?? Timely Media Insights: Apple, A24, FB, Pandora, Magnolia TV and Alibaba

We at DWA write a weekly media newsletter called Play Book. It's a chance to smarten up on media with less choice, quicker bites and more impact...and build community along the way. Last Friday's version is published below. Sign up here to join the weekly readership.

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Today in Play Book:

DWA's Holiday Mix party on Wednesday December 5th; Apple Taps A24 to Produce Slate of Films; The NY Times' Investigation of Facebook; Pandora's New Podcast Genome Project; Chip and Joanna Gaines' Magnolia Returns to Discovery with a Branded TV Network and OTT offering; The Hysteria of Alibaba's Singles Day; We're Hiring at DWA

• To Celebrate the Holiday Season, We at DWA are Hosting our Holiday Mix Soiree on Wednesday December 5th at LONO in Hollywood. Based on past attendee feedback, we're introducing a more mingling-focused format in another absolutely stunning venue via LONO's Green Room. A very BIG thank you to our sponsor, Bottle Rocket Management including founder and DWA friend Chas Lacaillade, for helping make our event even more special. Tickets can be purchased here!
• Apple Taps A24 to Produce Slate of Films. Premium hardware (+ growing services) meets premium arthouse. In a multi-year partnership announced Thursday, the tech giant will team up with indie studio A24 to produce an undisclosed number of films. With details surrounding Apple's upcoming digital video platform still tightly under wraps, exactly how these films will be distributed remains a thinly-veiled mystery. What we do know is that A24 is one of a dwindling number of sub-major Hollywood players that has maintained relevance and independence as the rest of the industry moves towards consolidation. Through savvy dealmaking, A24 has been able to strengthen its position without ceding control to a 3rd party; this partnership with Apple adds to existing deals with DirecTV and Amazon Prime. 

As the content arms race heats up, large tech will increasingly seek to differentiate (and accelerate traction) through M&A and partnerships with players that have an established taste pedigree and access to premium creator networks. This is a VERY exciting data point for Hollywood's elevated production and financier shops.

• Facebook is Back Under Intense Scrutiny as NY Times Investigation Reveals a Pattern of Delay, Deny and Deflect During the Russian Interference and Cambridge Analytica Probes. The NY Times published an in-depth investigatory piece on the social juggernaut this past Wednesday, highlighting FB's hiring of Washington PR firm Definers Public Affairs, participation in a counter propaganda machine, opposition research of inquiring senators, internal strife and more. Zuckerberg held a conference call on Thursday with reporters to respond to the investigation's claims and discuss FB's community standards and publishing policy. The NY Times The Daily podcast published an updated situational overview this AM. This re-emerged wave of public outcry again speaks to growing consumer and governmental concern about the role and impact of the social networks in our day-to-day, and the high level of responsibility, transparency and oversight expected by corporate leadership. Some big things might be shaken loose at the end of this tumult...Divestitures? Major fines? Incarceration? Other? The stock is currently trading at $138, down 4% since yesterday and 37% from its 52 week high of $218 on July 25th. The drop is not just a result of FB's growing meddling and privacy issues, but it's interesting to note. More unfolding to come...
• Pandora Brings Its Genome Technology to Podcast Recommendations.The content supply glut has made the discovery journey a growing focus area within the media ecosystem: for some its a competitive advantage (e.g. Netflix's personalization algorithm), for others its led to extremist content rabbit holes and frustrated advertiser clients (e.g. YouTube). Podcasts' growing popularity and production ramp-up is resulting in similar discovery challenges, and now big moves are being made. Just this week, Pandora (recently acquired by SiriusXM for $3.5bn) announced its Podcast Genome Project, which will now power "a new recommendation system that will be combined with human editorial oversight to offer content suggestions for Pandora users...the Podcast Genome Project can currently evaluate content across over 1,500 attributes, like MPAA ratings, production style, content type, host profile and more, as well as listener signals, like thumbs, skips, replays and more. It uses machine learning algorithms, natural language processing and collaborative filtering methods to help determine listener preferences." Improved discovery will definitely fuel consumption growth, and we at DWA expect many tech and platform peers to announce similar initiatives. When 83% of Americans aren't listening to podcasts on a weekly basis, per Pandora CEO Roger Lynch, the consumption headroom enabled by improved discovery is exciting for the overall market. 
• Magnolia, the Lifestyle Brand built by Fixer Upper’s Chip and Joanna Gaines, is Planning a Launch of a Branded TV Network and Corresponding Streaming Platform Powered by Discovery. During an appearance on last Friday’s Tonight Show With Jimmy Fallon, the couple announced that they're in early negotiations with Discovery to return to TV. Subsequent press releases from both Magnolia and Discovery confirmed the talks to roll out a Magnolia branded TV network - likely a re-brand of either DIY or Great American Country - with an accompanying streaming platform. Despite rumors of vigorous interest from Netflix, it appears that a lucrative equity offer and the couples' existing Discovery relationship has won out - a rare victory for linear networks vis-a-vis the streaming giants. 

For those paying attention to the home space in media, this comes as little surprise. Although the couple ended their popular HGTV show earlier this year to “catch [their] breath for a moment,” the Gaines never stopped serving their audience. In the past year alone, the Gaines have opened a restaurant, written multiple books and expanded their product lines. These accomplishments add to an established and diversified set of businesses that includes a real estate brokerage, multiple bed and breakfasts, brick and mortar + digital storefronts, a quarterly print publication and an annual festival held in the Gaines' home town of Waco, TX. Each expression of the Magnolia brand perpetuates an intimate and engaged relationship with its audience. More importantly, every view, every read, every in person interaction drives fans towards monetizable opportunities that further solidify brand loyalty. Overall, this move highlights the Gaines' belief in the power combo of familiarity + new opportunity; Discovery is a known entity in audience reach/demo/leadership, and a deeper partnership (and likely very attractive financial package) bolsters a more powerful top-of-funnel layer for Magnolia. Expanded reach and deeper branding within the Discovery demo will support the Gaines' further monetization of a fast growing array of down funnel opportunities, and we're excited to see the emergent streaming product (and newly segmented audience) take shape!

• Prime Day, Black Friday, Cyber Monday…it’s All Child’s Play Compared to the Hype and Sales Hysteria Ginned up on Alibaba's Singles Day. This decade old faux-holiday - invented by Alibaba to celebrate the surging consumerism of China’s middle class - crushes any spending spectacle here in the states. Case in point: Black Friday thru Cyber Monday drove $19bn in 2017 US sales...by comparison, Singles Day this year drove a staggering $31bn in just 24 hours, reaching its first $1bn in just 85 seconds and beating Prime Day 2018 total sales in just 10 minutes. Historically, Singles Day has consistently doubled YoY sales. To keep the momentum going, this year's promo included a live Mariah Carey performance, app gamification in the form of neighbor-vs-neighbor spend tallies (yes, a literal Keeping up with the Joneses feature), and robots making coffee and cocktails.

Despite the promo, this year resulted in disappointing YoY growth of 'only' 20%. Reasons include newly-intensified competition like Pinduoduo targeting more price sensitive shoppers in smaller Chinese cities, less attractive discount promotions (some only 5-15%) and tightened consumer spending from an overall slowing of economic growth. That said, the numbers are still meteoric and the slow down is not a surprise; growth tends to slow as a company gains size, especially considering Alibaba's gargantuan revenue base. Though the stock has taken a hit since the June high, we at DWA see a healthy, diversified, Amazon-lite business in size and scope (multi-$bn cloud computing, digital media / entertainment and innovation business segments). We’d bet anyone who created a $31bn holiday from thin (smoggy?) air has the capacity to conjure up more growth and innovation. Here's a great multi-media primer / recap from Business Insider.

Of note, looking ahead at our own US Holiday splurging, analysts estimate a measured 5% growth in sales spurred by higher wages, higher employment, marker gains and consumer confidence. We at DWA believe it will be interesting to see who positions best to fill the now defunct Toys R’ Us void. Hard to bet against Amazon, but Walmart and Target will be strong contenders in the mix. 

• We're Hiring at DWA: Seeking another Business Analyst (or two) to support our expanding client roster. Our ask = referrals of up-and-coming stars who are excited by media but frustrated by traditional and digital role hierarchies...we help our ranks forge new paths ahead (apply here).