Topic: Content
Tencent, Baidu and Sina Under Investigation in China Over Failure to Police Content (Aug 11, 2017)
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Facebook Announces List of Shows Created for its New Watch Video Tab (Aug 10, 2017)
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★ Facebook Launches Watch, a New Tab for Video Including Original Content (Aug 9, 2017)
Right after both Business Insider and Mashable posted sourced stories about it launching tomorrow, Facebook appears to have decided to take the wraps off its new video tab today instead. That this was coming was widely reported, and now we just know a few more details – the new tab in Facebook is called Watch, and will showcase lots of different kinds of videos, although the focus appears to be on personality-driven stuff of the sort that dominates the more popular YouTube channels. In general, the model here feels very YouTube-like, with a subscription model, though Facebook’s apps for TV platforms in recent months have signaled the broad structure and interface, with a combination of videos recommended or liked by friends, things you’ve saved, things that are popular on the platform, and so on. What I don’t see much of in Facebook’s announcement today is the longer form, more produced stuff that’s supposed to be coming too, probably because it’s not ready yet. There will be some other content in there too including the live MLB coverage Facebook acquired rights to a while back starting next season, but in general this is a hub for all kinds of video on Facebook, from professionally produced stuff to the stuff your friends share. Simply calling out video into its own tab, though, is going to raise its profile and thereby push people to spend more time in videos, where they’ll see ads only every few minutes, as opposed to scrolling through the News Feed, where they’ll see ads every few seconds. I’m more and more convinced that’s a risky move for Facebook, because all the anecdotal evidence I’ve seen so far suggests people are really put off by interruptive ads in Facebook videos (I certainly am too), and this whole effort could end up backfiring. That’s something I’m hoping to write about soon. Update: Variety has a listing of additional shows from professional producers which wasn’t in Facebook’s blog post.
via Facebook
★ Netflix Acquires Millarworld Comic Book Company to Hedge Against Loss of Marvel (Aug 7, 2017)
Netflix is (somewhat remarkably) making its first ever acquisition, buying comic book company Millarworld, which was started by Mark Millar and some former colleagues who had all written comic books for DC and Marvel and wanted a bigger stake in their creations, nearly 15 years ago. The terms of the deal aren’t being disclosed, so it’s far from clear what the immediate financial impact on Netflix will be, either in terms of the acquisition price or the revenue or profits from adding this first bit of diversification to the business. The whole announcement from Netflix reads like a subtle dig at Marvel, which is interesting given the close relationship the two companies currently enjoy. Millar is described as a “modern-day Stan Lee”, when of course Stan Lee himself is still alive and actively involved in the community if not actively creating new content, while the release also says that Millar was behind a number of the characters whose stories have been turned into movies by Marvel Studios over the last few years. Clearly, the claim here – somewhat farfetched – is that Millarworld is the new Marvel. Several of its characters and stories have already been turned into movies in recent years, and with some success, so it’s not a totally absurd claim. But overall few of them have the mass-market name recognition of Marvel or DC’s characters, and some quick feedback from people on Twitter who are more into this world than I am suggest that as a competitor it’s a pretty distant third behind the big two. This is clearly an attempt to secure more original content for Netflix, but also something of a hedge against the time that Netflix’s deal with Disney and therefore Marvel goes away, though on the latter point the acquisition also likely raises the risk that deal does go away, so perhaps Netflix has already had signals (or has simply decided independently) that it won’t renew. But it doesn’t sound like it’s going to provide anything like the same quality or quantity of content for Netflix that the Marvel deal does.
via Netflix (PDF)
Facebook Tests Inserting Posts from Local Officials Into Users’ News Feeds (Aug 4, 2017)
Facebook has begun inserting posts from local elected officials into users’ News Feeds in the app as part of a test it’s running, the latest in a set of moves over the past year to increase the visibility of political and election-related content on Facebook. This is one of those things that simultaneously feels like a great idea and fraught with problems. On the one hand, allowing local officials to communicate more effectively with their constituents at a time when news consumption is becoming more polarized, thanks in part to Facebook itself, seems like a great idea. On the other hand, local officials are also candidates in what sometimes seem like permanent election seasons in the US, at least for certain offices, and if Facebook only promotes posts from elected officials without promoting those of their opponents and rivals in elections, that’s an enormous issue. Of the two screenshots in the Recode piece linked below, one feels relatively apolitical while the other is clearly more political in nature, and a user who was shown only that one and not also something from a representative of a different political party would be getting only one perspective in a way that would be almost impossible for others to address without resorting to paid advertising on Facebook. The approach would massively favor incumbents over their challengers, something the US political system already does to a great extent. So although the effort seems like it has worthwhile elements, it feels like the potential for harm is significant, and I would guess that there will be a big backlash from politicians who feel they’ve been discriminated against if this test moves to a widespread rollout.
via Recode
Google is Developing Snapchat Discover-Like Formats with Publishers (Aug 4, 2017)
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Facebook Starts Ranking Websites in News Feed by Page Load Times (Aug 2, 2017)
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Snapchat is Partnering with College Newspapers for Campus Content (Aug 1, 2017)
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Netflix Takes Out $500m Line of Credit to Finance Content Binge (Jul 28, 2017)
This may help explain why Netflix laid out its content economics in even more detail than usual in last week’s earnings material: it’s apparently taking out a further $500 million line of credit, with an option to extend that by an additional $250 million. The driver is clearly its rapidly growing investment in original content, which has to be paid for up front, in contrast to the existing content it licenses, which is paid for as it’s made available on the site. All of that means that shifting to original content pushes cash burn much earlier in the process and thereby dramatically increases Netflix’s negative free cash flow, something I explained in some detail in this Variety piece last month. As I’ve said before, there’s no real reason why this should be a concern for investors, as long as Netflix is able to keep up its rapid pace of revenue growth, which is currently more than enough to fund its content investments and justify its increased borrowing. But the company’s debt load continues to rise fairly rapidly and at some point it will need to ease off and see that free cash flow picture change to something more positive.
via Variety
★ Netflix Q2 Earnings: Later House of Cards Launch Drives Strong Sub Growth (Jul 17, 2017)
Netflix today kicked off the Q2 earnings season with the first official earnings from a company that I cover, and reported stronger than expected subscriber growth off the back of a House of Cards season launch that was pushed back from Q1. Netflix was way off on its sub growth forecast, and though it surprised on the upside this time around that hasn’t always been the case in several recent guidance misses. Even though Netflix didn’t mention it this quarter, the delayed HoC launch screwed around with lots of year on year comparisons both this quarter and last, since Q1 is usually by far its strongest quarter for subscriber adds and Q2 is usually the low point of the year. Taking a step back, though, Netflix continues on its recent tear, with international growth the major driver, and profits domestically continuing to grow nicely off the back of last year’s price increases. Importantly, Netflix is now projecting that the international business will be profitable on a contribution basis for 2017 as a whole, which will be another major milestone after total non-US subs surpassed US streaming subs for the first time in Q2. The cash flow drain continues to be rapid, with an average of over half a billion dollars per quarter in negative free cash flow over the past year, and over $2 billion in cash content costs in Q2, and $8 billion over the past year, relative to the $6 billion Netflix protected for 2017 on a P&L basis (see this Variety piece I wrote last month for why cash and P&L spending are so different). For now, the subscriber and associated revenue growth are keeping Netflix out ahead of its content spending, but Netflix absolutely has to continue to grow at close to the current rate if it’s to continue to finance massive original content costs and grow profits at the same time.
This is a good time to remind you about the Jackdaw Research Quarterly Decks Service I also offer, which provides slide decks and videos on roughly a dozen major tech companies including Netflix each quarter during earnings season. Tech Narratives subscribers get a 50% discount, so let me know if you’re interested and I’ll send you a coupon code. The Q2 Netflix deck is available now, and will be updated in a few days when the 10-Q is out with more data. You’ll find some of the charts in this Twitter thread from earlier.
via Netflix
Instagram is Winning Over Some Big Publishers from Snapchat (Jul 14, 2017)
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Facebook Has Two More Original Video Series in the Works (Jul 3, 2017)
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Twitter is Reportedly Testing a Fake News Button (Jun 29, 2017)
The Washington Post reports that Twitter is testing a button that would allow users to flag tweets or links in tweets which appear to be false or misleading, although it says there’s no guarantee that the feature will ever launch, and Twitter itself says it’s not going to launch anything along these lines soon. On the face of it, this is a logical step for Twitter, which has been one of the biggest vehicles for the rapid spread of fake news over the last year or two, even though its much smaller scale means that Facebook still arguably has a bigger impact, especially given its tendency to reinforce people’s existing biases. But on the other hand, given how the phrase “fake news” has lost all meaning and come to take on distinct partisan overtones, there’s enormous potential for misuse and controversy, and if Twitter does launch something along these lines, it’s going to need either a massive team of its own or several big partners with significant resources to handle the refereeing that will be needed. That alone may prevent Twitter from ever launching the feature, needed though it may be. In addition, given that Twitter has arguably bent its own rules on acceptable content a little for public figures such as President Trump (and candidate Trump before him), there are some big questions about whether tweets from the President and others would be subject to the same rules as those from other users.
Facebook, Microsoft, Twitter and YouTube Create Forum to Counter Terrorism (Jun 26, 2017)
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Facebook Willing to Spend $3m Per Episode on Original, Clean, Non-Political Video (Jun 26, 2017)
The key part of this article many seem to have picked up on is the sheer amount of money Facebook is willing to spend on securing original video content – up to $3 million an episode, which is comparable to big-budget cable TV shows. And that’s certainly interesting, though it’s not yet clear just how much content Facebook is willing to commission at that cost level. However, in some ways more interesting is the nature of the content Facebook wants to commission: “Facebook has told people it wants to steer clear of shows about children and young teens as well as political dramas, news and shows with nudity and rough language.” In other words, this isn’t going to be the kind of content the other big original content spenders have focused on, which I’ve pointed out has tended to be mostly rated TV-MA. That’s a reflection of a tricky issue Facebook is going to have to deal with, which is that since it’s not explicitly a video platform, people’s expectations of what they find there are going to be different from, say, Netflix or Amazon. Given the recent controversy over Facebook’s role in elections, politics and news are obviously out to avoid any sense of editorializing, but given Facebook’s existing restrictions on content shared on the site (including nudity), it’s got to steer clear of some other forms of content too. And of course with children under 13 technically not allowed to use Facebook, targeting children doesn’t make much sense either. You might say – as a couple of people did to me this morning on Twitter when I tweeted about this – that that doesn’t leave much else for Facebook to show. But of course US broadcast TV has limits on nudity and swearing, and many of the dramas on network TV would comply with these restrictions and do just fine. And this could actually help set Facebook apart as the original video content hub which prioritizes cleaner stuff.
via WSJ
Some YouTube Advertisers Still Staying Away (Jun 21, 2017)
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Apple Poaches Two Sony TV Execs to Lead Video Programming (Jun 16, 2017)
Apple has hired two executives who previously helped make Breaking Bad and The Crown on behalf of AMC and Netflix respectively as its new heads of video programming globally. Those two pieces of content are powerful examples of the role of original content in boosting video brands – Breaking Bad was a major plank of AMC’s push over recent years to turn itself into more than just a catalog player, and while The Crown isn’t Netflix’s most popular bit of original content, it’s very good and a sign of the kind of big-budget stuff it’s going to be making more of going forward. As such, these are fascinating hires, given that for now at least Apple is on the opposite of that process – commissioning rather than producing original video content. These hires could be a sign that change is coming, given that these two new execs have experience producing and not just commissioning video, but that’s a somewhat unusual model for original content compared with other major players like Netflix, which have still tended to farm out original content rather than lead production internally. It’s possible that they will merely become equivalents of Ted Sarandos at Netflix, using their expertise to commission and oversee outside projects, but they seem somewhat odd hires in that context. All of this, meanwhile, seems much less plausible in a continued narrow focus on video content in Apple Music, and much more as part of a broader push into video ahead of a subscription video service. Two other things worth noting: Apple put out a press release on the hires, something it does very rarely indeed, suggesting it wants to make a fuss out of this. Secondly, these two will report directly to Eddy Cue, which will set up an interesting dynamic with Jimmy Iovine, who has seemed to loom large over all of Apple’s content efforts, but especially in video, and who I’ve speculated before is a bit of a loose cannon in this area. I’m hoping these two coming on board provides some more clarity in who owns original video content at Apple.
via WSJ
Facebook Working on Offering Paid Subscriptions for Third Party News Sites (Jun 12, 2017)
Facebook has been doing a great deal to reach out to news publications recently and let them know that it has their interests at heart, something which has occasionally been in doubt. However, despite all the soft enticements it’s offered to get publications to work with Facebook and use its Instant Articles feature, the big thing publications have wanted is a business model other than advertising, namely subscriptions. It sounds like Facebook is now working on that feature, which would allow users to pay for subscriptions to publications from within its apps. Apple News, of course, already offers that options, but it’s been a closed rather than open platform so far and though I was expecting it to open up more in iOS 11, there’s no word of that so far from Apple. I would guess Facebook would start with a narrower program too and open up somewhat over time. So although this is good news for whichever pubs get included in the first round, many will likely have to wait even longer. But this is a good first step in giving news publications something they probably want more than anything else from Facebook right now.
via WSJ
YouTube Clarifies Content Policies for Creators and Advertisers (Jun 1, 2017)
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EU Reports that US Internet Companies Have Improved Removal of Hate Speech (Jun 1, 2017)
Back in December, four big US Internet companies signed a voluntary code of conduct with the EU under which they agreed to improve and accelerate the removal of hate speech from their platforms. Now, the EU is reporting good progress on those goals, with twice as high a percent of offending content removed, and Facebook and Twitter removing substantially more content within the first 24 hours, while YouTube slipped a little in this regard for reasons that aren’t clear. As Facebook has discovered, policing content is an expensive and labor-intensive task at the best of times, but having external standards set like this raises the stakes even further. The big risk in the EU and specific European countries is that this moves from voluntary codes of conduct to actual laws with significant consequences for non-compliance, so the big US companies are wise to do what they can to play nicely to try to ward off such outcomes.
via Reuters