Tencent’s new experiement

[Editor’s note: This first appeared in SuperData CEO Joost van Dreunen’s weekly newsletter. Details to sign up below.]

Aaaaand, we’re back!

The atmosphere on the B train earlier today wasn’t great. Understandably a lot of folks still have their heads in last year’s festivities and refuse to wake to a new dawn.

But 2018 is here. And it’s going to be grand.

I say this mostly because it will be a year of change for a lot of companies. For one, the continued shift in how people like to spend their time and money on media is going to wreak havoc on, especially, traditional ad-based businesses. All eyes will be on sports and news—the two remaining pillars of the soon-to-be much smaller Murdoch empire. The good news here is that we’ll see a resurgence in subscription revenue, like the NY Times which now makes two-thirds of its money from combined digital and physical subscriptions.

Second, spring cleaning has come early this year. Hollywood is kickstarting a second sexual revolution by demanding freedom from sexual harassment. That’s a good thing. But it will obviously upset the existing power structure. And with comparable efforts underway in other entertainment industries, we’re going to see oodles of disappointed middle-management grappling with a new, augmented reality.

A third consideration for 2018 on many people’s mind is the whole net neutrality thing. But worry not. There’s no way that AT&T is going to put the broadband brakes on competing companies’ content out of the gate. That’s a terrible idea. Instead we’ll see a much slower transition to throttled internet taking place over years. So we have time to figure this out. And remember that in the meantime countries like Vietnam deploying a cyber warfare force to monitor and outright censor their citizens.

I’m just saying: it could be worse. It’s up to us to make this year better than the last. Let’s get to it.

BTW 1: here’s my games industry predications for 2018.
BTW 2: I’m at CES. Let’s hang out!

NEWS

Magic Leap finally let’s us in on what it’s been up to
The reveal of its mixed reality headset (Lightwear) was odd. First, after literally years of radio silence, the news came right as everyone had one foot out the door and their minds fully on the holidays. From a PR perspective that makes no sense. Why not wait for CES? Better to have the eyes of the world on you and steal the show at one of the biggest consumer electronic events of the year. Two years ago it worked magic for Oculus Rift, if you recall. Second, it gave the scoop to Glixel, the game-focused subsidiary of Rolling Stone. I’ve met its editorial director Brian Crecente a few times over the years and he’s every bit as good as you’d want industry critics to be. It’s a testament to the man’s connections that Magic Leap allowed him to do a write-up on this $6B beast. But certainly a broader focused media strategy would have gotten more exposure. Unless, of course, that wasn’t the point. My guess is that all of that investment money has gone towards product development and engineering, and that marketing and PR has been de-prioritized from jump. I’m excited about that—too often do we have to sift through half-baked products and services that will change our lives and then don’t. But that, unfortunately, leads me to my first 2018 crystal ball prediction: there’s no way we’ll see the Lightwear available for mass market sale this year. Engineers don’t care for shiny. I want to be wrong on this because I’m excited. But experience compels me to curb my enthusiasm. Link

Facebook signs deal with Universal. Still not a media firm, tho
According to Universal Music’s CEO Lucian Grainge, its recent deals with Facebook, YouTube, and Spotify are part of a broader strategy to “refine the balance between direct promotion and monetization.” Basically Taylor Swift wants to get paid whenever you post a morsel of her songs, suggesting that—if technically possible—you soon can’t hum without first making a deposit. What’s striking about Facebook signing all these content deals is that, unlike its competitor Tencent, it doesn’t own any of it nor does it have any leverage over the firms providing it. The logic of acquiring where it cannot innovate has worked well for Facebook in the past. But despite all its money, this is an expensive way to go on the long term even if it will help in retaining those desirable younger Facebook users. The real value here is the inevitable data exchange that’s taking place, giving publishers more control over both their current artist portfolio and their future one. Link

WHO names video gaming a mental disorder
In a preview of its upcoming 11th International Classification of Diseases, the World Health Organization has included a “gaming disorder.” So far a host of academics and scientists have blasted the inclusion. One source argues there’s pressure from Asian countries like China and South Korea which already have more pronounced national regulation on gaming consumption. Link

Tencent is testing link between digital ID and WeChat
Residents of Guangzhou can now link their national identity cards to WeChat as part of a beta test. The national ID cards are central to a host of mundane transactions and purchases, which means that Tencent will get even more insight into its users than it already does. This is a critical component to its long-term strategy, as both Tencent and its domestic rival Alibaba now compete over user data. China alraedy requires real-name registration for WeChat. Link

Coffee maker Lavazza invests in digital media platform
Talk about a complementary asset strategy! Lavazza will soon be serving a movie with your espresso. Milan-based Chili offers a library of 17,000 films and 10,000 TV series episodes via video-on-demand to 1M users. Things are going well for Chili, which saw its 2016 revenues of €7M increase to €30M in 2017. The Lavazza family fund investment is for 25% at a €100M valuation. Its CEO, Giorgio Tacchia, is a former Disney exec, and other investors include Sony Pictures Entertainment and Paramount Pictures. Ciao

That was helpful. I’m going to SUBSCRIBE!