Netflix and the sh*t sandwich

🥪 Netflix delivers the classic sh*t sandwich to investors

💩 New AI device launches and gets panned by creator

📺 Disney goes all nostalgic on us with live channels

🛑 US calls time on TikTok (1 year, to be exact)

🤝 M&A is heating up in Media land

📱Startup watch: Meet Folklore - a platform for fashion brands

“Netflix is now really profitable!”…share price slumps

• Netflix announced their results for Q1 ‘24, with a near 80% increase in profits combined with 9M extra subscribers 👏

• All good you might think…well no actually, not according to Wall St, where the share price has since dropped by over 10%. Why?

• Well, this growth was already baked in to the share price - its up by nearly a third since the start of the year - and the real clincher, the proverbial sh*t in the sandwich, is that they’ve announced they’re going to stop reporting on the number of subscribers

• What this really means is - “the subs growth number is not going to look all that good in the future, so we’re not going to bother telling you it” - or at least thats how it came across. Flattening subs growth = maturing business = investors getting disinterested

• If you do happen to be a longstanding Netflix shareholder - hooray - you’re already quids in and, frankly, for the everyday investor this is now a solid business in which to have your money - generating positive cashflow and well ahead of its competitors. Note: This is definitely not investment advice, more of a pat on the back

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YouTuber Marques Brownlee criticised for destroying a startup in product review

• We see the power of creators once more as the YouTuber Marques Brownlee trashes a hyped new digital wearable and goes viral

• The product - the Humane AI pin - is a small, wearable device that essentially seeks to do what smartphones can do, without needing to use the smartphone. Inbuilt cameras and microphones enable voice instructions and actions based on images, QR codes, etc

• The actual review was fairly balanced. It was the title that caused uproar: “The Worst Product I’ve Ever Reviewed…For Now”

• Is it fair that a single influencer could potentially ruin a startup’s new product launch with a single video review? Possibly not. But then again, if you were about to shell out $700 for a piece of kit that someone thinks is “the worst product ever reviewed” you’d probably want to hear about it

• I like Humane’s objective - change the way we interface with smart tech. Removing the need to fumble around for your phone clearly makes sense. It’s the execution which is in question. And after raising $230M, that’s a fair question to ask…😬

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Disney is bringing live channels to Disney+

• Sometimes things we thought were being consigned to the past, make a comeback. Bucket hats, Crocs, Cher,…and more recently, live tv channels

• The big new buzz in the TV world (note, few are buzzing about it outside the TV world) is “Free Ad-Supported TV” or “FAST” channels. These are made available on platforms such as Pluto TV or direct within your TV sets (eg. Samsung TV+)

• And now Disney has announced it will be bringing live channels to its Disney+ app. “Why?” you might ask. Well, there are some good reasons and some more cynical reasons.

• The good: building more ways to watch Disney content directly into the app and providing more ways to discover content (live, “lean back” TV is a good way of curating content for viewers in a seamless way)

• The bad: live channels can drive up metrics such as viewing time and (if ads are included) advertising impressions; good for reporting but not always indicative of good engagement (people often have live tv running in the background)

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US Govt takes one step closer to forcing Tik Tok sale

• The proposal to ban TikTok from the US if it remains under Chinese ownership moved one step closer to being enforced after being passed by The House over the weekend. It now goes to The Senate, which is theoretically the final step

• Once passed, ByteDance will have up to a year to sell the business to another owner

• Whilst there is a legitimate concern around privacy, this does have a strong whiff of modern day colonial activity - US politicians forcing the sale of a successful foreign-owned business which will, in all likelihood, be to a US buyer…

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Media buyups and consolidation

• If there are two media M&A trends you could bet your bottom dollar on right now, it would be the acquisition of music rights and the consolidation of streaming services

• So its no real surprise that last week saw movements on both of these fronts: in music, a bidding war has erupted for the Hipgnosis Song Fund, with a $1.4Bn offer from Concord being bettered by a $1.5Bn offer from the PE firm Blackstone, whilst in streaming Sony are lining up a bid for Paramount which is on more favourable terms than the existing one tabled by Skydance

• There’s a lot more detail to these proposed deals but, long story short, the race for IP continues and consolidation is happening across the media space

• This is good news more broadly - its no secret that investment firms have been sitting on cash for a while now, and M&A is needed to grease the wheels of the industry

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Startup watch: Meet Folklore

🎯 Looking for: Early stage Fashion & Consumer startups

👥 Founders: Amira Rasool

⛺️ Pitch: A wholesale management software, technology and marketplace help connect consumer brands to partner retailers around the world. The platform also includes a talent recruitment hub and financing support to help with the cashflow requirements of building inventory-based businesses.

😎 Our take: We generally like to hype up very early stage, pre-seed companies…having raised $6M+ in funding, this is not Folklore. But the ethos and mission of the company - namely to help provide community, capital and tools to early-stage consumer brands is something we want to get behind. Its just launched a B2B marketplace to help emerging brands enter retailers, and has partnered with the likes of Bloomingdales, Nordstrom and Urban Outfitters to offer genuine retail opportunities. If you’re building a consumer business, its well worth checking out Folklore

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