StreamWars
Netflix is a buy, along with HBO and Disney. This is a week we should mourn broadcast and cable (or celebrate??), not Netflix.
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Editorial
The King is dead, or are they? Indeed, the Google Finance chart seems to imply that Netflix is in horrible shape. From a 52-week high of almost $700, its stock sits at $218.22 as Thursday, 21st April.
At the same time, Apple TV+ seems to be growing into a powerful service. Friday Baseball has recently been added to the service that won the Oscar for best picture. Rumors abound that Sunday Ticket football will come soon. And HBO Max is also prospering. Meanwhile, CNN+ is closing down.
This can all give a confusing picture of what the trends are. So let’s start with the real facts (or opinions as they are sometimes now called).
The collapse of CNN+ with reportedly only 10k viewers, is symptomatic of how hard it will be for news to gather subscribers. CNN is a very good news channel, especially in times of big news, like now. But its contracts with distributors prevent it from running a meaningful streaming alternative. Even if it could, it would really have to close down the free service or run it ad-supported. People like me would pay a sub, free of ads, and others would take the ad-supported version. Walking away from its distribution agreements is a $2-3 billion annual loss. But I do believe it could make that up as a global streaming service leveraging free/subscriber as a model. It is not going to do that. This leaves the way open for Twitter, Substack, and others to evolve what online news is.
So is Netflix in trouble? Only if Wall Street is the referee. Wall Street scores according to growth. And the mantra is that Netflix's growth has stalled. That has dinged the stock. But has it really stalled? With global reach and household penetration still low in most markets, the company has enormous growth potential. Of course, it needs a strategy – like CNN. But unlike CNN, it has no limits on what it can do. Introducing games and ad-supported lower tiers is easier for them. I think Netflix does not stop growing until it is in over one billion homes globally. I doubt Reed Hastings disagrees.
HBO, Apple, and Disney are the next three big winners. The losers list includes Comcast, Viacom, AT&T, Verizon, DirecTV, Dish and the other legacy players. Fox, NBC, ABC, CBS are all going to become brands with cobwebs on them.
More in this week’s video
Video
StreamWars
What goes around, comes around. Netflix’s stunning 35% collapse on the stock market today should be a lesson to investors in all high-flying companies (I’m thinking of you, Tesla shareholders). The same investors who rush in helter-skelter while a business is expanding, happily paying any price, rush right back out again as soon as growth comes to a halt. And they won’t care how much a stock has already fallen or how cheap it may have become.?
Before Tuesday evening, Netflix shares had dropped 50% since November, when it traded as high as $691. And yet at today’s close of $226, the stock is down nearly 70% from that November high and is back to where it traded at the start of 2018, when Netflix had just over half its current number of subscribers. In a further sign of how things have changed, Netflix is now trading at almost exactly the same multiple of this year’s expected revenue as Disney, the leader of the supposedly slow-growing old-school TV folks, according to data from S&P Global Market Intelligence. What a comedown! Back in January, Netflix’s multiple was twice that of Disney, Koyfin data shows.?
And with things getting tighter and stock price lowering, Netflix has started to crack down on password sharing, testing out a feature that would prompt subscribers to pay extra if they were sharing the service with people outside their own household. So, when the company announced that it had lost 200,000 subscribers — the first decline in paid users since late 2011 — and warned of further problems ahead, the feeling in the room must have been less ‘Netflix and Chill,’ and more ‘ Netflix and OMFG it’s over.’
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WHEN THE DIRECT-TO-VIDEO?docuseries of the streaming wars is filmed, it’s easy to imagine this week’s disappointing Netflix earnings as a big episode-ending cliffhanger: Hemorrhaging customers for the first time in a decade, the company said Tuesday it plans to lose even more throughout 2022—and the future of the company is at stake.
Netflix lost 200,000 more paying customers than it gained in the first three months of the year, and it predicts it’ll lose another 2 million customers in the second quarter. “Our relatively high household penetration—when including the large number of households sharing accounts—combined with competition, is creating revenue growth headwinds,” the company?wrote in a shareholder letter . The loss of 700,000 customers in the last three months in Russia, the result of sanctions, was compounded by an unforecast 600,000-customer loss in the United States and Canada, and another 300,000-customer hit across Europe, the Middle East, and Africa. Gains in the Asia-Pacific region helped cushion the blow, but still resulted in a net loss in users.
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Here’s one way you can tell how big a deal this: In an earnings call after announcing his company’s results, Co-CEO Reed Hastings said the company was going to eventually add an advertising-supported version of the service, which would be cheaper than its current ad-free version. That’s the most obvious takeaway from Netflix’s stunning admission on Tuesday afternoon: Instead of adding more than 2 million subscribers in the first quarter of the year, as it predicted three months ago, it ended up losing 200,000.
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Back in July, rumors suggested that Apple was?pursuing streaming rights ?for the National Football League’s “Sunday Ticket” package, and as of this week, there is a report suggesting that the deal could already be done.
NFL Sunday Ticket has been described as “Apple’s to lose” by Matthew Belloni of?Puck News ?in a report that’s been making the rounds today. In fact, he says that the deal is “actually done” according to one of his sources, and is being kept quiet at the behest of Apple.
My sources say it’s Apple’s to lose, at this point. (One source told me this weekend that the deal is actually done and is being kept quiet at Apple’s request, which I haven’t confirmed and don’t know for a fact; Apple isn’t commenting.) That would make sense: Even after winning top Emmys and the best picture Oscar, C.E.O. Tim Cook has said Apple is merely in its early days of premium video, and nothing is more premium than NFL football. Plus, it would explain Apple’s recent foray into live events and advertising with MLB games.
Given that the information comes from unspecified sources and has yet to be confirmed, it should be viewed with some skepticism at this point. Apple was in talks with NFL executives last year, but there was competition from other TV networks and tech firms like Amazon.
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AT&T for the last time reported results for its entertainment business, with its Q1 2022 earnings out this morning. The company, which unloaded its WarnerMedia division earlier this month, still operated the business in the first quarter. The company said HBO Max and HBO ended March with total global subscribers of 76.8 million, up 12.8 […]
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The New York Times:
Warner Bros. Discovery has decided to shut down CNN+, the ballyhooed streaming service that had been intended to bring CNN into the digital future, just weeks after its splashy debut, according to two people familiar with its plans.
The service is set to cease operations on April 30, the sources said.
Chris Licht, the incoming president of CNN, called an all-hands meeting among CNN+ staffers for noon on Thursday to share the news.
Ignominious, to say the least. Even?Quibi ?lasted?eight months .
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CNN+ will celebrate its one-month anniversary by shutting down.
According to?Variety , CNN’s incoming CEO Chris Licht invited staffers to a meeting at noon ET on Thursday, at which the announcement was said to be made official.
The service will officially shutter on April 30, according to an email Licht sent to CNN+ staffers that was obtained by?Axios .
“In a complex streaming market, consumers want simplicity and an all-in service, which provides a better experience and more value than stand-alone offerings,” Licht wrote.
Whether CNN+ was successful or not is up to debate — the service?had a reported 150,000 subscribers ?three weeks after its launch, with a goal of signing up 2 million in its first year. However, its launch coincided with the corporate merger of Discovery and WarnerMedia, and it became clear quickly that Discovery’s leadership had no interest in a separate news subscription service. Discovery executives quickly ceased marketing spend to promote the service and?laid off CNN’s chief financial officer .
CNN+ staffers will continue to be paid and receive benefits for 90 days while they are given the opportunity to apply for other positions within CNN and Warner Bros. Discovery. Licht also announced that CNN+ head Andrew Morse will leave the company.
“While today’s decision is incredibly difficult, it is the right one for the long-term success of CNN,” Licht concluded in his email to staff. “It allows us to refocus resources on the core products that drive our singular focus: further enhancing CNN’s journalism and its reputation as a global news leader.”
It’s expected that some of the CNN+ catalog, including shows like the late Anthony Bourdain’s “No Reservations,” will find its way to HBO Max. The fate of the service’s new programming, and new interactive formats like the “Interview Club,” is unknown at this time.
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A16z Combinator
Today, we officially launched the?a16z START program , which fuels founders at the earliest stages of company-building with 1:1 support, network introductions, and up to $1M in funding.
Powered by the a16z?seed fund ?in collaboration with partners investing …
The post?Introducing a16z START ?appeared first on?Andreessen Horowitz .
For over a year, Andreessen Horowitz has quietly piloted its own take on an accelerator for early-stage entrepreneurs, and today, the firm announced the program’s official debut.
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In exchange for an unannounced percentage of ownership, “a16z START” will offer early-stage founders up to $1 million in venture capital. The checks are backed by a?$400 million seed fund , which?closed in August 2021.
The remote-first program will accept founders on a rolling basis and wants to connect folks with partners for advice, potential customers or investors, and of course, other entrepreneurs.
On the relatively brief application form for START, a16z names six categories — American dynamism, consumer, enterprise, fintech, games or other. Investment terms will be discussed with final candidates, the form says.
This program extends Andreessen Horowitz’s stamp of approval to the earliest step of an entrepreneur’s journey: the idea stage, or the pre-quitting-your-day-job part of startup life. The company has invested in solo founders before their companies ever existed, but this program appears to be a more formal effort to bring folks into entrepreneurship. Notably, there is no mention of a diversity mandate or focus.
The list of early participants in this program shows that a16z is certainly interested in international entrepreneurs, similar to how Y Combinator has increasingly?grown its global presence over the past few years . Some of START’s first entrepreneurs include executives from Rappi, a Colombian unicorn.
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The Battle for Twitter
Elon Musk wrote in?a letter to Twitter’s board :
I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy.
However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.
As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced. My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder.
Twitter has extraordinary potential. I will unlock it.
The vast majority of commentary about the Musk-Twitter saga has focused on the first three paragraphs: what does Musk mean by making Twitter more free speech oriented? Why doesn’t Musk believe he can work with the current board and management? Does Musk have the cash available to buy Twitter, and would the Twitter board accept his offer (no on the latter, but more on this below)?
The most interesting question of all, though, is the last paragraph: what potential does Musk see, and could he unlock it? For my part, not only do I agree the potential is vast, but I do think Musk could unlock it — and that itself has implications for the preceding paragraphs.
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Tesla CEO is putting $21bn of his own money in the package, according to US watchdog filing
Elon Musk has secured $46.5bn (￡35.6bn) in financing to fund a possible hostile?bid for Twitter ?and is putting up $21bn of his own money as part of the package.
On top of that equity, Musk is raising a further $12.5bn for the offer via a margin loan secured against his shares in Tesla, the electric carmaker that he runs as CEO. Morgan Stanley, the US investment bank, is leading a group of financial institutions providing $13bn in debt financing.
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All About Musk
Tunnel construction startup The Boring Company raised $675 million in a new round of funding that brings its valuation to nearly $6 billion, the company said late Wednesday.
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Electric car company reports $18.8bn in revenue for the first quarter, up 81% from a year before
Tesla smashed Wall Street estimates for revenue and profit in another record quarter on Wednesday, despite a?tumultuous few months ?for its CEO, Elon Musk, and ongoing supply chain concerns.
The electric car manufacturer reported $18.8bn in revenue for Q1 of 2022, up 81% from a year earlier. The report beat analyst expectations of $17.8bn, sending Tesla shares up 4% in after-hours trading.
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Crypto Corner
The best industrial research labs throughout history have played a critical role in pioneering much of modern technology. Two modern examples of successful research labs — both founded in the wake of radical advances in the field of artificial intelligence …
The post?Announcing a16z crypto research ?appeared first on?Andreessen Horowitz .
Today we submitted a comment letter objecting to the SEC’s proposed definition of an exchange as overbroad and likely to inhibit web3 innovation.
Specifically, our comment seeks clarification that it does not apply to DeFi protocols, and asserts that it …
The post?a16z Crypto’s Comment on SEC Exchange Act Proposal ?appeared first on?Andreessen Horowitz .
Coinbase has unveiled a long-awaited NFT marketplace, amping up the competition in a fast-growing sector that’s been dominated by a single player, OpenSea.
The crypto exchange announced Wednesday?the beta launch of Coinbase NFT ?where users can check out an initial collection for sale on the Ethereum blockchain.
Beta testers will be able to buy and sell NFTs with a Coinbase wallet or a self-custody wallet. The company is waiving transaction fees “for a limited time,” Sanchan Saxena, vice president of product for ecosystem products, said in a blog post.
Fees eventually will be added and will be “in-line with Web3 industry standards, and we’ll provide notice before anything changes,” Saxena said. OpenSea charges a 2.5% fee, and allows NFT creators to set their own fees, including royalties on subsequent sales.
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Essay of the Week
Good morning! Netflix is having its face-the-music moment and CNN+ is reportedly against the ropes after executives realized people don’t want to pay for what amounts to just CNN. What’s a streaming service to do? I’m Janko Roettgers, and I’ve been a Netflix subscriber since 2010 (am I … old?).
Also, we want to know what keeps you up at night when it comes to how companies are using AI. Read the bottom for more, then respond to this email and let us know.
It’s tough to be a streaming service
Netflix co-CEO Reed Hastings shocked the streaming world this week by announcing that, after years of saying absolutely not to the idea of an ad-supported tier, Netflix will almost definitely be launching?an ad-supported tier . And CNN’s new streaming service, CNN+, appears to be imploding just three weeks after launching — kind of like Quibi but even more wild because CNN is a legacy brand with a stable of reliable content and Quibi was, well, Quibi. All this goes to show: It’s hard out there for streaming services.
Netflix is adjusting its business model after losing subscribers for the first time in a decade. Its?stock price plunged 35% ?after its earnings whiff, the biggest drop since 2004, and investment firm Pershing Square sold its 3 million shares at a loss yesterday, saying, “We have lost confidence in our ability to predict the company’s future prospects.” Yikes. But changes are coming.
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Startup of the Week
Tesla CEO Elon Musk says the company’s robot, named Optimus, will be “worth more than the car business, worth more than FSD.” FSD, or “full self-driving,” is Tesla’s advanced driver assistance system that relies on cameras and computer vision technology to perform some autonomous driving tasks. An FSD subscription costs Tesla owners about $12,000, or […]
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