Rebecca Day

Spotify shares closed 8% lower Wednesday, at $317.25, after conservative Q1 revenue guidance based on pandemic uncertainties and ongoing effects on user, subscriber and revenue growth. Revenue guidance for Q1 is $2.4 billion-$2.6 billion with 354 million-364 million monthly active users (MAUs), including 155 million-158 million paid, said the company's Q4 shareholder letter Wednesday. Q4 revenue was $2.6 billion vs. $2.3 billion in the year-ago quarter. MAUs rose 8% to 345 million -- 155 million premium, 199 million ad-supported -- but premium user retention rate slipped year on year; the company expects churn to decline in 2021. Average revenue per user (ARPU) among premium subscribers fell by $5.12. Moving into 2021, COVID-19 “still has the potential to be a headwind, as it's difficult to fully gauge its impact,” said CEO Daniel Ek on a Wednesday investor call. Though sheltering at home in 2020 led to more listeners turning to Spotify for music and podcasts, “it also created disruption in listening habits, consumption hours and the release of new music and podcasts,” Ek said. Responding to an analyst question on whether conservative guidance is an indication user growth has peaked, Chief Financial Officer Paul Vogel cited promotional activity in Q1 2020 that didn’t repeat in Q1 this year. He also noted a pull-forward of listeners in a strong Q4. Spotify announced family plan price hikes Monday in 25 additional markets and full portfolio price increases in Sweden, Norway, Finland and Iceland to improve ARPU, Ek said. The music service had 2.2 million podcasts on the platform in Q4, up from over 1.9 million in Q3. A quarter of total MAUs engaged with podcasts last quarter, up from 22% in Q3, Ek said, and consumption hours doubled from Q4 2019.

Amazon blew past Q4 guidance of $112 billion-$121 billion -- and analysts' consensus of $119.6 billion -- posting $125.6 billion in revenue, up 44%, in a holiday quarter padded with October Prime Day receipts. Third-party units were 55% of total paid units during the quarter, said Chief Financial Officer Brian Olsavsky on Tuesday’s earnings call. Olsavsky downplayed changes resulting from Tuesday’s announcement that CEO Jeff Bezos will transition to executive chair in Q3. The move is part of succession planning put in place five years ago, he said. Amazon Web Services CEO Andy Jassy will assume the corporate CEO title when Bezos steps down in Q3. Wedbush analyst Michael Pachter wrote in a Tuesday investor note it’s not clear that Bezos will withdraw from day-to-day oversight of the business, “as we expect him to continue to be integrally involved in company strategy.” The analyst doesn’t foresee major changes at the company with Jassy at the helm and expects the transition to be “seamless and largely inconsequential.” Amazon assumed $4 billion in COVID-19 operating costs in the quarter -- including additional employee pay during the holidays -- bringing total 2020 pandemic costs to over $11.5 billion, Olsavsky said. Amazon's revenue guidance for Q1 is $100 billion-$106 billion, for growth of 33-40% vs. Q1 2020. Operating income is expected to be $3 billion-$6.5 billion vs. $4 billion in Q1 2020. Guidance assumes about $2 billion of COVID-19 costs, said the company.

Warner Music Chief Financial Officer Eric Levin expects it will cost more to stream music, referring to “an enormous gap between the monetization of eyeballs and the monetization of ears.” He sees the gap narrowing with increasing adoption of premium features, such as Amazon Music HD and higher subscription prices. “Ultimately, we think that all of the services over time will increase prices,” and “we encourage them,” he said on the company's fiscal Q1 call Monday. “Our expectations every day grow that the services will begin to raise prices for functionality and features.” In the quarter ended Dec. 31, "robust" digital sales in the recorded music and music publishing segments drove Warner Music revenue up 6.3% year on year to $1.3 billion. They were offset by COVID-19-related declines in physical recorded music, artist services, expanded-rights and performance revenue. Digital revenue grew 17% for 62% of total revenue, up from 56%. The music label is taking advantage of live streaming to promote artists via digital partners that are operating successfully during the pandemic, said CEO Steve Cooper.

Ford sees 5G as a "big opportunity with what we will do with Google and beyond,” a spokesperson said when we asked about fifth-generation wireless. The carmaker named Google Cloud its preferred cloud provider for data, artificial intelligence and machine learning as part of a six-year partnership, the companies announced Monday. Ford will continue supporting Apple CarPlay, the Ford spokesperson said: “We have always offered customers connected vehicle choice for their third-party apps and services and will continue to.” Ford’s recently launched Sync 4 system provides USB-less CarPlay functionality to make it easier to integrate with Ford vehicles, he noted.

Sinclair and Bally’s unveiled a Bally Sports logo Wednesday to go along with 19 renamed regional sports networks that will be rebranded under the casino company’s name over the next few months, part of a 10-year agreement announced in November (see 2011190028). It "signifies a new, transformative chapter in the regional sports business and is representative of our cohesive partnership with Bally's," said Steve Rosenberg, Sinclair president-local sports. The logo rollout is a first step in a “transformational partnership that is going to revolutionize the U.S. sports betting, gaming and media industries,” said Bally's CEO George Papanier. The company will integrate its content, including a fantasy sports platform it's buying from Monkey Knife Fight, into live game day coverage across the RSNs, he said. Sinclair has rights to eventually buy up to 30% of Bally’s stock, pending regulatory approval. Sinclair’s RSN portfolio will receive annual naming rights fees and a percentage of Bally’s Interactive’s marketing spending.

“There’s no return to January of 2020,” Microsoft CEO Satya Nadella told Tuesday's call for the quarter ended Dec. 31. Responding to a question on Microsoft’s expense profile post-COVID-19, Nadella focused on “flexibility” in time and where employees work because “expectations have changed.” That’s an opportunity for Microsoft’s Teams business communication platform, he said: “Work happens before meetings, during meetings, after meetings, and especially in hybrid work, you need that sophisticated set of tools that really track workflow irrespective of who is where,” he said. On Xbox, Microsoft exceeded $5 billion in quarterly revenue, a first, as the Series X and S debut set a record for most devices sold in a launch month. Xbox Live has more than 100 million active monthly users and Game Pass has 18 million subscribers, he said. Xbox hardware revenue grew 86%, driven by the new console launch and lower prices on previous-generation consoles, said Chief Financial Officer Amy Hood. The stronger PC market resulted in overall OEM revenue growth of 1% despite a strong prior year comparable in OEM Pro due to the end of support for Windows 7, said Hood. OEM non-Pro revenue grew 24%, OEM Pro revenue dropped 9%, she said. Quarterly revenue grew 17% to $43.1 billion, said the company. Shares closed at $232.90 Wednesday after hitting a 52-week high of $240.44.

Average video services per person grew 35% in Q4 over the year-ago quarter, to 6.7, among broadband-only subscribers, reported TiVo Wednesday. As the pandemic continues, “shifting consumer patterns in the video service landscape are proving to be more than mere anomalies,” the company found in 4,526 responses to a survey done for TiVo by a third-party company. “People are adjusting to a new normal.” Subscription hopping is prevalent during the pandemic, TiVo said, with 25% saying they added at least one new video subscription during the COVID-19 period; 15% canceled at least one. TVs are “overwhelmingly” the preferred screen for viewing subscription VOD (71%), ad-supported VOD (54%), virtual MVPD (58%) and network apps (43%). Smartphones came in second, followed by PCs and tablets. Respondents preferred watching streaming content via media players such as Roku, Fire TV, Apple TV and Chromecast (46%) compared with smart TVs (28%), set-top boxes or digital video recorders (13%), game console apps (6%) and Blu-ray player apps (1%).

Futuresource forecasts 80% of CE in 2024 will have voice assistants, dominated by Amazon, Apple, Baidu, Google, Microsoft and Yandex. Qualcomm’s announcement Tuesday that it will integrate Alexa Custom Assistant with its Snapdragon Automotive Cockpit platforms will enable OEMs to equip each brand with unique wake words, voices and capabilities (see report, this issue). Voice assistants will soon break out of mere command and control-based functions and simple Q&A operations, Futuresource's Simon Forrest told us. Amazon Conversation, an extension of Alexa’s voice control capability that's due this year, “should be able to interact intelligently in a multi-person discussion,” and Google Duplex has shown levels of conversation attainable with sufficient artificial intelligence and compute performance, said the analyst. Assuming conversational voice platforms develop intelligently, Forrest emailed, "this should naturally elicit deeper and more meaningful interaction," which would allow virtual assistant vendors to learn more about users and personalize responses

Qualcomm’s Snapdragon Automotive Cockpit platforms will be offered with pre-integrated Alexa Custom Assistant. Tuesday's news was part of a blitz of automotive Qualcomm announcements that included an extension of its relationship with General Motors for next-generation telematics and advanced driver assistance systems. The voice system has “highly intuitive, voice-based capabilities for natural, conversational interactions,” Qualcomm said. For next-generation vehicles, GM is using third-gen Snapdragon digital cockpit platforms for “rich” and “immersive” in-vehicle experiences and artificial intelligence-enabled in-car virtual assistance, “natural interactions between the vehicle and driver” and “contextual safety use cases,” said the companies. Qualcomm’s third-gen platforms work with systems from Google, Panasonic and Visteon, it noted. Qualcomm is working with Alps Alpine on a camera-based sensing and positioning device to support lane-level vehicle positioning based on 5G and satellite technology, they said. Qualcomm said 4G LTE connected services will continue to be deployed globally, while the automotive industry moves toward fifth-gen wireless for connected vehicles. It’s working with Continental, LG, ZTE and others as Strategy Analytics reports nearly 75% of vehicles sold in 2027 will have embedded cellular connectivity.

T-Mobile had the best 5G download speed among U.S. carriers, a first, in an Opensignal report. T-Mobile users had average 5G download speeds of 58.1 Mbps, ahead of AT&T at 53.8 Mbps and Verizon at 47.4 Mbps, said the report covering Sept. 16-Dec. 14. Opensignal collected 15 billion measurements from 2.2 million devices.