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September 21, 2018
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Media

Old media giants turn to VC for their next act

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The Web 1.0 and Web 2.0 eras weren’t kind to the world’s largest media conglomerates, throwing their business models into question, creating whole new categories of content consumption, and bringing online competition to subscription and ad pricing. Many of the media giants from the 1990s and early 2000s remain market leaders with multi-billion dollar valuations, however, and have become active investors in startups as a tactic to help themselves evolve.

Of the traditional media companies that have committed to corporate venturing, there are two distinct strategies: those whose investing seems to be about replacing the historic classifieds section of newspapers and diversifying into a range of consumer-facing marketplaces, and those whose investing is concentrated on capturing an early glimpse (and early equity stake) in startups reshaping media.

Replacing Classifieds, Investing in Marketplaces

Mathias Doepfner, CEO of Axel Springer. The company’s startup accelerator is one of the most active in Europe. (Photo by Michele Tantussi/Getty Images)

Given the first crisis newspaper groups faced from tech startups in the 1990s and early 2000s was the rise of online classifieds sites (like Craigslist) and transactional marketplaces (like eBay and Amazon), the disruption of their lucrative classified ads revenue stream drove their attention to e-commerce.

Aside from Hearst, the major US newspaper and magazine chains – like Gannett, News Corp, Meredith Corp / Time Inc, and Digital First Media – haven’t made many investments in startups. Perhaps the financial straits of most US newspaper companies have left little cash for VC investments that won’t pay off for years in the future.

But in Northern and Central Europe, where news readership and even print publishing remain healthy by comparison, the leading media groups have been aggressively investing in marketplace and e-commerce startups across the continent over the last decade.

Europe’s leading publisher, Axel Springer has made itself an established player in the European startup scene. Axel Springer’s Digital Ventures team has backed marketplaces from Caroobi (for cars) to Airbnb, and their Berlin-based accelerator (run in partnership with Plug & Play) has invested in over 100 young startups, like digital bank N26, boat rental marketplace Zizoo, and influencer-brand marketplace blogfoster. In a move more strategic to its business, the 15,000-employee group made a large investment in augmented reality unicorn Magic Leap this past February as well, forming a partnership to leverage its content IP in the process.

Meanwhile, Norway’s Schibsted, Sweden’s Bonnier, and Germany’s Hubert Burda Media (best know to many in tech for their annual DLD conference in Munich) and Holtzbrinck Publishing are each globally active, multi-billion dollar publishers who operate active early- or growth-stage VC portfolios comprised mainly of e-commerce brands and marketplaces.

The most iconic corporate venture investment by a newspaper conglomerate (or any company for that matter) is without question the $32M check written into 3-year-old Chinese social web startup Tencent in 2001 by the South African publishing group Naspers (founded in 1915). Tencent, now valued around $400B, is Asia’s largest and most powerful digital media company and Naspers’ 31% stake was worth roughly $175B in March 2018 when it sold $10B in shares.

As a result, Naspers has transformed into a holding company that incubates, acquires, and invests in online marketplace businesses around the globe (though it still maintains a relatively small publishing unit).

The challenge for traditional media companies investing in startups beyond the realm of media is that even if wildly successful, those investments neither give them a distinct advantage in media itself nor make their business model like that of a tech company by way of osmosis. These investments can be flashy distractions to make management and shareholders call the company innovative while it fails to actually re-envision its core operations. Investing in Airbnb or BaubleBar doesn’t address the key challenges or opportunities a traditional publishing group faces.

Therefore the best case scenario in this strategy seems to be that these companies find enough financial success that they just transition out of the content game and become holding companies for other types of consumer-facing brands the way Naspers has. But even then the path seems uncertain: despite all its other activities, Naspers’ market cap is less than the value of its Tencent shares…it’s not clear that the best case scenario necessarily transforms the core organization.

Investing in the Next Generation of Media

Thomas Rabe, CEO of German media group Bertelsmann. Bertelsmann is unique in treating startup investments as a dedicated division of the conglomerate. (TOBIAS SCHWARZ/AFP/Getty Images)

The other track for “old media” giants has been to focus on venture capital as a means to uncover the future of the media business so the old guard can learn from the new generation of media entrepreneurs and react to market changes sooner than competitors. Intriguingly, it is consistent that the conglomerates who have taken this strategy are ones whose operations in television, radio, data, and telecom outweigh any involvement in newspapers.

Bertelsmann, Hearst, and 21st Century Fox have been the most aggressive corporate venture investors in startups working to shape the future of media, whether it be through streaming video services, crowdsourced storytelling platforms, or augmented reality.

With annual revenue over €17B, Bertelsmann is one of the largest media companies in the world, spanning television production and broadcasting (RTL Group), book publishing (Penguin Random House), newspapers, magazine publishing (Grüner + Jahr), and education. Unlike of media companies though, it treats venture investments in media startups as a key division of its company rather than as a side project.

The company’s core Bertelsmann Digital Media Investments (BDMI) invests across the US and Europe in companies like Audible, Mic, The Athletic, and Wondery (and in funds like Greycroft and SV Angel) but there are also the 3 regionally-focused funds investing in China, India, and Brazil plus the education-focused University Ventures fund it anchors in NYC. Collectively, Bertelsmann teams made 40 new startup investments in 2017 and generated €141M in venture returns, according to their 2017 Annual Report.

The investment arm of Hearst, one of America’s largest publishers with $10.8B in 2017 revenue, has likewise been a major backer of BuzzFeed, Pandora, Hootesuite, and Roku not to mention Chinese language app LingoChamp, live entertainment brand Drone Racing League, VR capture startup 8i, and dozens of other media-related startups. Hearst’s ownership in these ventures makes strategic sense: they provide market insights relevant to the core businesses, offer immediate partnership opportunities, and would be strategic acquisition targets that evolve the company’s position in a changing market.

21st Century Fox and Sky Plc (in which 21st Century Fox owns a 39% stake and is trying to acquire outright) have both made a whole slate of startup investments across the media sector in the last few years. In addition to its $100M investment in live-streaming platform Caffeine (announced on September 5) and similarly massive investment in WndrCo’s NewTV venture led by Meg Whitman, Fox has invested repeatedly in sports-centric OTT service fuboTV, hit newsletter brand TheSkimm, VR studio WITHIN, and fantasy sports app Draftkings with Sky often co-investing or building meaningful stakes in international startups like iflix (a leading streaming video service in Southeast Asia and the Middle East).

Since traditional media giants own extensive intellectual property of hit shows, films, and often exclusive rights to popular live events – not to mention established distribution channels to tens or hundreds of millions of people – there are immediate partnerships that can be signed to benefit both a startup and the incumbent. The incumbents often re-invest repeatedly to build their ownership and deepen the alignment between the companies, which rarely happens when media companies invest in marketplace startups.

Tencent’s always-be-evolving model

The new crop of digital media giants that includes Netflix, Snap, VICE, and BuzzFeed aren’t doing much if any strategic investing. Instead they’re keeping focused on growth of their core product offering. The notable exception is China’s Tencent.

In addition to dominating China’s booming messaging app sector with WeChat and QQ, owning 75% market share of music streaming in China, and being the world’s leading games publisher through its own studios (Riot Games, Supercell, etc.) and its minority stakes in Activision Blizzard, Epic Games, and others, Tencent has taken a strategy of investing often and early in promising digital media startups…and it has its tentacles in everything.

Based on Crunchbase data, Tencent has done over 300 investments in startups. It is likely the most active venture investor in China, where most of its portfolio is concentrated, but also backs Western media startups like SoundHound, Wattpad, Spotify, Smule, and Wonder Workshop.

Tencent can give distribution to these upstarts through its vast portfolio of digital properties and it can keep tabs on what new content formats or business models are gaining traction. It operates from a mindset of perpetually evolving, and trying to snatch up startups whose products could be key assets in the future of content creation, distribution, or monetization. This approach is one both old media giants and the next gen of unicorn media startups should consider.

The pace of innovation is moving so fast, and so many new doors are opening up – from subscription streaming and esports to voice interfaces and augmented reality – that corporate venture as a core strategy can unlock opportunities for the organization to evolve early, before it ends up being categorized as “old media”.

News Source = techcrunch.com

Pandora takes on Spotify’s Release Radar with its newest playlist, The Drop

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Pandora is taking on Spotify with the launch of a new personalized playlist, The Drop, announced this morning. Similar to Spotify’s Release Radar, The Drop will also focus on new releases from artists its listeners care about. New tracks are added to the playlist on the day they’re released, the company says  – that means Fridays, as with Release Radar.

Pandora’s playlist will also be longer than Spotify’s 30-track Release Radar as it doesn’t immediately ditch older tracks when new ones arrive. The Drop will instead grow to feature 100 of the latest tracks listed in order, with the newest at the top.

The selections on your version of The Drop will be based on your prior listening behavior on Pandora, the company says. And they’ll be algorithmically programmed, not hand-curated.

As you listen, if you find something you like, you’ll be able to add it to “My Music” or share it directly with friends and family.

The launch arrives at a time when the company has been more recently focused on personalized playlists as a means of upselling free users to its paid tiers.

In May, the streaming service rolled out dozens of personalized playlists to its Premium subscribers, based on their listening behavior and Pandora’s Music Genome. These “soundtracks,” as Pandora calls them, are categorized by genre (R&B, Hip Hop, Pop, Alternative, etc.) as well as by mood or activity (Focus, Chill, Happy, Rainy Day, etc.).

Since their debut, more than 790,000 users have listened to at least one of these personalized soundtracks, Pandora told TechCrunch. In addition, users have collectively listened for nearly 1 million hours, and have played a total of 21.4 million songs from their soundtracks to date.

Energy is the top soundtrack with 2.8 million spins, followed by Hip Hop (2.5m), Country (1.8m), R&B (1.43m), Party (1.41m), Pop (1.4m) and Happy (1.2m).

Like these playlists, The Drop will also only be available to Premium subscribers or those testing Pandora on a free trial before committing to a subscription.

The Premium tier is Pandora’s answer to Spotify’s on-demand service, offering playlist creation, downloads for offline listening, unlimited skips and replays, higher-quality audio, and no ads, as well as the ability to play any song at will.

The strategy of enticing paying customers with personalization features may be working.

The streaming service in July reported its two paid tiers – Plus and Premium – had reached 6 million subscribers – a number that’s up 23% year-over-year. But its user base overall is declining slightly, as Spotify and Apple Music charge ahead. Its 71.4 million active users represented a 6% drop from its 76 million users in the year-ago period.

While I was able to test The Drop pre-launch, it’s harder to speak precisely to its quality because my child uses my Pandora account more often than I do. So my playlist was an eclectic mix of David Bowie, Blood on the Dance Floor, Interpol, Ariana Grande, Twenty One Pilots, Echo & The Bunnymen, among others. That said, it didn’t have anything on it that was way off base for at least one of us.

It was also not 100 songs at launch – just 14 – as the playlist will grow over time.

The Drop is launching today, but will roll out to Pandora’s Premium user base over the course of the next two weeks, says Pandora.

 

 

News Source = techcrunch.com

Streaming service CBS All Access rolls out support for offline viewing

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CBS All Access, the network’s over-the-top streaming service for cord cutters, will now let subscribers save shows for offline viewing. The feature, “Download & Play,” is only available to those on CBS’s Commercial Free plan, not those on the cheaper, ad-supported tier. It also supports a range of programming, including CBS All Access Originals, reality shows, primetime dramas, news magazines, and other classics from the CBS library.

At launch, the lineup of supported shows includes originals like Star Trek: Discovery, The Good Fight, One Dollar, Strange Angel, and No Activity, plus Big Brother, Survivor, Blue Bloods, Bull, Hawaii Five-0, MacGyver, NCIS: New Orleans, 60 Minutes, and 48 Hours. All classics will also be available for offline access, meaning you can download old Star Trek episodes, Cheers, Twin Peaks and many others.

Content from local stations, local news and sports will not be available for offline viewing.

There are a few caveats in using the download feature. The content is only available offline for 30 days after the download, or 48 hours from the time of playback. If it expires, you’ll then have to download it again.

Downloads are also only available in the U.S. for the time being, CBS says.

However, users are able to download up to 25 videos at once, and can watch videos on up to 5 different devices.

The feature is going live on both iOS and Android, on version 6.0 of the CBS All Access app and higher.

The company considers this a “premium” option, which is why it’s only making it available to Commercial Free subscribers, it says.

In reality, though, CBS may need more time to make ad attribution work on offline content – something that’s still fairly new.

Hulu, for example, only recently announced it would allow offline viewing, including the download of commercials for those on its ad-supported plan. It then became the first in the industry to support downloads with ads, it said during its Upfronts presentation in May.

CBS may choose to invest in similar technology in the future, but for now, it’s easier to just roll out offline support to those who pay more to skip the commercials.

Other major streamers have allowed for downloads for years, it’s worth noting. Netflix added support on mobile back in 2016, following Amazon Prime Video’s launch of offline support the year prior.

The addition of offline support for CBS All Access means you’ll be able to watch shows when you’re out of reach of a network or good signal – like when traveling, commuting, or on a plane, for example. (Maybe I’ll finally finish this new, not so great Star Trek). Or you can use the option to save money on your data plan.

But the feature will matter even more as CBS expands its originals catalog, which will include new shows like a reboot of The Twilight Zone from Get Out director, Jordan Peele; Scream writer and producer Kevin Williamson’s twisted fairytale series Tell Me a Story; and a new Star Trek series led by Patrick Stewart, among others.

News Source = techcrunch.com

YouTube Kids adds a whitelisting parental control feature, plus a new experience for tweens

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YouTube Kids’ latest update is giving parents more control over what their kids watch. Following a change earlier this year that allowed parents to limit viewing options to human-reviewed channels, YouTube today is adding another feature that will give parents the ability to explicitly whitelist every channel or video they want to be available to their children through the app.

Additionally, YouTube Kids is launching an updated experience to serve the needs of a slightly older demographic: tween viewers ages 8 through 12. This mode adds new content, like popular music and gaming videos.

The company had promised in April these changes were in the works, but didn’t note when they’d be going live.

With the manual whitelisting feature, parents can visit the app’s Settings, go to their child’s profile, and toggle on an “Approved Content Only” option. They can then handpick the videos they want their kids to have access to watch through the YouTube Kids app.

Parents can opt to add any video, channel, or collection of channels they like by tapping the “+” button, or they can search for a specific creator or video through this interface.

Once this mode is enabled, kids will no longer be able to search for content on their own.

While this is a lot of manual labor on parents’ part, it does serve the needs of those with very young children who aren’t comfortable with YouTube Kids’ newer “human-reviewed channels” filtering option, as mistakes could still slip through.

A “human-reviewed” channel means that a YouTube moderator has watched several videos on the channel, to determine if the content is generally appropriate and kid-friendly, but it doesn’t mean every single video that is later added to the channel will be human-reviewed.

Instead, future uploads to the channel will only go through YouTube’s algorithmic layers of security, the company has said.

YouTube Kids expands to tweens

The other new feature now arriving will update YouTube Kids for an older audience who’s beginning to outgrow the preschool-ish look-and-feel of the app, and the way it sometimes pushes content that’s “for babies,” as my 8-year old would put it.

Instead, parents will be able to turn on the “Older” content level setting that opens up YouTube Kids to include less restricted content for kids ages 8 to 12.

According to the company, this includes music and gaming videos – which is basically something like 90% of kids’ YouTube watching at this age. (Not an official stat. Just what it feels like over here.)

The “Younger” option will continue to feature things like sing-alongs and other age-appropriate educational videos, but YouTube Kids’ “Older” mode will let kids watch different kinds of videos, like music videos, gaming video, shows, nature and wildlife videos, and more.

YouTube stresses to parents that its ability to filter content isn’t perfect – inappropriate content could still slip through. It needs parents to participate by blocking and flagging videos, as that comes up.

It’s best if kids continue to watch YouTube while in parents’ presence, of course, and without headphones, or on the big screen in the living room where you can moderate kids’ viewing yourself.

But there are times when you need to use YouTube as the babysitter or a distraction so you can get things done. The new whitelisting option could help parents feel more comfortable letting their kids loose on the app.

Meanwhile, older kids will appreciate the expanded freedom. (And you won’t be constantly begged for your own phone where “regular YouTube” is installed, as a result.)

YouTube says the parental controls are rolling today globally on Android and coming soon to iOS. The “Older” option is rolling out now in the U.S. and will expand globally in the future.

News Source = techcrunch.com

Dish’s AirTV box now lets you watch and record live TV, access recordings through Sling TV

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Following reports that Amazon is preparing to launch a new device that would allow Fire TV owners to record live TV, Dish’s AirTV has just done the same. The company announced the launch of a “Local Channels DVR” feature for AirTV customers that lets users watch and record live TV both in and outside the home. The recorded content is made available within Dish’s Sling TV application, alongside subscribers other Cloud DVR recordings.

Dish first unveiled its AirTV Player, a 4K media streamer set-top box, at CES 2017, then later began doling out digital antennas to Sling TV subscribers with the AirTV Player as part of deal for pre-paying for the company’s streaming service.

This year, it expanded its hardware lineup to include a new device, just called the AirTV, which is a networked TV tuner that doesn’t connect directly to a TV, but rather streams local programming via Wi-Fi.

As with Plex – and, presumably, with Amazon’s forthcoming plans – being able to record and stream from live TV is one way companies are working around cable providers, or having to make content deals in order to expand their streaming line-ups. It gives cord cutters way to watch hard-to-access programming, like local news and sports, for example.

Dish’s new Local Channels DVR feature will require an external storage device in order to work, which is not included.

This means it’s similar to something like Tablo’s OTA DVR for cord cutters, which has customers attach their own USB hard drive. In AirTV’s case, the maximum supported drive size is 2 TB.

The DVR also supports dual-tuner functionality, so customers can record up to two shows at once, or watch one live while recording another.

TV show recordings can also be scheduled by the episode or by the series.

Once AirTV is set up, the recorded content is available through the Sling TV app across platforms, including iOS, Android, Amazon Fire TV, and Roku.

It will be found in the same menu as the Cloud DVR content – where you find the movies and shows you record through Sling TV’s DVR. But these recordings will have an OTA icon next to them to help users differentiate the AirTV content from the rest.

Upon playback, the content can be paused, rewound, or fast-forwarded. In addition, if watching a recording in real-time, users can pause the live TV stream.

To gain access to the feature, AirTV users will have to update their device and restart their Sling TV app.

News Source = techcrunch.com

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