April 21, 2022
Hello, and welcome to Protocol Entertainment, your guide to the business of the gaming and media industries. This Thursday, we’re taking a closer look at Netflix’s plans to bring ads to its service. Also: New leadership for Crunchyroll, and the mini-metaverse.
Netflix co-CEO Reed Hastings shocked the streaming world Tuesday by announcing his company’s prospective plans to launch an ad-supported tier. Hastings acknowledged during Netflix’s Q1 2022 earnings call that he had vehemently opposed ads on Netflix in the past, but the company’s recent struggles seem to have been severe enough to change his mind.
While the cat may be out of the bag, a lot is still unknown or unclear about Netflix’s embrace of advertising. Here’s what we know, and what can be read between the lines about the company’s ad plans.
Netflix won’t force anyone to watch ads. The company will be adding a new, cheaper service plan that includes advertising, but will also keep ad-free plans for its existing subscribers.
Ads are coming, but it may take some time. Netflix is famous for trialing, testing and fine-tuning features on its service, and the company frequently A/B-tests features that ultimately don’t make it into the final product. Don’t expect to see similar tests for ads, as the company seems to have made up its mind.
Ads are really about international growth. Netflix has seemingly hit a ceiling in North America, where it lost 640,000 subscribers in Q1. However, a more worrisome aspect of this week’s earnings report was a drop in subscribers in every global market save for Asia, where it signed up a modest one million new customers.
— Janko Roettgers
Crunchyroll CEO Colin Decker is leaving, and longtime Funimation COO Rahul Purini is taking over leadership of the combined Crunchyroll-Funimation business as president. Sony Pictures Entertainment President Keith Le Goy made the news official in an email to staff this week, writing: “Our anime business is stronger than ever and remains a vital part of our overall strategy ... We are really excited about the growth opportunities in manga, e-commerce, and mobile gaming.”
Decker recently told Protocol about his view on what makes a successful video subscription business, arguing that it wasn’t just about producing shows. “You are in the business of deeply understanding someone,” he said. “Every aspect of their life, their point of view, their hopes, their dreams and their fears. What are you going to do to super-serve them?”
Meta’s Quest headset is getting a Ghostbusters game that is being produced by nDreams in partnership with Sony Pictures VR. There’s no word on timing or exclusivity yet, and given the Sony connection, we could expect the title to show up on the company’s PS VR2 headset as well.
Meta announced the title as part of a Quest gaming showcase event Wednesday, which also featured a bunch of other new games including Resident Evil 4: The Mercenaries, Red Matter 2 and NFL PRO ERA. Plus, Meta gave an update on a long-awaited title: Among Us VR will arrive on the Quest app store before the end of the year.
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Sony eyeing in-game advertising, too. After reporting earlier this week that Microsoft was looking into offering in-game advertising for free-to-play Xbox games, Insider reported on Wednesday that Sony is considering the same for PlayStation.
Sling TV is now led by a former cable guy. Gary Schanman previously held roles at Charter and Cablevision, so he knows a thing or two about the struggles of the pay TV industry.
The Pokémon Company consolidates. The joint venture that oversees the Pokémon franchise announced on Tuesday it would acquire Millennium Print Group, the North Carolina-based company responsible for helping it print and manufacture its hugely popular trading cards.
Spotify shuts down Greenroom creator fund. The fund, which was supposed to support creators using Clubhouse-like live audio, may never actually have paid out any money, according to Podnews.
Amy Hennig returns to Star Wars. The former Uncharted creative director is working on a Star Wars game in partnership with Lucasfilm Games and her studio Skydance New Media. Hennig previously worked on a canceled Star Wars title at Electronic Arts’ now-defunct Visceral Games.
D-Link appears to be building a wireless adapter for Quest headsets. A leaked manual suggests the new device will help with wireless streaming of PC games. What’s interesting about this from an industry perspective is that Meta is leaving it to a third-party manufacturer, clearly leaving PC VR gaming in the rear mirror.
Deezer goes public in a SPAC deal valued at $1.1 billion. The French music streaming service says it has 9.6 million subscribers.Petition aims to remind Apple of Final Cut Pro. Over 100 film editors and post-production professionals have signed an open letter to Apple CEO Tim Cook, asking him to put more of an effort behind promoting Final Cut Pro.
If you need more proof that the term metaverse may be a bit overhyped, consider this: The other day, I got an email with the subject line “Is SaaS the mini-metaverse?” The pitch in a nutshell: Because companies do so much of what used to happen in the office on Slack and similar platforms, they’re “already getting us closer to a reality of working in the metaverse.”
The way Slack and the likes change the nature of work is an interesting topic, and I’d suggest subscribing to Protocol’s Workplace newsletter if you want to learn more. However, arguing that Slack is a proto-metaverse platform is like calling a barista a food delivery service. If you just squint hard enough, they do look vaguely similar. But then you have your coffee, and you’re left with a really bad aftertaste. Lesson learned: Tip better, and don’t believe the hype.
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