Apple belatedly looks to refocus on podcasts

The podcasting industry was shaken up this week with the announcement that JRE is moving exclusively to Spotify and it looks like it has caught Apple’s attention.

Bloomberg reports that Apple is looking to increase its investment in original podcasts, as well as buying existing ones, to augment its nascent Apple TV+ service. While its easy to view this as a classic case of shutting the stable door after the horse has bolted, Apple seems to view podcasts as either a by-product of video content or as material that could then be adapted to video.

Apple effectively invented the podcast format, which derives its name from the pioneering iPod digital audio player, but the pre-eminence of iTunes as a podcasting platform is under serious threat thanks to this recent development. You have to assume Joe Rogan (pictured) spoke to Apple before recently committing to Spotify, so it would be fascinating to know what led him to ultimately reject it.

If hearsay from Rogan’s friend Alex Jones is to be believed, the straw that broke the camel’s back was supplied by the podcast’s other main publishing platform, YouTube. In an article that seems to have since been taken down, Summit News claimed Rogan told Jones it was YouTube’s censorship of alternative views on the coronavirus pandemic that pushed him over the edge.

According to the piece, YouTube has been actively excluding popular content from its trending lists, including some of Rogan’s biggest. On top of that, YouTube has been taking down some videos from doctors and other experts that challenge the conventional narrative on things like COVID-19 pathology and the desirability of keeping society locked down. Rogan’s move is characterised in the piece as ‘a direct strike against the culture of censorship’.

We don’t know why that piece is no longer available, but it seems unlikely that Jones would have fabricated his conversation with Rogan, even if he is often inclined towards hyperbole. Our best guess is that Rogan either didn’t intend his views to be made public or regretted it once they were, and therefore asked for the story to be taken down. The publisher, Paul Joseph Watson, has close ties to Alex Jones and both of them were banned by Facebook a year ago for being ‘dangerous’.

Back to Apple, the podcasting industry will be hoping Spotify’s move will lead to the kind of spending arms race and bidding war for talent that has characterised the video streaming industry for some time. Not only do podcasts like JRE attract massive audiences, they cost next to nothing to produce. The only catch is that the best ones are completely uncensored and thus risky for prudish publishers. Perhaps that’s ultimately what pushed Rogan away from Apple.

Major blow for Google and Apple as Rogan podcast moves exclusively to Spotify

The streaming wars have opened a major new front with the news that Spotify has lured the Joe Rogan Experience away from YouTube and iTunes.

For those unfamiliar with the JRE podcast, it is the defining long-form, open discussion show, featuring completely unstructured conversations between host Joe Rogan and usually one other guest. As a comedian and martial arts commentator, those two topics are covered frequently, but the guest list is very eclectic, ranging from academics to politicians to showbiz figures.

JRE has 8.4 million subscribers on Google-owned YouTube and while that’s a massive number it’s nowhere near the top of the list of all YouTube subscribers. But if you strip out the music and TV brands, it must be right up there. The real traffic for podcasts, however, is from audio streams and downloads, which Rogan himself estimates are around ten times greater that video views. The biggest single platform for that is probably Apple iTunes, on which JRE is the second biggest in the US.

The raw numbers only tell half the story, however, with Rogan’s cultural influence extending even further, especially in the US. US Democratic presidential candidate Bernie Sanders used a claimed Rogan endorsement for political capital at the start of this year while, more recently, Rogan’s negative assessment of the eventual winner of the Democratic nomination, Joe Biden, sent shockwaves across the country and beyond. Most recently, his criticism of how California is handling the coronavirus lockdown seems to have made many residents consider fleeing the state.

So for Spotify to lure Rogan away from these two internet giants with a deal that will be exclusive from the start of next year is a major victory and a significant blow to its competitors. The WSJ reports that it cost Spotify $100 million, which is serious money. While that’s great news for Rogan, we will probably never know if it pays off for Spotify, but if Netflix (where you can find Rogan’s excellent standup) is anything to go by, paying for big names is the way forward.

As you may have gathered your correspondent is a big fan of JRE. At a time when public discussion seems to be more shrill, polarised and dumbed-down than ever, Rogan offers the kind of honest, nuanced, agenda-free discussion that is desperately needed. JRE fans not currently on Spotify will have some serious thinking to do at the start of the year and the Swedish streaming giant is betting a lot of the new users Rogan brings will upgrade to premium services.

The only thing that could go wrong is for Spotify to in any way try to alter the format or censor the often colourful content. Netflix hasn’t and it would be very surprising for Rogan to agree to any such interference. “While Spotify will become the exclusive distributor of JRE, Rogan will maintain full creative control over the show,” assures the Spotify announcement.

To date the streaming wars have largely focused on video content, but this move brings audio to the fore. Once people start commuting again, podcasts will be more important than ever and it increasingly looks like you need to be a Spotify user if you want access to the best ones.

Incidentally the only pod more popular than JRE in the US is currently in the middle of a drama over switching platforms. It may be no coincidence the YouTube recently lured its biggest star, PewDiePie, back from a rival platform. In these fractious times, authenticity has become a precious commodity, one that the internet giants are prepared to pay top dollar for.


Latest Quibi damage limitation exercise does anything but

The CEO of new video streaming service Quibi has turned to the press once more to address its faltering launch, but he continues to score own-goals.

Jeffrey Katzenberg has impeccable credentials as a video content exec, having founded DreamWorks and headed up Walt Disney Studio. He is the joint CEO of smartphone-focused streaming service Quibi alongside experienced tech CEO Meg Whitman and thus ultimately responsible for the success or failure of the venture, which has received billions in venture funding.

It would be fair to say that, right now, the numbers for Quibi are not what was hoped. Three weeks ago Katzenberg said the following in an interview: “Under the circumstances, launching a new business into the tsunami of a pandemic, we actually have had a very, very good launch.” Either that assessment was misleading, or Quibi’s fortunes took a dramatic turn for the worse since then, because he’s singing a very different tune now.

Speaking to the NYT, Katzenberg said: “I attribute everything that has gone wrong to coronavirus, everything. But we own it.” He seems to be trying to completely exonerate himself from any underperformance while at the same time claiming to do the opposite. Not a great start, regardless of how plausible the excuse is.

That wasn’t the last of the doublespeak. “If we knew on March 1, which is when we had to make the call, what we know today, you would say that is not a good idea,” said Katzenberg in response to a question about the timing of the launch. “The answer is, it’s regrettable. But we are making enough gold out of hay here that I don’t regret it.” It’s regrettable, but he doesn’t regret it, OK?

In response to the disappointing launch Katzenberg and co have been desperately trying to tweak the offering to broaden its appeal. They initially left out the ability to cast the content from your phone to your TV, apparently out of a desire to avoid diluting its smartphone specialness, but soon reversed that decision. Now the penny seems to have dropped that allowing some sharing of content online might help spread the word.

“There are a whole bunch of things we have now seen in the product that we thought we got mostly right,” said Katzenberg, “but now that there are hundreds of people on there using it, you go, ‘Uh-oh, we didn’t see that.’” Again, a perfectly normal part of refining a new product, but it’s hard to see how the previous ‘walled off’ approach was ever considered a great idea.

Part of the problem, on top of the pandemic, could be that Katzenberg is used to heading up operations that already have massive brand recognition and value. Disney can afford to limit the distribution of its content and over-charge for it because its unique and highly sought-after. The same it not true of Quibi, so acting all haughty and distant from the start would probably have been a bad idea no matter when it was launched.

A look back at the biggest stories this week

Whether it’s important, depressing or just entertaining, the telecoms industry is always one which attracts attention.

Here are the stories we think are worth a second look at this week:


O2 and Virgin Media are merging to form BT-busting connectivity giant

Telefonica and Liberty Global have confirmed plans to merge UK operations, O2 and Virgin Media, to challenge the connectivity market leader BT.

Full story here.


privacyHalf of Americans approve of using smartphones to track infected individuals

Pew Research Center asked thousands of US adults what they thought about how personal data should be used to help tackle the COVID-19 pandemic.

Full story here.


CSPs are being cut out of enterprise 5G projects – study

A new bit of research conducted by Omdia and BearingPoint//Beyond has found that only a small proportion of B2B 5G deals are being done by operators.

Full story here.


Streaming venture leads Disney to 29% revenue surge

The Walt Disney company has reported a 29% increase for year-on-year revenues thanks to its streaming bet, but COVID-19 has forced the team to withhold dividend payments.

Full story here.


Silver Lake pays a premium for a chunk of Jio Platforms

Private equity firm Silver Lake has shelled out $750 million for a 1.15% stake in the Indian telco, which represents a 12.5% premium on the price Facebook recently paid.

Full story here.


Online gaming seems coronavirus proof, but is it recession proof?

Online entertainment and gaming companies are seeing COVID-19 surges in revenues, but are these businesses in a position to resist the pressures of a global recession?

Full story here.

Streaming venture leads Disney to 29% revenue surge

The Walt Disney company has reported a 29% increase for year-on-year revenues thanks to its streaming bet, but COVID-19 has forced the team to withhold dividend payments.

The impact of the coronavirus pandemic is clear over the last three months, as Disney has been forced to close all theme parks and the majority of retail stores, while there have also been supply chain disruptions. The launch of Disney+ has offset much of the negative, while the suspension of dividend payments should save the company somewhere in the region of $1.6 billion in cash. This saving will become very useful as the team continues international launches for the streaming venture.

“While the COVID-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” said CEO Bob Chapek.

“Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November.”

Walt Disney revenues for Q2 2020 and H1 2020 (USD ($), millions)
Three months to March 28 Year-on-year Six months to March 28 Year-on-year
Revenues 18,009 21% 38,867 29%
Net income 475 (91%) 2,608 (68%)
Free cash 1,910 (30%) 2,202 (39%)

Source: Walt Disney Company Investor Relations

Looking across the business, Disney has been impacted quite severely by the coronavirus outbreak:

  • Cinemas are closed impacting theatrical release and delay to home entertainment revenue
  • Production for new content has been halted
  • Advertising for broadcast TV has been dampened, impacting ESPN and Hulu
  • Parks, hotels, experiences and retail footprint are closed
  • Construction and maintenance is on-hold
  • Benefits and synergies of $71 billion Twenty-First Century Fox acquisition delayed

There does seem to be light at the end of the tunnel for the parks and retail business unit with business returning to normal in China. The Disneytown shopping and entertainment complex has been reopened, while Shanghai Disneyland is scheduled to reopen next week. The team will hope these timelines are replicated around the rest of the world.

There will of course be negative consequences for every business during this unique period, however, Disney does of course have positives to point to. Most notably, the launch and expansion of its streaming platform, Disney+, and new content which has been released on other content platforms.

ESPN has seen viewing figures increase by 11% year-on-year, thanks to the release of Michael Jordan and the Chicago Bulls docuseries, The Last Dance, and the NFL draft, which took place virtually. But it is Disney+ which steals the headlines here.

Over the first five months, Disney+ has bagged 54.5 million subscriptions, vastly exceeding expectations, while there are still lucrative launches in Japan, the Nordics and Benelux over the next few months. The team is not providing much insight on when it plans to break into profitability, but adoption trends around the world are very encouraging to date.

Performance of Walt Disney media assets to March 28
Subscribers (million) Year-on-year Monthly ARPU ($) Year-on-year
Disney+ 33.5* 5.63
ESPN+ 7.9 359% 4.24 (17%)
Hulu (SVOD) 28.8 24% 12.06 (5%)
Hulu (Live and SVOD) 3.3 65% 67.75 29%

*Does not include April subscriber acquisition

This is a major growth asset for the business, especially under the current circumstances. Interestingly enough, there might be an opportunity to offset losses, by releasing certain titles directly on the streaming platform, cutting out theatrical release.

“As you know, we had seven $1 billion films in calendar year ’19,” said CEO Chapek. “But we also realize that either because of changing and evolving consumer dynamics or because of certain situations like COVID, we may have to make some changes to that overall strategy just because theatres aren’t open or aren’t open to the extent that anybody needs to be financially viable.

“So we’re going to evaluate each one of our movies on a case-by-case situation as we are doing right now during this coronavirus situation.”

Releasing in theatres is a big financial draw for Disney, but it also comes with a significant financial outlay. Marketing dollars will still have to be attributed to launches on the streaming platforms, but with content consumption trends shifting more to on-demand, in the living room and the real world, it might make more sense to skip the cinema for some titles.

NBCUniversal has already started releasing some titles on streaming platforms for an additional premium. It has been stated this is due to COVID-19, but it might not be a temporary trend for all titles. Not only is it likely to be cheaper, it satisfies consumer demand and makes the streaming platforms more attractive to subscribe to.

The content business unit is holding the Disney empire up as all the other pillars crumble in the background. Disney is not a company which will ditch its physical business, but success attracts dollars. Chapek has said he remains ‘bullish’ on international expansion of Hulu, while Disney+ is looking like a rip-roaring success. The Walt Disney Company could look like a very different organisation in a few years.

As yet another exec leaves, Quibi may struggle to stay afloat in a perfect storm

Disruptive mobile video streaming platform Quibi seemed to have everything in place to succeed until the coronavirus pandemic came along.

The thinking behind the new SVoD service seemed sound enough: a lot of people watch video while they’re commuting or standing in a queue, so they need short clips optimised for consumption on small smartphone screens. When it launched ten days ago CEO Meg Whitman insisted that launching in the middle of a pandemic of biblical proportions wasn’t a problem, but the signs since then suggest otherwise.

Maybe Whitman thought the disappearance of commuting, especially on public transport, would be offset by the sudden need to queue to get into shops. But reports increasingly paint a different picture, of a lack of buzz and memes as commentators grow sceptical about mobile-first as a positive differentiator.

Adding fuel to that fire is the fact that Quibi has just lost its Head of Brand and Content Marketing, Megan Imbres, who is the fourth senior exec to leave the ship in the past year. “It feels like an opportune time of transition where I can take some time to identify my next challenge,” Imbres reportedly wrote in a note to staff, just a year after joining from Netflix.

Perhaps in an attempt to focus public attention away from that news, Quibi founder Jeffrey Katzenberg granted Reuters an exclusive interview in which he insisted “Under the circumstances, launching a new business into the tsunami of a pandemic, we actually have had a very, very good launch.”

Katzenberg conceded, however, that having his entire target audience confined to quarters was pretty far from ideal. A further indication that the launch may be somewhat short of very, very good is the announcement that Quibi is introducing the facility to cast onto TVs, which would appear to defeat the object of the service somewhat, and presumably wouldn’t have been introduced under normal circumstances.

For an expert view on the matter we spoke to Omdia Analyst Ed Barton, who focuses on the entertainment sector. We’re still looking for the big growth indicators,” said Barton. “The download numbers aren’t great and the immediate pivot to make the shows available on the big screen doesn’t reflect confidence in the mobile-first model.

“Their biggest challenge is they have yet to unearth a service defining hit on the scale of Breaking Bad or House of Cards, something that makes their service mandatory to the zeitgeist obsessed mainstream viewer.”

As ever, content is king, but Quibi may have been hoping to avoid the spending arms race being fought by Netflix, HBO, Amazon, etc thanks to its novel format. That hope now looks forlorn and if Quibi wants to stay afloat long enough to survive the perfect storm of its launch, it may have to massively increase its investment in unique programming.

Disney+ gets off to a flier

Walt Disney executives might have believed the pieces were falling into place to a blockbuster debut, but perhaps even the biggest optimists would have failed to see this coming.

Having launched in the US to much fanfare and collecting 28 million subscriptions in the first six weeks, the team attempted to emulate this success across the pond. There is still a lot of room for growth for the streaming platforms in Europe, and Disney is certainly making a splash.

Five months after first launching the services, Disney is claiming to have secured 50 million paying subscriptions. Momentum should continue to gather over the coming months meaning it should easily surpass the self-imposed target 60 million and 90 million global subscribers by 2024. On this trajectory, it could hit the milestone by the end of year one.

By way of comparison, Netflix claimed to have 158 million subscribers at the end of January and took five years to get to 80 million subscribers.

“Disney is going to smash its own publicly announced subs target,” said analyst Paolo Pescatore of PP Foresight. “Disney+ is a blockbuster hit with users. The biggest challenge will always be keeping users entertained. It is fair to say that many users would have signed up to the annual offer or bundles on both sides of the pond. This will help maintain its total base steady for the first year.

“However, Disney and others are not immune to the current challenges of filming new shows. This will have a knock-on effect next year. All eyes are now on Netflix’s first quarter results to see if Disney+ has had a negative impact on subs base.”

As Pescatore states, the risk which Disney faces in the short- to mid-term future is a lack of new content. In terms of depth, it cannot compete with Netflix which has been investing billions in an incredibly varied strategy to create content for ever type of consumer, in every different market. With COVID-19 encouraging more consumers to stream content, the scrutiny will be on the services in ways executives might not have anticipated.

But for the moment, the numbers are encouraging.

“We’re truly humbled that Disney+ is resonating with millions around the globe and believe this bodes well for our continued expansion throughout Western Europe and into Japan and all of Latin America later this year,” said Kevin Mayer, Chairman of Walt Disney Direct-to-Consumer & International.

“Great storytelling inspires and uplifts, and we are in the fortunate position of being able to deliver a vast array of great entertainment rooted in joy and optimism on Disney+.”

What is unknown for the moment is the regional split of these subscribers. Disney+ has been launched in the US, eight European countries (UK, Ireland, France, Germany, Italy, Spain, Austria and Switzerland) and India.

If Disney+ collected 22 million subscribers in the US by Christmas, months before launching anywhere else, and has also acquired 8 million more in India, there are 20 million unclaimed subscriptions. These will be split between the eight European nations, but would also include US subscribers acquired post December 31.

We’re unlikely to find out these numbers in the immediate future, but it would be very beneficial to find out which of the partnerships in Europe are working better than others.

Vodafone says upstream broadband data flows have doubled in some markets

Operator group Vodafone has shared an update on changes to activity across its European networks coz of Coronavirus.

Apparently a fifth of global internet traffic goes over Vodafone’s networks, so it has a fairly comprehensive view of what’s going on in certain regions. Principal among those is Europe and Vodafone says mobile data usage has increased by 15% on average across the continent. The more advanced the pandemic is, the more mobile data use has increased, so Italy and Spain are the main drivers of that increase.

A similar, but more exaggerated, pattern applies to fixed-line broadband, with Italy and Spain showing a 50% increase in usage. While streaming video will account for a lot of that, the most extreme changes have been caused by video conferencing, which is why upstream (originating from the user) data has increased by 100% in some markets.

“The biggest user of bandwidth on our networks is still the streaming of TV, film and games. Streaming traffic has increased by 40% on mobile and 50% on fixed broadband across European networks as a whole,” blogged Johan Wibergh, Vodafone group CTO. “Gaming traffic alone has increased twofold on mobile and nearly threefold on fixed broadband.

“This has put our mobile and fixed networks under strong pressure with evening peaks for mobile increasing by 20% in countries like Italy and Spain and fixed broadband traffic by around 35% in those countries, putting them near capacity during some parts of the evening. We have therefore brought forward planned upgrades to add four Terabits per second of additional capacity to our networks during March and April.”

Vodafone’s metrics tally with those published recently by Nokia. Operators and networking vendors alike are keen to stress how on top of the unique circumstances they are, but then again would they be blogging about it if they weren’t? Having said that there have been few reports of network problems that we’re aware of and our evening viewing of Tiger King yesterday went without a hitch, so what more could you ask for?