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.
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.
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.
Consumer demand for games and consoles has surged during lockdown. Sales are on track for the best year ever, while games production has been resilient, with studios and platforms adapting quickly to distancing and working from home.
New consoles will still launch in 2020, but Sony and Microsoft will need to replace tradition with creativity and smarts for this launch cycle.
Hollywood’s home entertainment offer is crucially missing games. It’s not too late for Disney to change course, and Warner Bros. to move quickly.
In response to COVID-19 and the associated lockdown and economic crash, advertisers have slashed budgets. Online budgets are not immune.
This has clarified features of the online ad market: it is demand-driven, relies heavily on SMEs and startups, and is built on direct response campaigns.
We expect online advertising to outperform other media, and for platforms to further gain share. But with a very few exceptions, this health and economic disaster is good for nobody.
Overall revenue growth in the top five markets dipped yet again in the September quarter, to -3.5% from -2.0% in the previous quarter
However, the good news is that this particular dip was entirely due to the regulatory-induced effect of accelerated termination rate cuts, caused by the reintroduction of cuts in the UK and France. Underlying growth was -0.7%, which was flat on the previous quarter
This is the first time that underlying growth has not dropped since March 2008 –when underlying growth was at a much healthier 5.3%, a full 6 percentage points better
Vodafone Europe’s service revenue growth declined again in the September quarter to -4.6%, but on an underlying basis it improved, and volume growth also improved, suggesting that improving economic fundamentals are starting to feed through
Margins again fell, with the net benefit of the cost reduction program a long way from compensating for revenue declines, but overhead costs are at least dropping in absolute terms
We are optimistic that revenue growth can continue recovering in Europe, implying a still-depressed 2009/10 but a much better 2010/11, with positive revenue growth in 2010/11 a real possibility, and that the company could stabilise margins if it sticks to cost reduction plans, and resists the temptation to ‘reinvest’ in ‘strategic’ initiatives
Iliad is the only candidate in the rerun of the French 4th 3G Licence tender and we believe its bid will be successful
Free Mobile could launch by the autumn of 2011 under a ‘low cost’ model
We remain doubtful on the venture’s economic prospects – Iliad appears to underestimate the network and subscriber acquisition costs required to build a mobile operator of profitable scale
At TalkTalk Group (TTG) net broadband additions at TalkTalk/AOL UK were unexpectedly strong, with low cannibalisation of Tiscali subscribers particularly good news
At the newly acquired Tiscali UK, the inevitable skeletons are starting to emerge from their cupboards. Management appears well prepared for the challenges, although it is early days
Carphone Warehouse’s distribution business grew connections at 2.1% during the quarter, another very creditable performance in a declining market, and it remains well positioned for the market recovery
Vodafone has launched a suite of internet services, platforms and handsets under the ‘Vodafone 360’ umbrella brand
Our views are mixed: we applaud the contacts back-up service that will be available across a wide range of handsets, provided it proves user friendly, but are puzzled by the point of a Vodafone-designed user interface built onto a fairly obscure smartphone operating system
Overall, if Vodafone 360 can stimulate data usage amongst low- to mid-end handset users, Vodafone would profit in both revenue and loyalty terms, but competing at the high end with the likes of Apple, RIM and Google strikes us as both needless and futile