FTI Consulting News Bytes – 8th April 2022

This week’s news

Should Netflix sell ads?

Netflix has a slight issue. It’s slowing subscriber growth. The Company sported over 20% year-over-year subscriber growth for years, but hasn’t broken the 20% mark since Q4 2020; growth for the last three quarters was in the single digits. Recent attempts to address this include entry into gaming and trialling crack downs on account sharing.  Internet analyst Ben Thompson makes the case via his newsletter Stratechery that the Company should build an ads business. He offers three reasons: an advertising-supported or subsidized tier would expand Netflix’s subscriber base, advertising would make it easier for Netflix to continue to raise prices and advertising is a natural fit for the job Netflix does (filler TV and ads are bedfellows.) How should they justify it? Ben says “differentiated user experience is worth paying for, today Netflix demands scarce attention because of its investment in unique content. That attention can be sold, and should be, particularly as it increases Netflix’s ability to invest in more unique content.”

Musk joins Twitter

9.2% was the investment stake. 30% was the share price bounce. On Monday, it became public knowledge that long time Twitter critic Elon Musk is now Twitter’s biggest shareholder and sits on the board.  A key criticism from users has been the lack of an edit button. In one sign that Musk may already be having an impact, Twitter disclosed late on Tuesday that it would soon start testing an “edit” button to let users change their tweets. It’s a popular step among users. There are wider concerns about Musk’s role however.  Is Musk now just another media baron? Does he have undue control over one of our largest free speech platforms? Is he simply just far too volatile a personality?  Musk adds to the building activist presence among Twitter’s biggest investors: Elliott Management and Silver Lake’s Egon Durban. Twitter CEO Parag Agarwal still fresh into the job will likely have his hands full.

A metaverse for kids?

Forewarning: it’s that word ‘M’ word again. The Verge cover the partnership Lego and Epic to build a Metaverse for kids. Details are scarce, but the companies say that whatever it is they end up building will be designed as a family-friendly virtual space from the beginning. There is sense in the partnership, Epic has extensive experience creating virtual worlds, primarily through the enduringly popular Fortnite, while Lego has had an increasingly large focus on video games. There’s no information about what this new Fortnite-meets-Lego world could look like, when it will be available, or on what platforms it’s expected to launch. But the companies did announce a trio of principles they say will guide its creation: “protect children’s right to play by making safety and wellbeing a priority; safeguard children’s privacy by putting their best interests first; empower children and adults with tools that give them control over their digital experience.”

Push to help make the UK ‘global cryptoasset hub’

Sky reports that Chancellor Rishi Sunak is to launch a non-fungible token (NFT) – a type of cryptocurrency asset – through the Royal Mint as part of a drive to make the UK a “global cryptoasset hub”. The government-backed NFT will be created and issued “by the summer”, with a  promise to unveil more details soon. As part of a wider push to become a global leader in cryptocurrency, the UK Government also plans to introduce a number of measures to bring digital assets under more regulatory scrutiny. This will start with stablecoins which are a form of cryptoasset that are typically pegged to a fiat currency such as the dollar and are intended to maintain a stable value. According to HM Treasury’s site which published the plans, “the government intends to legislate to bring stablecoins – where used as a means of payment – within the payments regulatory perimeter, creating conditions for stablecoins issuers and service providers to operate and invest in the UK.”

Shein worth as much as SpaceX

According to the WSJ, China-based Shein was valued at $100 billion in a recent funding round, according to people familiar with the matter, making the China-based apparel seller one of the world’s most valuable private companies. Shein’s valuation of $100bn means that it’s worth more than H&M and Zara combined or as much as SpaceX. It’s grew its valuation from mooted $15bn in 2020 to $100bn after the recent funding round this month. The Times writes that Shein’s success is largely due to its use of algorithms that trawl social media for fashion trends and customer behaviour, which are passed directly to its designers and factory production lines.

Top Tweets of the Week

• The Washington Post tweets: For the past few months, I’ve had the honor of spending time with a carpet cleaner named Vaughn Smith. You’re not going to believe me when I tell you what he can do.
• Maria Taddeo, Bloomberg TV’s Europe correspondent citing Italian PM Mario Draghi tweets: Do we want peace or air conditioning?
• The FT’s Peter Campbell tweets on electric vehicles:  Half of UK car sales to be EV by 2028 as Gov set out zero emission sales targets.

Number of the Week

$93.5bn – according to the FT is the global private investment in AI in 2021, more than double the amount invested in AI in 2020.

What’s happening next week?

• 11 April – World Parkinson’s Day
• 11 April – Fortune 100 Best Companies to Work For
• 13 April – Tesco full year preliminary results
• 15 April – UNESCO World Art Day

Contact Us

To be added to the distribution list for FTI Consulting News Bytes, or for further information on the dedicated TMT team at FTI, please contact [email protected].