Dana Blankenhorn

Bezos Come Back

Since Jeff Bezos left his post as CEO of Amazon, in mid-2021, the stock is down 43%.

That’s 5 times worse than the average stock in the S&P 500. It’s more than twice as bad as Google. It’s as bad as the performance of Meta, the artists formerly known as Facebook.

Amazon is also shedding employees faster than Bed, Bath & Beyond. Some 27,000 have been let go this year alone. 

The job of running this company is simply too big for Andy Jassy.

The store is at war with itself, with third party sellers sabotaging Amazon’s own merchandising. The company’s physical retail effort has been a disaster. Walmart is beating it all to hell. The streaming unit is on an island. Jassy replaced himself with an outsider. Adam Selipsky had been at AWS 11 years but left to join Tableau Software and was recruited back by Jassy.

Morale at Amazon is at an all-time low. My own Amazon drivers used to be cheerful folks who looked forward to driving new electric vans. Now they’re in beat-up gas-powered garbage, they don’t say hello, sometimes they’re in personal cars, and one even blocked my driveway the other day. (I’m not going to report her. She was obviously overworked and under stress.)

Soccer’s America Problem

I’m an American soccer fan. But soccer has growing America problem.

European soccer is being knocked on its ass by American money. The English Premier League, powered by big TV contracts and American interest, now dominates all European leagues. The competitive balance that was the hallmark of European soccer is gone.

American owners are increasingly dominating the English game. Todd Boehly, who also controls the LA Dodgers, recently bought Chelsea, and is maintaining the free-spending ways of Roman Abramovich. Americans now own nearly half the league.

Then there’s MLS. The league has yet to realize its potential, but that potential is huge. Most clubs still play in 20,000 seat bandboxes. The ratings are garbage. But nearly all the clubs make a profit, thanks to strict revenue-sharing and salary caps. Apple is going to send a flood of money into the league starting this month. Sellouts are now common. My Atlanta United drew 47,000 fans per match last season, better than the average Premier League team.

We can afford soccer. Other countries can’t. Soccer is now America’s 4^th leading sport, ahead of hockey and right behind baseball. Soccer is growing, baseball is not.

Why Clouds Will Win the Streaming Wars

Since long before the streaming crash began, I predicted its Big Three would end up being Apple, Google, and Amazon.Com.

Not Netflix. Not Disney. Not Comcast or Paramount or Warner Brothers.

The Cloud Czars.

As usual, I was early to the story. But it has long been clear that, when push comes to shove in streaming, money talks. The coming result was easy for me to see and the story was easy to do.

Of the three Cloud Czars, Amazon is the best-positioned. They have the front-end technology with the Fire Stick, which has one-third of the U.S. market. They have Prime Video, which becomes a huge value if you use the Amazon store. They can re-sell every other streamer’s stuff and make money. They’re also global, something only Netflix and Disney among their competitors can lay claim to.

ChatGPT

Hate to rain on y’all’s parade but…ChatGPT is not the best thing since sliced bread. It’s not the Macintosh. It’s not the iPhone.

It’s software that translates search requests and results into what seems like plain English. Whether it’s useful depends on the input it gets. Garbage in, garbage out.

That doesn’t mean ChatGPT is Bitcoin or blockchain. It makes search accessible again. But it also makes search messy again. It creates imprecision in a world of 1s and 0s. Not that there’s anything wrong with that. Humans are imprecise. We’re messy. And it is fun to see computer output seem as imprecise and messy as we are.

It’s very easy to get a lie out of ChatGPT. Ask it about a subject where there are lots of lies on the Internet. They will appear in your answer. ChatGPT doesn’t have a filter. Yet.

Andy Jassy Blues

Andy Jassy became CEO of Amazon almost 18 months ago.

I’m starting to believe he is not very good at his job.

Jassy spent his previous 15 years running Amazon Web Services. He built that cloud and managed its managers. He made it self-service and made Amazon THE Cloud Czar. That’s his genius. That’s what he’s good at. Let him do that.  

But running a store isn’t like running a Cloud. Stores need merchandising. Amazon’s store didn’t need merchandising while it was scaling, because demand took care of everything through the worst of COVID.

But now it needs merchandising. Walmart and Target all have good benches. Hire one of them and make them the face of the franchise. Their aim should be to use Amazon’s buying power to get the mass market goods Americans most want and leave niches to the giant third parties on the platform. (Those relations are vital, and need to be improved.) Coordinate with third party sellers instead of competing. Let them know your focus, have them tell Amazon theirs, and stay out of one another’s way.

Amazon also needs someone to operate the back end. That’s not easy, and it can kill good merchandising. Lowe’s found that out until they got Marvin Ellison out of JC Penney (he’d previously been with Home Depot). Jassy shouldn’t be involved.

The Coming Streaming Shakeout

Streaming is about to learn what the printed web learned 20 years ago.

In a world of unlimited content, the gating factor for your audience is time.

There’s a corollary. Don’t depend on ads to make up for this. There’s just too much inventory.

I have a bad tendency to be early to things. I screamed about the dot-com bubble in 1997. I’ve been yammering about the coming streaming crash since 2019.

But now it’s here. First Netflix (NFLX) fell from grace. Then Disney (DIS) did the same. The Cloud Czars are worth half what they were now that you can get paid for having money. When interest rates were 2%, a price to earnings multiple of 45 looked OK. With money at 5% you need to be below 20 to be competitive.

Beyond the PC

I’m surprised more people didn’t anticipate this year’s tech wreck.

Once computing mastered video, as it did early in the last decade, there were no obvious new horizons. What resulted was crap without application. Crypto has no application. The metaverse has no application.

Without new files to deal with, this year is featuring a shakeout in how to deal with them. PCs were already being hurt by Chromebooks, which move most workloads to the cloud. PCs even accepted it. Most of my own PC’s files are now cloud-based.

But what I didn’t anticipate (and should have) was the death of writing.

The Streaming Crash

A small fall in subscriber numbers sent Netflix stock down 25% overnight in what stock market observers are calling the “streaming crash.”

All the companies involved in streaming crashed in sympathy. Paramount was down 11%. Warner Discovery dropped 5%. Disney was down 4% and even Amazon lost 2%.

As usual I was early to this. I wrote about the streaming crash in 2019.  “The limits to the streaming market are time and, to a lesser extent, money,” I wrote. If you were reading closely, you’d know the most important limit is time.

Beyond Even the Cloudless Cloud

The impending failure of the “Cloud Gaming” movement points toward the end of the cloud decade.

Google’s “Stadia” cloud gaming service is proving a technical failure. The company claimed it would reach hundreds of countries. It reached fewer than two dozen. The company claimed it would solve the game latency problem. It didn’t.

It turns out that for a low latency application like gaming to work, content must be cached close to every player. If it’s centralized, then some players have advantages that render the game worthless. Or you can create a delay, making the whole game worthless.

Forced delays happened over a decade ago, in stock trading. A trading platform found that, by putting their data center close to the Hudson River, it could act on orders from Wall Street before centers further away, based on the speed of light.

The TV Content Crash

Ever since the Web was spun, over a quarter century ago, TV content providers have been getting squeezed out of the advertising market.

That’s not how it’s reported. But fewer people have cable than can watch a broadcast. Fewer still have access to streaming. What’s left of broadcasting now are mostly one-set news shows, cheap reality and game shows, endless re-runs of movies and old TV, people sitting around tables talking, or sitting in chairs yelling. Cable is evolving into the same wasteland.

Streaming is where it’s at because of ARPU. That’s Average Revenue Per User. Broadcasting is free, cable brings in very little to most channels, but a streaming subscription costs $10-15/month and the programmer only shares that with the producer.