Profits at The New York Times show media dinosaurs are ruling the internet

Today’s news that the (failing?) New York Times reported net income of $55.2 million, after losses a year earlier — and that its digital business raked in $709 million — is just one indicator that some of the nation’s oldest media properties are finally crossing the bridge into the 21st century. The Times managed to turn […]

Today’s news that the (failing?) New York Times reported net income of $55.2 million, after losses a year earlier — and that its digital business raked in $709 million — is just one indicator that some of the nation’s oldest media properties are finally crossing the bridge into the 21st century.

The Times managed to turn a profit while employing 1,600 journalists — an all-time high. Fourth-quarter digital advertising revenue increased 22.8 percent, while print advertising revenue decreased 10.2 percent. Digital advertising revenue was $103.4 million, or 53.9 percent of total advertising revenues, compared with $84.2 million, or 46.1 percent, in the fourth quarter of 2017, according to the company.

Add those numbers to a newly robust Washington Post, a consistently profitable New Yorker, and the erection of paywalls at sites across the vast reaches of the internet point to a very simple lesson learned — people will pay for quality reporting, videos, personal writing, and exclusive information.

Given the excitement around subscriptions, it may seem surprising that TechCrunch isn’t doing something in this area… yet.

Some of this is driven by a newly relevant news cycle that has seen American audiences wake up to the day-to-day decisions that are reshaping the country from the halls of power in Congress and the White House .

“Our appeal to subscribers — and to the world’s leading advertisers — depends more than anything on the quality of our journalism,”  said the Times’ chief executive, Mark Thompson, in a statement. “That is why we have increased, rather than cut back, our investment in our newsroom and opinion departments. We want to accelerate our digital growth further, so in 2019, we will direct fresh investment into journalism, product and marketing.”

For some in the word salad business, the news comes a bit too late. Compare the fortunes of these hundred-year-old companies with the newer darlings of the media world and it becomes even more starkly clear how ad-driven businesses were eviscerated by social media.

Layoffs at BuzzFeed, Vice Media, and our own parent company Verizon Media Group especially point to the failings of the “new” media model. The Times actually covered this at some length, but it’s worth repeating.

At two other new media properties; Vox Media Group (a division of Comcast NBC Universal) and Axios, a new subscription newsletter business; it’s a combination

Owning an audience through exclusive information or distribution is a much better way to get to profitability then giving away the store to get eyeballs.

Even network television and movie studios are coming around to the subscription model as the salvation of their business. Ad revenues are declining and subscription services like Netflix and Spotify have already taken huge bites out of the cash cows of the broader entertainment industry. What do studios and networks have left but subscription, subscription, subscription? It’s why CBS launched its exclusive service, why Disney is launching theirs, and how Amazon, Netflix and (even) Hulu have managed to become ascendant.

With a subscriber base, it’s easier for media businesses to sell sponsorships to particular companies or brands that want the influence. With subscriptions, a core readership gets to support the investigative work of a group of journalists and support (and join) a community.

The eyeball business was a classic contrivance of first generation internet businesses — and it largely didn’t work then either.

Now the question remains whether this resurgence can also revivify the moribund prospects of local media. The Times and its marquee media brethren have a national scope and an amazing reach — or command a monopoly in large cities. What’s needed is the resurrection of a vibrant local news scene that can actually make money. Let’s see if the Times’ model shows the way… again.

Disney+ streaming service will feature non-Disney content at launch

Disney’s soon-to-launch streaming service and Netflix competitor, known as Disney+, will include non-Disney programming at launch, Disney CEO Bob Iger confirmed in a call with investors following Disney’s earnings on Tuesday. The company had already licensed a CBS show for its service, which led to questions about Disney’s content strategy for the new service. Iger […]

Disney’s soon-to-launch streaming service and Netflix competitor, known as Disney+, will include non-Disney programming at launch, Disney CEO Bob Iger confirmed in a call with investors following Disney’s earnings on Tuesday. The company had already licensed a CBS show for its service, which led to questions about Disney’s content strategy for the new service. Iger said that while Disney’s long-term strategy will focus on the company’s own internally-sourced programming, it plans to launch this year with shows licensed from outside of Disney.

Last month, Disney had ordered the 10-episode series, “Diary of a Female President” from “Crazy Ex-Girlfriend writer Ilana Peña, Gina Rodriguez (“Jane the Virgin”), and CBS TV Studios.

But it was unclear if a buy like this was something of a one-off for Disney, or if the company planned to strategically shop for more programming from outside of its walls to fill out Disney+.

The service, we already knew, will feature content from all of Disney’s big-name brands, including Marvel, LucasFilm/Star Wars, Pixar, National Geographic, and Disney Studios itself. And we knew, too, the service will focus on family-friendly fare, while snaring the exclusive streaming rights to things like the Star Wars and Marvel movies.

On Tuesday, Disney announced that “Captain Marvel” would be the first of its movies to stream exclusively on Disney+.

Disney will also produce original shows and movies for the service, including a “High School Musical” show, an animated “Monsters Inc.” series, a Marvel live-action title, and a “Star Wars” title, “The Mandalorian,” among other things.

What was less clear was whether Disney-owned content would be all there is to watch on Disney+ – at least until Disney’s Fox deal goes through, that is. The company said it plans to leverage some of its new Fox assets and output further down the road to round out Disney+’s offerings.

In the foreseeable future, however, Disney confirmed will strategically buy shows from other studios, and will continue to do so in the future

According to Iger, the long-term strategy is “pretty heavily weighted to internally sourced versus externally sourced.” But he added that there would be times when Disney would be “glad to license from third parties.”

One of those times, apparently, is launch.

“Because we need to launch the service with some volume – and it takes time to ramp up – we’re buying certain products from the outside opportunistically, and we’ll continue to do that,” said Iger. He added that this is something Disney has done for some time, in other areas of its business. For example, its theme parks licensed IP from George Lucas, as well as the Indiana Jones IP, and the Avatar IP.

“We’ll continue to look at opportunities that we think we can leverage because there is a potential consumer demand for it,” Iger said.

Streaming was a big part of Disney’s conversation with investors on Tuesday, as the public debut of Disney+ nears. Investors will get a first look at the new service on April 11, but the pricing and an exact release date aren’t yet known.

Disney also updated investors on its other streaming efforts, including ESPN+ milestone of 2+ million subscribers, and the company’s plans to use the same underlying technology platform, BAMTech, to power Disney+. The company touched on its plans for Hulu, too, again reiterating its desire to take the service international and to offer bundles that combined Hulu and ESPN+ or Disney+ in one package deal.

Iger spoke also of FX’s plans to output content to Hulu instead of Disney+, as FX doesn’t fit the latter’s family-friendly nature.

The shift to streaming is not coming without an initial hit to Disney’s business, though. The company noted it expected to lose $150 million from stopping its licensing deals with Netflix this year, as it expected. Disney believes that it will eventually make up for the loss as consumers sign up for Disney+.

Disney reported flat growth of $15.3 billion in revenue in its fiscal Q1 2019 and adjusted earnings per share of $1.84, topping analyst estimates. It warned that its investments in streaming, including both ESPN+ and Disney+, would negatively impact the segment’s year-over-year operating income by $200 million in Q2.

 

Image credits: Disney

 

Chinese e-commerce challenger Pinduoduo is raising over $1 billion more

The price of competing with e-commerce giants Alibaba and JD.com is immense. That’s evidenced by challenger Pinduoduo, commonly known as PDD, which is raising more than $1 billion in fresh capital just six months after it went public. The company announced plans to sell 37 million shares in a move that will raise over $1 billion, going […]

The price of competing with e-commerce giants Alibaba and JD.com is immense. That’s evidenced by challenger Pinduoduo, commonly known as PDD, which is raising more than $1 billion in fresh capital just six months after it went public.

The company announced plans to sell 37 million shares in a move that will raise over $1 billion, going potentially as high as $1.25 billion if underwriters exercise their full share purchase option. The secondary event will also see a number of existing backers sell a portion of their stock, those sellers including Sequoia China, Lightspeed China and Banyan, according to a filing.

PDD went public in July when it raised $1.6 billion through a Nasdaq listing.

Founded in September 2015 by ex-Googler Colin Huang, it adds a social twist to e-commerce by offering discounts for shoppers who gang up with friends or family to make group orders. That’s resonated in particular with consumers, who tend to be female, the company said. PDD claims 385.5 million active buyers with an annual GMV of RMB 344.8 billion, or $250.2 billion, as of Q3 2018.

That’s helped it make a dent in China’s e-commerce market, which is dominated by Tencent and Alibaba, although it has come at some cost. PDD isn’t profitable, and it isn’t likely to be for some time. Since going public, it has recorded net losses of RMB 6.49 billion ($981.4 million) in Q2 and RMB 1.10 billion ($159.9 million) in Q4.

Yes, there has been heady growth, revenue in Q4 surged by 697 percent year-on-year to reach RMB 3.37 billion ($491.0 million), but the corresponding operating loss increased five-fold.

Huang has described his business as a combination of Costco and Disney, which signifies “value-for-money and entertainment combined.” In a letter to shareholders, he emphasized that his vision will require a decade before it begins to reach its potential.

“It is not easy to take the leap of faith believing in such an unconventional company, which strives to meet both economic and social needs of users, and to make a positive impact to the society. The pursuit and focus of our long-term vision and intrinsic value may not always translate into near-term profits. Instead, we hope to show you the true colors of our company no matter how bumpy or rough the numbers may seem to be. We ask you to ride the journey with us for the long term. We believe it will be wonderful,” he wrote.

LittleBits lays off employees as it shifts focus toward education

New York City open-source maker startup LittleBits began to lay off staff last month, TechCrunch has learned. The loss of jobs comes as the company looks to shift more focus toward the K-12 market. Education-specific offerings have been lucrative for the company in its eight-year existence, but recent products have found the company embracing licensed […]

New York City open-source maker startup LittleBits began to lay off staff last month, TechCrunch has learned. The loss of jobs comes as the company looks to shift more focus toward the K-12 market.

Education-specific offerings have been lucrative for the company in its eight-year existence, but recent products have found the company embracing licensed products, courtesy of its involvement with Disney’s hardware accelerator.

LittleBits confirmed the layoffs as part of an internal restructuring, in a statement offered to TechCrunch.

“The true potential that littleBits provides teachers, parents, and the children is far beyond your standard ‘off the shelf’ gift or toy. In order to have the greatest impact in shaping the next generation of Changemakers, we are prioritizing our business around the K-12 education market,” the company says. “As you can imagine, the education market’s needs are vastly different than that of retail. Given this, we had to re-shape our internal structure, which ultimately led to a reduction in staff.”

It has yet to offer a specific number, but TechCrunch believes the number to be around 15. Not huge in the grand scheme of things, but no doubt a hit to a staff of this size, which numbered around 100, after its acquisition of DIY Co, last summer. That acquisition, LittleBits’ first, will no doubt play a role in the restructuring, going forward.

It’s hard not to see echoes of the difficult decision Sphero made roughly this time last year. The robotics startup went all-in on licensed Disney brands like Star Wars and Marvel, but ultimately pivoted to an education-only focus, after a disappointing holiday season. Education, on the other hand, can prove a lucrative and stable path forward, as schools and districts tend to buy products in bulk. 

Another thing both Sphero and LittleBits have in common is a knack for truly innovative tech products that could do extremely well in the educational space with the right positioning.

Thanks to Hulu, Disney lost $580 million last fiscal year

The streaming media business is tough. Disney, which has a 30 percent stake Hulu, saw losses of $580 million last fiscal year, according to an SEC filing. This was, the SEC filing states, “primarily due to a higher loss from our investment in Hulu, partially offset by a favorable comparison to a loss from BAMTech […]

The streaming media business is tough. Disney, which has a 30 percent stake Hulu, saw losses of $580 million last fiscal year, according to an SEC filing.

This was, the SEC filing states, “primarily due to a higher loss from our investment in Hulu, partially offset by a favorable comparison to a loss from BAMTech in the prior year.”

BAMTech is the streaming technology that powers ESPN+ and other services. In total, streaming accounted for more than $1 billion in losses for Disney last fiscal year.

Meanwhile, Disney has yet to release its own streaming service, Disney+, which is slated for late 2019. Disney is also planning to increase its investment in Hulu, focusing more on original content and international expansion.

As part of Disney’s buyout of 21st Century Fox, Disney will soon own another 30 percent of Hulu. If the business goes similarly for Hulu this fiscal year, that will only increase Disney’s losses.

Consolidation is coming to gaming, and Jam City raises $145 million to capitalize on it

A slew of banks are coming together to back a new roll-up strategy for the Los Angeles-based mobile gaming studio, Jam City and giving the company $145 million in new funding to carry that out. There’s no word on whether the new money is in equity or debt, but what is certain is that JPMorgan Chase […]

A slew of banks are coming together to back a new roll-up strategy for the Los Angeles-based mobile gaming studio, Jam City and giving the company $145 million in new funding to carry that out.

There’s no word on whether the new money is in equity or debt, but what is certain is that JPMorgan Chase Bank, Bank of America Merrill Lynch and syndicate partners including Silicon Valley Bank, SunTrust Bank and CIT Bank are all involved in the deal.

“In a global mobile games market that is consolidating, Jam City could not be more proud to be working with JPMorgan, Bank of America Merrill Lynch, Silicon Valley Bank, SunTrust Bank and CIT Group to strategically support the financing of our acquisition and growth plans,” said Chris DeWolfe, co-founder and CEO of Jam City. “This $145 million in new financing empowers Jam City to further our position as a global industry consolidator. As we grow our global business, we are honored to be working alongside such prestigious advisers who share Jam City’s mission of delivering joy to people everywhere through unique and deeply engaging mobile games.”

The new money comes after a few years of speculation on whether Jam City would be the next big Los Angeles-based startup company to file for an initial public offering. It also follows a new agreement with Disney to develop mobile games based on intellectual property coming from all corners of the mouse house — a sweet cache of intellectual property ranging from Pixar, to Marvel, to traditional Disney characters.

Jam City is coming off of a strong year of company growth. The Harry Potter: Hogwarts Mystery game which launched last year, became the company’s fastest title to hit $100 million in revenue

Add that to the company’s expansion into new markets with strategic acquisitions to fuel development and growth in Toronto and Bogota, and it’s clear that the company is looking to make more moves in 2019.

Jam City already holds intellectual property for a new game built on Disney’s Frozen 2, the company’s newly acquired Fox Studio assets like Family Guy and the Harry Potter property. Add that to its own Cookie Jam and Panda Pop properties and it seems like the company is ready to make moves.

Meanwhile, games are quickly becoming the go-to revenue driver for the entertainment industry. According to data collected by Newzoo, mobile games revenue reached a record $63.2 billion worldwide in 2018, representing roughly 47% of the total revenue for the gaming industry in the year. That number could reach $81.3 billion by 2020, the Newzoo data suggests.

Roughly half of the U.S. plays mobile games and they’re spending significant dollars on those games in app stores. App Annie suggests that roughly 75% of the money spent on app stores over the past decade has been spent on mobile games. And consumers are expected to spend roughly $129 billion in the app store over the next year. The data and analytics firm suggests that mobile gaming will capture some 60% of the overall gaming market in 2019 as well.

All of that bodes well for the industry as a whole, and points to why Jam City is looking to consolidate. And the company isn’t the only mobile games studio making moves.

The publicly traded games studio Zynga, which rose to fame initially on the back of Facebook’s gaming platform, recently expanded its European footprint with the late December acquisition of the Helsinki-based gaming studio, Small Giant Games.

 

Amazon hires Disney SVP Kyle Laughlin as Director of Alexa Gadgets

Amazon has hired Disney SVP Kyle Laughlin to head its Alexa Gadgets division, TechCrunch has learned. Laughlin spent eight years at Disney, most recently as the SVP and General Manager of Games, Apps and Connected Experience at the entertainment giant’s Consumer Products and Interactive Media division. According to his LinkedIn profile, the role found Laughlin […]

Amazon has hired Disney SVP Kyle Laughlin to head its Alexa Gadgets division, TechCrunch has learned. Laughlin spent eight years at Disney, most recently as the SVP and General Manager of Games, Apps and Connected Experience at the entertainment giant’s Consumer Products and Interactive Media division.

According to his LinkedIn profile, the role found Laughlin overseeing apps, connected hardware and games for Disney and Lucasfilm. The gig also involved AI, IoT and AR/VR. Also, lots of Muppets.

Amazon has since confirmed the hire. A spokesperson for the company told TechCrunch, “I can confirm that Kyle Laughlin has joined Amazon as Director, Alexa Gadgets. We’re very excited to have him.”

The gig appears to revolve around the newly defined “Alexa Gadget” category, which the company describes as “fun and delightful accessories that pair to compatible Echo devices via Bluetooth.”

Doesn’t seem like much of a stretch after eight years at Disney. Examples of current Alexa Gadgets include the Echo Wall Clock and Gemmy Industries’ connected Big Mouth Billy Bass and Dancing Plush Animatronics.

In a few short years, the Echo has transformed from smart speaker to a category defining, industry driving project. Alexa has become a huge business for Amazon and left everyone else struggling to catch up. Alexa Gadgets is a big push from Amazon to grow the smart assistant’s ecosystem beyond the smart speaker, through a wide range of connected devices.

Kano will start releasing Star Wars and other Disney-branded products later this year

Educational computing kit company Kano announced today that it has signed a two-year licensing deal to create Disney-branded products later this year. Details are still pretty scant on how precisely the deal with Disney’s Parks, Experiences and Consumer Products will take shape, but the first product looks to be a Star Wars-themed kit due out […]

Educational computing kit company Kano announced today that it has signed a two-year licensing deal to create Disney-branded products later this year. Details are still pretty scant on how precisely the deal with Disney’s Parks, Experiences and Consumer Products will take shape, but the first product looks to be a Star Wars-themed kit due out in the second half of the year. 

Kano, which is best known for its kid-centric computer kit, has already had success with third-party branding, including a Harry Potter wand kit, which was announced over the summer. Disney, too, has been more aggressive in licensing its IP to hardware startups, including, notably, STEM education companies like Littlebits, which has released both Marvel and Star Wars-themed products.

“Our goal at Kano is to take you on a journey, unlocking powers in yourself and others, through the medium of technology – from wands that really work, to computers you make yourself, and more” Kano CEO Alex Klein said in a statement, “Collaborating with Disney is a blessing. We can combine connected, creative technologies with some of the most memorable stories ever told.”

Of course, if Sphero’s struggles taught us anything, it’s that IP alone does not a successful product make. The company had an undeniable hit on its hands with the release of its BB-8 robot, but it flew a little too close to the sun when it effectively quadrupled its product output to include additional Star Wars robots and Pixar and Marvel-branded products.

Kano will also be taking a fairly ambitious approach to licensing, with several more brands already in the works.

Disney quietly shut down Babble, the parenting blog it once acquired for $40M

As Disney gets closer to launching a shiny new video service and continues to ramp up efforts in other new streaming areas like gaming, it looks like it might be winding down one of its more legacy bets. Babble, a parenting blog that Disney acquired reportedly for about $40 million to help it target hipster parents, […]

As Disney gets closer to launching a shiny new video service and continues to ramp up efforts in other new streaming areas like gaming, it looks like it might be winding down one of its more legacy bets. Babble, a parenting blog that Disney acquired reportedly for about $40 million to help it target hipster parents, quietly ceased publishing in the middle of December, TechCrunch has learned.

“For everything there is a season, and after more than a decade of serving as a community and resource for parents, Babble will be saying goodbye,” reads a post from the site’s editors. “To all the moms, dads, family, friends, writers, and readers who supported us – thank you. We are so grateful for the time spent sharing your stories and your lives, through all the ups and downs of raising tiny humans.”

When Disney acquired Babble — originally spun out from a (now-defunct) dating website called Nerve.com — in 2011, it was part of a bigger push at the media giant to built up a stock of content properties to target younger parents, the kind that turn to online media for parenting advice and inspiration.

The idea was that Disney would populate the site with lots of evergreen content aimed at savvy middle class parents — recent articles included a post on soft-serve pickle-flavored ice cream and kids nailing 80s-style Halloween costumes — to help it build a connection to these consumers that would lead, over time, to trusting and using and exposing kids to other Disney products as they grew up.

But times have changed. The Disney Interactive Media Group that housed Babble doesn’t exist as such anymore — and Babble’s two founders, Rufus Griscom and Alicia Volkman, moved on years ago from Disney.

And while (I’ve been told) hipster parents definitely still do turn to digital media to answer questions, get inspiration, or just waste time under the guise of doing something constructive, I don’t think that their focus has consolidated on a single destination to do that, but rather a plethora of sources that include other parenting-focused blogs, BuzzFeed-style viral sites that source stories from whatever is trending on social media, YouTube, apps like Pinterest and Facebook and more.

Sometimes, parents even meet other parents in real life, and talk and listen to each other that way.

It’s also not clear how much Disney had been investing in building out the Babble brand and site over the years. When it was acquired, it was on a growth tear, expanding 100 percent year over year with 4 million uniques. However, it hasn’t had much buzz or evolution since.

We’ve reached out to Disney to ask for more details, but in any case, this is far from being one of the biggest acquisitions to get shuttered by the company after things fizzled out. Club Penguin, a kids-focused gaming platform Disney acquired for around $700 million, shut down its main site in 2017, and its remaining app last year.

Disney’s Star Wars Land could open in June, says CEO Bob Iger

We know Disney’s Star Wars Land (or “Galaxy’s Edge,” if we’re being formal) is opening sometime in summer 2019. But that’s about as exact as anyone at Disney would get. The rumors said June. Now, it seems, so does Disney CEO Bob Iger. Iger casually dropped the June target in an interview with Barron’s (as […]

We know Disney’s Star Wars Land (or “Galaxy’s Edge,” if we’re being formal) is opening sometime in summer 2019. But that’s about as exact as anyone at Disney would get.

The rumors said June. Now, it seems, so does Disney CEO Bob Iger.

Iger casually dropped the June target in an interview with Barron’s (as spotted by the OC Register).

You can read the full interview here, but the key bit comes in a question about the strategic impact of Galaxy’s Edge.

When Star Wars opens in Anaheim in June and in Florida later in the year, that’s adding capacity. You’re adding 14 acres of land [each], more rides, and more things for people to do.

So while it’s not as official as a press release, it’s about the next best thing. Anaheim in June, Florida still “later in the year.”

A June target makes a ton of sense, of course. Disney wants to make the biggest possible splash right out of the gate, which means opening the doors when the greatest number of people can visit. While Disney won’t have any trouble getting people into Star Wars Land, they might as well clear the runway. June means summer vacation, and summer vacation means ticket sales. Combine that with an unusual uptick in season pass blackout dates for June of 2019, and it really seems like all the stars are aligned for June.

Coming in at roughly 14 acres, Galaxy’s Edge is one of Disney’s biggest endeavors in years. It’s got a Millennium Falcon! It’s got a cantina with blue milk (and booze!). It’s got a hotel where guests get their own friggin’ storylines! As with anything Star Wars, expectations are going to be ridiculously high — but after seeing what they’ve done with Cars Land or Pandora (the Avatar-themed land in Florida), I’m convinced they’ll pull it off.