Netflix pulls a Disney

Good morning! The VW bus is making a comeback after fading into obscurity post the ‘60s counterculture boom and The Scooby-Doo Show. The New Yorker reports that Volkswagen is building an electric cargo van called ID. Buzz. The ID. Buzz has already suffered production delays and will hit the market only next year, but its tryst to become groovy again has got our attention for now. 

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The Market Signal* 

Stocks: The Singapore dollar strengthened against the Euro, which tumbled about 11% this year. The winning streak continued for Indian equities for the third straight day. Shares of Delhivery surged 7% on Tuesday. Shares for Airtel and Reliance Industries closed higher. 

Early Asia: The SGX Nifty advanced +1.07% at 7.30 am India time today. Nikkei 225 (1.95%) and The Hang Seng Index (+2.20%) also marched ahead.

BUSINESS

Not good business

A statement issued by the management of Lucknow’s Lulu Mall—owned by UAE-based Lulu Group, which operates in 22 countries but has significant heft in MENA (Middle East and North Africa)—is perhaps an ominous sign for companies expanding in India.

Elaborate: An anti-Lulu campaign erupted when a viral video showed men offering namaaz in the mall recently inaugurated by CM Yogi Adityanath. Lulu declared that over 80% of its staff is Hindu after some groups alleged that most of the employees were Muslim males and the rest were Hindu women. 

Why this matters: CM Adityanath pitches UP as an investment destination. But businesses cornered into declaring the demographic make-up of their staff is a bad look for a state prepping for a global investors’ summit. Not least after the Gulf—where the Lulu Group founded by MA Yusuff Ali has immense goodwill—decried former BJP spokesperson Nupur Sharma’s remarks on the Prophet. The Centre had to denounce her to safeguard its growing engagement with MENA.

🎧 It's not good business if investors have to navigate religion.

TECH POLICY

Indonesia Imposes Digital Licence Raj

Faced with the prospect of being banned from the country, Google, Facebook, and WhatsApp complied with Indonesia’s new licensing rules on Wednesday.

Why? Indonesia’s regulatory body wants platforms to take down content that authorities consider unlawful or inappropriate within 24 hours (four hours if urgent). The diktat comes ahead of the country’s general election in 2024. Almost 6,000 domestic companies and 108 foreign firms, including Spotify and TikTok, have already registered.

Pattern: Indonesia is the latest entrant to the registration-as-regulation club, which wants to regulate social media in the garb of maintaining social order (read: censorship). This is becoming a common tactic, especially among countries in the global south (India, Nigeria) and others such as Russia, which just imposed a $370 million fine on Google. Indonesia is one of the world’s largest social media markets, and Facebook’s third-largest user base.

STREAMING

Netflix Goes From Disruptor To Conformist

Beleaguered Netflix is taking a leaf out of Disney’s book by banking on franchises. It’s looking to turn its shows (such as Stranger Things and Bridgerton) into Disney-like IPs. In essence, it wants its own version of Star Wars. And The Gray Man, Netflix’s most expensive gamble yet, is dropping mere days after the platform announced a low-priced, ad-supported subscription in partnership with Microsoft. It’s also piloting a plan to charge South American users for password sharing.

The Signal

Netflix lost nearly a million subscribers in the June quarter, adding to the 3.6 million subscribers who quit between January-March 2022. It however, hopes to add a million paying viewers in the third quarter. Second quarter revenue fell but profit improved.

Underpinning the chaos within Netflix is its shift from being a gamechanger to a settler. The platform—which started life as a DVD rental company—was a streaming trailblazer that introduced the concept of binge watching in 2012. Originals such as Lilyhammer, House Of Cards, Orange Is The New Black, and even Sacred Games (Season 1) made it a bastion of atypical content, the kind that could break away from studio-set norms and succeed.

Over time, however, Netflix morphed into a cable TV-lookalike that could no longer justify its premium tag. The company’s culture too took a hit; staff were irked about their feedback not being received well. Netflix is now relying on the very mechanisms it’d disrupted: advertising and money-spinning franchises.

The question is if any of this matters in context of its Q2 results. 

🎧 It's not been a great year for Netflix but the streaming giant has forecast better quarters ahead.

TELECOM

Airtel’s Doing A Google

The ad tech business has an unlikely contender: Bharti Airtel. Airtel Ads, a newfangled division of the telecom major, is counting on ads to propel a multibillion-dollar revenue stream in the next 10 years. Not surprising, considering the digital advertising market is touted to be worth ₹27,759 crore by the end of this year.

Push to play: Launched in February 2021, Airtel Ads will sell targeted ads to customers, given its 360 million-plus users and access to first-party data. Brands will have access to users through Airtel platforms such as Wynk Music, Airtel Thanks App, Xstream Premium, DTH, and SMS. Airtel even acquired blockchain startup Aqilliz to cash in on targeted advertising through blockchain third-party cookie-tracking. Coming up: location-based advertising. 

Jumping in: Reliance Jio and Vi have also taken the plunge into ad tech. Airtel’s average revenue per user remains strong compared to other telcos, but its foray into advertising is telling of the need to monetise its user base through old school methods.

GLOBAL AFFAIRS

Russian Roulette, Chinese Checkers 

The West might want to shackle Russia and China but the two are irrepressible. While global dependence on fossil fuels gives Russia leverage, manufacturing prowess is China’s trump card. 

No dollars: Russia has asked its Indian oil buyers to pay in dirhams, the UAE’s currency. Dubai, which is emerging as a major Asian financial hub after the decline of Hong Kong, is playing Switzerland and remaining neutral.  

No gas: Russia has also shut off (for repairs, it says) a key gas pipeline to Europe, which is roasting in a heatwave. Surviving without Russian fuel is not only tough but also costly. Ask Boris Johnson. 

Made by China: Have a problem with Chinese products? Get the dragon’s factories. Indian gadget makers have urged the government to let Chinese component makers set up shop here. Tesla’s Chinese battery maker CATL may move closer to the US. 

Meanwhile, China has sent out invitations to European leaders to have tea with Xi Jinping in Beijing. 

FYI

Chhota rupaiya: The Indian rupee temporarily breached the 80 mark against the US dollar for the first time before settling at ₹79.94.

Knuckle rap: China will impose a whopping $1 billion fine on Didi Global after a yearlong investigation into the ride-hailing giant, and ease some of the restrictions on the company.

Yikes: Spot checks conducted by aviation regulator DGCA reveal that Indian airlines aren’t just misidentifying the causes of reported malfunctions, but operating with minimum equipment lists due to a shortage of engineering personnel.

Add to cart: Instagram users can now pay and track packages via DM. YouTube is encouraging its creators to sell their merch via live e-commerce tools, and announced a partnership with Shopify. 

Going global: Indian Premier League franchise owners have snapped up all six teams in South Africa’s new Twenty20 league. CSK will own Johannesburg, Mumbai Indians picked up Cape Town, while the Sunrisers Hyderabad owners bought Port Elizabeth.

FWIW

No TikTok: TikTok influencers won’t receive any perks in Nepal anymore. The country has banned creators from shooting videos in historic and pilgrimage sites. Tourists often complained of the nuisance, thanks to loud music and awkward poses. Good riddance, we say. 

Sorry fam: The Pulitzer Prize Board just said BRB. It rejected former US Prez Donald Trump’s request to withdraw the 2018 prizes awarded to The New York Times and The Washington Post for their coverage of Russian meddling in US elections. Trump had accused the newspapers of publishing false reports. 

Golden age: KFC is trying to be hip. By this, we mean bringing out chicken nuggets for the Gen Z crowd. Apparently, younger customers are interested in boneless chicken options. We'd think it'd crack the code if it was dinosaur-shaped.

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