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SiriusXM Buys Car Dongle Company Automatic for $100m (Apr 27, 2017)
Amazon Readying Launch of Echo Device with a Screen (Apr 27, 2017)
Comcast reported Q1 2017 results this morning, and in keeping with past trends, the numbers were generally good. It saw another rise in TV subscribers as the cable companies continue to take share from the telcos, despite the overall trend of cord cutting, and it also saw strong growth in broadband subscribers, which now significantly outnumber its TV subs. Interestingly, it also began placing more emphasis on its home automation and security business this quarter, and reported that it has almost a million subscribers, or around 4% of its broadband base. The big theme that’s emerging from this quarter’s earnings reports from these providers is bundling – Comcast continues to see the percentage of customers taking more than one product rise over time (it’s now reached 71%), while AT&T suffered precisely because it can’t offer broadband/TV bundles to DirecTV customers. The wireless-TV bundles it can offer aren’t the ones consumers are looking for, which makes Comcast’s push into wireless somewhat questionable too. At NBCU, we’re seeing many of the same trends we’ve seen before too – subscriber numbers and viewing are down, but contractual rate increases with MVPDs are driving revenue growth anyway (of course those rate increases are rising costs on the cable side). Ad revenue was down in the cable networks business but up slightly in the broadcast business despite lower ratings because prices have been rising, though my analysis across the TV industry suggests the rate of price increases is slowing dramatically. Comcast continues to be a powerhouse across the categories where it competes (which also includes movies through Universal) but it’s facing some significant headwinds in the form of cord cutting, ratings declines, and rising content costs, which are going to take an increasing toll over the long term.
Note: you can see all my earnings posts or all Q1 2017 earnings posts specifically by clicking on the relevant tags below.
ESPN Lays Off 100 On-Air Personalities (Apr 26, 2017)
Google Broadens Hate Speech Policies for AdSense (Apr 26, 2017)
Gett Acquires Fellow Ride-Sharing Company Juno for $200m (Apr 26, 2017)
This has been in the offing for weeks, with lots of reporting since Ajit Pai took over as FCC Chair about his intentions to dismantle net neutrality regulations, but today it finally become official with a speech by Pai outlining his proposed approach. For now, all that will happen is that the FCC will tomorrow publish a Notice of Proposed Rulemaking outlining plans to reclassify broadband services as Title I, and inviting public comment. The significance of that is that the 2015 reclassification of broadband as Title II was what enabled the agency to pass net neutrality rules which stood up in court, so reversing that decision would also remove the net neutrality regulations. What Pai didn’t do in his speech today was outline how net neutrality rules, which he says he broadly supports, would be enforced going forward, though reporting has suggested he favors handing enforcement to the FTC with providers drawing up voluntary codes of conduct. The providers themselves, meanwhile, have been piping up in praise of the proposal while reiterating their commitment to a version of net neutrality they can live with: not blocking or degrading competing traffic. Once again, how you feel about all this depends on what you think net neutrality should mean: if you agree with that basic definition from the providers, things should be fine, but if you think it should also mean no paid prioritization, no zero rating, and so on, then you’ll have a problem with how this plays out. Pai’s fundamental argument here is that the providers were largely self-regulating before the rules, and that they will be again. The counterargument is that the threat of rules was enough to keep the carriers in line without them, and with rules eliminated and no immediate prospect of their reintroduction, carriers would be emboldened to push the limits in a way they weren’t in 2015. Also, as I argued a few weeks back, though the proposal released tomorrow will be up for public comment, I wouldn’t expect it to change much in the face of even very strong negative feedback.
It’s hard to avoid the sense that Facebook is trying to rain on Twitter’s parade here. It’s announced that Instagram now has 700 million monthly active users, up from 600 million in December, which means it’s added 100 million users in just a little over the time it took Twitter to add nine million. It previously announced that Instagram Stories has 200 million users, up from the 150 million it had shared earlier, and attributed the growth in the core Instagram user base in part to an improved signup flow. But Instagram has also benefited from strong adoption in emerging markets, including Brazil, which is its second largest market after the US, with 45 million users. That’s in marked contrast to Snapchat, which has emphasized primarily mature markets on the basis that emerging markets users have more constrained and expensive bandwidth and would be less likely to use a visually intensive app like Snapchat. And of course Facebook’s other apps continue to grow rapidly too: Messenger and WhatsApp are now both over 1.2 billion, while the core app will likely hit 2 billion in the next quarter or two.
Twitter Aiming to Broadcast Live Video Full Time in Future (Apr 25, 2017)
This is an interesting announcement to make the night before earnings. Twitter broadcast 800 hours of live video in the first quarter, but it’s aiming to broadcast 24/7 eventually, which would be a roughly threefold increase in video just to have a single stream full time, let alone to give people options. And though this piece talks up the idea of being the equivalent to CNBC in airports, the whole value proposition of the latter is that you have nothing better to do. For Twitter to do well with live video, it needs compelling content, not just ambient content. And that’s tough to do when the vast majority of sports rights are sewn up for years to come and Twitter just lost one of the few available packages to Amazon. Beyond sports, there’s not much live content that’s compelling enough for people to tune into deliberately and importantly to watch through a commercial break. Color me skeptical that this effort will make a big difference to Twitter’s user base or its ability to monetize it. Live video still feels like an interesting complement to Twitter’s core value proposition rather than being central to it, and I don’t see that changing anytime soon.