Earnings

Once a major name in smartphones, LG Mobile is now irrelevant — and still losing money

Posted by | Asia, Earnings, Facebook, G7, LG, LG Electronics, Mobile, Motorola, smartphone, smartphones, technology | No Comments

LG was once a stalwart of the smartphone industry — remember its collaboration with Facebook back in the day? — but today the company is swiftly descending into irrelevance.

The latest proof is LG’s Q1 financials, released this week, which show that its mobile division grossed just KRW 1.51 trillion ($1.34 billion) in sales for the quarter. That’s down 30% year-on-year and the lowest income for LG Mobile for at least the last eight years. We searched back eight years to Q1 2011 — before that LG was hit and miss with releasing specific financial figures for its divisions.

To give an indication of its decline, LG shipped more than 15 million phones in Q4 2015 when its revenue was 3.78 trillion RKW, or $3.26 billion. That’s 2.5 times higher than this recent Q1 2019 period.

Regular readers will be aware that LG mobile is a loss-making division. That’s the reason its activities — and consequently sales — have scaled down in recent years. But the losses are still coming.

LG put Brian Kwon, who leads its lucrative Home Entertainment business, in charge of its mobile division last November and his task remains ongoing, it appears.

LG Mobile recorded a loss of 203.5 billion KRW ($181.05 million) for Q1 which it described as “narrowed.”

It is true that LG Mobile’s Q1 loss is lower than the 322.3 billion KRW ($289.8 million) loss it carded in the previous quarter, but it is wider than one year previous. Indeed, the mobile division lost 136.1 billion KRW ($126.85 million) in Q1 2018.

LG said Mr. Kwon is presiding over “a revised smartphone launch strategy,” which is why the numbers are changing so drastically. Going forward, it said that the launch of its G7 ThinQ flagship phone and a new upgrade center — first announced last year — are in the immediate pipeline, but it is hard to see how any of this will reverse the downward trend.

LG Mobile is increasingly problematic because the parent company is seeing success in other areas, but that’s being countered by a poor-performing smartphone business. Last quarter, mobile dragged LG to its first quarterly loss in two years, for example.

Just looking at the Q1 numbers, LG’s overall profit was 900.6 billion KRW ($801.25 million) thanks to its home appliance business ($647.3 million profit) and that home entertainment business, which had a profit of $308.27 million. Its automotive business — which is, among other things, focused on EVs — did bite into the profits, but that is at least a business that is going places.

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Facebook reserves $3B for FTC fine, but keeps growing with 2.38B users in Q1

Posted by | Advertising Tech, Apps, Earnings, Facebook, Facebook ads, Facebook Earnings, facebook privacy, Facebook Stories, Facebook Stories Ads, Government, Mobile, privacy, Social, TC | No Comments

A massive penalty hangs over Facebook’s head, but it otherwise had a very strong Q1 earnings report. Facebook reached 2.38 billion monthly users, up 2.5 percent from 2.32 billion in Q4 2018 when it grew 2.2 percent, and it now has 1.56 billion daily active users, up 2.63 percent from 1.52 billion last quarter when it grew 2 percent. Facebook pulled in $15.08 in revenue, up 26 percent year-over-year compared to Refinitiv’s consensus estimates of $14.98 billion in revenue.

Facebook recorded earnings per share of $0.85 compared to estimates of $1.63 EPS. However, that’s because Facebook has set aside $3 billion to cover a potential FTC fine that it’s still resolving. Without that fine, it would have had an EPS of $1.89. Despite the set-aside, Facebook still earned $2.429 billion in profit, though that’s down from $4.988 a year ago and $6.8 billion in Q4 2018.

Facebook’s share price rose 8.3 percent to $197.84 after closing before earnings at $182.58, way up from its recent low of $124.06 in December. Wall Street seems to have already priced in the potential FTC fine. Facebook has agreed to strict oversight of how it handled user privacy in a 2011 deal with the FTC. It promised to not misrepresent its privacy practices or change privacy controls without user permission, and it’s now negotiating the fine for potentially breaking those terms.

Facebook wrote in its earnings release about the FTC fine that:

“In the first quarter of 2019, we reasonably estimated a probable loss and recorded an accrual of $3.0 billion in connection with the inquiry of the FTC into our platform and user data practices, which accrual is included in accrued expenses and other current liabilities on our condensed consolidated balance sheet. We estimate that the range of loss in this matter is $3.0 billion to $5.0 billion. The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.”

It’s possible Facebook escapes with a lesser fine that would likely still dwarf Google’s $22.5 million penalty for violating an FTC privacy deal. But it also might have to drag down a future quarter of earnings if the fine ranges as high as $5 billion or larger. Though Facebook does have $45.2 billion in cash and securities on hand to pay that fine and make any necessary acquisitions. Facebook’s headcount grew 36% year-over-year to 37,773 as it staffs up its security team, but it still has a 22 percent operating margin.

Facebook has managed to hold on to its 66 percent daily to monthly user ratio, showing people aren’t necessarily using it less despite all the backlash. It added 39 million daily users, compared to Snapchat’s addition of 4 million in Q1. But Facebook failed to grow past its 186 million daily user count in the US & Canada where it got stuck last quarter, but at least it added 4 million in its lucrative Europe market, plus it had atypically large gains in Asia-Pacific and the Rest Of World regions. As for monetization, Facebook made modest gains in average revenue per user across markets compared to Q3 2018 (excluding the holiday-laden Q4). Europe did especially well, growing ARPU 8.2 percent.

Zooming out, Facebook now has over 2.7 billion total mothly users across its family of Facebook, Messenger, Instagram, and WhatsApp, the same as last quarter. 2.1 billion people use at least one of those apps daily, up from 2 billion last quarter. Instagram Stories, WhatsApp Status, and Facebook Stories on Facebook and Messenger combined each now have 500 million daily users. Facebook also now has 3 million advertisers buying Stories ads across its apps, so the ephemeral format will likely start to contribute meaningful revenue soon.

Color From The Earnings Call

In March, Zuckerberg announced plans for a massive privacy-centric overhaul of Facebook to turn it from just a townsquare into also a “living room”. That means unifying its messaging apps with a backend that supports end-to-end encryption, and promoting ephemerality in content sharing and communication. That could help deter calls for regulation, make Facebook harder to break up, and help it stay ahead of competitors like Snapchat, but will also be a massive product and engineering undertaking.

Today, Zuckerberg focused on providing more details to this plan to expand privacy, encryption, impermanence, safety, interoperability, and secure data storage. He stressed that given people traditionally spend more time communicating and consuming content privately than publicly, strengthening Facebook’s “living room” could boost its business. Zuckerberg noted that since Facebook already doesn’t use messaging content for ad targeting and recent content is more useful for its business, encryption and impermanence shouldn’t be a big risk either. Refusing to store data in countries with poor records of privacy could lead to Facebook being banned there, which Zuckerberg admitted is a major business threat, but one it’s grappled with over content policies for years.

In fact, impermanence is already earning money for Facebook. It said that Instagram Stories was the greatest contributor of additional ad impressions this quarter. And while the Facebook and Instagram feeds are already jammed full of ads with little room for more, Facebook says there’s still room to significantly increase Instagram Stories ad load.

Another highlight of the call was Zuckerberg’s discussion of Facebook’s payments strategy. He confirmed that Facebook plans to build out ways for people to pay merchants through its messaging apps. “So I think that what we’re going to end up seeing is building out payments, which is going to end up being something that we do country by country . . . The goal is to have something where you could do discovery through the broader townsquare-like platforms like Instagram and Facebook, and then you can complete the transactions and follow up with businesses individually and have an ongoing relationship through Messenger and WhatsApp.”

This is the first earnings report of a full quarter following Facebook’s worst-ever security breach in September that impacted 50 million users, shaking confidence in the social network’s privacy and security. It’s also the first full quarter in which Facebook sold its own branded hardware — its Portal video chat device that was well received by critics except for the fact that it was made by Facebook.

Yet the defining story continues to be Facebook’s struggle with claims that its user research and developer platform efforts endangered user privacy and steamrolled competitors in search of growth. That includes TechCrunch’s big scoop that Facebook was paying teens to snoop on their data with a VPN app, which eventually led Facebook to shut down its Onavo user surveillance apps. The fact that Facebook isn’t losing massive numbers of users after years of sustained scandals is a testament to how deeply it’s woven itself into people’s lives.

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Snapchat fully rolls out reengineered Android app, boosting usage

Posted by | Apps, Earnings, Evan Spiegel, Mobile, snap inc, Snapchat, Snapchat Android, Snapchat earnings, Social, TC | No Comments

After a year of its user count shrinking or staying flat, Snapchat is finally growing again, and more growth is likely on the way. That’s because it’s finally completed the rollout of Project Mushroom, aka a backend overhaul of its Android app that’s 25 percent smaller and 20 percent faster. Designed for India and other emerging markets where iPhones are too expensive, Snapchat saw an immediate 6 percent increase in the number of people on low-end devices sending Snaps within the first week of upgrading to the new Android app.

Snapchat grew from 186 million daily active users in Q4 2018 to 190 million in Q1 2019, adding 1 million in North America, 1 million in Europe and 2 million in the Rest of World, where the Android app makes the biggest difference despite rolling out near the end of the quarter. It has been a long wait, as Snap first announced the Android reengineering project in November 2017.

“As of the end of Q1, our new Android application is available to everyone,” Snap CEO Evan Spiegel wrote in his prepared remarks for today’s estimate-beating earnings report. “While these early results are promising, improvements in performance and new user retention will take time to compound and meaningfully impact our top-line metrics. There are billions of Android devices in the world that now have access to an improved Snapchat experience, and we look forward to being able to grow our Snapchat community in new markets.”

Some of the growth stemmed from tweaks to Snapchat’s ruinous redesign, including better personalized ranking of Stories and Discover content, as well as new premium video Shows. Now with the Android app humming, though, we might see significant growth in the Rest of World region in Q2.

Unfortunately, since Snapchat uses bandwidth and storage-heavy video, more usage also means more Amazon AWS and Google Cloud expenditures. That’s partly why Snapchat is predicting a slight increase in adjusted EBITDA losses from $123 million in Q1 to between $125 million and $150 million in Q2. Rest of World users only earn Snap about one-third as much money as North American users, but cost nearly as much to support.

We first highlighted Snap’s neglect of the international teen Android market when Instagram Stories launched in August 2016. Spiegel and Snap were too focused on cool American teens, squandering this market that was snapped up by Facebook’s Instagram and WhatsApp. Now Snapchat will have a much harder time winning emerging markets as they’re not the first to bring Stories there. But if it can double-down on ephemeral messaging, premium video and its augmented reality platform that are leagues ahead of Facebook’s offerings, it could finally creep toward that 200 million DAU milestone.

 Come see Snap CEO Evan Spiegel speak at TechCrunch Disrupt SF on October 2nd-4th. Get your tickets here.

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Verizon Q1 beats analyst expectations with earnings per share of $1.22

Posted by | Earnings, hans vestberg, Mobile, verizon wireless | No Comments

Verizon just released its first quarter earnings report, with earnings per share that came in significantly ahead of analyst expectations, while revenue was right in line with predictions.

The company reported EPS of $1.22 per share (or $1.20 when adjusted to exclude a 2 cent benefit due to a pension re-measurement triggered by its recent voluntary redundancy program) and revenue of $32.1 billion, which was up 1.1 percent year-over-year. Analysts had predicted EPS of $1.17 and revenue of $32.15 billion.

Verizon also saw 61,000 net additions to its postpaid retail wireless business, including 174,000 net additions on the postpaid smartphone side.

The Verizon Media division (which owns TechCrunch) reported revenue of $1.8 billion, down 7.2 percent year-over-year. The company blames this decline on falling desktop ad revenue.

The report comes as Verizon begins its 5G rollout in  Chicago and Minneapolis, with the company saying that the 5G network buildout was part of its $4.3 billion in capital expenditures.

“2019 is shaping up to be an exciting year for Verizon,” said chairman and CEO Hans Vestberg in a statement. “We are leading the world in the development of new technologies with the launch of our 5G Ultra Wideband network. Our ambition remains unchanged to provide the most advanced next-generation networks in the world.”

As of 8am Eastern, Verizon shares are up 0.72 percent in pre-market trading.

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Tencent Q4 profit disappoints, but cloud and payments gain ground

Posted by | alibaba, alibaba group, alipay, Asia, Baidu, China, cloud computing, e-commerce, Earnings, games publisher, Gaming, iQiyi, online payments, Snap, Tencent, WeChat, weixin | No Comments

China’s Tencent reported disappointing profits in the fourth quarter on the back of surging costs but saw emerging businesses pick up steam as it plots to diversify amid slackening gaming revenues.

Net profit for the quarter slid 32 percent to 14.2 billion yuan ($2.1 billion), behind analysts’ forecast of 18.3 billion yuan. The decrease was due to one-off expenses related to its portfolio companies and investments in non-gaming segments like video content and financial technology.

Excluding non-cash items and M&A deals, Tencent’s net profit from the period rose 13 percent to 19.7 billion yuan ($2.88 billion). The company has to date invested in more than 700 companies, 100 of which are valued over $1 billion each and 60 of which have gone public.

Quarterly revenue edged up 28 percent to 84.9 billion yuan ($12.4 billion) beating expectations.

tencent revenue

The Hong Kong-listed company is best known for its billion-user WeChat messenger but had for years relied heavily on a high-margin gaming business. That was until a months-long freeze on games approvals last year that delayed monetization for new titles, spurring a major reorg in the firm to put more focus on enterprise services, including cloud computing and financial technology.

Tencent has received approvals for eight games since China resumed the licensing process, although its blockbusters PlayerUnknown Battlegrounds and Fortnite have yet to get the green light. The firm also warned of a “sizeable backlog” for license applications in the industry, which means its “scheduled game releases will initially be slower than in some prior years.”

Video games for the quarter contributed 28.5 percent of Tencent’s total revenues, compared to 36.7 percent in the year-earlier period. Despite the domestic fiasco, Tencent remains as the world’s largest games publisher by revenue, according to data compiled by NewZoo. The firm has also gotten more aggressive in taking its titles global.

Social network revenues rose 25 percent on account of growth in live streaming and video subscriptions. The segment made up 22.9 percent of total revenues. Tencent has in recent years spent heavily on making original content and licensing programs as it competes with Baidu’s iQiyi video streaming site. Tencent claimed 89 million subscribers in the latest quarter, compared with iQiyi’s 87.4 million.

Tencent has been relatively slow to monetize WeChat in contrast to its western counterpart Facebook, though it’s under more pressure to step up its game. Tencent’s advertising revenue from the quarter grew 38 percent thanks to expanding advertising inventory on WeChat. Ads accounted for 20 percent of the firm’s quarterly revenues.

All told, WeChat and its local version Weixin reached nearly 1.1 billion monthly active users; 750 million of them checked their friends’ WeChat feeds, and Tencent recently introduced a Snap Story-like feature to lock users in as it vies for eyeball time with challenger TikTok.

The “others” category, composed of financial technology and cloud computing, grew 71.8 percent to generate 28.5 percent of total revenues. WeChat’s e-wallet, which is going neck-and-neck with Alibaba affiliate Alipay, saw daily transaction volume exceed 1 billion last year. During the fourth quarter, merchants who used WeChat Pay monthly grew more than 80 percent year-over-year.

Meanwhile, cloud revenues doubled to 9.1 billion yuan in 2018, thanks to Tencent’s dominance in the gaming sector as its cloud infrastructure now powers over half of the China-based games companies and is following these clients overseas. Tencent meets Alibaba head-on again in the cloud sector. For comparison, Alibaba’s most recent quarterly cloud revenue was 6.6 billion yuan. Just yesterday, the e-commerce leader claimed that its cloud business is larger than the second to eight players in China combined.

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Razer hooks up with Tencent to focus on mobile gaming

Posted by | airasia, Android, Asia, ceo, Companies, computing, consumer electronics, Consumer Electronics Show, Earnings, Gaming, HTC, LG, malaysia, Meituan, Min-Liang Tan, mobile phones, mol, Razer, razer phone, Singapore, smartphone, smartphones, Southeast Asia, TC, Tencent, Xiaomi | No Comments

Razer is summoning a big gun as it bids to develop its mobile gaming strategy. The Hong Kong-listed company — which sells laptops, smartphones and gaming peripherals — said today it is working with Tencent on a raft of initiatives related to smartphone-based games.

The collaboration will cover hardware, software and services. Some of the objectives include optimizing Tencent games — which include megahit PUBG and Fortnite — for Razer’s smartphones, mobile controllers and its Cortex Android launcher app. The duo also said they may “explore additional monetization opportunities for mobile gaming,” which could see Tencent integrate Razer’s services, which include a rewards/loyalty program, in some areas.

The news comes on the same day as Razer’s latest earnings, which saw annual revenue grow 38 percent to reach $712.4 million. Razer recorded a net loss of $97 million for the year, down from $164 million in 2017.

The big-name partnership announcement comes at an opportune time for Razer, which has struggled to convince investors of its business. The company was among a wave of much-championed tech companies to go public in Hong Kong — Razer’s listing raised more than $500 million in late 2017 — but its share price has struggled. Razer currently trades at HK$1.44, which is some way down from a HK$3.88 list price and HK$4.58 at the end of its trading day debut. Razer CEO Min Liang Tan has previously lamented a lack of tech savviness within Hong Kong’s public markets despite a flurry of IPOs, which have included names like local services giant Meituan.

Nabbing Tencent, which is one of (if not the) biggest games companies in the world, is a PR coup, but it remains to be seen just what impact the relationship will have at this stage. Subsequent tie-ins, and potentially an investor, would be notable developments and perhaps positive signals that the market is seeking.

Still, Razer CEO Min Liang Tan is bullish about the company’s prospects on mobile.

The company’s Razer smartphones were never designed to be “iPhone-killers” that sold on volume, but there’s still uncertainty around the unit with recent reports suggesting the third-generation phone may have been canceled following some layoffs. (Tan declined to comment on that.)

Mobile is tough — just ask past giants like LG and HTC about that… and Razer’s phone and gaming-focus was quickly copied by others, including a fairly brazen clone effort from Xiaomi, to make sales particularly challenging. But Liang maintains that, in doing so, Razer created a mobile gaming phone market that didn’t exist before, and ultimately that is more important than shifting its own smartphones.

“Nobody was talking about gaming smartphones [before the Razer phone], without us doing that, the genre would still be perceived as casual gaming,” Tan told TechCrunch in an interview. “Even from day one, it was about creating this new category… we don’t see others as competition.”

With that in mind, he said that this year is about focusing on the software side of Razer’s mobile gaming business.

Tan said Razer “will never” publish games as Tencent and others do, instead, he said that the focus is on helping discovery, creating a more immersive experience and tying in other services, which include its Razer Gold loyalty points.

Outside of gaming, Razer is also making a push into payments through a service that operates in Southeast Asia. Fueled by the acquisition of MOL one year ago, Razer has moved from allowing people to buy credit over-the-counter to launch an e-wallet in two countries, Malaysia and Singapore, as it goes after a slice of Southeast Asia’s fintech boom, which has attracted non-traditional players that include AirAsia, Grab and Go-Jek, among others.

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Snapchat’s Android usage keeps falling but rebuild tests well

Posted by | Apps, Earnings, Evan Spiegel, Mobile, snap inc, Snapchat, Snapchat earnings, Social, TC | No Comments

Snap has finally begun publicly testing the engineering overhaul of its slow and buggy Android app that for years has cost Snapchat users. Promising early results and reduction in app startup time could help Snapchat fix its growth problem after daily active users sank in Q2 and Q3 before staying put at 186 million in Q4, Snap announced in its earnings report today.

“We ended the year with user engagement stabilizing and have started rolling out the new version of our Android application to a small percentage of our community,” CEO Evan Spiegel wrote. “Early tests show promising results especially on less performant devices, including a 20 percent reduction in the average time it takes to open Snapchat.” The problem is that because “Our engineering team remains focused on rebuilding our Android application,” they haven’t been dedicated to fixing the existing version. That means that despite iOS daily active users and average time spent growing faster than last year, Android dragged Snapchat again to see no total daily user growth.

Interim Chief Financial Officer Lara Sweet noted that, “While we are not going to give specific guidance on daily active users, we are cautiously optimistic and we do not foresee a sequential decline in daily active users in Q1 2019.” It seems Snap believes the new year is going well and the Android rollout could stem losses so it might finally grow its user count again, or at least stop shrinking.

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Nintendo posts $958M profit but cuts Switch target despite strong Christmas sales

Posted by | Asia, Christmas, Earnings, Gaming, Mario, mario kart, nes classic edition, Nintendo, Super Mario Party, super smash bros, Wii U | No Comments

Nintendo has cut its ambitious annual Switch sales forecast despite enjoying a strong Christmas Q3 quarter.

The Japanese games giant recorded a 104.21 billion JPY ($958 million) net profit on revenue of 608.39 billion JPY ($5.59 billion) between October and December 2018. Revenue was up 26 percent year-on-year, which is an impressive feature given that quarter was a successful one for Nintendo, yielding its biggest operating profit in a Q3 for eight years.

The Nintendo Switch is now closing down on lifetime sales of the N64. Nintendo shifted a record 9.41 million consoles during the three-month period, up 30 percent annually, to take it to 14.49 million this financial year, which began in April 2018. However, despite a success last quarter, likely helped in no small amount by Christmas, Nintendo has trimmed its ambitious goal to sell 20 million Switch units this financial year. Instead, the target is 17 million, which means it is estimating around 2.5 million sales during January, February and March.

In terms of games, a bunch of new releases performed well in the last quarter. Pokémon: Let’s Go sold million titles since its November release, Super Smash Bros. Ultimate sold 12.08 million since its December launch and Super Mario Party, released in October, reached 5.3 million sales. Total game sales jumped by 101 percent to reach 94.64 million sales during the period.

Nintendo’s retro consoles — the NES Classic and Super NES Classic — sold 5.83 million. But there is bad news for Nintendo loyalists, the upcoming Mario Kart Tour mobile game won’t ship in March — its revised launch date is this summer.

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Yep, iPhone revenue is down

Posted by | Apple, Earnings, hardware, iPhone, Mobile, Tim Cook | No Comments

Apple’s Q1 earnings are in, and things don’t look too rosy for the iPhone. Revenue for the handset has declined 15 percent year over year for the quarter. It’s a pretty hefty drop for a device that’s been flying high for so long, but you can’t say Apple didn’t warn us. Earlier this month, Tim Cook noted that the company was lowering its guidance, thanks in no small part to smartphone figures.

In its earlier report, the company put much of the blame at the feet of the Chinese market. There are a lot of factors on that front, including slowing economic growth in the world’s largest smartphone market, and a general trend toward prolonged upgrade cycles, as users are holding onto devices for longer. That’s been a large part of the reason that smartphone sales are down nearly across the board, marking the first contraction of the category since analysts began tracking it. 

Last year’s arrival of the XS marked a less dramatic refresh than the iPhone X, but Apple also introduced a new budget handset with the XR. That device has reportedly been a disappointment, though Apple has repeatedly noted that the device has been the best selling iPhone since its October launch.

Notably, those numbers are offset somewhat by growth in other categories. The iPad grew 17 percent on the strength of new models, while Mac/Wearables and Home/Accessories each grew, at 9 and 33 percent, respectively. Services, meanwhile, saw the biggest uptick at 19 percent to $10.9 billion — an all-time high for the category.

“While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide,” Cook said in a statement. “Our active installed base of devices reached an all-time high of 1.4 billion in the first quarter, growing in each of our geographic segments. That’s a great testament to the satisfaction and loyalty of our customers, and it’s driving our Services business to new records thanks to our large and fast-growing ecosystem.”

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Top 10 US subscription video apps pulled in $1.3B last year, a 62% increase from 2017

Posted by | app stores, Apps, Earnings, Mobile, mobile apps, sensor tower, subscriptions | No Comments

Subscriptions are booming on the app stores, and particularly subscription video apps, thanks to the growing number of cord cutters who are choosing to stream their TV shows and movies instead of paying for cable or satellite. In the U.S., the top 10 subscription video apps by revenue pulled in $1.27 billion in 2018 across both the iOS App Store and Google Play, according to new data from Sensor Tower — that’s a 62 percent increase over the $781 million spent in 2017.

It’s also three times higher than what was spent in these apps back in 2016.

The top app, not surprisingly, was Netflix — which snagged the spot for the second year in a row. It earned an estimated $529 million in the U.S., the report found. However, Netflix won’t maintain the top spot in the rankings in 2019, as the company recently made a decision to keep more of its subscription revenue to itself.

Netflix in 2018 had dropped in-app subscription sign-ups in its Android app on Google Play, then did the same on the iOS App Store in December. That will decrease its in-app subscription revenues this year, though it won’t immediately go to zero because of revenues from existing subscribers.

The No. 2 top grossing app was YouTube, which is maybe more of a surprise to those who don’t realize that the app they use to watch free videos is making quite so much money through in-app purchases. But YouTube offers a couple of different types of in-app purchases, including subscriptions to its ad-free tier, YouTube Premium, as well as virtual currency to be used in Super Chat.

Sensor Tower says YouTube took in less than half as much revenue as Netflix at around $223 million, but it grew substantially in 2018 — up 114 percent from $104 million in 2017.

HBO NOW was the No. 3 top grossing app, even though its subscriber base declined. The app generated 12 percent less in 2018, at $166 million, down from $189 million. The reason, naturally, was that the app was without “Game of Thrones” to attract viewers. That doesn’t bode all that well for HBO’s future without “Thrones,” unless its spin-off becomes a hit.

Hulu and YouTube TV were the No. 4 and No. 5 apps, respectively. Hulu grew by 68 percent while YouTube TV jumped up a whopping 419 percent. CBS’s streaming app is doing decently, too, with 57 percent year-over-year growth in subscriber spending.

Much of that comes from streamers interest in the new “Star Trek” series. In fact, with the Season 2 premiere this month, CBS said its streaming service hit a new milestone across both subscription sign-ups and unique viewers in a weekend. While the network didn’t share exact numbers, it said the January 19 weekend, when the new season of “Star Trek: Discovery” aired, eclipsed 2017’s previous record from the series premiere by more than 72 percent, in terms of sign-ups.

 

Combined, 2018’s top 10 subscription streaming apps accounted for a sizable chunk — now 22 percent — of non-game app revenue on the app stores in the U.S. Their 62 percent revenue growth was also more than all the other non-game apps combined, which grew 56 percent year-over-year, the new report said.

Subscriptions — and not just for streaming apps — have become the new driver for non-game spending on the app stores, and that isn’t going to change anytime soon.

According to App Annie’s recent forecast for 2019, 10 minutes of every hour spent consuming media across TV and internet will come from streaming video on mobile. It estimates that total time in video streaming apps will increase 110 percent from 2016 to 2019, with consumer spend in entertainment apps rising by 520 percent over that same period. Most of those revenues will come from the growth in in-app subscriptions, the firm had said earlier.

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