Is Netflix’s giant quarter a temporary win?
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It is no surprise that oil prices are plummeting when no one is driving or flying. Banks raising bad debt provisions in a once-in-a-lifetime economic downturn is a classic dog-bites-man story. And yet, Netflix adding nearly 16 million subscribers in one quarter is shocking, even if it was to be expected.
For context, the streaming leader had told investors to anticipate seven million added subscribers. It ended up adding more subscribers in the U.S., its most mature market, than it did a year ago. And worldwide first-quarter additions were quadruple the similar tally in the last fourth quarter.
Netflix management was suitably monotoned about its performance. It knows its surge is a result of so many people around the world sheltering in place. It suggested the situation is short-term—and empathetically said it hopes that’s the case. It heaped praise on Disney for its streaming successes, akin to Salesforce applauding Oracle’s cloud efforts. (Not gonna happen.)
“Temporary” is how Gene Munster, a longtime equity analyst now with the investment firm Loup Ventures, summarized Netflix’s quarter. “Netflix proved in [the first quarter] that it is effective medication for shelter-in-place boredom,” Muster told clients. “While the momentum will likely continue for the balance of this year, next year gets measurably more difficult.”
Maybe. Netflix said its 2020 slate is done and that it is well into 2021. Any production slowdowns it faces won’t be any worse than the competition. Perhaps the biggest problem Netflix ultimately will face is churn from customers who need to economize.
Please be sure to tune in at 10:00 a.m. Pacific/ 1:00 p.m. Eastern today for the 40-minute video conversation I’m hosting with Fortune’s Erika Fry about her story in the April issue on how the Seattle business community worked together to help fight the pandemic. Plus, we’ll discuss how and why San Francisco also has done well, especially in light of the city’s well-documented (including by me) political dysfunction. The call is open to the public, and we will take your questions via chat. To participate, register here.
This edition of Data Sheet was curated by Aaron Pressman.
If at first you don't succeed. Mark Zuckerberg is making another big bet on India. Facebook will invest almost $6 billion for a 10% stake in Jio Platforms, which combines Reliance Industries’ popular e-commerce ecosystem, apps, and wireless service. The deal also connects Facebook’s WhatsApp with Jio’s JioMart offering. In another part of the Facebook empire, the company agreed to censor posts in Vietnam after the government there took its local servers offline.
Where have all the flowers gone, long time passing. While the streaming wars rage on with Netflix charging ahead, AT&T is getting ready to bring its newest weapon onto the battlefield. The carrier’s HBO Max service will debut on May 27 with a heavy emphasis on older TV shows including The West Wing, Friends, and South Park.
What’s good for the goose. Epic Games pays the Apple tax to have its popular Fortnite game included in the iPhone’s App Store. Now it will also pay Google for inclusion in the Android Play Store (while complaining that Google made life too hard to avoid the expensive listing).
Freedom's just another word for nothin' left to lose. Months after Barry Diller ousted the CEO and CFO of Expedia Group, the media magnate is contemplating selling a $1 billion stake in his online travel company to private equity firms Silver Lake and Apollo Global Management. Crushed by the pandemic-induced slowdown in travel, Expedia has already borrowed most of its $2 billion credit facility.
Chit chat. Elsewhere on Wall Street, Snap reported 229 million daily active users in the first quarter, up 20% from a year ago, and revenue of $462 million, up 44%, impressing investors. Its shares, down 24% in 2020 so far, jumped 20% in pre-market trading on Wednesday. AT&T missed expectations for first quarter revenue and profit and pulled its guidance for the year. Its shares, also previously down 24%, gained about 1%.
FOOD FOR THOUGHT
There's a juicy sub-genre of science fiction known as steampunk that imagines what the 19th century might have been like with a little more technological gadgetry. Now some scientists who study quantum mechanics are trying to apply the theory to 19th century laws of thermodynamics. The result, as physicist Nicole Yunger Halpern writes for Scientific American, is "quantum steampunk."
Just as traditional thermodynamics helped to describe the physics of steam engines, our efforts in quantum thermodynamics can help us invent quantum engines. Experimentalists have now created quantum engines with photons (particles of light), electronic systems and superconducting qubits (quantum circuits in which current can flow forever without dissipating).
Recently I designed a new quantum engine with Christopher D. White, now at the University of Maryland, Sarang Gopalakrishnan, now at the City University of New York, and Gil Refael of the California Institute of Technology. Being theorists, we initially devised the engine as a thought experiment that existed in our minds. But we are also envisioning how scientists could build a real version of the engine using the quantum tools found in laboratories today. For instance, by cooling atoms, then trapping and manipulating them with lasers, one could bring our design to life.
IN CASE YOU MISSED IT
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BEFORE YOU GO
The baby hadrosaur dinosaur died in what is now China about 70 million years ago. A recently discovered piece of fossilized cartilage from its skull may contain the most elusive and sought-after remnant of that long ago age: dinosaur DNA. But don't plan your visit to Jurassic Park quite yet. The degraded genome sequences probably can't be recovered. Probably.
In a similar vein, this tweet made me laugh: