Week in Review: Snapchat strikes back

Hello hello, and welcome back to Week in Review. Last week, I wrote about the possibility of a pending social media detente, this week I’m talking about a rising threat to Facebook’s biz.

If you’re reading this on the TechCrunch site, you can get this in your inbox here, and follow my tweets here. And while I have you, my colleague Megan Rose Dickey officially launched her new TechCrunch newsletter, Human Capital! It covers labor and diversity and inclusion in tech, go subscribe!


Image: TechCrunch

The Big Story

First off, let me tell you how hard it was to resist writing about Quibi this week, but those takes came in very hot the second that news dropped, and I wrote a little bit about it here already. All I will say, is that while Quibi had its own unique mobile problems, unless Apple changes course or dumps a ton of money buying up content to fill its back library, I think TV+ is next on the chopping block.

This week, I’m digging into another once-maligned startup, though this one has activated quite the turnaround in the last two years. Snap, maker of Snapchat, delivered a killer earnings report this week and as a result, investors deemed to send the stock price soaring. Its market cap has nearly doubled since the start of September and it’s clear that Wall Street actually believes that Snap could meaningfully increase its footprint and challenge Facebook.

The company ended the week with a market cap just short of $65 billion, still a far cry from Facebook $811 billion, but looking quite a bit better than it was in early 2019 when it was worth about one-tenth of what it is today. All of a sudden, Snap has a new challenge, living up to high expectations.

The company shared that in Q3, it delivered $679 million in reported revenue, representing 52% year-over-year growth. The company currently has 249 million daily active users, up 4% over last quarter.

Facebook will report its Q3 earnings next week, but they’re still in a different ballpark for the time being, even if their market cap is just around 12 times Snap’s, their quarterly revenue from Q2 was about 28 times higher than what Snap just reported. Meanwhile, Facebook has 1.79 billion daily actives, just about 7 times Snapchat’s numbers.

Snap has spent an awful lot of time proving the worth of features they’ve been pushing for years, but the company’s next challenge might be diversifying their future. The company has been flirting with augmented reality for years, waiting patiently for the right moment to expand its scope, but Snap hasn’t had the luxury of diverting resources away from efforts that don’t send users back to its core product. Some of its biggest launches of 2020 have been embeddable mini apps for things like ordering movie tickets or bite-sized social games that bring even more social opportunities into chat.

Snap’s laser focus here has obviously been a big part of its recovery, but as expectations grow, so will demands that the company moves more boldly into extending its empire. I don’t think Snapchat needs to buy Trader Joe’s or its own ISP quite yet, but working towards finding its next platform will prevent the service from settling for Twitter-sized ambitions and give them a chance at finding a more expansive future.


Image Credits: Bryce Durbin

Trends of the Week

These next few weeks are guaranteed to be dominated by U.S. election news, so enjoy the diversity of news happenings out there while it lasts…

Quibi is dead
Few companies that have raised so much money have appeared quite dead-on-arrival as Jeffrey Katzenberg’s mobile video startup Quibi. This week, the company made the decision to shut down operations and call it quits. More here.

Pakistan unbans TikTok
It appears that the cascading threat of country-by-country TikTok bans has stopped for now. This week, TikTok was unblocked in Pakistan with the government warning the company that it needed to actively monitor content or it would face a permanent ban. Read more here.

Facebook Dating arrives in Europe
Facebook Dating hasn’t done much to unseat Tinder stateside, but the service didn’t even get the chance to test its luck in Europe due to some regulatory issues relating to its privacy practices. Now, it seems Facebook has landed in the tentative good graces of regulatory bodies and has gotten the go ahead to launch the service in a number of European countries. Read more here.

 

 

Until next week,

Lucas M.

#apple, #computing, #europe, #facebook, #instant-messaging, #isp, #jeffrey-katzenberg, #megan-rose-dickey, #mobile-applications, #mobile-software, #pakistan, #quibi, #snap, #snap-inc, #snapchat, #software, #tc, #tiktok, #trader, #united-states, #vertical-video, #week-in-review

0

The short, strange life of Quibi

“All that is left now is to offer a profound apology for disappointing you and, ultimately, for letting you down,” Jeffrey Katzenberg and Meg Whitman wrote, closing out an open letter posted to Medium. “We cannot thank you enough for being there with us, and for us, every step of the way.”

With that, the founding executives confirmed the rumors and put Quibi to bed, a little more than six months after launching the service.

Starting a business is an impossibly difficult task under nearly any conditions, but even in a world that’s littered with high-profile failures, the streaming service’s swan song was remarkable for both its dramatically brief lifespan and the amount of money the company managed to raise (and spend) during that time.

A month ahead of its commercial launch, Quibi announced that it had raised another $750 million. That second round of funding brought the yet-to-launch streaming service’s funding up to $1.75 billion — roughly the same as the gross domestic product of Belize, give or take $100 million.

“We concluded a very successful second raise which will provide Quibi with a strong cash runway,” CFO Ambereen Toubassy told the press at the time. “This round of $750 million gives us tremendous flexibility and the financial wherewithal to build content and technology that consumers embrace.”

Quibi’s second funding round brought the yet-to-launch streaming service’s funding up to $1.75 billion — roughly the same as the gross domestic product of Belize, give or take $100 million.

From a financial perspective, Quibi had reason to be hopeful. Its fundraising ambitions were matched only by the aggressiveness with which it planned to spend that money. At the beginning of the year, Whitman touted the company’s plans to spend up to $100,000 per minute of programming — $6 million per hour. The executive proudly contrasted the jaw-dropping sum to the estimated $500 to $5,000 an hour spent by YouTube creators.

For Whitman and Katzenberg — best known for their respective reigns at HP and Disney — money was key to success in an already crowded marketplace. Indeed, $1 billion was a drop in the bucket compared to the $17.3 billion Netflix was expected to spend on original content in 2020, but it was a start.

Following in the footsteps of Apple, who had also recently announced plans to spend $1 billion to launch its own fledgling streaming service, the company was enlisting A-List talent, from Steven Spielberg, Guillermo del Toro and Ridley Scott to Reese Witherspoon, Jennifer Lopez and LeBron James. If your name carried any sort of clout in Hollywood boardrooms, Quibi would happily cut you a check, seemingly regardless of content specifics.

Quibi’s strategy primarily defined itself by its constraints. In hopes of attracting younger millennial and Gen Z viewers, the company’s content would be not just mobile-first, but mobile-only. There would be no smart TV app, no Chromecast or AirPlay compatibility. Pricing, while low compared to the competition, was similarly off-putting. After a 90-day free trial, $4.99 got you an ad-supported subscription. And boy howdy, were there ads. Ads upon ads. Ads all the way down. Paying another $3 a month would make them go away.

Technological constraints and Terms of Service fine print forbade screen shots — a fundamental understanding of how content goes viral in 2020 (though, to be fair, one shared with other competing streaming services). Amusingly, the inability to share content led to videos like this one of director Sam Raimi’s perplexingly earnest “The Golden Arm.”

It features a built-on laugh track from viewers as Emmy winner Rachel Brosnahan lies in a hospital bed after refusing to remove a golden prosthetic. It’s an allegory, surely, but not one intentionally played for laughs. Many of the videos that did ultimately make the rounds on social media were regarded as a curiosity — strange artifacts from a nascent streaming service that made little sense on paper.

Most notable of all, however, were the “quick bites” that gave the service its confusingly pronounced name. Each program would be served in 5-10 minute chunks. The list included films acquired by the service, sliced up into “chapters.” Notably, the service didn’t actually purchase the content outright; instead, rights were set to revert to their creators after seven years. Meanwhile, after two years, content partners were able to “reassemble” the chunks back into a movie for distribution.

#apps, #entertainment, #jeffrey-katzenberg, #media, #meg-whitman, #quibi, #streaming-media

0

4 quick bites and obituaries on Quibi (RIP 2020-2020)

In memory of the death of Quibi, here’s a quick sendoff from four of our writers who came together to discuss what we can learn from Quibi’s amazing, instantaneous, billions-of-dollars failure.

Lucas Matney looks at what the potential was for Quibi and how it missed the mark in media. Danny Crichton discusses why billions of dollars in VC funding isn’t enough in competitive markets like video. Anthony Ha discusses the crazy context of Quibi and our interview with the company earlier this year. And Brian Heater looks at why constraints are not benefits in new products.

Lucas Matney: A deadpool company before it was even launched

#jeffrey-katzenberg, #media, #meg-whitman, #quibi, #startups, #wndrco

0

Quibi founder Jeffrey Katzenberg blames coronavirus for the streaming app’s challenges

Quibi founder Jeffrey Katzenberg is admitting that the short-form video service’s launch hasn’t gone the way he’d hoped — and he knows what to blame for its issues.

“I attribute everything that has gone wrong to coronavirus,” Katzenberg said in an interview with The New York Times. “Everything. But we own it.”

Back in April, I actually asked Quibi executives about how they thought the worldwide pandemic and widespread social distancing measures might affect their launch. After all, an app designed to deliver videos under 10 minutes when you’re on-the-go seems less appealing when no one can leave their house (where you can just sit on your couch and watch Netflix).

“I’m looking to take small breaks more than ever before to stand up, walk around, go outside,” CTO Rob Post said at the time. “Our use cases are these in-between moments. Now more than ever, that use case is still present.”

Similarly, Katzenberg told The Times he’d hoped “there would still be many in-between moments while sheltering in place.” Instead, he argued that those moments are still happening, “but it’s not the same. It’s out of sync.”

How badly has the launch gone? Quibi says it has been downloaded around 3.5 million times, and that it currently has 1.3 million active users. That’s a significant audience, especially for a service that was only released a little over a month ago.

Still, Katzenberg admitted it’s “not close to what we wanted.” And the company is apparently adjusting its projections, which had called for the service to reach 7 million users and $250 million in subscriber in its first year.

At least it sounds like Quibi is trying to learn and adapt. For one thing, the marketing has started to shift to promoting specific shows like “Reno 911” reboot, rather than advertising the idea of Quibi itself. For another, the company said it will be adding support TV viewing support for iOS users this week.

#jeffrey-katzenberg, #media, #mobile, #quibi, #tc

0