Fortnite has been kicked from mobile app stores over the ‘App Store tax’, the 30% cut that Google and Apple charge for in-app purchases.
Apple needs Fortnite to keep the iPhone attractive, but it also needs its revenue cut, as services have become a key part of its growth story to investors.
Apple can no longer set its ecosystem rules without regard for partners, as apps like Fortnite, Amazon and WeChat are so central to the utility of a smartphone.
The COVID-19 crisis and suspension of sport has hit Sky hard, with Q2 revenue falling 12.9% year-on-year, and EBITDA (while flat for now) expected to fall 60% in H2 as the rights costs from a condensed schedule hit the bottom line
Underlying trends are hard to discern amidst massive disruption, but the UK remains strong, and increasingly less dependent on sport, with continental Europe a work in progress to repeat this model
Longer-term initiatives continue, with new branded channel launches in the UK, broadband launched in Italy, and scope for further moves in Germany provided by significant sports rights cost savings following recent auctions
Premium sports subscriptions are the primary sector weakness in the current crisis, and they look set to drive fixed operator revenues down 10% next quarter and Sky’s EBITDA down by 60%.
As lockdown eases, latent broadband demand can be more easily sated, and sports subscriptions will bounce back from the September quarter. A surge in working-from-home is likely to increase both the quantity and quality of home broadband demand, with ‘failover’ mobile backup also likely to be of greater interest.
Openreach will benefit from accelerated demand for full fibre, converged operators will be best-placed to offer mobile backup for broadband, and operators with a strong corporate presence will most easily target demand for home-working products.
Apple’s developer conference coincided with a period of unprecedented tension with its developer community, parts of which are chafing under Apple’s rules for the iPhone App Store.
These rules let Apple extract a large portion of the value of the App Store. This revenue is more important than ever to Apple’s growth story, so it has been applying its rules more strictly.
Apple is constrained here by the need to deliver the best product possible to its users, and by the possibility of regulatory intervention.
Market revenue growth plummeted to -2% in Q1 2020, with a lack of premium sports pay TV revenue the biggest factor.
The lockdown is also reducing churn and firming up pricing, but it is unclear how long this will last post-lockdown.
Pay TV revenue trends will continue to dominate next quarter; thereafter the battleground will move to ultrafast.
Online reviews are a vital input for consumer decision-making. However, reviews are easy to manipulate, and widespread fraud is undermining credibility and raising the issue of consumer protection.
Facebook, Google, and Amazon utilise reviews to improve the consumer experience, but also to sell advertising to businesses and to address fraud. These companies leverage their data superiority to better utilise reviews on their platforms, and possess a competitive advantage, versus sites like TripAdvisor, Yelp, and eBay.
Demand for expert opinion remains strong, yet is supplied only by publishers and Which?, a small segment in terms of share of traffic relative to platforms.
The COVID-19 crisis is compounding the already grim revenue prospects for upcoming football rights sales in continental Europe.
The financially weakest leagues in Italy and France are especially exposed. Serie A is exploring deals with private equity firms, with the pros and cons finely balanced.
There is a window of opportunity for Sky and Canal+—the adults in the room—to build coalitions with selected clubs to nudge leagues towards needed reforms including longer licence terms, reducing the number of clubs and more equal revenue splits.
For an unproven service to attract 1.3 million active users in its first five weeks is impressive. But by its own account, Quibi’s launch underwhelmed.
Sizeable subscriber targets—7 million by year one and 16 million by year three—justify a level of spend never seen in short-form video, but are ambitious for an experimental start-up with limited brand equity.
The service’s failure to recognise the social side of mobile media, restricted use case and, critically, lack of a hit show increased scepticism of product/market fit. Now Quibi must adapt the product with knowledge of user preferences and reassess its targets, provided it can afford to do so.
Sky posted understandably weak results for Q1, amid the ongoing COVID-19 crisis. Revenue fell by 3.7% year-on-year, with most sports subscriptions on pause and advertising markets in shock
The company has guided to a 60% fall in EBITDA over the next two quarters, as it bears the extra costs of a very condensed sporting schedule, but much will depend on what level of rebate it negotiates from the rightsowners for the disruption
On screen, Sky faces similar production issues to other broadcasters, but it has continued to enhance its platform gatekeeper role and strong content offering, most recently by integrating Disney+
Amazon reported $75bn in net sales, which was largely in line with expectations, and 28% growth in Prime subscription revenue—as Amazon now has more than 150 million Prime subscribers worldwide—cementing its place as the irreplaceable utility for many in lockdown.
However, Q1 results only covered a few weeks of lockdown. Amazon expects low profitability in Q2 as lockdown persists in its main markets, with customer expenditure focused on a narrow basket of essentials as people face pressures from unemployment and business closures.
Amazon’s warehouses are a key vulnerability in the time of COVID-19. Jeff Bezos pledged $4bn to keep workers safe and warehouses in function, though whether this is enough to placate government’s and workers’ concerns is yet to be seen.