PACIFIC • Evan Spiegel Should Be Sweating

August 8, 2018  |  Venice
What's Next: Evan Spiegel Hits A Ceiling: The audience for existing social media platforms in the US and Europe appears to have hit a saturation point, as Facebook, Twitter and now Snapchat have all seen their user bases flatten or shrink in recent months. But the ceiling poses an existential crisis for Snap, specifically.

Why Evan Spiegel should be sweating:

Snapchat is losing fast to Instagram. Facebook's smartest acquisition now has more than 1 billion monthly active users and continues to grow, while Snapchat's daily active users declined by three million in Q2 to 188 million. Snap doesn't disclose global monthly active users, but says they've passed 100 million in the US and Canada.

Snapchat isn't growing generationally. Spiegel touted the retention of new users over the age of 35, but the company hasn't grown substantially beyond its core audience of teenagers and younger users.

Snapchat isn't growing globally. Facebook continues to grow in Asia-Pacific and the rest of the world, and is pushing hard to get into China. Snap isn't pursuing global growth on nearly the same scale.

Growth isn't the only metric -- Snap's revenue grew 44% year-over-year -- but it is the most important one. When you start focusing on milking existing customers for ad revenue, you risk driving them away.

The Big Picture: Spiegel needs to come up with a major innovation in social communication that can't be copied by Facebook, or by another competitor that Facebook can buy. ... What's the innovation? .... A loyal reader here in Venice posits that every evolution in social media moves us closer to behavior that mimics real human interaction. First email, then messaging/posts, then, thanks to Snap, messages/posts that disappear ...

So, what comes after messages that disappear?
The Agenda
Good Morning. We're running a little late. It's a long story.

Thought bubble: We think the Instagram stream is replacing the magazine. People scroll through it the way they used to flip through glossies like Vogue, Bon Appetit and Conde Nast Traveler. The content is similarly stylized and tailored to your aspirations and desires: clothes you wish you could wear, dishes you wish you could eat, places you wish you could go. Like the glossies, it's also filled with ads that blend into the content, because they're tailored to your interests and look just like posts from the accounts you follow.

Bonus: Recode's Kurt Wagner asks if Instagram Stories can become Facebook's next big business.
Speech Problems
Jack Dorsey goes rogue

We said yesterday that tech firms needed to make decisions about acceptable speech based on consistent policies, not vague, case-by-case responses to public pressure or the actions taken by its competitors.

Jack Dorsey explains why Twitter did not follow Apple, Facebook and others in banning Alex Jones and InfoWars from his platform:



We're still not totally clear on how clear Twitter's policy is on this matter. But insofar as they didn't just respond to Apple, a la Facebook ... kudos.
Talk of Tinseltown
Bob Iger's DisneyFlix plan

Bob Iger shed a little more light on Disney's plans to take on Netflix in direct-to-consumer streaming during yesterday's Q3 earnings call:

• Disney's three streaming services -- Disney streaming for families and children, Hulu for older audiences and ESPN+ for sports fans -- "will be designed to attract different tastes or different audience demographics."

• Disney's main streaming service "does not have to have close to the volume of what Netflix has, because of the value of the brands."

The Big Picture: The Disney stable -- Disney, Marvel, LucasFilm, Pixar and now Fox -- is incomparable, and makes Disney perhaps the only traditional Hollywood player capable of taking on the tech and telecom giants in the streaming space.
Disney vs. Comcast
Fox buys time for Sky

Bob Iger and Rupert Murdoch still aren't finished with Brian Roberts.

We reported in mid-July and again on Monday that Iger and Murdoch were planning another bid for Sky Broadcasting. On yesterday's earnings call, Iger cited the Sky as a key part of Disney's "global growth strategy." Now, Murdoch has extended the deadline for a counter-offer til September 22:

The Details, via Reuters:

• "Fox posted its formal offer document, without improving its price ... setting in motion a timetable to end the uncertainty over Sky's future by triggering a 46-day period during which both Fox and Comcast can lift their offers."

Remember, the worst-case scenario for Iger is that he drives up the price that Roberts has to pay for Sky. Since Roberts drove up the price of Fox by 36%, why wouldn't he exact that revenge?
The Sumner Redstone Tape

The Sumner Redstone tape we wrote about last week -- which has the potential to undermine Shari Redstone's effort to merge CBS and Viacom -- has been deemed relevant to the CBS board's lawsuit against the Redstones' holding company. "We are pleased that the Court, while keeping the tape confidential, recognized today that the tape is relevant to the issues in this case," a CBS spokesperson said in a statement.

Meanwhile ... CBS has folded all its investigations into sexual misconduct allegations into one, meaning the findings about Les Moonves, Charlie Rose and others likely won't be known for weeks, if not months.
Stream Brevity
Richard Plepler adds Axios

HBO and Axios have signed a deal to produce a limited-run series of news documentaries timed to the midterm elections.

The Details, via WSJ's Ben Mullin:

• "Titled 'Axios,' the series will focus on politics, technology and culture with a combination of breaking news, short documentaries and high-profile interviews."

• What Axios gets: A chance to "expand the breadth of content the company publishes and experiment with new formats."

• What HBO gets: "Additional content [for] its slate of current-events programming ... [which] already includes 'Vice News Tonight,' a deal with Vice Media, a partnership with progressive media company Crooked Media, 'Last Week Tonight' host John Oliver and comedian Bill Maher."

The Big Picture: AT&T's John Stankey has given Plepler a mandate to add more content to the HBO portfolio. But this is also a personal bet for Plepler, who is a loyal Axios reader and often cites Axios as essential reading for him and other media execs.
The Big Picture
Who killed the cable bundle?

Bloomberg's Gerry Smith identifies the four suspects who may have been responsible for the slow demise of the cable bundle:

Reed Hastings: "No one deserves more credit for threatening the old TV business model than [the] Netflix chief ... But if Hastings's success is responsible for the decline of the cable industry, he had plenty of accomplices among TV executives who fueled Netflix's rise in the early going."

Bob Iger: "TV executives have also spent billion of dollars acquiring sports rights, which has driven up the price of TV service -- and almost no one has bid more aggressively for sports than Disney CEO Robert Iger."

Charlie Ergen: "It wasn't until 2015, when Ergen introduced Sling TV, that the floodgates truly opened. ... giving online subscribers the option to buy just a few channels and pay a much lower monthly fee."

Everyone's Greed: "The cable industry's failure to protect the bundle came down largely to greed ... Media executives wanted to charge more for certain rights ... instead of giving them away for the good of the industry."

Stat of the Century: "Every minute, another six people cut the cord."
What Next: The Academy has announced changes to the Oscars to make them more exciting and more relevant to movie goers, including a new category for achievement in popular film and "a more globally accessible, three-hour telecast."

See you tomorrow.
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