With media/tech headlines flooding your inboxes daily, the VIP+ team stands ready to sift through the most significant stories of the week and share their insights in a rousing discussion on LinkedIn Live, Fridays at 11:30 a.m. PT.
Agree — or disagree — with our picks, or maybe want to make some of your own? Join us this morning to share! In advance of the session, here are our picks for the stories that heated up the week that was.
Heidi Chung, Media Analyst/Correspondent
Big Tech had a big week. Actually, “big week” might even be an understatement. As of Thursday afternoon, the major tech giants that reported this week (Microsoft, Alphabet, Apple, Facebook, Amazon) had blowout quarters, leaving many speechless, with the strong results from Apple and Facebook Wednesday afternoon helping the S&P 500 open at record highs Thursday.
Regulatory headwinds facing Big Tech notwithstanding, investors are grinning from ear to ear, as Apple is on track to have a record year for profit and revenue and Facebook is inches from crossing $1 trillion in market cap. Not to mention the 50% year-over-year YouTube ad growth for Alphabet, Microsoft’s biggest revenue leap in three years and the Q1 profit tripling at Amazon.
Despite these companies already being massive, they’re still managing to post huge growth. It almost looks foolish to bet against them when they’re able to produce these kinds of numbers. But all this does beg the question lawmakers have been asking for the past couple of years: Is Big Tech too big?
Kevin Tran, Media Analyst
Facebook CEO Mark Zuckerberg is moving to ensure more creator-economy transactions come as a result of his company. Earlier this week, Zuckerberg announced a string of forthcoming creator-focused monetization tools, such as the ability to sell products directly through Instagram profiles. The tools also include marketplaces that will help connect Instagram creators with relevant brands as well as compensate them for sales of products they’ve promoted. Many details (including launch timing) of the features are still unclear.
Zuckerberg is surely aware of things like Twitter aggressively moving to help creators monetize (via forthcoming Super Follows et al.) and the booming OnlyFans economy, but it’s unlikely his influencer tool announcements are directly a result of them. It’s long been a goal for Facebook to make its platforms more of a priority to creators — Facebook started letting creators charge for content in 2018, while Instagram began making posts more shoppable years ago.
But what Zuckerberg’s latest announcements do suggest is the exec knows his platforms could still do much more to help creators earn a living. While he likely truly does have some altruistic intentions in making it easier for influencers to monetize content on Instagram, his most recently announced tools also help address his problem of Gen Z (which counts many that will age into becoming influencers) favoring other social platforms over Instagram and Facebook.
Andrew Wallenstein, Chief Media Analyst
It looks like Verizon has gotten around to doing what everyone has been expecting for a long time: putting its media division on the auction block. What this phone company was doing with assets such as AOL and Yahoo was something few ever seemed to understand.
While rival AT&T is clearly focused on content through its WarnerMedia arm, Verizon has always seemed to hold these fading digital brands at arm’s length, as if it didn’t really know what it wanted to do with them. There was lots of talk about driving its portfolio into hot growth areas including commerce, subscriptions, gambling and 5G but no sense that Verizon was ever getting anywhere with these plans.
Yes, ancient as AOL and Yahoo are, the roots their products have with global consumers run deep and wide, but restoring these antiques has proven to be very difficult. It will be interesting to see who has the stomach — and $4 billion to $5 billion — to take another crack at resurrecting these brands.
Private equity is seen as the likeliest bidder, which makes perfect sense considering, as we’ve seen in the newspaper business, its M.O. is typically to slash costs in order to squeeze every remaining dollar out of troubled assets rather than reinvesting or even trying to reinvent what Verizon never could.
Gavin Bridge, Senior Media Analyst
It was a good week for ad-supported streaming. VIP+’s “Viewniverse” special report showed back in November that YouTube was the most popular ad-supported streaming or TV network among U.S. adults under 55, but even that didn’t prepare anyone for the stunning increase YouTube just reported in ad revenue.
Global revenue was up 50% versus Q1 2020, to a total of $6 billion in the quarter. This is a strong signal to anyone late to the party: Find a way to put your content on YouTube in a format consumers like (as the WWE has, relative to other U.S. sports), or risk not even reaching younger consumers.
For advertisers, this indicates more of the marketing mix should be placed on carefully targeted content on platforms such as YouTube. Clearly more are doing so, hence the increased spend, but one can still find modern-day equivalents of the Luddites advocating TV-only or TV-supermajority for spend. These will soon have to face up to the reality that ad-supported streaming isn’t going away.
Kaare Eriksen, Information Editor
Sony’s PlayStation 5 console has sold 7.8 million units as of the fiscal year ending March 31, following its November 2020 release. The PS4 sold 7.6 million within the same timeframe after its November 2013 launch, making this significant for Sony given the pandemic’s impact on global production and shortages in semiconductor chips necessary to make the PS5 run.
Per the NPD Group’s Mat Piscatella, the PS5 is already the fastest-selling gaming console in U.S. history, and Sony’s Game & Network Services division also brought in approximately $25 billion for FY 2020, the best in the division’s history (per Sony earnings).
More people than than ever are playing games today, with a significant increase observed in the age 45-54 demographic. The first PlayStation console was released 27 years ago (and Nintendo before that), so this substantial amount of time has allowed for multiple generations to be familiar with and playing games today.
PlayStation has always been known for critically acclaimed single-player titles that generally appeal to older crowds, but Sony’s latest earnings also show add-on content — often seen in free-to-play games such as kids favorite “Fortnite” — now accounts for more than a third of the gaming division’s revenue, per Niko Partners’ Daniel Ahmad.
This ability to cater to different generations of gamers will continue to drive up the $175 billion global games market even further.