ITV

Tag: Direct-to-consumer

  • Netflix recovers with 2.4 mn subscriber gain in Q3

    Netflix recovers with 2.4 mn subscriber gain in Q3

    Mumbai: In the third quarter ending September 30, 2022, Netflix reported 2.41 million net new paid subscribers. It now has 223.1 million paid subscribers globally. Earlier, the expectation was to gain one million subscribers. The expectation for Q4 is 4.5 million paid net additions versus 8.3 million in Q4 2021.

    The company said that after a challenging first half, it believes that it is on a path to reaccelerate growth. The key, it says, lies in pleasing members. Its focus has always rested on winning the competition for viewing every day. When its series and movies excite members, they tell their friends, and then more people watch, join, and stay with the platform.

    Speaking about competition, it said that while competitors are investing heavily to drive subscribers and engagement, building a large, successful streaming business is hard. Netflix estimates that they are all losing money, with combined 2022 operating losses of well over $10 billion, versus Netflix’s five to six billion dollars annual operating profit.

    For incumbent entertainment companies, this high level of investment is understandable given the accelerating decline of linear TV, which currently generates the bulk of their profit. Ultimately, though, Netflix believes that some of its competitors will seek to build sustainable, profitable businesses in streaming—either on their own or through continued industry consolidation. While it’s early days, we are starting to see this increased profit focus—with some raising prices for their streaming services, some reigning in content spending, and some retrenching around traditional operating models which may dilute their direct-to-consumer offering. Amidst this formidable and diverse set of competitors, it believes that its focus as a pure-play streaming business is an advantage. Netflix explains that its aim remains to be the first choice in entertainment and to continue to build an amazingly successful and profitable business.

    Netflix said that it operates in a highly competitive industry where people have many different entertainment choices—from linear TV to streaming, YouTube to TikTok, and gaming to social media. The silver lining is that the opportunity is very large and growing, and Netflix is still very small relative to that opportunity (for example, eight per cent of total TV time in the US and the UK, two of its most established countries). Its annual revenue of $30 billion or more in the 190 countries in which it operates is roughly five per cent of the combined estimated $300 billion pay TV/streaming industry, $180 billion branded advertising market, and $130 billion consumers spend annually on gaming. So, Netflix believes that it has a long runway for growth if it can continue to improve its offering steadily over time.

    Netflix also stated that its six per cent year-over-year revenue growth in Q3 was driven by a five per cent increase in average paid memberships and a one per cent increase in average revenue per membership (ARM). Excluding the impact of foreign exchange (F/X), revenue and ARM grew 13 per cent and eight per cent year-over-year, respectively. The sequential decline in revenue was entirely due to F/X.

    In the third quarter of the fiscal year in the Asia Pacific region, revenue grew by 19 per cent, excluding F/X, as average paid memberships rose 23 per cent year-over-year. ARM fell three per cent year on year, excluding F/X, owing in part to lower ARM in India. This was somewhat offset by higher ARM in Australia and Korea. It added 1.4 million paid memberships in the region (versus 2.2 million in the last Q3).

    Excluding F/X, EMEA revenue and ARM grew 13 per cent and seven per cent, respectively. Paid net additions totaled 0.6 million, down from 1.8 million in the previous quarter. In Latin America, revenue increased 19 per cent year-over-year, supported by ARM growth of 16 per cent vs. the year ago quarter excluding F/X. It added 0.3 million paid memberships, in line with membership growth in Q3’21. ARM and revenue grew by 12 per cent and 11 per cent, respectively, in the US and Canada, which is its most penetrated market. Paid net adds totalled 0.1 million (similar to the 0.1 million in Q3’21).

    For Q4 of 2022, it is expecting revenue of $7.8 billion, with the sequential decline entirely due to the continued strengthening of the US dollar vs. other currencies. On a constant currency basis, this equates to nine per cent year-over-year revenue growth. The revenue growth forecast is driven by the expectation of 4.5 million paid net ads (vs. 8.3 million in Q4 ’21) and ARM growth of six per cent year-over-year, excluding F/X. The paid net adds forecast assumes that it experiences its usual seasonality as well as the impact of a strong content slate, counterbalanced by macroeconomic weakness, which leads to less-than-normal visibility. While it is very optimistic about the new advertising business, the company does not expect a material contribution in Q4 2022 as it is launching its Basic with Ads plan intra-quarter and anticipates gradually growing its membership in that plan. Its aim is to give prospective new members more choice—not switch members off from their current plans.

    Members who don’t want to change will remain on their current plan, without ads, at the current price, the company explains. It has forecasted a Q4 2022 operating margin of four per cent compared to eight per cent in the year-ago period. The fourth quarter is typically its lowest operating margin quarter of the year as it is usually its largest quarter in terms of content and marketing spend.

  • Disney+ announces Alisa Bowen as its new president

    Disney+ announces Alisa Bowen as its new president

    Mumbai: Alisa Bowen has been named Disney+ president, effective immediately. In this role, Bowen will build on the flagship streaming service’s reputation as a global destination for premium content. Bowen has led global business operations for Disney’s streaming platforms, including Disney+, since its launch in 2019. In that time, Disney+ has expanded rapidly, growing its reach to 154 markets worldwide with 152.1 million total subscriptions as of the end of the third quarter of fiscal year 2022.

    Bowen will work closely with key leaders across Disney to drive continued focus on innovation, including the forthcoming launch of the ad-supported tier, as well as multi-channel promotional support for Disney+ and its robust content slate. Regional leaders for Disney+ in Canada, Europe, the Middle East, and Africa (EMEA), Asia Pacific, and Latin America will report jointly to Bowen and regional leadership. Bowen will continue to report to Michael Paull, president of Disney Media Entertainment and Distribution Direct to Consumer.

    “Alisa has been an indispensable member of our leadership team since the inception of Disney+. She possesses a rare and valuable combination of deep institutional knowledge, forward-thinking innovation, and global vision rooted in a strong focus on our consumers that is perfectly suited for this critical role, and I am confident that she will have an immediate and positive impact on the business,” said Paull.

    “Disney+ is a phenomenal growth story and has delighted fans around the world on a tremendous scale. We have a best-in-class team behind this success, and I’m excited to partner with them in this new role as we drive the next phase of Disney+ growth. Our upcoming content is incredibly exciting, and we are committed to innovation to give our fans and subscribers the best possible experience, including more choice on how they can enjoy Disney+,” said Bowen.

    Bowen is a seasoned media executive with decades of experience in product, technical, and operational leadership roles in several global media organisations. She most recently served as Disney Streaming executive VP of global business operations. She oversaw global content and business operations for the company’s direct-to-consumer video streaming businesses, Disney+, Hulu, ESPN+, and Star+. This included cross-functional leadership of the global Disney+ rollout in 154 markets worldwide.

    She joined Disney in 2017 as SVP of digital media and CTO of the company’s international operations, where she led a transformation of Disney’s channel broadcast technology, content operations, and digital publishing across EMEA, Asia Pacific, and Latin America.

    Prior to Disney, Bowen served as News Corp Australia’s CTO, where she was responsible for the digital transformation strategy, including the pivot to digital subscription business models and the launch of new digital advertising offerings. She has also held product, business operations, and general management leadership positions at major media organisations.

  • GUEST COLUMN: Can D2C beauty brands of today be the market leaders of tomorrow?

    GUEST COLUMN: Can D2C beauty brands of today be the market leaders of tomorrow?

    Mumbai: A lot is being written and said about direct-to-consumer (D2C) brands in general, and D2C beauty brands in particular. Low entry barriers, relative ease of consumer targeting through online channels, and a burgeoning beauty market overall have led to a veritable explosion of beauty brands that have followed an online-only (or online-first) approach to product marketing. Can these brands eventually replace some of the incumbents today as the market leaders of tomorrow? The answer (the easy one, as always) – it depends. On what? Three key factors:

    Product strength and innovation capabilities

    Marketing gets the customer; the product keeps her. Any amount of smart & shiny marketing (made all the easier through creator apps) will not substitute for the moment of truth when the consumer applies the product on face, lips, hair or body. And for the compliments, she gets from friends or family or colleagues, which is a key factor in driving overall delight with the product.

    Being able to consistently deliver on interesting promises, while keeping up with rapidly evolving tastes and trends, is the top critical success factor for new-age brands looking to become market leaders. This takes a motley combination of agility, patience, long-term commitment, and the right innovation approach to get the marketing mix right – again and again.

    Omnichannel expansion

    Despite explosive growth, the online channel still accounts for 10 per cent or less of the overall beauty market in India. It is believed that the online share in China and the US is closer to 50 per cent, even with the post-Covid acceleration. It’s clear, therefore, that in the medium term, any brand with scale ambitions has to be able to succeed in both online as well as brick-and-mortar distribution environment. The two could not be more different from each other and need diverse sets of skills and capabilities to be developed. The arrival and maturing of distribution aggregator apps might make this a little easier for newer brands, though.

    Scalable systems and processes

    Most of the (well-funded) emerging brands today are solving for speed and agility (defined as flexibility and speed of response). Sustainability of the approach, margin stability and resilience in the face of extreme market swings (on both supply- or demand-side) are yet being developed. Several brands are expected to reach a somewhat mature stage over the next 2-5 years, and those that are able to put in place scalable systems and processes across functions (marketing, distribution, supply chain etc) would be the ones poised to make the leap into the big league.

    The landscape in 2026

    The inherent strength of the incumbent brands in terms of brand, distribution and product capabilities notwithstanding, it can be safely said that the dynamics of the industry have changed forever. Consumers are open to (and in fact, hungry for) fresh ideas and delightful new experiences, and a lesser-known brand is no longer a barrier. The market is likely to be no longer dominated by a handful of brands but would indeed have a ‘fat middle’ of similar-sized brands, best known for a few categories each. To get there, and stay there, new-age brands have their work cut out along the above three dimensions.

    (About Author: Shankar Prasad is the founder and CEO of Plum)

  • GUEST COLUMN: FMCG companies took to apps, bet big on direct-to-consumer reach

    GUEST COLUMN: FMCG companies took to apps, bet big on direct-to-consumer reach

    Mumbai: The eruption of COVID-19 has left millions and millions of businesses scurrying for survival. Although somewhat less affected than some categories, the FMCG companies also faced headwinds for some time. And to counter these headwinds, technology has been the single most important intervention that they have employed during these trying times. And of the technologies, applications enabling a direct route to the consumer as well as other businesses in the value chain have been most prominent.

    While placing their faith in these applications, FMCG companies have also recast their value chains weeding out unnecessary elements at various levels allowing themselves greater leverage vis-à-vis their vendor partners and establishing a more direct connect with their end-consumers. And among FMCG firms, food companies, or those with prominent food product portfolios have been particularly noteworthy for taking the app route.  A step ahead of general trade, modern trade, or even traditional e-commerce channels, these apps have been popular yet necessary go-to modes for these companies.

    The big B2C advantage

    How does B2C prove to be advantageous for FMCG companies? Until now, customer-relationship building and acquiring customer insights were largely the preserve of the retailer community. However, what B2C apps do is that they facilitate a direct and one-on-one company-to-consumer relationship, with the former no more having to make efforts to establish bonding with a faceless consumer. On top of allowing deeper end-consumer insights for companies and brands, they can catalyse more relevant and individualised product and service propositions by the brand to the consumer thus leading to a more enriching customer experience which in turn would drive increased customer acquisition, conversion, and retention for the brand. And needless to say, the power balance between the brand and the retailer is further shifted in favour of the brand and away from the retailer.

    B2B applications not too far away

    However, this taking to applications has not been limited to B2C channels. FMCG companies have also incorporated apps in their business processes directly targeting retailers and kirana stores who offload their products and serve as a last-mile seller/supplier to end-consumers. Identifying and prioritising retailers who delivered top volume businesses, the companies made sure that the retailers continued to place orders for their products, and even more efficiently using these applications than they did before. In fact, thanks to Covid, the earlier forecasts projecting a contribution of around 10 per cent digital channels in the total FMCG market in the next ten years in the country has been advanced to next three to four years now. And at the same time, cutting out or minimising the role of distributors especially in terms of selection of retail outlets, the brands have reclaimed their power vis-à-vis the latter while effecting greater streamlining and consolidation of their distribution systems.

    Proliferation of new products

    While pivoting to digital technologies, B2C and B2B apps, the FMCG companies have also realigned their product portfolios in a major way capitalising on the shifting consumer preferences and behavior in times of the pandemic. And as part of this realignment, there has been a proliferation of new and innovative products which have been introduced to the market in the last few months. With health and hygiene being a predominant consumer focus, as many as 3,000 products in the health and hygiene category have been estimated to be launched in the September quarter alone last year. Earlier, in the April-September quarter, as many as 9,700 new products were launched by FMCG companies. Mindful of and in response to the country-wide lockdowns in place and customers being confined to their homes, 125 products were introduced in-home cooking segment alone during March-August 2020 in categories including ketchup, jams, cheese, and milk powders.

    Exploring alternative channels of distribution too

    Even as D2C apps gain traction, the FMCG companies are also exploring tie-ups with new-age delivery startups, food-tech service players, food aggregators, hyper-local apps, and courier firms to have their products delivered to the doorsteps of the end-consumer. In fact, some FMCG companies are also making product-specific tie-ups with delivery platforms and micro delivery platforms.

    Digitisation not limited to distribution: Influencer marketing gets a boost

    Rising uptake in apps and the broader digitisation has not only been confined to retail and distribution but also advertising and marketing. And riding on the increasingly entrenched position of social media and its consumption, influencer marketing has become a big part of FMCG’s digital marketing strategy in recent years. According to a report, globally, nearly a fifth (19 per cent) of FMCG companies have raised their influencer spending significantly as compared to pre-COVID-19 levels. And within India, during the festive season campaign alone, influencer marketing saw a 20 per cent jump in campaigns. A digital marketing agency has estimated India’s influencer market at $75-150 million a year, as compared to the global market of $1.75 billion, which is only set to get bigger in the coming months and years.

    Other technologies that could aid the B2C momentum

    At the same time, apart from apps, there are several related B2C technologies and platforms that could add teeth to the ongoing B2C drive. They could range from customer data platforms to data management platforms to marketing automation tools to business intelligence and data visualization tools to social listening tools, among others.

    So, in the future, there is no doubt that the B2C apps as part of an FMCG company’s digitisation program will acquire a more permanent dimension. Notwithstanding a resurgence of Covid in certain states, now with vaccination underway and revival of consumer sentiment in urban India, FMCG businesses including food companies are set to see greater activity and growth.  

    (Manish Aggarwal is director, Bikano, Bikanervala Foods Pvt Ltd. The views expressed in the column are personal and Indiantelevision.com may not subscribe to them.)

  • SUGAR Cosmetics onboards Suchit Sikaria as chief business officer

    SUGAR Cosmetics onboards Suchit Sikaria as chief business officer

    Mumbai: Beauty brand SUGAR Cosmetics has announced the appointment of Suchit Sikaria, former managing partner of Performics India, as the chief business officer to lead and handle the core direct to consumer division. With this strategic move, the brand aims to double-down on its aggressive past performance of building one of India’s fastest-growing brands in the D2C consumer space, it said in a statement.
     

    An MBA from IIM – Ahmedabad, Sikaria brings more than 14 years of leadership experience in sales, marketing, and business operations with stints at Performics India and Nokia India. He also brings an additional four years of start-up experience from his own entrepreneurial venture.

    SUGAR Cosmetics co-founder & CEO Vineeta Singh said, “We are excited to welcome Suchit Sikaria as the new Chief Business Officer for our D2C business at SUGAR Cosmetics and are eager to see the magic he creates for the brand. Over the past 6 months at SUGAR, we have aggressively been growing the team and recruiting the sharpest minds who can accelerate the brand’s trajectory – 120+ new team members, and we’re not done yet. Suchit’s deep expertise in scaling large-budget performance marketing campaigns for one of India’s largest digital advertising agencies will be pivotal to scaling the revenues 5x times in the next 3 years and further cementing the brand’s hold in the D2C market space.”

    Speaking on his new role, Sikaria said, “I am incredibly excited to start this new journey at SUGAR Cosmetics. I have been avidly following the journey of this brand and have been quite inspired by how quickly they have grown and become a cult-favourite among India’s gen Z and millennial women. I look forward to bringing in my experience of the industry and building the brand into a much larger D2C player; not just in the country, but even globally. I look forward to this new opportunity!”

    In addition to SUGAR’s international presence in the US & Russia markets, SUGAR has also recently forayed into the Middle Eastern market in an exclusive partnership with the Landmark group and will be retailing their products at Lifestyle Stores across UAE and other countries

  • Disney makes direct-to-consumer biz top priority after strong Q1 earnings

    Disney makes direct-to-consumer biz top priority after strong Q1 earnings

    MUMBAI: The Walt Disney Company (Disney) started the financial year 2019 on a strong note by smashing Wall Street expectations. Sales increases in media networks and theme parks businesses helped the giant media conglomerate to post total revenue of $15.30 billion. However, the revenue came in slightly lower than the first quarter of 2018.

    In its first quarter earnings report, Disney reported $1.86 EPS against a consensus estimate of $1.55. Total revenue of $15.3 billion also beat consensus estimates of $15.18 billion. Media Networks revenues for the quarter increased 7 per cent to $5.9 billion and segment operating income rose 7 per cent to $1.3 billion.

    “After a solid first quarter, with diluted EPS of $1.86, we look forward to the transformative year ahead, including the successful completion of our 21st Century Fox acquisition and the launch of our Disney+ streaming service,” Disney chairman and CEO Robert A Iger said.

    At a time when Netflix and Amazon are getting more aggressive in the entertainment sector, Iger went to state that direct-to-consumer business is the top priority for his company. Interestingly, he also mentioned in a post-earnings call that its sports streaming service ESPN+ has doubled paid subscribers in the past five months reaching 2 million in total.

    However, Direct-to-Consumer & International revenues for the quarter decreased 1 per cent to $918 million and segment operating loss increased from $42 million to $136 million.

    “The increase in operating loss was due to the investment ramp-up in ESPN+, which was launched in April 2018, a loss from streaming technology services and costs associated with the upcoming launch of Disney+, partially offset by an increase at our international channels and a lower equity loss from our investment in Hulu,” the company said.

    Notably, this earnings report could be the last full quarter of results before Disney closes its acquisition of most of 21st Century Fox. While Disney’s upcoming streaming platform Disney+ is making a grand entrance this year, the company expects 21st Century Fox’s assets will aid in its streaming strategy.

    The media powerhouse is gradually changing the core of its business to take on services like Netflix as well as to cope with changing content consumption trends. In the earnings call, Iger also said that that departments across all of Disney are working on creating high-quality content specifically for Disney+.