Taking the Temperature of Top Media/Tech Companies, Aug. 10-14

Taking the Temperature of Top Media/Tech
Cheyne Gateley/VIP

The VIP Heat Index evaluates the latest moves made by the businesses dominating the week’s biggest media and technology headlines: The hotter the score, the better the situation for the company in question. Here’s how the temperature checks stack up for the week of August 10…

Fortnite Maker Epic Games Launches Crusade Against Apple & Google

Just two weeks after Apple and Google were among the tech giants subjected to a federal hearing, Epic Games is turning up the heat again. Developers were already frustrated with Apple and Google’s 30% cut of in-app purchases, so Epic’s decision Thursday to take 20% off in-app “Fortnite” currency purchased through Epic only escalated tensions. Apple subsequently dropped its “Fortnite” app, leading to immediate legal filings from Epic and a bizarre video satirizing an ad from Apple’s past. By night, Epic was suing Google for the same thing. To top it all off, Facebook is applying pressure on Apple as well. Given its $17 billion valuation after an impressive funding round, Epic can afford to be this bold, and it already has goodwill from developers due to the generous 12% cut for games released through its own platform. And Fortnite’s timing couldn’t be better: Big Tech’s biggest headache just got bigger.

CBS All Access Could Undergo Name Change

As ViacomCBS considers rebranding CBS All Access, “Paramount+” is at the top of the shortlist for potential new names, FT reported this morning. The reasoning: Management reportedly thinks CBS appeals to an older audience. The Paramount+ name could help All Access alleviate this older-skewing concern, given there are millennials out there who closely associate Paramount with many of their favorite films. And some of those millennial film fanatics who had previously overlooked All Access, an SVOD that historically focused on more TV content than film, just might give the rebranded version a shot.

Apple’s SVOD Growth Could Soon Be Buoyed Via Bundles 

Bloomberg reported Thursday that Apple is working on a series of bundles — one such bundle would group services like Apple TV+ and Apple Music at a lower monthly price, while another would offer discounted access to CBS All Access and Showtime OTT to Apple TV+ customers. If true, such moves should eventually accelerate growth for Apple TV+ in a streaming market where one of its biggest competitors is already doing the same and succeeding (as in, Prime Video, which gets a big boost from the Prime membership bundle). With a massive device footprint in place, no one is better positioned than Apple to make a cross-media bundle work. But until we see some price points, best to reserve judgment on how effective the new packages will be. 

WarnerMedia Furthers Layoffs Amid Company Focus on HBO Max 

WarnerMedia on Monday started laying off hundreds of employees in the wake of a company restructuring that heavily hit Warner Bros. HBO and DC Comics staffers were also among those affected. Painful as these cuts are, the layoffs mark a prudent strategic move by WarnerMedia’s newish chief Jason Kilar, who consolidated decision-making powers (Warner Bros. CEO Ann Sarnoff is now in charge of content development for HBO Max, TruTV, TNT and TBS, for example) to cut costs and help prioritize the growth of HBO Max. That SVOD focus is needed as Kilar aims to get more of the millions of HBO subscribers eligible to upgrade to HBO Max for free to make the jump.

Disney Shortens Theme Park Operating Hours As COVID-19 Lingers 

Disney over the weekend announced it will be shortening the operating hours in September of four of its Disney World Parks, which were among North America’s most attended theme parks in 2019. While the company declined to comment on why hours are being cut, it’s hard not to chalk up coronavirus-induced weak attendance as a main cause. Disney World started reopening in early July after closing in March, and Disney CFO Christine McCarthy last week said the upside from reopening “is less than we’d originally expected.” The move could help Disney trim losses posted to its Parks, Experiences and Products segment, the unit that saw its calendar Q2 revenue drop 85% year-over-year. In fact, it was the Disney segment hardest hit by COVID-19.

TikTok Still Getting Dinged by Investigations Into Its Data-Collection Practices 

TikTok’s journey to quell data-privacy concerns got complicated by someone other than Donald Trump this week. The WSJ on Tuesday reported that the platform has used a tactic prohibited by Google to collect data on Android users for at least 15 months. Separately, France’s data-privacy watchdog CNIL on Tuesday said it had begun investigating TikTok after it received a complaint, although additional details were scant. These investigations will act as fresh ammo for the app’s detractors on Capitol Hill, even if they don’t explicitly prove TikTok has been nefariously providing U.S. data to the Chinese government (a main fear of the Trump administration). Rivals reportedly have thought about capitalizing on TikTok’s vulnerable state by merging with one of its competitors, while Reliance Industries is reportedly mulling investing in TikTok’s business in India, where the app is banned. 

Amazon Homes In on Gaming Audience With Twitch Perks Program Rebrand 

Twitch Prime, which was free to Prime members and offered such benefits as free games and Twitch channel subscriptions, was rebranded Prime Gaming on Monday. Prime Gaming still offers the same basic perks as its pre-rebranded self, although Prime members no longer need a Twitch account to take advantage of them. The rebrand is smart because it could help (a) broaden the audience of Twitch and (b) increase the number of Prime members who take advantage of the gaming perks long offered to them. That’s because the new name could help make it clearer to Prime members that games perks are theirs for free — Prime Gaming fits in cleanly with Amazon’s Prime Video and Prime Reading branding.  

Fox Makes International Streaming News Play 

Fox is broadening the reach of its brand to Mexico, Spain, Germany and the U.K. via a new $7 per month video streaming service called Fox News International, the company announced Tuesday. This is good timing for Fox, which will be able to reach more cord-cutters ahead of the November election, although Fox News International’s ability to quickly get off the ground will probably be limited by the vast amount of political news that is easily accessible online for free. Additionally, many of the markets (Spain, Germany and the U.K.) in which Fox’s SVOD is launching show a low willingness to pay for online news (relative to the U.S.), according to Reuters’ 2020 Digital News report.

Univision’s Ad Revenue Gets Hammered During Q2

Univision announced Monday that its ad revenue tanked 40% during the second quarter. On the company’s earnings call, Univision CFO Peter Lori said ad revenue was on pace to see only 15% year-over-year declines in Q3.  Even though management believes the company is beginning to see steady improvement, it could be awhile before ad revenue stabilizes. Also in focus was Univision’s plan for a direct-to-consumer streaming service. Plans for a DTC offering have been put off for a couple years, and investors are growing weary of the company’s lack of effort to compete in the streaming wars. A solid plan for that will also play a critical role in the near-term success of the company.

Liberty Media’s SiriusXM Remains Bright Spot in Business 

With many major sporting events canceled during the pandemic, Liberty’s Braves Group and Formula One Group got hit the hardest during the second quarter. Formula One Group saw revenue tumble 96%, and revenue at the Braves Group sank 95%. Amid the carnage, Liberty’s SiriusXM Group was rather resilient and emerged as the bright spot, with earnings down just 5% from the year-ago period. While it’s hard to argue that music and radio consumption might be recession proof, SiriusXM’s strong performance across the board is an encouraging sign that the business is navigating the pandemic in stride. One big upcoming hurdle for SiriusXM: renewing Howard Stern’s deal, set to expire at the end of 2020. 

Tencent Gets Massive Boost From Gaming in Q2

Gaming, a key part of Chinese tech giant Tencent’s business, grew a staggering 40% from last year, to 38.29 billion yuan. Despite that surge, Tencent believes consumption within games will normalize in the third quarter. Tencent’s Value Added Services, which includes online gaming, represented more than half of its overall revenue. However, financial performance aside, Tencent finds itself caught in the crosshairs of President Donald Trump’s war with China. Last week, Trump signed an executive order that would ban WeChat in the U.S. if Tencent doesn’t sell the business within 45 days. While there are still many unknowns about the proposed ban, it probably won’t put a meaningful dent in the business’ bottom line. According to the company, the U.S. represents only about 2% of total revenue and 1% of ad revenue. 

AMC Doubles Down on Nostalgia With 15-Cent Tickets 

Following disastrous losses stemming from COVID-19’s closure of theaters, AMC has once again readjusted its reopening plans with a ludicrously low discount of $0.15 for re-released titles at the 100 or so locations that will be the first AMCs to open on Aug. 20. While this discount only applies to opening day, the price for re-releases will still be a low $5, with new titles at $10. It’s evident that AMC has zero clue how many filmgoers are actually willing to return to cinemas and are, at least at the start of reopening, mainly interested in gaining a real sense of those numbers before it starts trying to make its money back.