In this week’s Week in Review: Netflix says it won’t turn to ads despite slowing subscriber growth, Blackstone buys mobile video ad tech company Vungle, and the BBC and ITV give Britbox a launch date and a price. To receive an update on the industry’s top stories every Friday, sign up to the weekly Video Round-Up.
Netflix Says it Won’t Turn to Ads Despite Subscription Struggles
Netflix insisted this week that it won’t create an ad-supported subscription tier for its service, despite its troubles with slowing subscriber growth. The company’s share price fell by over ten percent this week as its Q2 financial results fell short of expectations. Worldwide subscriber growth for the quarter was 2.7 million, well short of analysts’ estimates of around five million, while its subscription count in the US fell by around 100,000.
Netflix has recently raised its prices in several markets, including the US, which may have contributed to the slip. But despite this, the company said in a letter to investors that it won’t be tempted to try offering an ad-supported subscription tier. “We, like HBO, are advertising free,” the letter said. “That remains a deep part of our brand proposition; when you read speculation that we are moving into selling advertising, be confident that this is false. We believe we will have a more valuable business in the long term by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction.”
Blackstone Buys Vungle for $750 Million
Private equity firm the Blackstone Group these week announced it is buying mobile video ad tech company Vungle, with the deal reported by the Wall Street Journal be worth $750 million. Vungle claims it serves over 60,000 mobile app publishers, including Microsoft, Pandora and Rovio, delivering over 4 billion video views per month. “Our investment will help deliver on the company’s tremendous growth potential and we look forward to partnering with management to extend Vungle’s strength across mobile gaming and other performance brands,” said Sachin Bavishi, principal at Blackstone.
The deal also involves a settlement with founder and former chief executive Zain Jaffer. Jaffer filed a wrongful termination suit against the company after being dismissed by the company in 2017, when he was charged with child abuse – the charges were dropped, but Jaffer claimed that Vungle subsequently “sought to destroy [his] career”.
BBC and ITV Set Out Plans for BritBox
UK broadcasters the BBC and ITV this morning laid out details for the UK launch of their joint streaming service BritBox. The service will launch between October and December this year, and will cost £5.99 per month for an HD subscription. The two broadcasters confirmed a number of shows including Love Island, Gavin & Stacey, The Office and Broadchurch will be available at launch, with original content expected next year.
A number of other shows though will only move onto BritBox once they’ve expired on ITV and the BBC’s own catch-up services – which could mean a long wait for some content, as the BBC is awaiting regulatory permission to keep shows on iPlayer for a year after first broadcast. The two also confirmed that not all BBC and ITV content will make it to BritBox, with shows made by independent production companies retaining the right to sell streaming rights to other services.
The Week in Tech
FTC Reportedly Ready to Hand Facebook $5 Billion Fine Over Data Leaks
Reports emerged last Friday that the US Federal Trade Commission (FTC) has voted to hand Facebook a $5 billion fine for various privacy violations, include the data leak to Cambridge Analytica. The fine would be the largest handed out by the FTC, but nonetheless some feel it’s too small, with four senators sending a letter to the Commission describing the rumoured penalty as “woefully inadequate”. Facebook announced earlier this year that it had set aside money to deal with the fine, which it had expected to come in between $3-5 billion. And while the penalty is at the upper end of that scale, that fact that Facebook’ share price rose after the story broke suggests investors believed the FTC might be harsher.
— rat king (@MikeIsaac) July 12, 2019
Impact Engine Accuses Google of Copying its Ad Tech
Impact Engine, a small California-based tech company, has filed a lawsuit against Google accusing the search giant of “willful patent infringement”. The filing states that several of Google’s digital advertising platforms including Google Ads and AdSense infringe on six patents relating to ‘programmatic creative’ held by the tech company.
Impact Engine alleges that Google initiated discussions around a partnership between 2005 and 2007, expressing interest in integrating Impact Engine’s dynamic creative tech into its own platforms. These discussions reportedly led to Impact Engine developing a working prototype to run on Google’s platforms, sharing source code and other intellectual property with Google in the process. Read the full story on VAN.
Amazon Offers Shoppers $10 to Hand Over Their Data
Amazon this week began offering shoppers $10 in credit for installing the Amazon Assistant, a move which many interpreted as the e-commerce giant effectively paying shoppers for their data. Amazon Assistant is a web browser extension which shows users’ Amazon’s prices for products they’re browsing on other retail sites. But to do so, it needs access to web browsing data, and Amazon says it the T&Cs that it can also use the data to improve its general marketing.
The Week in TV
Dailymotion Made to Pay €5.5 Million to Mediaset for Copyright Infringement
French video platform Dailymotion has been ordered to pay Mediaset €5.5 million in damages for distributing copyrighted content by an Italian court. The judge ruled that Dailymotion was “entirely aware of the fact that most of the material distributed on its platform was covered by copyright”, and imposed an addition fine of €5,000 for each day the offending content remains on the site. This case is the first of seven lawsuits to be resolved, with Mediaset claiming total damages could add up to €200,000, based on this first ruling.
Deutsche Telekom Ordered to Change Zero-Rating StreamOn Service
Deutsche Telekom has been ordered by a German court to make changes to its StreamOn mobile video product, which gives customers free data for video streaming when they’re in Germany. The court ruled that the offering breaks European rules on network neutrality, since download speeds are throttled under some cheaper price plans. It also violates the EU’s roaming charge laws, since the free data is only available when users are in Germany. Deutsche Telekom says it will assess its legal options going forward, and will continue offering StreamOn for the time being.
Disney to Shut Down FX+ SVOD Service
Disney confirmed this week that it will shut down its FX+ subscription video on-demand (SVOD) service in August, as it prepares to launch Disney+ later this year. The service was a home for FX’s original series, which will still be available of Disney-owned Hulu.
EC Clears Way for Vodafone to Become Western Europe’s Largest TV Operator
The European Commission this week announced that it’s cleared Vodafone’s proposed €18 billion takeover of Liberty Global’s cable businesses in Germany, Hungary, Romania and Czechia, subject to certain conditions. The deal, which is expected to now complete by July 31st, will add substantial assets to what was already one of Europe’s largest cable operators.
Following the completion, Vodafone says it will have 22.1 million TV customers across 13 European countries, making it Western Europe’s largest TV operator by subscriber count, going by Digital TV Research’s forecasts. Sky, the closest rival, doesn’t specify exactly how many TV subscribers it has, but in its most recent financial report said it has 23 million customers overall – given that this includes non-TV subscribers, it seems likely that Vodafone will overtake it. Read the full story on VAN.
The Week in Publishing
Schibsted Ad Revenues Hit by Gaming Regulations
Norwegian media business Schibsted’s Q2 revenues beat expectations in its financial results this week, with revenues up four percent to 4.8 billion Norwegian krone. But the group’s advertising performance was “somewhat mixed” according to CEO Kristin Skogen Lund, due to changes in gaming regulations. “Our main challenge lies in Aftonbladet [a Swedish tabloid], where the strong market contraction for the gaming industry due to regulatory tightening has resulted in reduced advertising spend,” said Lund. But Lund said digital subscription revenues are rising quickly, negating the effect of this falling ad spend.
Quibi and NBC to Collaborate on Daily News Show
Quibi, the upcoming mobile-first streaming service founded by Jeffrey Katzenberg, announced this week that it will run a twice-daily news show in collaboration with NBC News. The show will run less than six minutes, in-keeping with the platform’s short-form emphasis, with a morning and an evening edition released every day.
Reach in the Running for Johnston Press Assets
British publishing group Reach (formerly Trinity Mirror) this week confirmed it has put in an offer for “certain of JPI Media’s assets”. JPI Media owns national daily newspaper i, as well as a number of regional titles, having been formed last year to buy the titles from troubled publisher Johnston Press. Reach didn’t confirm which titles specifically it is interested in, though Sky News has reported it’s interested in buying “most” of JPI Media.
The Week for Agencies
Publicis Shares Drop Nine Percent as North American Business Suffers
Publicis’ share price fell by nine percent this week as the holding group lowered its full year revenue guidance following its Q2 financial results. Organic revenue growth in Q1 was 0.1 percent, comfortably below analyst expectations of 0.7 percent. And while Publicis had previously said it would beat 2018’s organic revenue growth of 0.8 percent, it now expects a “broadly stable net revenue” this year. Meanwhile in North America, the group’s biggest market, net revenue fell by 1.7 percent.
Omnicom Profits Rise, but Revenues Fall 3.6 Percent
Omnicom beat analyst’s profit expectations in its Q2 financial results this week, but its share price fell by up to four percent with revenues down 3.6 percent and its full year sales growth forecast unchanged. Net income rose around two percent year-on-year to $370.7 million, but total revenues fell thanks in large part to the strength of the dollar. Organic revenues though were up 2.8 percent. Nonetheless, investors were somewhat disappointed as the company kept its sales growth forecast steady, with Omnicom saying that a slowing global economy is harming ad spending.
UK Marketing Budgets Stall, But Internet and TV Budgets Grow
UK marketing budgets flat-lined on the whole in Q2 this year according to the Institute of Practitioners in Advertising’s (IPA) Q2 Bellwether Report, but internet and TV budgets continued to grow healthily. After a strong Q1 had raised hopes for a sustained revival in marketing budgets, UK businesses have proven more cautious overall in Q2 – though this caution hasn’t spread to their plans for TV and digital advertising. Read more on VAN.
Hires of the Week
Netflix Appoints Jackie Lee-Joe as CMO
Netflix this week hired former BBC Studios executive Jackie Lee-Joe as its new chief marketing officer. Lee-Joe succeeds Kelly Bennett, who announced his retirement earlier this year.
Ray Carpenter Joins Simulmedia Board
Simulmedia announced this week that Ray Carpenter, chief financial officer at Xandr, has been appointed to its board of directors. “Ray’s background in the confluence of media and technology makes him a valuable addition to what is already a strong board,” said Simulmedia CEO Dave Morgan.
Bidstack Appoints New CCO and CMO
Native in-game advertising platform Bidstack this week announced two new hires, with Rob Dembitz appointed as chief commercial officer (CCO), and Simon Gosling named as chief marketing officer (CMO). Gosling most recently worked as futurist at Unruly, while Dembitz joins from Cannes Lions.
This Week on VAN
Reaching In-Travel Audiences: How In-Transit Advertising is Set to Take Off, read more on VAN
Impact Engine Accuses Google of Copying its Ad Tech, read more on VAN
UK Marketing Budgets Stall, But Internet and TV Budgets Grow, read more on VAN
EC Clears Way for Vodafone to Become Western Europe’s Largest TV Operator, read more on VAN
Ad of the Week
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