FTI Consulting News Bytes – 22nd April 2022
We kick off today’s newsletter with the loss of 200,000 Netflix subscribers in the first quarter of the year. Issues with competition from other platforms and the conflict in Ukraine contributed to this drop. The next big question … is whether Netflix will crackdown on sharing passwords? Next we have Tesla who is planning to introduce Robotaxis which they claim will “be a massive driver of Tesla’s growth.” Elsewhere, how can the tech sector help with inflationary pressures on businesses? And some positive news.. the EU is set to unveil their new landmark law to force Big Tech to police their platforms. Margaret Vestager, the EU’s executive vice-president said this law aims to allow people to feel “safe online, buy products and express oneself.” Finally, Just Eat looks to sell Grubhub only one year on.. did they get too greedy during pandemic highs?
This week’s news
Netflix loses subscribers for the first time in 10 years
For the first time in a decade, Netflix lost subscribers – as disclosed in the company’s first quarter earnings. According to the streaming giant, this loss of 200,000 subscribers comes as a result of shifting economic forces, increasingly fierce competition from other streaming platforms and the conflict in Ukraine. The Tuesday announcement sent the stock down 35 percent on Wednesday. Netflix has since hinted at a password sharing crackdown in response to the sharp fall in subscribers. The company estimated that more than 100 million households currently access Netflix from another household’s account. Research from Kantar also found this week that in the UK, the rising cost of living has led to households cancelling a total of 1.51 million services in the first three months of 2022 – this includes Netflix, Amazon Prime and Disney +.
It isn’t Robocop…it’s Robotaxis!
Techcrunch has reported Tesla’s plans to bring a dedicated robotaxi with no steering wheel or pedals to market by 2024. During Tesla’s first quarter earnings, Elon Musk told of his plans to turn his idea around in the next two year – from development to testing, verifying and producing at volume to make commercialise. Tesla faces questions around increased costs for its existing vehicles and this robotaxi option is a way of providing customers with the opportunity to experience Tesla. Musk added that there are a number of other innovations around the autonomous taxi concept, and he is “very excited” with what is yet to come…. Watch this space!
Tech Innovators to Tackle Soaring Costs
A survey this week by accountancy firm BDO found that almost a third of British businesses have been forced to seek additional finance due to soaring costs. According to the data, 24% are taking on higher debt to deal with the situation and that UK businesses had not planned for such levels of inflation, driven in part due to energy costs. UKTN covered the survey this week, which included analysis from DevicePilot CEO Pilgrim Beart who called on the tech sector to deal with the energy situation commenting “it is the tech innovators in the renewables and smart energy sectors who will be responsible for the transition away from coal and gas.”
Big Tech to Police Content
The EU has unveiled a landmark law today that will now force Big Tech to police their platforms more aggressively over illegal content. The FT reported on the new Digital Services Act, which will set for the first time the rules on how to keep users safe online. As part of the deal, children will be subject to new safeguards such as clear terms and conditions in a way a minor can understand and platforms will not be able to target minors with advertising. Regulators will also include an emergency mechanism to force platforms to disclose what steps they are taking to tackle misinformation or propaganda in light of Covid-19 and the war in Ukraine.
Just Eat Take’s Away Grubhub
Less than a year after Just Eat Takeaway bought U.S Grubhub for $7.3 billion, the company is looking to sell following pressures from investors to revive its shares. What seems to be an abrupt turnaround, CEO Jitse Groen is said to have hired banks to explore the possible sale, alongside potential partnership options it was already exploring. Just Eat Takeaway’s shares have lost two-thirds of their value since October 2020 following stiff competition and a fading pandemic boost. Reuters reported this week that the outlook follows a warning by British rival Deliveroo on consumer spending slowing this year amid a cost-of-living squeeze.
Top Tweets of the Week
- Bloomberg tweets that 5G technology will add $1.5 trillion to the U.S GDP by 2025.
- CoinMarketCap tweets that Crypto billionaire Sam Bankman-Fried says he would be “excited” to help Elon Musk transform Twitter and blockchain technology could play a big role.
- Rory Cellan-Jones tweets that changes to the high-way code mean that you can watch TV at the wheels of self-driving cars.
Number of the Week
2m – The number of subscribers Netflix expects to lose in Q2.
What’s happening this week?
- 25 April – News UK launches new channel TalkTV in the UK with Donald Trump as the first guest on Piers Morgan’s new show, World Malaria Day
- 26 April – HSBC Q1, Alphabet Q1
- 27 April – Boris Johnson faces Keir Starmer at PMQs, Meta Q1
- 28 April – Ruling in appeal over awarding PPE contracts, Twitter Q1, Barclays Q1
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