See It To Believe It: AOL Is Launching AOL On, A Video Network To Drive Video Ad Sales
AOL has had a few knocks from shareholders over whether it’s on the right track with its content strategy — a mix of high-volume, ad-based websites that cover lifestyle, tech, travel, news and more — but CEO Tim Armstrong has stayed the course, and today the company is launching a video portal that it hopes will prove that the value of those holdings extends beyond even what you see on the sites themselves.
AOL On, as the new site is called, is a premium content portal that will work across desktop, mobile and tablet optimized sites and apps, as well as connected TV devices. And the guy running it, Ran Harnevo, SVP of AOL On, makes clear that it is nothing like a YouTube wannabe: “No dogs on skateboards, and no upload button,” he says.
Instead, it brings together all the video offerings from AOL’s various content properties, including sites like HuffingtonPost, Engadget, AOL.com and (of course) TechCrunch — 14 properties in all with a total reach of 57 million U.S. consumers monthly. It will also bring together content that once existed on AOL Video, goviral, StudioNow and AOL HD brands.
But wait! There’s more: it will also include a program of commissioned, original content. Initially that list will include mainly factual/unscripted programming, shows with titles like “Digital Justice,” “Little Women Big Cars” (that’s me! no, just kidding) and “Next Door Hero.” It will also include at least one comedy show thrown into the mix: “Fetching,” written by Amy Harris of Sex and the City fame. The whole of AOL On is the brainchild of the team from 5min, the video syndication network that AOL bought for $65 million, coincidentally at the same exact time as it bought TechCrunch.
Another contrast to YouTube: a focus on a simplified interface. While the homepage will have a search window that lets you access some 320,000 videos at launch, AOL On will also be offering a curated selection as well: simple tabs with subject headings like lifestyle and health will take you to a selection of videos that will change regularly; and a playlist on the homepage will focus on a slide-deck of nine different pieces of content.
AOL’s idea here is to capitalize on the growing interest in watching online video, and specifically professionally produced online video — evidenced as well by YouTube now moving into a more premium content channels; sites like Hulu continuing to gain ever more momentum; and, closer to home, HuffPo launching the “HuffingtonPost Streaming Network.”
While some of this video under the AOL umbrella may not be getting the audience scale it needs to monetize that well on individual sites, the hope seems to be that if you consolidate all of it on to a single platform, that will create the kind of audience needed to drive much better returns on ads. Taken together AOL says the holdings catapult it into a top-10 video platform, with 861 million video streams per month, and a total of 2.4 billion minutes consumed.
For now, the site will be run as the main websites are — no paywalls and funded by ads, which will come in the form of pre-rolls to the videos. When I asked whether there were plans to also introduce paid services into the mix, Harnevo would not rule it out.
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You Earn Facebook An Average Of $1.21 Per Quarter
Facebook makes an average of $1.21 on you per quarter, depending on who you are and where you live according to documents filed today. Most of that goes towards running the site, as Facebook’s net income from January 1st to March 31st this year was just $205 million despite its total revenue of $1.058 billion. So while you are “the product” on Facebook, just like on any website or physical venue that makes money through advertising, don’t expect a check in the mail.
And thanks to your contribution, Facebook now values itself at $71.97 billion dollars. That’s based on what it paid for Instagram, which could end up being way more than $1 billion.
Here’s how that $71.97 valuation for the social network breaks down. Bloomberg Business Week reports that the total outstanding shares of Facebook number 2.33 billion. To buy Instagram, Facebook paid $300 million in cash plus 23 million shares of its stock that it valued at $30.89 each. Multiply 2.33 billion by $30.89 and you get $71.97 billion dollars.
That means the Instagram founders may have gotten a sweet deal, as the last SecondMarket auction of Facebook stock before the IPO saw shares priced at $44.10 for a total valuation of $102.8 billion. If the public Facebook stock price reaches the SecondMarket level once the company IPOs, the stock paid for Instagram would be worth $1.014 billion. That would make the total price paid for Instagram $1.314 billion.
Back to how much you’re worth to Facebook. Its global average revenue per user (ARPU) of $1.21 per quarter went up 6% since the end of the first quarter of 2011. That’s still down 10% from the last quarter of 2011 when the holiday season led brands to buy more ads and led users spend more on virtual goods. If Facebook made the exact same amount per user for the next three quarters (it will make more), you’d be worth $4.84 a year.
Now to keep growing its business, it will need to earn more per user by showing them more accurately targeted ads that advertisers will pay more for, or it needs to sign up more users. The latter is getting tough, as with 901 million users, one in 7.7 people on Earth uses Facebook every month.
More big Facebook news from today:
Facebook’s Amended S-1: 901 Million Users, 500M Mobile, Paid $300M Cash + 23M Shares For Instagram
Facebook Buys AOL Patents From Microsoft For $550 Million In Cash
Rather Than Pay Off Yahoo, Facebook Built A Fortress 1400 Patents Strong
Zynga Contributed 15% of Facebook’s Revenue In Q1, Down From 19% A Year Ago
Go here to read the rest: You Earn Facebook An Average Of $1.21 Per Quarter
Facebook’s Amended S-1: 901 Million Users, 500M Mobile, Paid $300M Cash + 23M Shares For Instagram
Facebook has just filed a fourth amendment to its S-1 to IPO that notes that it now has 500 million mobile users, 901 million monthly active users, and that it paid 23 million shares at $30.89 a share plus $300 million cash for Instagram for a total of $1,010,470,000. Facebook also made $1.058 billion in revenue in the first quarter of 2012, up 44.7% from Q1 2012 but down 6.5% from Q4 2011.
So if Facebook maintains its current revenue rate, it would make $4.69 on each of its 901 million users each year. Read on for more on the performance of Facebook’s ad business, and to see our embed of the full amended S-1.
Advertising made up $872 million of Facebook’s Q1 2012 revenue, while payments and other fees accounted for $186 million. Those numbers are down from the $1.131 billion in total revenue, $943 million in advertising, and $188 million in payments from the holiday quarter of Q4 2011.
The numbers are still way up from the $637 million in ads, $94 million in payments, and total of $731 million total revenue it made in Q1 2011. However revenue growth rates are slowing, as Facebook increased revenue 88% from 2010 to 2011, but just 44.7% from Q1 2011 to Q1 2012. Payments are becoming a larger part of Facebook’s business, with advertising accounting for 82% of business at the end of Q1 2012 compared to 87% at the end of Q1 2011
Despite Mark Zuckerberg noting about the Instagram acquisition that “We don’t plan on doing many more of these, if any at all”, the amended S-1 notes that a lack of similar companies to acquire could actually be a risk: “Our ability to acquire and integrate larger or more complex companies, products, or technologies in a successful manner is unproven. In the future, we may not be able to find other suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all.” Facebook will pay Instagram a $200 million termination fee if government authorities prevent the acquisition from being completed.
Other information Facebook now lists include that it will IPO on the NASDAQ, collects 300 million photo uploads a day, hosts 125 billion total friendships (up from 100 billion on Dec 31, 2011), and sees 3.2 billion likes and comments per day (up from 2.7 billion on Dec 31, 2011). Its mobile interfaces gained 12 million monthly active users just since March when Facebook listed 488 million monthly users of its mobile products, and now has over 500 million. It now has 526 million daily active users, up from 483 million at the end of 2011.
It also listed today’s $550 million cash purchase of 650 patents from Microsoft, which had recently bought them from AOL. While it seems Facebook has built a strong enough fortress now that it has over 1400 patents, the amended S-1 still notes that “in the future we may acquire additional patents or patent portfolios, which could require significant cash expenditures.”
Facebook’s momentum wasn’t enough to push revenues above the especially high holiday quarter when brands make huge ad buys and users are flush with money and gift cards to spend on virtual goods. Still, the 44% year on year growth for Q1 2012 should assure investors that the social network’s not done growing its business even as it starts to runs out of users to sign up that are of age and don’t live in countries like China where Facebook is banned.. With 901 million users and 7.009 billion Earthlings, now one in 7.7 people in the world have a Facebook account.
Here’s the full amended S-1 from April 23, 2012:
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Netflix loses $4.58 million, as DVDs decline and streaming grows
Netflix has reported its first quarter financial results. The company lost $0.08 per share on $870 million in revenue in the quarter.
Analysts had expected the company to lose 27 cents per share. The company exceeded that mark. Wall Street expects revenues of $897 million for the company in the second quarter, and a 17 cent per share loss.
One year ago, Neftlix made $1.11 per share on revenues of $719 million in the same calendar quarter. The company added ‘nearly’ 3 million streaming subscribers in the quarter. The company anticipates a ‘return to global profitability’ in the next quarter, and intends to add its next ‘international market’ by the end of the year.
The company did note that its Latin American operations are not performing as exactly expected: “Our revenue and membership is growing in Latin America, and we are rapidly learning. The odds of us building a large, profitable business in Latin America are very good, but it will take longer than we initially thought.” International revenue was up to $43 million for the quarter, which the company declared to be ‘up more than 3X from a year ago, and in-line with expectations.’
Here’s something to chew on: every single DVD metric that the company reported was down (added subscriptions, total subscriptions, revenue, and profit). Netflix, calling itself the leading ‘Internet Television’ company, obviously sees the writing on the wall.
Netflix’s ability to source content is a worry. If it has less total content, it has a harder time providing a value propostion to consumers, who may leave the service. That in turn would cut revenues. According to CNet, a spiral could develop:
Netflix needs to add subscriber revenue in order to keep up with those rising content-acquisition costs. If the number of subscribers decline, then there’s less money to pay for new movies, which leads to even bigger subscriber losses. That’s a dangerous cycle.
The company’s earnings today diminish that specific fear. Even more, the much touted loss of Starz content had no material impact on the company: “The Starz deal for 15 Disney Pay TV 1 output titles, plus some catalog films, ended in February. There was no discernible change in churn or viewing levels.” That demonstrates customer loyalty that perhaps people did not anticipate.
You can read the full announcement here.
In after hours trading, Netflix is taking a beating, off double digit percentage points.
Read the original: Netflix loses $4.58 million, as DVDs decline and streaming grows
Netflix CEO’s compensation massively increased in 2011 in spite of Qwikster debacle
Netflix’s CEO Reed Hastings saw his overall compensation increase by 68%, a proxy that the DVD rental and online streaming company filed today at the SEC reveals. While this data is somewhat hidden by the fact that his salary decreased, it is unlikely to please the company’s shareholders after a difficult year.
As you can see on this chart, Reed Hastings’ salary went down to $500,000 in 2011, compared to $519,231 in 2011. However, his stock option award increased greatly, heavily impacting his total compensation:
This may come as a surprise to shareholders, as Hastings took the blame for Netflix’s erratic strategy in 2011. As you may remember, the company announced that it would spin off its DVD rental business and name it ‘Qwikster’, before backtracking mere weeks later.
Still, shareholders may find some comfort in hearing that his 2012 compensation will reflect the company’s situation more accurately. “For 2012, the Compensation Committee took into account the Company’s performance during 2011 and reduced the Chief Executive Officer’s total compensation by $1.5 million,” the document clarifies, referring to stock options.
As for Netflix’s chief content officer Ted Sarandos, he will see both his salary and stock option allowance keep on increasing this year. This is probably the result of his growing importance within the company; as we reported, Netflix is increasingly investing in original and exclusive programming to maintain its edge.
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