Company / division: Other Companies
Costco has launched a new online grocery shopping service, which will offer two-day delivery nationwide. There’s only a small delivery fee, but that’s a little misleading because the list prices for the items ordered in this way will be 15-17% higher than prices customers would encounter in stores. The irony here is that Costco’s stores are in some ways very much like warehouses, and therefore offer many of the same cost benefits as actual warehouses, meaning that e-commerce doesn’t provide many savings in that department, while shipping for the bulk items Costco typically sells would be disproportionately expensive. It would certainly be more transparent for Costco to be explicit about shipping while keeping the prices the same, but it’s likely banking on consumers making the same assumptions they make in its stores, namely that buying in bulk is always cheaper, without actually checking prices. That’s a tougher sell online, though, where comparison shopping is only a browser tab away. In other words, all this feels like a box-checking exercise against Amazon rather than a serious attempt to actually sell many groceries this way, which makes you wonder whether it’s worthwhile at all. Meanwhile, Amazon’s massive logistics advantage just continues to grow.
Rovio’s IPO Ends the Day Flat with Opening Price (Sep 29, 2017)
Rovio, the Finnish company behind the Angry Birds franchise, held its IPO today, just a day after TV box and platform maker Roku, but saw very different results. Whereas Roku saw a massive jump in its stock price in its first day of trading, Rovio’s stock ended the day back where it started, having traded in a pretty narrow range all day. In the context of Roku’s IPO and expectations for Spotify’s, I’ve been asked a lot recently about the prospects for tech IPOs overall, and my response is always the same: it’s not really about the “climate” for tech IPOs (though that clearly matters), but about the performance of each company in its own right. In the case of these two companies, a quick glance might make you think Rovio was actually in better shape, profitable and growing whereas Roku is unprofitable and growing. But it’s all about the trajectory and ultimate potential when it comes to valuations, and while Roku seems to be in the midst of a clear transition which should lead to profits and revenue growth, Rovio continues to be very reliant on a single franchise, Angry Birds, and though it’s expanded the nature of gameplay in games released under that banner considerably, none of its recent game launches have come close to matching the performance of the top games globally over the last couple of years. So Rovio is a mid-tier mobile game maker with some profits and growth but there’s no great success story here, nor any sign of a dramatic positive change in its fortunes. Spotify, on the other hand, is like Roku currently unprofitable, but there is at least a theory as to how it might eventually turn that around with enough growth in paid streaming, off the back of recently renegotiated record deals.
Kids’ Anonymous Feedback App TBH Hits #1 on App Store (Sep 25, 2017)
The hottest new app on the iOS App Store isn’t an augmented reality game enabled by iOS 11, but a new social app aimed at older school kids called TBH (styled tbh). What sets the app apart from pretty much every other social app aimed at kids is its limits, which prevent it from being used for bullying or other nastiness and instead focuses it on positive anonymous messages. In a world where pretty much every new platform eventually gets used for bullying and trolling, this one is admirable for its focus on positivity, something that shines through pretty clearly in the reviews on the App Store. At the same time, it clearly taps into every tween and teen’s desire to talk about friends with other friends in quasi-anonymous ways. The full article from TechCrunch which I’ve linked to below is worth a read fro the other details, but if nothing else the app’s success is admirable for its focus on trying to be a force for good in a world where so little else is. But it’s also notable for being yet another example of an app that’s launched on iOS first (with Android supposedly in the works), that’s thrived on limitations, and which has – like Facebook – taken a slow and steady approach to rolling out (I downloaded the app to try it out but it’s only available in certain states and mine isn’t one of them). The next big challenge, of course, is monetization – something that might be tough among the 12-18 crowd this seems firmly aimed at.
Major US Banks to Launch Zelle, a P2P Payments App (Sep 8, 2017)
Angry Birds Maker Rovio Announces Plans to Go Public (Sep 5, 2017)
Discovery to Acquire Scripps Networks for $14.6 Billion (Jul 31, 2017)
iRobot CEO Backtracks on Roomba Data Sale Comments (Jul 28, 2017)
Roomba Owner iRobot Talks About Selling Home Mapping Data (Jul 24, 2017)
Cable Network Owners Discovery and Scripps in Merger Talks (Jul 18, 2017)
The Wall Street Journal is reporting that two cable network owners, Discovery Communications and Scripps Networks, are discussing a merger, though there seems no guarantee that a deal will actually get done. The two are among the mid-tier cable network owners in the US, similar sized domestically while Discovery has a significant international business too. Combined, they would be the size of HBO domestically, and the size of Viacom including the international business. Each company has several networks which reach the vast majority of US households by being in the basic cable tier, but Scripps also has several less widely distributed networks, and the biggest thing they have in common is their focus on non-fiction, non-sports content, an important slice of overall content consumption but missing arguably the most popular dramas, comedies, and sports content that most people consume a great deal of. There have been recent talks about sports-free pay TV packages involving Discovery, though not Scripps. The reality is that the cable network business is only going to become more challenging in the coming years as subscriber numbers and ratings continue to drop in the face of cord cutting, cord shaving, and shifting consumption patterns driven by online video services like Netflix. Joining forces would boost scale and negotiating power and therefore help somewhat, but even the combined company would be dwarfed by the industry giants like Time Warner, Disney, and 21st Century Fox in the cable network business alone. I could see some standalone streaming services coming out of all this too, especially for non-sports fans, but I don’t see any of this solving the underlying problems cable network owners face today or in the future.