Bollywood loses its OTT cushion
Also in today’s edition: Amazon’s Prime Day reprieve; Revenue cover for Indian media; Russia bans crypto payments; IndiGo’s SpiceJet-like glitches
Good morning! Wordle, the popular online word-guessing game, has gone offline. The New York Times has teamed up with Hasbro to produce the multiplayer board game. The rules remain the same. Players get six chances to figure out the five-letter word. Over to game night fans.
The Market Signal*
Stocks: The highlight of the coming week in the US market could be Netflix and Tesla earnings. Both the pandemic darlings have taken a beating of late. Meanwhile, senior RBI officials believe the worst of the price rise could be behind us, and the economy might turn out to be an outlier in an inflation-buffeted world. Indian equities ended on a positive note after remaining in the red for most part of the week.
Early Asia: The SGX Nifty soared 1.02% from its previous close at 7.30 am India time. The Hang Seng Index (+0.78%) and Nikkei 225 (+0.54%) surged.
The OTT Vs. Theatre Battle
For over two years, OTT platforms spent a fortune on acquiring movie rights as pandemic restrictions forced studios to look beyond theatrical releases. But with audiences returning to theatres, platforms are rethinking splurging on movie rights.
Details: Platforms paid hefty sums to producers and studios to reduce the gap between a theatrical release and an OTT broadcast from eight weeks to four. Digital rights, which accounted for 30-40% of a movie’s revenue, also climbed to 50-60%. However, the ways of old will come into effect on August 1 as exhibitors gradually return to the driver’s seat.
No leeway: Bollywood hasn’t done well lately. Seven A-lister movies with a total budget of ₹1,100 crore recovered only a third of their budgets. Dubbed pan-India blockbusters such as RRR, KGF2 and Pushpa contributed to half of Bollywood’s collections in 2022. The cushion once provided by eye-popping movie rights sales may now elude producers and studios.
Russia Outlaws Crypto Payments
Russia has banned crypto payments. It’s a win for the Russian finance ministry (and by extension, Vladimir Putin) over the Bank of Russia (BoR). While the BoR wanted a total ban (on payments, investments, trading), Putin favoured regulation. He got his way when financial watchdog Rosfinmonitoring okayed crypto settlements for international trade.
Heft: Russians held cryptocurrencies worth $214 billion—12% of global holdings—in February 2022, with volumes increasing after the ruble declined. Russia accounted for so much traffic that crypto exchanges were directed to block Russian wallets. It’s also the world’s third-largest Bitcoin miner, which is why western countries are still pressuring allies to drive exchanges out of Russia.
Caveat: While Russians cannot pay with digital assets, they can still invest in them. A bid to capitalise on a now-recovering ruble as long-term decline looms, perhaps.
🎧 Russia, one of the most influential crypto markets, has banned payments in token.
Amazon Primes Its Way Through Scrutiny
Andy Jassy and Amazon, it would appear, had a mixed weekend. The e-commerce giant, according to reports, earned at least $11.9 billion during its annual Prime Day sale, selling over 300 million items during the two-day event. Amazon claimed the 2022 edition was “the biggest Prime Day event in Amazon’s history”.
Hot: Household essentials, health and beauty, and consumer electronics were the hottest categories. Amazon’s Fire TV stick, Echo Dot, and Ring doorbell flew off the virtual shelf.
Not: Amazon revealed (pdf) that it had handed over surveillance footage from its smart doorbell company Ring to law enforcement without a warrant or owner consent at least 11 times this year.
A truce: The company is scaling down the number of private label products due to “weak sales”. It has even broached the prospect of exiting the business entirely.
Notwithstanding the inflation squeeze on their wallets, shoppers in the US went on a buying spree to take advantage of big discounts from retailers. Even there, they prioritised “necessities over indulgences.” For retailers, Prime Day sales were an opportunity to clear their warehouse shelves and restock ahead of the busy holiday shopping season this fall.
On the regulatory front, the Ring revelations were a dampener on Amazon’s offer to settle two antitrust cases in Europe. Its decision to scale down on (or potentially exit) AmazonBasics should also be seen in this light, weak sales or not—given that it is central to a proposed legislation.
🎧 Amazon is reportedly ditching its own line of products, AmazonBasics.
Code Red For IndiGo?
A series of glitches are now plaguing IndiGo. A Sharjah-Hyderabad flight was diverted to Karachi because of an engine snag on Sunday. Just two days earlier, an “engine vibration” caused another flight diversion. It doesn't help that the airline's technicians wrote to Airbus complaining that the airline isn't maintaining standard maintenance procedures. This, while IndiGo workers are on mass sick leave to protest low salaries.
Technical glitches are coming for other airlines as well.
Crack: US planemaker Boeing has slashed its demand forecast for aircraft over the next two decades. The figure is down from 43,610 to 41,170 deliveries due to economic and industry slowdowns and Russia’s invasion of Ukraine.
A Legal Cover For Indian Media Revenues
India will likely join pioneer Australia and some EU countries in making Big Tech pay traditional media for using content.
Gift to the fourth pillar: The government intends to provide local media companies, which appear to be in terminal decline, legislative leverage against the market power of companies such as Google, Apple and Microsoft. Even market leader BCCL, whose profit margins in the past often rivalled some of the blue chip corporations, has been wallowing in losses in the past couple of years.
Ad surge: A revenue share with tech platforms could act like a steroid. The advertisement market in India is expected to grow the quickest in the world in 2022. While the overall market could expand to over $11 billion, digital advertising is forecast to grow at 31.6%.
Fixing matches: No more shows while the king’s parade is on. Soon, international fixtures might be fixed in a way to avoid clashing with the IPL. Hint: It may have something to do with the high price broadcasters paid for rights.
Exchange offer: BSE chief Ashish Chauhan is moving to rival exchange NSE as managing director and CEO.
Capital fishing: Online meat seller FreshToHome is looking to raise as much as $125 million. Amazon might be interested.
Unicorn born: UK investors have put in $100 million in blockchain startup 5ire, valuing the infant company at $1.5 billion.
Pac-man: Gautam Adani's Adani Ports has won the tender to privatise Israel’s state-owned Haifa Port for $1.8 billion.
Throwback: Fancy trading sunflower oil for beer? The Giesinger Brewery in Munich kickstarted this unusual barter after it ran out of sunflower oil to fry schnitzel. So far, the pub has bartered about 400 litres. It came up with the idea after the Russia-Ukraine war, which has battered oil supply to European countries.
Hotel sleepbox: Two Japanese companies have an answer for overworked employees. It's a vertical napbox to help employees take power naps throughout the day. We’d argue that a healthy work culture is preferable, but capitalism would rather have people settle for crumbs, wouldn’t it?
Crossover episode: The Office lovers unite. Lego is out with a set based on the popular show. The set features the iconic TV characters with a callback to iconic scenes. Michael Scott still carries his ‘World's Best Boss’ mug. Garbage, one of Angela's cats, is also part of the set. Of course, The Office fans made this possible.
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