FTI Consulting News Bytes – 22nd July
Trouble ahead for food delivery and streaming services, as the cost-of-living crisis takes its toll on tech. In music streaming news, Warner introduced a Soundcloud-pioneered proportional royalties system, looking to dish out fairer pay to its artists. There was good news for UK aviation with American Airlines provisionally ordering 250 UK made ‘flying cars’ from Vertical Aerospace which could be available as early as 2025. The metaverse saw an unlikely pairing as Roblox teamed up with the National Gallery, hoping to encourage interest in museums among children. And an Ofcom report revealed that the BBC has been overtaken by Instagram and TikTok as the top news sources for teenagers, with the broadcaster slipping from first to fifth place.
This week’s news
Cost of living bites
The cost-of-living crisis is taking its toll on streaming and food delivery services. As consumers tighten their purse strings, companies such as Netflix and Deliveroo are starting to suffer. The first three months of the year saw Netflix lose around 1.5 million subscribers, The Times reports, and now with users looking to cheaper alternatives, things may not improve any time soon. The pandemic meant a boost in revenue for Deliveroo, with more diners opting to take away, but the picture is less upbeat this year. The company announced a sharp reduction in its full-year revenue guidance on Tuesday. The companies have seen some positive news this week, however. Netflix’s shares rallied on Tuesday night as they only lost half as many subscribers over the quarter as they had anticipated in Spring (970,000 as compared with an expected 2m), and Deliveroo remains optimistic that its profit margin will improve this year.
Warner introduces proportional royalties
Warner has struck a deal with Soundcloud to incorporate their user-based revenue model, The Verge reports. The pro-rata system means that Warner’s artists will be paid based on how much their music is streamed. Given a Rolling Stone report that the top 1% of musicians take in 90% of all streams, Warner’s decision could spell bad news for smaller artists. However, Soundcloud saw a 30 percent jump in subscribers to its premium creator services after it incorporated the system. Warner are the first of the major labels to make the change, and it remains to be seen whether the system will become industry standard.
American Airlines flies into the future
American Airlines has pre-ordered 250 VX4 flying taxis from UK aerospace firm Vertical Aerospace, Insider reports. The emerging ‘flying car’ market is geared around short-distance air travel, and many hope it will contribute to the air industry’s ambitions of net-zero by 2050. The ‘eVTOLs’, an acronym for ‘Electric Vertical Take-Off and Landing’, which American Airlines have ordered, will supposedly offer a quieter, faster, and more sustainable alternative to helicopter travel. Vertical Aerospace is set to begin trialling the craft this summer, and hopes it will be certified by aviation regulators as soon as 2025.
Museum in the metaverse
The National Gallery has teamed up with Roblox for a new in-game addition, reports The Times. Players can curate their own museum collections and rise through the ranks from Apprentice to High Keeper through a series of quests. The National Gallery hopes that the collaboration will garner interest in museums from younger audiences, with Roblox providing a familiar and engaging platform. Previous museum-gaming collaboration saw the Victoria and Albert Museum and the Tate team up with Minecraft.
Instagram top news source for teens
An Ofcom report into news consumption in the UK published this week found that Instagram has become the most popular news source among British teenagers, closely followed by TikTok. Almost 3 in 10 teenagers cited Instagram as a source of news while the number that reported watching BBC One or BBC Two has fallen to a quarter from 45% five years ago. The FT suggested the trend was concerning given the government is currently negotiating the future funding model of the BBC. Yet the broadcaster noted that the BBC is still a trusted news source and the survey didn’t taken into account young people accessing news via the BBC’s social channels.
Top Tweets of the Week
- Financial Times: “Netflix: running up that hill in search of new subscribers”
- City AM: “London takes world’s number 1 spot as global hub for remote workers
- Scott Galloway, professor of marketing at the NYU Stern School of Business: “In California, 91% of all consumer loans issued in 2020 were #BNPL”
Number of the Week
4,000 – jobs will be created by Amazon in the UK in 2022.
What’s happening next week?
- 21 July: Ocado interim results, Snap Inc Q2 results, Twitter Q2 results
- 26 July: Apple Q3 results, Alphabet Q2 results, Microsoft Q4 results
- 27 July: ITV interim results, Meta Q2 results, Spotify Q2 results
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