating they took earlier that day. Snapchat has a redesign in the works that will improve its Stories feature. Taking a page from Facebook and Twitter, Stories will be algorithmically shown by how important Snap thinks it is to you. Snap is still looking for original content to increase its lead on Facebook vis a vis in terms of original content (given that Facebook’s Watch section is still in its infancy). Snapchat users don’t appear to be turning into Instagram users, as previously feared. Finally, news came out that, despite Snapchat having only ⅕ the users Instagram does, Instagram has less than twice as many advertisers.

Why You Care: As mentioned in previous articles, Snap is one of the few upstarts to truly frighten Facebook in quite some time. It has one of the few chances of breaking the advertising Duopoly and a major pillar of Facebook’s power over content creators. Most importantly it is still trying to rework itself, both in terms of content and product, which opens up major opportunities to their partners.

 

Quick Hits

  • World of Wonder (creators of Ru Paul’s Drag Race) launch a LGBT-focused SVOD service. The launch included several original series.
  • Instagram has created a photo bookmarking tool that is rather similar to Pinterest. Facebook could be attempting to copy the popular photo sharing platform as it did with Snapchat.
  • Group Nine, Discovery’s digital media holding group, has bought digital comedy studio Jash. Jash has had shows distributed across Facebook, Snapchat, YouTube, Go90, and beyond.
  • Millarworld’s first project since being acquired by Netflix is called The Magic Order. It is about five families of sorcerers sworn to defend the world. Although no plans have been announced yet it is likely they will be adapted into series by Netflix- that being the point of Millarworld in the first place.
  • Vivendi’s short-form SVOD service, Studio+, is coming to the US. Priced at $3.99/month, and has series designed for mobile viewing.
  • Twitter now allows 280 character tweets. There are fears that this dilutes the one element that distinguished the service from other platforms.
  • Twitter also releases Promote Mode, where users pay $99/month to have their Tweets passively promoted, no matter how many tweets they post that month. New paradigm for online social advertising.
  • Apple orders two seasons of Reese Witherspoon & Jennifer Aniston’s morning show.