Thursday Jul.18, 2019

Netflix actually shrank in the US

_Ignoring Prime Day like a boss_

Hey Snackers,

Missed World Emoji Day? "Most popular" was won by 🥰, and 🥺ironically came in 2nd. Here are the 59 new emojis Apple's whipping up this fall. Think waffles.

Markets slipped as Facebook's 2-day Congressional grilling ended along with Amazon's Prime Day.

Vcommerce

Amazon's (record) Prime Day highlights its defining strategy: the "flywheel"

Even Siri knows it... Sales on Amazon's Prime Day surpassed both its Black Friday and Cyber Monday. Combined. A record 175M items were snagged — up 75% from last year. Some of that's thanks to T-Swift's kick-off concert, most is from the 18 countries now taking part. Here are your worldwide best-selling items (straight from Amazon's brag sheet):

US: Personal water filter straw, 23andMe ancestry kits.
UK: Sony PlayStation (FYI, Mexico loved Nintendo Switch, while Australia's top-seller was Mario Kart 8 Deluxe).
China: Dove exfoliating scrub.
Italy: Nescafé espresso (classic).
Germany: Some very, very practical stainless steel pans.

Add "Halo Effect" to the shopping cart... That's the impact Amazon's mid-summer splurge-fest had on the rest of retail as everyone launched their own mini-sales.

The positive: Sales surged 68% at big non-Amazon retailers and 28% at small ones.
The negative: Discounts drove those sales — retailers desperately race to the bottom on prices on Prime Day. Great for us, not really great for the companies.

"Flywheel effect" is bigger than "halo effect"... The flywheel is what Amazon biographer Brad Stone called the company's "secret sauce" — the self-reinforcing wheel that Prime Day is now a spoke in. Here's the cycle: Prime members shop big on Prime Day (to justify the $119/yr membership) and they bought Alexa products for their homes — Echo Dot and other voice assistant products were the top sellers this week. Now those primers will do even more with Amazon, thanks to Alexa's help.

Turo, the new $1B unicorn, lets you Airbnb your car

The matchmaking master is IAC... The internet beast that already owns most of Match Group (Tinder, Hinge, and more than 25 other dating apps) just invested $250M in Turo, Earth's leading car-sharing marketplace. In the announcement, InterActiveCorp (IAC) opened with "We like marketplaces." Concise. Here's the marketplace Turo has created:

10M people need short-term wheels: And they've downloaded Turo's app, which lets them rent somebody else's car for 1 day or several.
400K people have a car that's available: So they're putting their car (which on average sits idle 95% of the time) to work by renting it out.
It has 1 big rival: Getaround, which has tech heavyweight SoftBank as an investor.

The business model is so simple... Turo acts as the middleman, connecting a supply of cars with demand, then taking a cut of the transaction (exactly how Airbnb works). One detail is crucial: Turo offers insurance so that the "#LastCallForMoll" backseat bachelorette road trip shenanigans don't leave the car owner with a mess.

Economics drive it, tech enables it... Our generation has student debt and jobs that aren't as secure as our parents'. We also need to set a high glamour bar on social media. Those are the conditions that let Airbnb unleash short-term apartment rentals, so we can travel cheaper than a hotel, and make money on our own place back home while we're at it.

Airbnb: Homes are sharable.
Outdoorsy: RVs, campers, and trailers are sharable.
Turo: Cars are sharable.
What's next?

Shrink

Netflix loses subscribers in the US (we've never seen that before)

The MoviePass for living rooms... Netflix announced it only added 2.7M new subscribers last quarter, way below the 5M it expected — That's its biggest miss ever, by far. But this stat was the most shocking: In the US, Netflix actually lost 300K subscribers (it was hoping to gain 200K). America is post-peak Netflix.

2 key problems drove the disappointment... And neither was Friends or The Office, the two most popular Netflix shows that'll get pulled in 2020 and 2021, respectively.

The price increase: Last quarter, the price of a standard account rose from $11 to $13.
The un-inspiring content: Netflix execs said the "content slate" didn't drive as many users to sign up. Meanwhile, Big Little Lies, GoT, and Chernobyl won eyeballs at HBO. But don't worry — CEO Reed Hastings predicts that Stranger Things 3, The Crown, and Orange Is the New Black's final season will drive 7M new subscribers in the 3rd quarter.

It's harder to win new customers than keep existing ones... Netflix will have to spend $22B annually by 2024 on original, new content, according to JP Morgan, to keep winning new users. It spent big last quarter, but money doesn't always buy great content.

What else we’re Snackin’

Over: Google just terminated its controversial censored search project for China, codenamed "Dragonfly"
IPO'd: DouYu just became the biggest Chinese IPO in the US this year — it's a live-streaming platform for gamers (and the name translates to "fighting fish")
Poked: Facebook's done discussing its new cryptocurrency with Congress — politicians on both sides aren't fans
Team: Spotify partners up with Disney on a new streaming hub focused on families
Trophy: AT&T's HBO dominated Emmy nominations (because, Game of Thrones)
Investigate: Amazon is being looked at by the European Union for antitrust laws

Thursday

Earnings from Chewy (the 1st since its IPO), Microsoft, and Morgan Stanley

Disclosure: An author of this Snacks owns shares of Amazon.

20190718-903426-2718628

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Tangential remarks

Nicolai Tangen, the CEO who holds the purse strings of Norway’s $1.6 trillion sovereign wealth fund, thinks that his fellow Europeans don’t quite stack up to US employees when it comes to pure hustle, telling the Financial Times in a recent interview that there is a difference in “the general level of ambition” and that “the Americans just work harder”.

Tangen has clearly been putting his money — or more specifically Norway’s — where his mouth is: the sprawling Norwegian oil fund, now one of the largest investors on the planet, has been pumping more capital into its US holdings in the past decade, while decreasing its investment into European entities.

The troublesome news for our European readers? Tangen might be onto something. According to data from the OECD, American workers are putting in almost 60 hours a year more than the weighted average for OECD nations… a benchmark that workers from countries in the European Union are already ~180 hours shy of.

Europeans ‘less hard-working’ than Americans | FT

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Sales of what are up 136% since 2019?

Don't be a sucka

$70B

Alphabet shares are soaring in the after-market session, with a initial jump of more than 10% implying a gain of upwards of about $200B in market value when the stock opens tomorrow morning.

Google’s parent company crushed earnings expectations, initiated a cash dividend for the first time, and authorized a fresh $70B in share repurchases for good measure. The market likes it very much.

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No, Apple hasn’t cut its Vision Pro production estimates in half

Quite a few news outlets are reporting that Apple thinks it’s only going to sell 400,000 to 450,000 Vision Pros in 2024, compared a “market consensus” of 700,000 to 800,000. They’re all citing a note from Apple analyst Ming-Chi Kuo.

Obviously there’s no question that Apple’s $3,500 face computer will have a limited audience and could be a huge flop, but this also doesn’t seem like accurate news.

The issue is that 1) this 400,000 number isn’t new. Back in July of 2023, the Financial Times reported that Apple planned to make fewer than 400,000 units in 2024, reducing its initial projections of 1M units, citing two people close to Apple and, the Chinese contract manufacturer assembling the device. 2) It's unclear who was estimating 700,000-800,000 Vision Pros in the first place, but it appears that it was Ming-Chi Kuo himself?