😭 Product shortages are here to stay
And the situation is much worse than you think.
👋 Welcome to FWIW by David Tvrdon, your weekly tech, media & audio digest.
In this edition
The great supply chain disruption is here to stay beyond 2022
Quarterly results: Alphabet, Meta, Spotify, Sony, Nintento and others
NY Times hit 10 million subscribers three years early (and bought Wordle)
The great supply chain disruption is here to stay beyond 2022
Last year in December, The New York Times published an excellent interactive infographic explaining the ‘Great Supply Chain Disruption’. It helps to understand where things went wrong, why not enough PS5s were in stock and how the issue is unlikely to be resolved in the very near future.
Two months later, The Times published another piece saying the chaos at ports, warehouses and retailers will probably persist through the year, and perhaps even longer (read the whole piece, it will be worth your while).
Here is the gloomy outlook from the NYT:
For those who keep tabs on the global supply chain, the very concept of a return to normalcy has given way to a begrudging acceptance that a new normal may be unfolding.
Cheap and reliable shipping may no longer be taken as a given, forcing manufacturers to move production closer to customers. After decades of reliance on lean warehouses and online systems that monitor inventory and summon goods as needed — a boon to shareholders — manufacturers may revert to a more prudent focus on extra capacity.
The deepening understanding that the supply chain crisis has staying power poses a daunting challenge to policymakers.
The IMF (International Monetary Fund) last week cited supply chain woes among other factors as it downgraded its forecast for global economic growth for 2022 to 4.4 percent from 4.9 percent.
It’s not merely about the chip shortage that Tesla and other car manufacturers around the world pointed to as a struggle in the coming year. Society and behaviours changed and trends accelerated in the pandemic.
With the steep uptick in ecommerce and customers expecting quick delivery, suddenly the vast majority of products are not distributed to retail outlets via central warehouses, but instead individual orders must be delivered to homes and businesses.
That means more warehouses closer to where people are living. Which means you have to build them near populated areas and that’s expensive and sometimes there just isn’t enough space for them.
So with the existing warehouses full, good are stuck at ports. With limited room to stash goods offloaded from inbound vessels, containers have piled up on docks uncollected. That has prompted port overseers to force ships to float offshore for days and even weeks before they can unload.
Looking back, the issues happening in global supply chain at the moment could have been foregone as there were signs the system is in dire need of upgrade. Unfortunately, it was a problem no one wanted to see or solve.
Which means we are left with a guessing game as we enter the third year of pandemic - will people keep buying things to upgrade their homes so that they don’t have to leave to go to the gym or work or a restaurant? Or will the majority of the society go back to the way it was before be were locked inside.
I realise this is not strictly a technology question and you might think this does not belong in a tech / media / audio newsletter but the results of how this turns out will shape all of these industries, that’s why we need to keep a close eye on what happens.
TECH
📊 Alphabet reported a big fourth-quarter and the stock jumped. Google’s advertising revenue came in at $61.24bn for the quarter, up 33% from $46.2bn in the same period a year earlier. The company’s cloud reported revenue growth of 45% to $5.54bn. Operating loss in the cloud came in at $890m during the quarter, which narrowed from the $1.14bn loss a year ago. YouTube ad revenue was the only metric that fell short of analysts’ expectations ($8.63bn vs. $8.87bn expected). [Bloomberg]
📊 Meta beat revenue but stock is down by 20% and Facebook daily active users (DAU) fell for first time in 18-year history. Zuckerberg acknowledged that Meta is facing serious competition for user time and attention, particularly from viral video-sharing app TikTok. It was also the first financial report since Zuckerberg declared that attracting young people - 18-29-year-olds - was the company’s new “North Star.” The company lost $10bn in investment in Reality Labs (Oculus, metaverse, etc) over 2021. Still, the company is massively profitable making nearly $40bn in net income over the past year. [CNBC, Bloomberg]
Investors wiped almost $200bn from the market valuation of Facebook owner Meta as it warned that its users were spending more time on newer rivals such as ByteDance’s TikTok.
📊 Spotify reported having 406 million MAUs and 180 million subscribers but projected slower growth for Q1 causing stock to plunge. Podcasting boosted the company’s advertising business. Advertising sales accounted for 15% of revenue in the final quarter of 2021, a new high for the company. Spotify said advertising rates were going up and that its growing audience has created more ad inventory. The company delivered positive operating income last year for the first time. [Bloomberg]
📊 Sony shipped just 3.9 million PS5 consoles in its all-important holiday quarter. 17.3 million units in total have been shipped as of December 31st, nearly three million fewer than the PS4 had managed at the equivalent point after its release. PlayStation is now Sony’s most important individual division, accounting for more than a quarter of the company’s overall revenue and almost a quarter of its operating profit. Sony’s crucial image sensor division had a good quarter as did the movie division, Spider-Man: No Way Home and Venom: Let There Be Carnage contributed to much higher theatrical revenues than a year before. [The Verge]
📊 The Nintendo Switch had a relatively strong holiday quarter, with 10.67 million units shipped between October and December despite the global semiconductor shortage. That brings the system’s lifetime total to 103.54 million units shipped, meaning it took just under five years to overtake the Wii’s 101.63 million. [The Verge]
Other notable earning results:
Electronic Arts met expected earnings as the game publisher saw big engagement with its existing games.
🇪🇺⚠️ Belgium's data watchdog fines IAB Europe €250K after finding its ad-targeting tool violates GDPR. IAB Europe’s so-called Transparency and Consent Framework (known as TCF) enables websites and publishers to obtain the consent of users for the processing of their personal data for targeted advertising goals. The tool is especially aimed at facilitating real-time bidding, an advertising technology used by publishers. IAB Europe has two months to comply with EU data requirements. [Bloomberg]
🤔 Google seems to be giving its Android tablets division some attention. One of Android’s original founders, Rich Miner, is working on Android tablets. The upcoming Android 12L update, which is currently in beta, is focused on improving the tablet and foldable experience. [The Verge]
🤬 OpenSea has a massive fraud problem. More than 80% of NFTs created for free on Opensea are fraud or spam. [Vice]
👀 Web3 explained in 3 minutes. [Bloomberg]
📈 Europe smartphone market gains 8% YoY in 2021. Apple saw a 25% growth in the European smartphone market last year to hit the highest ever share of 26% of all sold phones in 2021 behind Samsung with 32% and followed by Xiaomi with 20% share. [CPR]
😈 How the Czech search engine Seznam has been a pain in the ass for Google for over a decade. A good story documenting a notable holdout in the central European market that is, even with an 11% share, an internet giant in the country. The story also documents how is Seznam helping regulators to fight Google now. [NYT]
Note: The unspoken idea of the story is also that Seznam might have a bigger market share than Google if the latter did not spend so much money and effort on making its search engine the default on smartphones leaving little option for competing. That’s the story the regulators in Brussel are seeing.
🛠 Canva, one of the world’s most valuable private software companies, has acquired London-based data visualization platform Flourish to expand its suite of design tools. Flourish is used by many news organizations and has 800,000 users. Canva has more than 75 million monthly active users, up from 50 million a year ago, and 2,500 employees globally. [Bloomberg]
MEDIA
🥳 The New York Times hit its goal of 10 million subscriptions with the addition of The Athletic, the sports site it acquired for $550m. It also announced a new goal: It will aim to have at least 15 million subscribers by the end of 2027. [NYT]
🤓 The New York Times bought Wordle for a low seven-figure sum. The popular internet game will remain free to play and will become part of the NYT Games. [NYT]
📺 Disney+, HBO Max and other streaming services have to produce big hits otherwise they will not continue growing, plus keeping subscribers is hard. Streaming services spent about twice as much on content - both to create originals and acquire the rights to old movies and shows - last year than they did in 2017, according to projections from Ampere Analysis, a research firm. [WSJ]
😲 Jeff Zucker resigned as the president of CNN and the chairman of WarnerMedia’s news and sports division. In a memo, he wrote he had failed to disclose to the company a romantic relationship with another senior executive at CNN. [NYT]
🎮 How publishers are using games to attract and retain subscribers. Examples from NYT, WSJ, Telegraph, Le Monde, The Guardian. [Twipe]
FROM THE FIX
1️⃣ Your newsroom might produce the next Europe-targeting scripted TV show. Here is why
2️⃣ Telegram shutdown in Germany? Balancing anonymity and accountability in social media
3️⃣ When memes come in handy: What publishers need to know to flourish on TikTok
4️⃣ Reasons for optimism: journalists around the world
[ 📬 Get The Fix newsletter delivered to your inbox every week with the latest insights, news, and analysis about the European media market. Sign up here > ]
AUDIO
🤨 Spotify had to deal with musicians leaving the platform because of Covid-19 misinformation being spread in the Joe Rogan podcast. After more than a week of controversy started by Neil Young, the dust seems to be settling. Spotify’s CEO had to write a note explaining the situation, meanwhile Joe Rogan defended the podcast and apologized to Spotify for backlash.
Science Vs (a Gimlet show) editor Wendy Zukerman just sent an email to the CEO of Spotify saying she would devote her fact-checking show exclusively to contradicting misinformation on other podcasts carried by parent company Spotify. She considered the platform's support of Rogan a "slap in the face" after she spent months encouraging her listeners to move to the service because of its support for her fact-based science podcast.
📊 Podsights has released its Conversions Benchmark Report for Q1 2022. Mid-roll ads work best, says the study, with the average conversion rate being 1.42 %. Brands saw up to a +33% improvement on conversion rate when they diversify their podcast advertising to more than one network. [Podsights]
😮 Amazon has replaced Spotify as the biggest spender in audio. Amazon’s spending spree extends beyond podcasting. The company is also signing deals with musicians, radio hosts and other celebrities for a new live audio service. Think of it as a hybrid of Clubhouse and Apple’s Beats One Radio. Famous people will host live shows on a regular basis, and fans will be able to interact in some way. [Bloomberg]
📈 Podnews says that the latest downloads data released for BBC podcasts (257M) would make it the #3 podcast publisher in the world. Global News Podcast (BBC World Service), The Documentary (BBC World Service) and In Our Time (Radio 4) once again proved the most popular. [BBC]
🎙️ Podcastle won the audio & voice tool of the year in Product Hunt’s Golden Kitty awards. Podcastle is an AI-powered, collaborative audio creation platform that helps professional and amateur podcasters create, edit and distribute production-quality podcasts in seconds. [All results]
GAMING
💸 Sony is buying Bungie, the developer of Destiny and original creator of Halo. The deal is worth $3.6bn. [The Verge]
WANT TO READ BUT HAVE NOT READ YET
Meet the NSA spies shaping the future. In his first interview as leader of the NSA's Research Directorate, Gil Herrera lays out challenges in quantum computing, cybersecurity, and the technology American intelligence needs to master to secure and spy into the future.
How the Seattle Times hit 81,000 digital subscribers while avoiding ‘deep discounting’ and the ‘volume chase’.
❓ Poll: What was a good thing about the pandemic for you?
🙌 Thanks. I used HandyPolls to create this poll (instructions).
Last poll results: How often do you use the incognito/private mode in your browser? 48% sometimes and 17% wish cookies went away.
🙏 And big thanks to Celine Bijleveld who helped me edit this newsletter. You can follow her on Substack here.