With news from the media/tech landscape flooding inboxes daily, the VIP+ team is at the ready to sift through the biggest stories of each week and share their insights in a rousing online discussion every Friday. Below, each of our incisive analysts has chosen one development that heated up the week that was.
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Heidi Chung, Media Analyst/Correspondent
Things are heating up (again) in the fight between Big Tech and Congress. And again, investors don’t much seem to care.
About a week ago, lawmakers from both sides of the aisle took things up a notch and proposed five bills aimed at breaking up tech behemoths Amazon, Alphabet, Facebook and Apple. Now the main caveat is that the proposed bills would have to be passed for them to inflict any actual harm to the companies, but still these are not light matters.
Nevertheless, the Teflon tech stocks held their own and are on pace to outperform the broader market in closing out the week. As of Thursday afternoon, Apple and Amazon stock were both up more than 4%, while Facebook had risen 1% and Alphabet was down less than one-tenth of a percent. That stands in contrast with the broader market’s 0.5% decline over the past five days.
What that signals to me is investors seem to think, even after the meteoric growth of the past several years, that tech giants have even more room for growth and that bullish sentiment trumps any or all threat from regulatory pressures. So then my question is, for how much longer? Over the past five years, Alphabet has surged 246%, Apple rallied 453%, Facebook jumped 198% and Amazon soared 394% compared with the S&P 500’s 104% gain during the same time period.
Andrew Wallenstein, Chief Media Analyst
If linear TV is dying, it’s sure going out with a bang. Disney, NBCUniversal and Fox all reported robust demand in the upfront marketplace this week despite the fact that TV ratings are clearly in a pronounced decline that saw no slackening during the pandemic.
Regardless, how’s this for counterintuitive: The growing scarcity of TV ad impressions is only making them more expensive. And these aren’t small revenue and CPM increases. As Discovery CEO David Zaslav observed at an analyst conference this week, the industrywide double-digit gains are “more than I have seen in my lifetime.”
Now, none of this seems to be taking any wind from the sails of the digital giants with which the TV companies vie for dollars. With marketing burgeoning as the globe emerges from COVID-19, everyone is flush. Disney saw 40% growth for its digital and streaming extensions, including Hulu and ESPN+, which is a sign the companies that feast on TV dollars are pivoting quickly to get with the streaming explosion.
The only question that remains is, will the revenue richness of scarcity dry up in the long term? These companies will have lean harder into their streaming pivot to make up for the pain sure to come once diminished ratings are appropriately valued.
Kevin Tran, Media Analyst
It’s becoming increasingly competitive to capture listeners in the social audio space as tech giants wade further into Clubhouse’s territory. On Wednesday, Spotify rolled out Greenroom, the music streamer’s live audio platform, in over 135 markets globally.
The launch of Greenroom, built on the tech of Locker Room, a sports-focused Clubhouse-like platform Spotify acquired in March, came just one day after Facebook conducted the first public U.S. test of its Live Audio Rooms, the company’s answer to Clubhouse. Facebook has previously said its Live Audio Rooms would be available “by the summer.”
The moves by Spotify and Facebook this week are the latest indication that social audio experiences will be a lasting way of consumers taking in content. It’s certainly still possible that some current social audio fans may gradually use platforms like Clubhouse less as their outdoor entertainment options broaden.
But having more options to encounter live audio content decreases the chances that these fans will forget about social audio completely. And the fact that some other countries are still not recovering from COVID-19 as well as the U.S. likely gives social audio originator Clubhouse more time to breathe, despite its reported dip in downloads from February to April.
Between Facebook and Spotify, the latter may have an easier time quickly converting users, at least in the U.S., to become adopters of its social audio platform. People (largely) already go to Spotify with the intention of listening to something, and the same can’t be said for Facebook.
Spotify can easily divert these audio-seeking users to Greenroom from Spotify’s homepage. This begs the question of whether we will eventually see a row on Spotify’s homepage promoting Greenroom rooms on which media companies, brands or influencers can pay to be featured.
Gavin Bridge, Senior Media Analyst
The burgeoning world of NFTs saw two media companies throw their hats into the ring this week, albeit in very different ways. For those who don’t know, an NFT (non-fungible token) is effectively a unique digital collectible that’s verified by blockchain and can be a work of art, video clip, photo or even a tweet.
Many companies and individuals have been dabbling with NFTs or announcing plans to do so, including Live Nation Entertainment, Warner Music Group, WWE, Tom Brady and Universal Music Group. Now media companies and brands are joining them.
CNN announced plans to launch “Vault by CNN,” which will sell NFTs based on its coverage of historic events. This may be a limited market, as there are a finite number of historic events. I expect at some point CNN will branch out and offer NFTs based on moments when evening news hosts Don Lemon or Anderson Cooper trolled President Trump or other public figures.
Fox just announced NFT plans as well. Following in the footsteps of recent investments in gambling, Tubi and social broadcasting platform Caffeine, Fox’s NFT strategy is to invest in areas that can supplement its core media operations. In this case, it takes the form of a $100 million fund for a new business unit called Blockchain Creative Labs, which will also be a digital marketplace for NFTs. As part of the venture, the network’s upcoming animated show “Krapopolis” will see a range of digital products sold to fans on the new platform.
NFTs are an upsell revenue stream, requiring little in costs but yielding strong payoffs. As such, expect all of the media companies, sports leagues and anyone else with video or audio assets to soon announce their own NFT plans, as they all look to cash in on the next craze.
Kaare Eriksen, Information Editor
Oculus, the VR headset developer owned by Facebook, announced in a blog post Wednesday that it would begin testing targeted ads using first-party Facebook data and non-personal data collected from VR apps within the Quest 2 headset, in addition to ads launched prior on the Oculus mobile app.
Some may see this as an overly invasive way to target customers with ads, but Facebook has assured the data it collects alongside ad responses won’t include private user details like height and weight or personal chats with other Oculus users.
Facebook’s willingness to integrate ads into Oculus follows a massively successful 2020 holiday quarter for the Quest 2 headset, which shipped 1.4 million units globally versus 317K for Quest’s prior model in Q4 2019, per SuperData. By comparison, PlayStation VR only shipped 125K in Q4 2020 despite being the number two headset globally.
These ads will first appear solely in the shooting game “Blaston” before rolling out on other apps in the coming weeks, and a sample image in the blog post suggests these ads will function as pop-ups within explorable and interactive environments.
But if they prove lucrative, there’s no reason to think advertisers won’t want to experiment with launching their own branded, fully interactive ad experiences alongside existing apps on Oculus.