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1. Cash from US investors pours into Reliance Jio – the next big tech firm?
  • Since its founding in 2016, Reliance Jio has become India’s largest telecom operator with 387M+ subscribers. It has been a key force in driving the cost of data down, opening up Indian digital markets such as video-streaming.
  • Reliance Jio appears to be pursuing an Amazon-like strategic flywheel in the competitive and rapidly digitizing Indian economy. Facebook, which now has a 10% stake in Jio, plans to integrate Jio-powered ecommerce into WhatsApp – which has 400M+ subscribers in India, its largest market.
  • Related Briefs:
    • Jan 30 2020: India is the market battleground everyone is watching
    • Dec 13 2019: Tech players expand their ecosystems through payments & financial services
2. Uber strengthens its grip on the mobility ecosystem
  • Uber is in active talks to acquire Grubhub, which has been looking for a buyer since at least Jan 2020, for a reported $6B. One analyst estimates that Uber Eats (32% of the market) and Grubhub (24%) would collectively represent 55% of the market, trailed by DoorDash with 35%. The Uber-Grubhub combination would cut per-delivery costs using Uber’s advanced routing, in addition to savings on marketing and staff.
  • These reports come just one week after Uber led a $170M funding round in e-scooter/e-bike startup Lime at a deeply discounted $510M valuation. The deal included Lime taking over Uber’s e-bike arm Jump to become the largest micromobility player.
  • While Uber’s core ride-hailing business has dropped as much as 94% in some markets as a result of COVID-19, the company has been quick to reduce costs – laying off 3,700 employees (14% of its global workforce) – and may emerge in an even stronger position after the pandemic.
  • The big elephants on the table in Uber’s long-term success, however, are its navigation of the regulatory landscape (e.g. the current lawsuit in California) and handling of gig workers’ compensation and benefits.
  • Related Briefs:
    • Mar 26 2020: Grocery delivery, ecommerce & the renewal of Walmart
    • Jan 10 2020: Uber & the gig economy are facing headwinds
3. Video-streaming & big tech shake up the business of theatrical releases
  • NBCUniversal’s release of the Trolls World Tour movie on streaming platforms during the pandemic yielded a notable $100M in revenue for the studio from 5M+ digital rentals during the first 3 weeks of its North American release – and with higher margins.
  • On the heels of this success, CEO Jeff Shell announced plans to continue to release movies in both theaters and on streaming platforms, even after the crisis has passed. The implication that NBCUniversal would no longer honor the standard exclusive window for a major release (typically 75 days) prompted AMC Theatres (the largest global cinema chain) to announce it would no longer show Universal films in any of its theaters worldwide.
  • AMC is seeking to fend off a broader theme of studios debuting top-shelf productions, such as Hamilton on Disney+, on streaming platforms simultaneously with or even before theatrical releases. Warner Bros has also indicated that it is rethinking its theatrical model.
  • This is a turnaround from Sep 2019, when Amazon Studios was reportedly steering away from the headaches of the theatrical-release business. That, however, was before the US Justice Dept decision in Nov 2019 to seek a court ruling to allow movie studios to own theaters.
  • At this time, AMC’s market cap is just $480M – a small acquisition for Amazon. While still not confirmed, an acquisition could generate value for Amazon as a distribution channel for original content (on which it spends $6B+ per year), as an asset in making plays for major film awards, as a differentiator in luring top movie-making talent, as an integrated boost to its crown-jewel Prime membership, and as a dimension in Amazon’s ongoing push into digitizing and automating brick-and-mortar retail.
  • Related Briefs:
    • Mar 18 2020: Looking beyond – 11 ways in which COVID-19 might be an inflection point
    • Oct 24 2019: Disney+ and the age of streaming-video wars
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