Are Influencers a Liability? (STRATEGY) + AI Can't Do Basic Math Ops?
K-Drama v. Netflix + Ninja Turtle STRATEGY.
The Agenda:
Opinion/Links
Are influencers a liability? (STRATEGY) [B2C, Tech, Hollywood]
How a fashion brand survives. (STRATEGY) [Fashion/Luxury, B2C, Tech]
K-Drama v. Netflix. [South Korea, Hollywood]
Disney pulls a Netflix. (STRATEGY) [Hollywood, Streaming]
Paramount inches towards recovery, goes global. (STRATEGY) [Streaming, Hollywood]
AI can’t do basic math ops? [AI]
Stability AI: Internal turmoil, increasing competition. [AI, IP]
Ninja Turtle STRATEGY. [IP, Hollywood, Gaming]
Saudi Arabia: Now a regional center for Hollywood. [Saudi Arabia, IP]
After toy movies, anime movies next. [IP, Hollywood, Japan]
Manga: What is fueling US growth? (STRATEGY) [Japan]
Gaming industry recovers and evolves. [Gaming]
Final Fantasy XVI underperforms? [Gaming, Japan]
Supreme Court sides with Apple, vs. Epic… for now. (STRATEGY) [Gaming, Tech Regulation]
Roblox: Player spending below expectations. [Gaming]
NPC e-girl fetish on social media goes viral (I’m not kidding). [Gaming, Tech]
Manga
Business Samurai is on hiatus until CP’s fundraising is complete. Meantime, please read up on all the previous episodes! Thank you for your understanding, I will get back to it ASAP.
Monday Motivation
"What do you need to start a business? Three simple things: know your product better than anyone, know your customer, and have a burning desire to succeed." (Dave Thomas, founder, Wendy’s)
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Opinion/Links
B2C
Are influencers a liability? (STRATEGY) [B2C, Tech, Hollywood]
Interesting segment on Bloomberg Technology, some businesses considering influencers to promote their product now require the influencer to take out an insurance policy to protect the brand.
Potential legal issues include the use of unlicensed music, taking pictures in front of a painted wall.
Can influencers afford to take out a USD 2M policy and keep it?
I can’t help but wonder if the whole Bud Light/Dylan Mulvaney controversy has been an influence on the above.
Meanwhile, back in June, the WSJ published an article, “American Companies Held Hostage by the Whims of TikTok”, which discusses, among other things, when business-influencer collaborations go wrong. I’m interested in this subject bc maybe IP can be alternative for businesses to promote their brands.
How a fashion brand survives. (STRATEGY) [Fashion/Luxury, B2C, Tech]
While we’re on the subject, I’d like to discuss fashion brands that are behaving influencer-like, IMO. My writeup on Mattel’s President and COO move to Gap got me thinking about Abercrombie & Fitch’s turnaround, which includes, among other things, curation in each store. Curation. Not unlike Barnes & Noble’s turnaround strategy, TBH. Following up on my thoughts on whether fashion co.’s are platforms or brands, it looks increasingly like the way forward is to lean in on being a brand, and curating. Almost like being… an influencer.
[Premiumization.]
Hollywood
K-Drama v. Netflix. [South Korea, Hollywood]
US streamers have to contend with the dual actors and writers strikes in Hollywood, and now, it looks like Korean artists are preparing to do the same. A South Korean strike would be a challenge to Netflix in particular, as the streamer has earmarked USD 2.5B for S. Korean TV/film. And of course, S. Korean entertainment is a major driver for streaming in the Asia-Pac region.
The contention appears to revolve mostly around residuals and less on AI, since S. Korea’s labor costs are lower, although AI is already being used in S. Korean productions.
There is proposed legislation to change things, though local service providers’ (broadcasting, streaming, etc.) argument against is that such legislation would weaken investment, and, in an echo of what their US counterparts are saying, it is the service providers that bear the risk of launching streaming content.
[Cultural globalization; The importance of IP in the digital economy.]
Disney pulls a Netflix. (STRATEGY) [Hollywood, Streaming]
Disney’s quarter numbers came in last week, along with the announcement that, like Netflix, it would raise some of its streaming prices to get users to move to its ad tier, along with password crackdowns. Re: movie strategy, CEO Bob Iger also reiterated less quantity, more quality, at a lower cost and also emphasized the importance of this segment to Disney’s overall performance. Addressing the Apple acquisition rumors, Iger said: “[A]nyone who wanted to speculate about such things would have to immediately consider the global regulatory environment, and I’ll say no more than that.”
IMO, Iger is right to lean into the movie biz as a top priority. If you do it right, you can make Super Mario and Barbie money. Maybe the product mix for entertainment co.’s MT, LT are movies (well-executed) to contribute significantly to margin, while streaming drives rev. IP has to be deployed strategically cross-platform - not too much, not too little. Maybe the challenge is getting the mix right.
Another challenge is, of course, labor. In addition to the Hollywood strikes, it looks like Marvel’s VFX artists are unionizing. While news broke that Disney has created an AI task force.
[Premiumization.]
Paramount inches towards recovery, goes global. (STRATEGY) [Streaming, Hollywood]
Meanwhile, Paramount’s quarterly numbers included a narrowing YOY loss on its streaming biz. The company also announced the divestiture of its book publishing segment, Simon & Schuster. Oh, and it raised streaming prices in July, and it is rolling out international content globally.
It appears that Paramount is shedding its legacy media assets to become Netflix-like, not dissimilar to Disney above. The CFO talked about “not too little, not too much” streaming content (also see above), and, importantly, super-serving.
[Premiumization.]
AI
AI can’t do basic math ops? [AI]
First, I’d like to say that gen AI is amazing tech, there are real use cases for it, and there may be some adjusting in the global job market going forward.
Having said that, I’d also say the tech isn’t perfect. I’ve talked about “model collapse”, “no moat”, and “training data contamination”. Add to this list, “drift”: “[W]here attempts to improve one part of the enormously complex AI models make other parts of the models perform worse.” In some cases, the AI can’t do some basic computer math operations.
Some other issues: ChatGPT might not be that good at coding, and hallucinations creating something that isn’t intelligible to humans continues to be an issue.
I think there’s a danger in hand-waving with the conclusion, “Oh, the tech will improve.” The question isn’t whether the tech will improve or not. The questions are how will it improve and how long will it take. Do we have flying vehicles yet? No? How about self-driving ones? Apparently, human drivers are in demand.
I think some people are getting ahead of themselves re: gen AI, even those in the industries we discuss in Cross Platform. But then again, I guess that’s why some are calling it a hype cycle.
Stability AI: Internal turmoil, increasing competition. [AI, IP]
Speaking of “no moat”, per Bloomberg Technology, Stability AI is facing challenges, with increasing competition, multiple employee departures, and high R&D costs. Also, the co.’s head of public policy admitted to using copyrighted works without consent.
[The importance of IP in the digital economy.]
IP, Japan, Saudi Arabia
Ninja Turtle STRATEGY. [IP, Hollywood, Gaming]
Even though the new Teenage Mutant Ninja Turtles animated movie is aimed at kids, largest demo in US opening weekend was the same crowd that showed up for Across the Spider-Verse: 18-34 y.o. males. I wonder if US, IP-driven action animation is a niche, but a very large niche.
Historically, there’s been a massive box office drop-off between TMNT sequels, so maybe TMNT itself is relatively niche (but profitable). The plan to support the current movie with a TV show and then a sequel represents a new strategy. Meanwhile, a new game based on the Last Ronin TMNT comic was announced, clearly geared toward an older audience - or the same audience that actually showed up for the movie, per above.
Saudi Arabia: Now a regional center for Hollywood. [Saudi Arabia, IP]
Saudi Arabia continues its strategy to be an entertainment center. Before 2018, a film industry didn’t really even exist in Saudi, now the country is screening Barbie, which is doing well, and even attracting audiences from neighboring countries.
After toy movies, anime movies next. [IP, Hollywood, Japan]
I’ve talked about upcoming toy IP movies in the wake of Barbie’s massive success, and some are saying the next IPs to get the Hollywood treatment will be anime IPs. Hopefully Netflix’s live-action One Piece does well!
Manga: What is fueling US growth? (STRATEGY) [Japan]
Aside from increased physical locations for manga. Anime, a gateway to manga, is now more accessible in the US - in multiple streaming services, rather than just select cable channels. Also, based on publishers’ discussion, global younger generations are more open to manga made for a Japanese audience. Per Ben Applegate of Penguin Random House: “Now there’s a bunch of Japanese authors making comics specifically for French audiences.”
[Cross-platform marketing; Cultural globalization.]
Gaming
Gaming industry recovers and evolves. [Gaming]
Per Newzoo, the global gaming market actually grew rev. YOY, despite macroeconomic headwinds. IMO everyone needs to understand gaming, so this writeup is a good jumping-on point to understand the industry, bird’s-eye view. Note that transmedia (what I call cross-platform IP) has a positive effect on MAU (monthly active users). Also, because of recent privacy regulations on mobile, mobile devs are releasing games on PC and console.
[Cross-platform marketing.]
Final Fantasy XVI underperforms? [Gaming, Japan]
Sales did not meet Square Enix’s expectations. One reason was the slow adoption of Playstation 5. OTOH, there has been a drop-off in sales of XVI. Remains to be seen what happens going forward, but Naavik did bring up two really good considerations:
Was it correct to evolve the Final Fantasy IP beyond its core combat system and iconography?
Was it correct for XVI to be a Playstation exclusive? Square Enix has executed both platform-exclusive and multi-platform strategies for its games.
[Evolving the IP; Cross-platform marketing.]
Supreme Court sides with Apple, vs. Epic… for now. (STRATEGY) [Gaming, Tech Regulation]
An update on the Apple vs. Epic Games antitrust case. Previously, the judge’s injunction required Apple to allow Epic Games, and other app devs, to provide links for users to pay for digital content outside of iOS. Then, the 9th U.S. Circuit Court of Appeals delayed the injunction, which Epic then sought to lift. Now, the Supreme Court has denied Epic’s request. No explanation was provided.
I pointed out last week that iPhone sales are slowing down, and Apple’s services rev., which includes entertainment and also the app store, may be the co.’s growth driver going forward. Perhaps from Apple’s POV, Epic effectively has an app store that is competing with Apple’s own app store.
[The importance of IP in the digital economy.]
Roblox: Player spending below expectations. [Gaming]
Roblox shares plunged more than 20% following quarterly numbers. Player engagement is up, but actual spending is lower than expected. Roblox is working on cost-cutting.
[B2C digital platforms are difficult.]
NPC e-girl fetish on social media goes viral (I’m not kidding). [Gaming, Tech]
Old news but I finally got around to it. In a bizarre, but not wholly unexpected, case of life imitating art imitating life, people are paying some Tik Tokers to repeat lines like an NPC (Non-Player-Character) in a video game.
See? The metaverse is real! Time to own the platform! Ice cream so good!
[Entertainment is approaching gaming.]
Monday Motivation
Common theme throughout the news we discussed this issue. From Hollywood, to fashion, to AI, to manga, to gaming: Sometimes, the IP has to transcend the platform. Which means branding continues to be crucial. Which means, we should all follow Dave Thomas’ advice above. Fundamentals in brand-building and therefore, business-building.
GO FOR IT! REACH YOUR GOAL!