Good morning! Today’s word count is 1,218 words, or a 7-minute read. Let’s get to it:
“The Dow opened lower as data showed fewer Americans applied for jobless benefits and lawmakers in Washington remained far apart on a spending plan,” The Wall Street Journal writes.
- S&P 500: $3,372.95
- Nasdaq: $11,026.90
- Bitcoin: $11,583.99
- U.S. 10-Year: 0.680%
Epic Games Bypasses Apple, Google Payments in Challenge
Epic Games, creators of the wildly popular game Fortnite, has issued a challenge to Apple and Google by offering in-app purchases in its game that bypass the two companies’ payment systems.
Why It Matters
Epic and a growing number of app makers have criticized Apple and Google for requiring them to use their payment systems.
- Both Apple and Google take a 30 percent cut from transactions.
- The issue is the centerpiece of antitrust probes on Apple in the U.S. and Europe.
It’s a dare.
- Epic is testing the waters to see how the tech giants will respond.
- Banning Fortnite from the App Store or Google Play could be a public relations nightmare.
- It becomes a question of whether Apple and Google deem it necessary to “preserve a policy that has been almost sacred to them.”
- However, removing Fortnite from either platform only adds more fuel to the antitrust fire.
Numbers to Consider
- $5 Billion – Epic Games’ estimated revenue in 2020.
- $400 Million – Fortnite’s revenue alone in April, attributed mainly to the pandemic.
Read More: (THE INFORMATION)
Postponed College Football Games Could Disrupt $1 Billion in TV Ads
It’s been a dark week for the college sports world, as the dangers of the Covid-19 pandemic resulted in sweeping cancellations across college football, including two of the industry’s most prominent conferences in the Big Ten and Pac-12. The economic implications are scary to consider as postponing college football could disrupt the flow of more than a billion dollars from advertisers to television networks, according to The New York Times.
Why It Matters
The college sports economy needs that money.
- Declining revenues from pandemic-related cancellations at the college level have pushed many athletic departments into financial crisis.
- College football, the industry’s primary revenue engine, could have salvaged a significant amount of the potential revenue loss.
There’s a trickle-up effect.
- Schools invest millions into their athletic programs, networks spend billions on securing broadcast rights and advertisers throw large sums for TV spots.
- Companies like Allstate, Chick-fil-A and State Farm each spent more than $30 million to run ads during games, while AT&T spent more than $70 million.
Disney and Fox are likely to take a hit.
- More than 27.3 million people tuned into the LSU-Clemson College Football National Championship last year, which drew an estimated $91 million in advertising broadcast on the Disney-owned ESPN.
- College football was behind nearly 6 percent of ad spending and almost 10 percent of all TV ad impressions at Fox.
Advertisers have to be ready to adapt quickly.
- “There’s going to be a domino effect here, because if Advertiser X can’t get their dollars into college football, and if they have a specific time frame for messaging, they’re going to have to find those audiences elsewhere,” Optimum Sports Managing Director Jeremy Carey said.
- Visa, for example, advertises heavily on pro football broadcasts (not college football). If the NFL season can’t progress, the company has to prepare for the possibility of shifting its spending elsewhere, maybe to digital platforms, at a moment’s notice.
Numbers to Consider
- $1.7 Billion – The advertising revenue college football brought networks last season, according to research firm Kantar.
- 50 Days – How long it would take to sit down and watch the more than 300 regular season national college football broadcasts at risk.
Read More: (NEW YORK TIMES)
A Quick Look
Weekly Unemployment Claims Continue to Drop
- For the first time since the Covid-19 pandemic hit the U.S. in March, U.S. unemployment claims fell to less than one million last week. According to the U.S. Department of Labor, new applications for unemployment benefits decreased to 963,000 in the week ending Aug. 8.
- It’s a significant drop from the peak of nearly seven million claims in March. But unemployment remains at historically high levels, noticeably above the pre-pandemic record of 695,000.
- The number of people collecting unemployment benefits through regular state programs also decreased in August. However, it’s current position at 15.5 million dwarfs the pre-pandemic peak of 6.6 million in 2009.
- Overall, signs point to the battered labor market healing, albeit slowly. Employers added 1.8 million jobs in July. The unemployment rate fell to 10.2 percent last month after peaking near 15 percent in April.
Read More: (WALL STREET JOURNAL)
Worth Your Time
Saving Grace: As President Trump’s WeChat ban inches closer, a group of American corporations banded together to lobby against the move in a recent call to the White House. Apple, Ford, Walmart and Walt Disney highlighted a dozen companies stating how the ban would hurt their ability to compete in China. U.S. businesses utilize the WeChat social network, which has around a billion users, as a “conduit” for doing business in China. Without access, it could leave American companies at a “crippling disadvantage” in one of the world’s most valuable markets. (THE INFORMATION)
Hello Darkness My Old Friend: After a California judge ruled Uber and Lyft have to reclassify their drivers as employees, the two ride-sharing companies will likely shut down out west. San Francisco and Los Angeles have historically been in Uber’s top 10 cities, which means a suspension of service would be a terrible blow to an already pandemic-devastated business. The court’s ruling will go on hold for a minimum of 10 days – the companies plan to file an emergency appeal to a higher court. (THE INFORMATION)
Back In The Saddle: TikTok may not be dead in India after all. The app’s parent company, ByteDance, is in preliminary discussions with Indian conglomerate Reliance Industries to invest in TikTok’s India business. India’s government had banned TikTok in June, but an investment from Reliance, a corporate power in the country, could help revive TikTok’s Indian presence. Before the app was banned, India was TikTok’s biggest market by the number of active users. (TECH CRUNCH)
To The Moon: BodyArmor is gearing up to challenge Gatorade for the sports drink market, despite the latter possessing nearly ten times the market share. “This is either going to go bankrupt in five years or going to be the No. 1 sports drink by 2025,” CEO Mike Repole told CNBC. (AXIOS)
“As TikTok’s fate remains in flux, its smaller rival Likee has been making waves around the world, garnering 150 million monthly active users as of this June.”
Democrats and Republicans are still “miles apart” on a new coronavirus-relief bill.
Cisco’s revenue took a hit after CFO Kelly Kramer announced plans to retire from the company, dropping 9 percent.
The long-awaited, near-billion-dollar IPO of Palantir could be coming as early as September.
Airbnb reported a second-quarter revenue drop of $335 million this year, complicating its plans to go public later this year.
Apple is preparing a series of bundles that will let customers subscribe to several of its digital services at a lower monthly price.
Amazon is spending $10 billion to deploy thousands of internet-beaming satellites.
Fat Brands Inc. is buying the Johnny Rockets burger chain for around $25 million.
A Couple Cents Content
Read Justin Oh’s breakdown of the Teladoc-Livongo merger. (POST)
Interested in real estate investing? Justin Oh takes a look at how Fundrise could be a useful tool for investors. (TIKTOK)
The “Netflix of Factual TV” is going public through a SPAC. Check out Justin Oh’s breakdown. (TIKTOK)