13 min read

July 21 2023 - Summer Spice

July 21 2023 - Summer Spice

👋Happy Friday friends. and welcome back. This week, earnings season is starting roll back around, AI continues to dominate, and a relatively light week for tech! I'll take it. All that and more below–

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Top Stories

Meta has faced setbacks in developing AR glasses and seems to be scaling back its ambitions. The company initially acquired British firm Plessey to secure AR displays but has struggled to make them bright enough and reduce manufacturing defects. As a result, Meta has decided to abandon Plessey's microLED technology in favor of older liquid crystal on silicon (LCoS) displays, reducing the competitive edge of its AR glasses. Technical setbacks have caused delays, and Meta now anticipates releasing AR glasses to the public no earlier than 2027. Meta has also scaled back its high-end VR headset, Quest Pro, due to poor reviews and weak sales. Additionally, the company faced setbacks in developing its own chips and instead relied on its existing supplier, Qualcomm.


Netflix reported its quarterly earnings, revealing a 3% year-on-year increase in revenue, reaching $8.2 billion. The growth was primarily driven by new paid memberships, attributed to the anti-password sharing rollout. The streaming giant gained 5.9 million net new subscribers in the quarter, compared to 1.5 million in the previous quarter. However, advertising revenue remains stagnant as the percentage of users watching with ads is still too small. Netflix's ad-supported offering has only been available since November, and currently has approximately 1.5 million subscribers in the US, which accounts for just 2% of its 75 million US subscribers. Despite the slow progress, Netflix remains optimistic about its advertising model and aims to attract more subscribers to the ad-supported tier.

Meta has announced its plan to provide developers and software enthusiasts with the code behind its latest and most advanced AI model. This move follows a similar strategy Meta implemented earlier this year by making their model open source, aiming to attract developers while competing with companies like Google and Microsoft. The latest version of Llama is more powerful and has been created using 40% more data than its previous version. While concerns about the potential misuse and spread of disinformation associated with generative AI exist, Meta believes that an open-source approach will lead to improved technology through collaboration and scrutiny. Meta's collaboration with Microsoft will ensure that Llama 2 is available on the Azure cloud services, with additional accessibility through providers like Amazon Web Services and HuggingFace. Meta's decision to open-source its AI technology has received support from various industry figures, including Reid Hoffman and executives from Nvidia, Palo Alto Networks, Zoom, and Dropbox.

The United Nations Security Council held a session for the first time to discuss the threat posed by AI to global peace and stability. UN Secretary-General António Guterres called for the establishment of a global watchdog to oversee AI, which he believes could be used by criminals, terrorists, and other malicious actors for destructive purposes. Experts highlighted both the risks and benefits of AI, emphasizing the need for regulation and governance. While a legally binding resolution is distant, many diplomats expressed support for a global governing mechanism and international rules.

Microsoft and Activision Blizzard have extended the deadline for their $75 billion merger until mid-October to gain regulatory approval in the U.K. The extension allows more time for the transaction that would give Microsoft ownership of Activision's portfolio of videogames. The termination fee has been increased to $3.5 billion if the deal is terminated after August 29. Both companies expressed confidence in closing the deal quickly, with Microsoft's Vice Chair and President Brad Smith stating they are confident about getting the deal across the finish line. Activision also reported its second-quarter financial results, showing a rise in revenue and earnings. The deal is still awaiting approval from Britain's Competition and Markets Authority, the last major obstacle.

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Rundown
  • Unity has started rolling out support for Apple's Vision Pro headset, allowing developers to create apps and games for the upcoming device. The partnership between Unity and Apple was announced during Apple's WWDC 2023 keynote, and now developers can join a closed beta to begin working with Unity for Vision Pro. The workflow is similar to developing for iOS, with the ability to create projects, generate Xcode projects, and preview work within Unity or the Xcode Simulator. Unity is also introducing "PolySpatial," a feature that enables apps to run in Vision Pro's Shared Space using RealityKit.
  • During Netflix's second-quarter earnings call, co-CEO Ted Sarandos stated that the company plans to focus on "sports-adjacent" programming rather than focusing on streaming live sports. Nonetheless, Netflix has confirmed that it will be streaming its first live sporting event in November, featuring a celebrity golf tournament. The event will serve as a promotional vehicle for Netflix's sports-related brands like "Full Swing" and "Drive to Survive". Netflix views the event as an experiment and has stated that its position in live sports remains unchanged, as it aims to provide sports-related content without entering the complex economic model of live sports licensing. Sarandos emphasized that Netflix's strength lies in storytelling and offering a wide variety of sports programming year-round.
  • Goldman Sachs has reported ongoing losses from its credit card operations, primarily driven by the Apple Card. The bank's Platform Solutions division, which includes the Apple Card, experienced a net loss of $667 million in the second quarter of 2023. Goldman Sachs has lost over a billion dollars thus far, largely attributed to the Apple Card, and is reportedly seeking to end its partnership with Apple. The bank's executives have revised their target for the consumer division to break even by 2025, after initially aiming to achieve it by the end of 2022.
  • Google is testing an AI tool called "Genesis" that can generate news articles and is being pitched to publications like The New York Times, The Washington Post, and News Corp, with the goal of assisting journalists by automating certain tasks and freeing up time. However, some executives find the tool unsettling, as it may disregard the effort put into producing accurate news stories. Google emphasizes that the tool is intended to enhance journalists' work and productivity, not replace their essential role.
  • TikTok is expanding the closed beta testing of its subscription-based music streaming service, TikTok Music, to Australia, Mexico, and Singapore. Select users in these countries will have the opportunity to join the beta test and receive a three-month free trial of the service. TikTok Music combines music discovery on the TikTok platform with a music streaming service that offers millions of tracks from various artists. The service can be accessed through the dedicated TikTok Music app or linked to a standard TikTok account. TikTok Music provides features such as importing music libraries, offline listening, collaborative playlists, real-time lyrics, song identification, and interactive community.
  • Activision Blizzard has laid off workers in its esports department while Overwatch League franchise owners prepare to vote on the future of the league. According to the company's second-quarter earnings report, franchise owners will vote on whether to continue the league in its current format after the current season. Activision Blizzard's financial struggles and recent team developments suggest that owners may choose not to continue with the league, which would result in the end of the Overwatch League as it currently exists. Meanwhile, the company has faced criticism for the layoffs, with former employees expressing surprise and concern over the decision.
  • Apple is reportedly developing its own AI-powered chatbot known as "Apple GPT," but the company has yet to solidify its plans for public release. The chatbot utilizes Apple's own LLM framework called "Ajax," which runs on Google Cloud and is built with Google JAX for accelerated machine learning research. While other tech giants have already released generative AI products, Apple has been relatively quiet. However, sources suggest that Apple is working on an AI-related announcement expected to be made next year. Apple's AI efforts are overseen by John Giannandrea and Craig Federighi.
  • Toon Boom Animation has been acquired by New York investment firm Integrated Media Company (IMC) for over $110 million. The impact on users is unclear, but Corus has expressed support for a smooth transition. IMC, backed by private equity firm TPG, aims to expand Toon Boom's platform into new markets.
  • Glassdoor has undergone a rebranding led by London-based design studio Koto. The rebrand includes a new tagline, color palette, line-based illustrations, custom typeface, and motion features. The new typographic logo, called Glassdoor Sans, was created in partnership with Giulia Boggio and features a geometric sans serif typeface with quirky characteristics inspired by office language. Koto also collaborated with Josep Puy to develop a sophisticated and playful illustration library that visualizes themes of conversation, diversity, anonymity, and collaboration.

Note: There is a debate on #DesignTwitter for similarities between this and a recent rebrand of Puck. The argument bounces between: direct rip off vs. illustration trends across tech. You decide for yourself!

  • Netflix is introducing a new capability for advertisers to target ads around its top 10 performing titles each day in an effort to scale its ad business. The company aims to provide both unique solutions and standard tools to advertisers while focusing on reach and meeting advertisers' expectations. Although ad revenue is not yet significant, Netflix has seen a doubling of membership for its ad-supported plan since the first quarter. The company held its first upfront pitch to advertisers in May and plans to add more advertiser features to make its offering more attractive.
  • Stagwell has acquired experiential design studio Tinsel Experiential Design, aiming to enhance its experiential capabilities as live events resume post-COVID. Tinsel, known for immersive and experiential marketing, will join Stagwell's Constellation Network of agencies, bringing creative resources and integrated production capabilities for larger projects and clients. Tinsel's expertise in environmental design, 3D renderings, and corporate events will support Stagwell's goal of strengthening its experiential offerings. Tinsel will retain its brand and leadership while operating out of New York, and its earnings will be recorded as part of Stagwell's Constellation Network. The terms of the deal were not disclosed.
  • Publicis has maintained strong growth in the second quarter, with revenues increasing by 7.1%. This growth rate matches the performance in the first quarter, surpassing its main agency rivals. The company attributes its success to its unique revenue mix, which includes data and consulting services, as well as new-business wins. Publicis Media experienced the highest growth, reaching double digits, while the data unit Epsilon and the consulting arm Publicis Sapient also showed positive growth. Creative growth was in the low single digits. Notable global media wins from the previous year, such as AB InBev, Mondelez, and PepsiCo in China, contributed to the revenue boost. Despite economic uncertainties, Publicis Groupe's performance in North America, its most important market, increased by 4.9%, with Europe and Asia-Pacific showing even stronger growth rates. The company has also resumed activities in Ukraine after more than a year since the conflict began. CEO Arthur Sadoun upgraded Publicis Groupe's full-year forecasts, expecting a 5% increase in annual revenues and an operating margin of 18%. Sadoun also discussed the company's recent success including partnerships with Microsoft and Adobe, which has resulted in major deals with clients such as Pfizer, Disney, Walmart, LVMH, and Stellantis. Regarding acquisition rumors, Sadoun stated that independence is important to Publicis Groupe, although they continue to pursue an aggressive M&A strategy focused on data and technology solutions.
  • Taco Bell has emerged victorious in the "Taco Tuesday" trademark battle against Taco John's. Taco John's, the original holder of the trademark, has chosen to relinquish its claim, allowing any business to use the phrase without legal consequences, except in New Jersey. Taco Bell argued that "Taco Tuesday" was a commonly used term and not eligible for trademark protection. The campaign to "liberate" the phrase garnered publicity for Taco Bell, and now Taco John's plans to donate money that would have been spent on defending the trademark to the nonprofit Children of Restaurant Employees. Taco Bell CEO Mark King expressed gratitude for Taco John's decision and acknowledged the shared victory for taco lovers everywhere. Taco Bell has also filed a separate challenge to the "Taco Tuesday" trademark held by Gregory's Restaurant & Bar in New Jersey.
  • Accenture Song has announced that Bryan Yasko, former president and partner of Johannes Leonardo, will join as its Northeast Lead. In his new role, Bryan will be responsible for leading and growing Accenture Song's business in the Northeast, shaping the strategy and vision for the region, collaborating across Accenture to benefit global clients, and fostering a culture that attracts top talent. Accenture Song recently announced a $3 billion investment in AI and believes that Bryan's creative and strategic expertise will help take their investments to the next level. Bryan brings over 25 years of experience delivering business growth and award-winning work for global brands.
  • Sports publishers covering the FIFA Women's World Cup are generating more ad revenue compared to the men's tournament. Digital video-focused Team Whistle and women's sports newsletter company The Gist reported higher ad revenue for their Women's World Cup coverage compared to the men's World Cup. Team Whistle's revenue from the women's tournament represents 15% of its overall ad revenue in 2023 so far. The Gist's ad revenue for the Women's World Cup is over four times that of the men's tournament. Other publishers, such as Bleacher Report and Telemundo, have also seen increased ad revenue for their Women's World Cup coverage.
  • Microsoft has announced that it will charge businesses $30 per user per month for its generative AI features in Office products such as Excel, PowerPoint, and Word. The pricing is part of an effort to expand revenue streams and present an upsell opportunity for Microsoft's Office subscription revenue. The $30 price tag applies to Copilot, a generative AI assistant that can perform tasks such as ranking emails, summarizing meetings, analyzing data, providing writing prompts, and designing presentations. However, analysts suggest that the high cost may limit adoption as many organizations may not have the budget for the price increase. Microsoft's Copilot tools are currently in the early testing stages with selected customers. Additionally, Microsoft has launched Bing Chat Enterprise, powered by GPT-4, priced at $5 per user per month, with added data protection features to enhance adoption.
  • Diageo has collaborated with creative technology company Phantom to develop an AI tool for package design. The tool, called the Smirnoff Generator, allows users to generate multiple versions of packaging designs for different drinking occasions and moods. The tool was tested on Diageo brands Don Julio Tequila and Smirnoff, and was successful in stimulating interest. Diageo believes that combining creativity with AI will open up new possibilities for design and enhance the relationship between consumers and its brands.
  • Omnicom highlighted the opportunities that AI presents in developing and deploying creative ideas quickly and easily during the company's earnings report on Tuesday. Omnicom has partnered with Microsoft, Google, AWS, and Adobe to incorporate generative AI into its operations, leveraging tools such as ChatGPT, Vertex AI, Imagen, and Firefly. While AI is seen as a valuable tool, CEO John Wren emphasized that human creativity and ingenuity remain essential.
  • According to a report from the 4A's (American Association of Advertising Agencies), little progress has been made in improving diversity in the advertising industry, especially at the leadership level. The survey found that the number of agencies owned or run by white CEOs increased to 90.2% in 2022 from 73% in 2021. Representation for owners and CEOs from other ethnicities declined. Asian representation dropped from 12% to 1.5%, Black representation fell from 5% to 0.75%, and Hispanic representation decreased from 10% to 5.26%. The report also highlighted a decline in diversity in certain areas, such as creative roles. While there has been progress in Hispanic representation and strong female representation, the industry still lacks diversity.
  • Battery, a creative agency, is expanding its presence in China with the opening of an office in Shanghai. The move comes as the agency secures new business opportunities in helping major gaming brands launch and grow in western markets. Industry veteran Paul Lin has been appointed as the Managing Director of Battery, Shanghai. The office will focus on assisting Chinese companies in expanding globally and launching their products to western audiences while maintaining their original brand ethos. Initial clients include Tencent Games, Lilith Games, and Rivergame.
  • CMD+B is a new creative agency founded by Felix Steiner, the former head of design and creative director at HeimatTBWA\ in Berlin. The agency aims to provide holistic communication solutions driven by strategy and design.
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Published by:

Joe Nash

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