YouTube launches subscription channels with pilot partners at $0.99/mo, will expand in coming weeks
YouTube has just announced that it will offer a pilot program for a ‘small group of partners’ to offer a subscription service that starts at $.99 a month. The program will expand outwards from there.
A statement from YouTube says that it has been building out its partner program since 2007. “We’ve watched them build amazing channels that have made YouTube into a news, education and entertainment destination one billion people around the world cannot do without.”
YouTube says that of the over 1M channels generating cash on YouTube, one of the most frequent requests has been ‘more flexibility in monetizing and distributing content’, which is what this new program is about.
Beginning today, a group of early test channels will start to offer paid channels beginning at a buck a month. Every channel will have a 14-day trial and some will offer discounts if you pre-pay for a year. Sesame Street is among those that will be offering free channels and UFC is also a tester.
You can only subscribe to paid channels on the desktop for now, but YouTube says that will be coming to mobile later. For now, you can still watch subscribed shows on every platform. YouTube says that this is ‘just the beginning’ and that the paid channels will be rolled out over the coming weeks as something that ‘qualifying partners’ can toggle on themselves.
Here’s a full list of the current paid channels. For now, UFC, National Geographic, Sesame Street and Jim Henson are among the flagships. The paid channel program sign up form is located here.
So far, the mix of channels is heavily kid oriented, which makes a lot of sense. Full episode content of kids shows is hard to find on tablets like the iPad, which are very kid friendly. I would personally welcome a Disney Junior subscription channel with full episodes of some of those shows, for instance. Currently, you can only catch one or two full ones in the app and the others are bootleg copies all over YouTube.
While the subscription model won’t be right for every channel, it does open up a new source of revenue for big YouTube partners aside from ads. It also encourages those partners to seek addition revenue streams within YouTube, rather than from without. YouTube has built its partner program up over several years, offering courses in maximizing content and taking advantage of its shift towards a channel model. This addition is just one more stepping stone in the effort to make YouTube a viable place to make money and therefore more attractive to individual creators and broadcast media looking to serve up back catalogs alike.
Photo credit: LOIC VENANCE/AFP/Getty Images
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Groupon’s Q1 Results: Beats With $601.4 Million In Revenue, Stock Up 11% In After-Hours Trading
Groupon just reported its earnings for its first financial quarter of 2013. The company, which is still looking for a new CEO after the ouster of Andrew Mason in February, posted a $0.01 loss per share but says its non-GAAP EPS, excluding stock-based compensations, was $0.03. Its revenue was significantly higher than expected with $601.4 million in sales, compared to $0.02 earnings per share (EPS) on $559.3 million of revenue in the year-ago quarter.
Wall Street clearly likes these numbers. The stock is already up over 11 percent and currently trading around $6.23.
The expectation among financial analysts was that the company would report a year-over-year sales growth of 5.3 percent and an EPS of $0.03 on revenue of $588.92 million for this quarter (with a very optimistic high estimate of $618.5).
Last quarter, Groupon reported $638.8 million revenue, buoyed by a strong holiday season, but the company still posted an operating loss of $19.9 million and a loss per share of $0.12.
“We are encouraged by our results, as our local revenues accelerated and our margins improved over the prior quarter,” said Eric Lefkofsky, Chairman and co-CEO of Groupon. “We had record mobile performance as 45 percent of our North American transactions came from mobile in March, and more than 7 million people downloaded our apps in the quarter.”
One of the main indicators for Groupon’s health has long been gross billings – a reflection of how much money the company has collected from its customers for Groupons it has sold. Last quarter, gross billings increased 24 percent to $1.52 billion. Gross billing for this quarter was $1.41 billion, and the company says it has $1.2 billion in cash and cash equivalents.
In the last quarter, Groupon also reported that it had 41 million active customers, up 22 percent quarter-over-quarter and that it was handling about 37,000 active deals at any given time. In the last quarter, Groupon says the number of active customers grew to 41.7 million – a 13 percent year-over-year growth but just a minor increase from the last quarter.
Groupon has obviously been through a somewhat tumultuous time recently. The company’s ouster of CEO Andrew Mason after a number of disappointing quarters, however, seems to have brought some stability back to the company. Its share price remains low, though it’s up from its all-time low of $2.60. Currently, the stock is trading at around $5.60.
After Mason’s exit, Lefkofsky and vice chairman Ted Loensis were appointed to the company’s newly created Office of the Chief Executive as interim CEOs. The company has yet to announce a permanent replacement for Mason.
From the release:
First Quarter Operating Highlights
- Global units: Consolidated units, defined as vouchers and products ordered before cancellations and refunds, increased 4% year-over-year to 45 million. North America units increased 37%, and International units decreased 18%.
- Active deals: As of March 31, 2013, the number of active deals in North America increased to nearly 40,000, compared with nearly 37,000 at the end of the fourth quarter 2012.
- Active customers: Active customers, or customers that have purchased a Groupon within the last twelve months, grew 13% year-over-year, to 41.7 million as of March 31, 2013, comprising 18.2 million in North America, and 23.5 million in International.
- Customer spend: Trailing twelve month billings per average active customer decreased to $138 from $144 in the fourth quarter 2012, related primarily to seasonal strength in the fourth quarter holiday period.
- Mobile: In March 2013, 45% of North American transactions were completed on mobile devices, compared with nearly 30% in March 2012. In the first quarter 2013, more than 7 million people downloaded Groupon mobile apps worldwide.
- Marketplace: The rollout of Groupon’s marketplace (”Pull”) continued to gain momentum, as email accounted for less than 45% of North American transactions in the first quarter 2013.
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Microsoft Mulling Nook Media LLC Purchase For $1 Billion
Microsoft is offering to pay $1 billion to buy the digital assets of Nook Media LLC, the digital book and college book joint venture with Barnes & Noble and other investors, according to internal documents we’ve obtained. In this plan, Microsoft would redeem preferred units in Nook Media, which also includes a college book division, leaving it with the digital operation — e-books, as well as Nook e-readers and tablets.
The documents also reveal that Nook Media plans to discontinue its Android-based tablet business by the end of its 2014 fiscal year as it transitions to a model where Nook content is distributed through apps on “third-party partner” devices. Speculation about the plan to discontinue the Nook surfaced in February. The documents we have are not clear on whether the third-party tablets would be Microsoft’s own Windows 8 devices, tablets made by others (including competing platforms) or both. Third-party tablets, according to the document, are due to get introduced in 2014.
Nook e-readers, meanwhile, do not appear to fall into the discontinuation pile immediately. Rather, they’re projected to have their own gradual, natural decline — following the general trend of consumers moving to tablets as all-purpose devices.
Microsoft and B&N representatives declined to comment for this story.
A deal to buy the digital assets of Nook Media is the natural next step for Microsoft, which first announced a plan to work with Barnes & Noble on its Nook devices and content in April 2012, ponying up $300 million at the time to help. That plan included an additional $180 million advance to develop content for its Windows 8 devices — which Nook has been doing.
To date, there have been 10 million Nook devices sold, including both tablets and e-readers, with more than 7 million active subscribers. Microsoft has seen limited interested in its Windows 8 devices (although it says it has sold more than 100 million licenses for the OS to date). Currently the Nook app is available on every major platform, including Android, iOS and Windows.
Nook Media split from the retail arm last October with a $300 million investment by Microsoft for a 16.8 percent stake in the company. The partnership was aimed at getting B&N content on then-nascent Windows 8 tablets. At the time, President of Digital Product at Nook Media, Jamie Iannone, said “It’s hardware, software, content: everything Nook is part of Nook Media. There will always be a long-term relationship between Barnes & Noble and the Nook business.”
Nook’s decline seems to have helped alter company strategy. Barnes & Noble founder Leonard Riggio proposed buying back the whole of the company’s retail operation.
The documents TC has seen values B&N at $1.66 billion. When Nook Media was first formed, the valuation of that division alone was $1.7 billion. When Pearson invested $85 million at a 5 percent stake in January, it was valued at $1.8 billion. If the deal goes through, Microsoft’s $1 billion purchase will be well below the price it had originally bought in at.
Projections in the document, which are based on company filings and management discussions, show the Nook unit bringing in total revenue of $1.215 billion for fiscal year 2012 (which for Barnes & Noble ended April 30th), for a loss of $262 million in earnings before interest, taxes, depreciation and amortization (EBITDA). It expects revenue to fall to $1.091 billion in fiscal year 2013, for a loss of $360 million as tablets are phased out — and estimates revenues to gradually recover, up to $1.976 billion by fiscal year 2017, for EBITDA profit of $362 million.
In the meantime, the Nook division has taken a beating this year following a slow holiday season. The new models have sold at a discount for weeks at a time and their flagship 10-inch Nook HD+ fell from $269 to $179. Kindle is offering the Fire HD for the same price. The hardware, while in many ways superior to Amazon’s, seems to have fallen behind in the race to market share and revenue. If Microsoft steps in, the dedicated e-reader race between the stalwart B&N and Jeff Bezos’ Amazon could be over.
John Biggs contributed to this article.
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Apple Supplier Pegatron’s Hiring Spree Further Fuels Speculation About A Cheaper iPhone
Once again, news from a supplier is fueling rumors about Apple’s future product roster. This time it’s manufacturer Pegatron’s announcement that it will increase its number of workers in China by up to 40 percent in the second half of this year. The hiring blitz at the company, which produces iOS devices, has led to new round of speculation that a cheaper iPhone is in the works.
Suppliers have told Reuters that Apple is developing a cheaper iPhone in order to target emerging markets such as China and India. The less expensive version of the smartphone is expected to launch by the third quarter.
Pegatron’s financial performance is closely tied to the Apple products it makes. Just yesterday the company forecast its biggest drop in consumer electronics revenue in six quarters due to falling demand for the iPad Mini. Pegatron said its second quarter revenue will decrease 25 percent to 30 percent from the previous three months.
Other signs that Pegatron is expecting orders for a cheaper iPhone is chief financial officer Charles Lin’s disclosure that more than 60 percent of the company’s 2013 revenue will come from the second half of the year. Pegatron president and chief executive officer Jason Cheng said earlier this week that revenue from communication products will contribute up to 40 percent to the total in second half of 2013, compared to 24 percent in the first quarter.
Apple CEO Tim Cook said last month that the Cupertino company will start rolling out new products this fall and throughout 2014, including devices in “exciting new product categories.” Though its unclear exactly what Apple will be unleashing in a few months, many analysts believe that it will launch a cheaper iPhone instead of a larger-sized “phablet” that would compete with Samsung’s Galaxy Note.
A less expensive handset will allow Apple to compete with cheaper devices running on Android in emerging markets, but analysts’ opinions on how much of an effect a less pricey iPhone would have on Apple’s earnings vary widely. The company posted its first year-over-year earnings decline since 2003 in the second quarter, reporting $43.6 billion in revenue (up from $39.2 billion in the year-ago quarter) along with $9.5 billion in quarterly net profit.
Enders Analysis’ Benedict Evans said “a blockbuster new Apple phone that almost doubles unit sales and blows a hole in the middle of the Android market might only add 5 percent to Apple’s gross profits.”
On the other hand, Morgan Stanley analyst Katy Huberty believes a cheaper version can potentially add another 20 percent to the 10 percent market share iPhone currently holds in China. “Even in a scenario of low 40 percent gross margin and 1/3 iPhone cannibalization rate (flattening legacy iPhone shipment growth, which we view as conservative, the iPhone Mini adds incremental revenue and gross profit dollars,” she wrote in a recent investors note.
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Line Reports Q1 2013 Earnings Of $58.9M: Half From Game In-App Purchases, 30% From Stickers, 80% From Japan
Line, a free-at-the-point-of-use messaging app made by NHN Japan Corp which recently passed 150 million worldwide users, has announced earnings for Q1 2013 – revealing for the first time how much of its revenue comes from game in-app purchases and how much from its other shtick: stickers. Line uses free social messaging and gaming services as its hook to draw in users, and monetises its offering via entertaining add-ons that can be purchases within its apps.
According to the Q1 results, Line is drawing the vast majority of its revenues from Japan — the region where its app was first rolled out. Some 80% of the ¥5.82 billion yen ($58.9 million) Q1 revenues come from Japan. It also noted that its total Q1 revenues are up 92% on Q4 2012:
Breaking the revenues down by content type, game in-app purchases account for around half (50%) of the Q1 revenues, while paid stickers (Line offers some free stickers) generated around a third (30%).
Line also reveals that it now has 24 “seed games” — or games that can be downloaded from within its main messaging app — 191 varieties of stickers and 92 official accounts (for celebrities and brands) across Japan, Thailand and Taiwan.
The company notes it will be reporting earnings regularly from now on, and also indicates that it will be adding new types of in-app entertainment content — mentioning shopping and music as two areas of focus, among others.
It also says it plans to strengthen marketing of its app in Asia, Spain and South America, but interestingly does not mention the U.S. — where Line launched back in January.
Asia evidently remains Line’s primary market but there is plenty of messaging variation and competition within the region. For example, Chinese WhatsApp rival WeChat — made by Tencent – has now passed 190 million monthly active users.
Excerpt from: Line Reports Q1 2013 Earnings Of $58.9M: Half From Game In-App Purchases, 30% From Stickers, 80% From Japan