Streaming Is Coming 64

N°1 MARCH 2020 WWW.SWISSQUOTE.COM CHF 9.-

FINANCE AND TECHNOLOGY UNPACKED

LUXURY Lalique, from crystals to hotels

E-COMMERCE Canada’s Shopify takes on Amazon

K-BEAUTY A fresh revival in the cosmetics industry

DOSSIER

TV series, talk shows, video games, podcasts... STREAMING The entertainment industry IS COMING is experiencing a revolution

Peter Dinklage as Tyrion Lannister, one of the main characters of the Game of Thrones series

NETFLIX ROKU DISNEY SIRIUSXM APPLE AMAZON SPOTIFY

EDITORIAL SWISSQUOTE MARCH 2020

Content is king

By Marc Bürki, CEO of Swissquote

n the train, in waiting rooms ure up? Gilles Marchand, director p. 38 or even in the toilets, people general of the Swiss group (in- are listening to music on terviewed in this edition) believes OSpotify, watching series on Netflix so. He explains why the quality of and gaming on Apple Arcade. As Swiss-made TV series will improve. mobile devices have multiplied While comparisons never stop be- and networks have moved from 3 tween Disney and Netflix or Spotify to 4 and now 5G, entertainment and Amazon Music, the streaming is being consumed everywhere, wars are actually not a battle by in- all the time. As a result, driven dustry – video against video or music p. 24 by streaming technology, the glob- against music – but rather an all-out al entertainment market (video, war to monopolise the “economics of music, gaming) has never been attention”, to borrow an expression healthier. In 2021, it is expected to from Herbert Simon, winner of the be worth $439 billion. This explo- Nobel Prize in Economics in 1978. sion of energy-consuming services p. 61 comes with ecological challenges. And content is the perfect way to capture people’s attention. Many companies are joining the “Content is King,” as Bill Gates fray, even stepping far outside their observed as long ago as 1996! business models to do so. In 2019, Nearly 25 years later, these words p. 46 Apple launched a video game and have never been more true. Just video-on-demand platform; Google look at Netflix’s spending: in 2020, released its cloud gaming service the global streaming leader will Stadia; and Disney entered the spend more than $17 billion on the streaming video market with a bang. production of original content. With But this is just the tip of the ice- such expenses, it will be difficult berg: 2020 will be just as plentiful, for all the players on the market if not more so, with new film and TV to turn a profit. Some experts platforms (HBO Max and Peacock) even believe we will reach “peak and video game services (Microsoft content” – oversaturation. “We’re xCloud and Amazon cloud gaming). competing with sleep,” said Netflix CEO Reed Hastings in 2017. At- To compete with these US giants, tention spans are indeed finite. SSR will launch a new streaming platform in 2020. Will it meas- Happy reading!

3 SWISSQUOTE MARCH 2020 CONTENTS SWISSQUOTE MARCH 2020

PUBLISHER Swissquote Chemin de la Crétaux 33 DOSSIER 1196 Gland – Switzerland T. +41 44 825 88 88 www.swissquote.com [email protected]

64 Manager Brigitta Cooper PORTRAIT EDITORIAL

Editor-in-chief Ludovic Chappex Associate editor Bertrand Beauté STREAMING K-BEAUTY Design director Natalie Bindelli and Caroline Fischer CANA atelier graphique Route de Jussy 29 – 1226 Thônex IS COMING LEADERSHIP www.ateliercana.ch Editorial staff Bertrand Beauté, Ludovic Chappex, 22 Benjamin Keller, Raphaël Leuba, Martin Longet, Angélique Mounier-Kuhn, Grégoire Nicolet, Gaëlle Sinnassamy, 26 Julie Zaugg Layout Natalie Bindelli, Caroline Fischer, Romain Guerini (CANA atelier graphique) Cover HBO Photography Olivier Vogelsang, AFP, Keystone, 28 72 Getty images, Istockphoto, BUSINESS Newscom, Reuters Editing (English version) Ose Ayewoh, Marco Simon Translation CONTENTS Technicis Finance PRINTING, BINDING AND DISTRIBUTION Stämpfli Ltd. 3. EDITORIAL 20. FOCUS 28. DOSSIER : Streaming is coming 64. K-BEAUTY 76. AUTO Wölflistrasse 1 – 3001 Bern by Marc Bürki A dark future Cosmetics Range Rover Evoque: www.staempfli.com for nuclear 34 Infographic: 46 Video games: get a fresh smaller vehicle, 6. SCANS streaming services the final holdout revival stellar lineage ADVERTISING take over the world Infoplus AG Economic 22. PORTRAIT Traubenweg 51, CH-8700 Küsnacht 49 Twitch and survey Lalique, 68. E-COMMERCE 80. TRIED AND TESTED [email protected] from crystals 36 Traditional TV the future of TV Canada’s Shopify Delivering for is putting up a fight WEMF 14. TRENDS to hotels takes on Amazon Uber Eats REMP 2019: 53,752 Ex. Print run: 60,000 ex. 50 Sport, the new Personality, 40 Interview with Gilles El Dorado for country, innovation 26. BUSINESS 72. LEADERSHIP Marchand, director streaming services Hong Kong, Masayoshi Son, general of SSR 18. ANALYSIS a minefield the megalomaniac 52 The kings of streaming “The potential for for companies? visionary SUBSCRIPTIONABONNEMENT 44 Podcasts... CHF 40.- pour 6 numéros a correction is very CHF 40 FOR 6 ISSUES to the rescue? 61 Video on demand: www.swissquote.ch/magazinewww.swissquote.ch/magazine/f/ high in the US” a drain on energy STILL, YONHAP NEWS/YNA/NEWSCOM, KEYSTONE MOVIES / AFP, LALIQUE, ISAAC LAWRENCE

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fashion RANKING Opened in October NIKE ABANDONS AMAZON 2018, the Nike House SCANS of Innovation in Nike’s current strategy, a direct-to- Shanghai, which consumer model, has taken a new AI CAPACITIES FOR IMAGE covers almost RECOGNITION 4,000 m2, focuses on turn. The shoe company recently Percentage of images recognised correctly interactive shopping. announced it would no longer sell food its products on Amazon, ending a two- GOOGLE CLOUD VISION CHINESE FROZEN FOOD IS BOOMING year partnership. This is the company’s 81.7% latest initiative aiming to eliminate intermediary distributors. The global AWS REKOGNITION (AMAZON) The Sanquan leader in sport products has invested frozen food brand 77.7% exports its products heavily in applications and online sales worldwide. platforms. Nike has also created shops MICROSOFT AZURE dubbed “Houses of Innovation” that 75.8% “Global meat combine traditional shopping with an interactive mobile application. The IBM WATSON consumption New York and Shanghai shops are 55.6% is expected to already open, and a Paris location is expected to open this year. Source: Statista/JDN decrease by NKE AMZN DR 50% and global Despite scandals, Chinese consumers increasingly want more dairy consump- MOST SEARCHED WORDS frozen food products. In a country where frozen products only ON GOOGLE IN 2019 represent 5% of the food market, compared to 60%–70% in tion by 20%” (entire world) developed countries, the margin for growth is significant. Four Emmanuel Faber, local brands share two-thirds of all sales: Sanquan, Sinian, CEO of Danone, in 1. INDIA VS SOUTH AFRICA Longfeng and Wanchai Ferry. Wanchai Ferry, based in Hong an interview with Kong, is part of General Mills, but it is Sanquan, listed on the Russian media RBC Pro. Shenzhen Stock Exchange, which should be of interest to 2. CAMERON BOYCE investors as its products are now exported around the world. COPA AMERICA

GIS 002216 XIAO GANG / NEWSCOM 3.

4. BANGLADESH VS INDIA

pharmacy free trade 5. IPHONE 11 ZUR ROSE: SEEING ORANGE NORTH AMERICAN COMPANIES Source: Google TO WATCH IN 2020 Medicine on sale alongside M-Budget macy will open in the Crissier shopping products? That’s what Zur Rose is hoping centre (Vaud canton) and other locations “There will for. For the past two years, the wholesaler are being considered. Following an IPO CARS SOLD AROUND The new United States-Mexico-Canada and online pharmacy has partnered with in 2017, Zur Rose finalised the acqui- be tough talks THE WORLD Agreement (USMCA), which updates the Migros to test the concept of pharma- sition (valued at 197.8 million Swiss (in the first three quarters of 2019) North American Free Trade Agreement ahead and each cies inside the orange giant’s supermar- francs) of its counterpart Medpex, which (NAFTA), is expected to benefit many kets. After a successful pilot phase in is the third-largest online pharmacy side will do CHINA companies, particularly those based Bern, Basel and Zurich, Zur Rose hopes in Germany. With this acquisition, the 14,963,000 11% in the United States. According to the what is best for to replicate the idea across Switzerland. Swiss group continues its expansion The percentage of financial magazine Barron’s, the car USA Before the end of February 2020, a phar- in Germany. ROSE them. It will not household waste industry (Tesla, General Motors and be simple.” 12,709,100 recycled each day Ford), as well as the agri-food indus- in Shanghai, the try (Danone North America and Tyson Ursula von der Leyen, EUROPE equivalent of Foods) will benefit the most from this the new president of the 12,115,900 3,000 tonnes of waste new treaty. The magazine also advis- European Commission, JAPAN (far from the 70% es investors to keep an eye on steel in a speech given at the producers U.S. Steel and Nucor, as the London School of Economics, of household waste 3,441,200 agreement includes higher quotas for recognising that negotia- recycled daily in North American steel used for car tions with London over the INDIA Germany, according to manufacturing. TSLA GM F conditions of Brexit will 2,177,500 Süddeutsche Zeitung). be difficult to complete DANOY TSN X NUE in less than one year.

ZUR ROSE Source: Verband der Automobilindustrie

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SCANS automobile GOOGLE REFINES ITS AUTONOMOUS VEHICLE KICKSTARTER

“I am disap- pointed with “I think the 250 M the results of rich need to The number of COP25. The pay more taxes vegetarian burgers international than they do that Beyond Meat community lost Since October 2019, is expected to sell currently, and autonomous taxis each year in the an important from Waymo, a United States via its opportunity to that includes Google subsidiary, partnership with Melinda have been travelling show increased driverless in certain McDonald’s, according and me” parts of Phoenix. to UBS Bank. This ambition.”

GOOGLE would bring Beyond Bill Gates in a note Antonio Guterres, published on 30 December After beginning an exclusive partnership expected to help Waymo make its test Meat’s annual revenue UN Secretary-General on his blog, GatesNotes. with Renault-Nissan in 2019, Waymo drives more realistic by using a form of to $325 million. in a press release. (Alphabet’s self-driving car project) has automatic imitation learning. This acqui- ORBA acquired Latent Logic, a UK company sition also marks the launch of Waymo’s that began in the IT department of the first European engineering hub, which ORBA, AN ORCHESTRA University of Oxford and specialises in will be based in Oxford. IN YOUR HAND simulation software. Latent Logic is GOOGL insurance LOWER BILLS FOR INSURERS US start-up Artiphon is familiar with Kickstarter. In 2015, its first product – a digital musical Fifteen natural di- instrument called “Instrument sasters have caused 1” – raised more than $1 million more than $1 billion via crowdfunding and was named industry in damage in 2019. Here, the dramatic the best musical invention by STRATEGIC SHIFT AT DÄTWYLER fires that ravaged Time Magazine. Orba, its new Australia. minimalist music creation device is Dätwyler, based in the canton of Uri, also en route to success – it has An employee of has separated from its companies already raised nearly $1.5 million. Dätwyler’s pharma- Distrelec and Nedis, distributors of With eight buttons, this device is ceutical packaging electronic products. The revenue from about the same size and shape as division these companies was 300 million half an orange and fits in the palm Swiss francs in 2018. The central of your hand. It includes a synthe- Swiss industrial supplier has decided to sizer, looper and MIDI controller focus on sealing solutions (particularly that lets you create songs in a fun way, regardless of whether for health care, cars and construction), SAEED KHAN / AFP which is a booming industry. The two 28.5 M or not you know how to play an entities were sold to Aurelius, an asset In its latest report, the reinsurer Swiss Re estimates that the total cost instrument. management group based in Germany The number of Apple of natural and man-made disasters in 2019 was $56 billion, compared that already owns several distribution Watches sold in the world to $93 billion in 2018 – a 40% decrease. As such, amounts paid by the companies throughout Europe, includ- in 2019, according to insurance and reinsurance sectors continue to decrease after a peak in ing Calumet Photographic, the largest estimates from Swiss daily 2017, when costs reached a record $144 billion. According to UK-based Christian Aid, 15 natural disasters caused more than $1 billion in dam- European distributor of photographic Le Temps. Switzerland age last year. Seven of those disasters cost more than $10 billion and equipment. DAE AR4 exported nearly 21 million FUNDS RAISED AVAILABLE each was linked to climate change. SREN Xxx watches in 2019. $1,442,074 APRIL 2020 DÄTWYLER

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SCANS hydrocarbons chemistry RUSSIAN OIL FLOWS FREELY SYNGENTA SOON LISTED IN CHINA? Chinese conglomerates ChemChina and Sinochem announced in early January that they would join their agrochemical businesses in a new holding company. This reorganisation would involve Basel-based agrochemical group “In fact, Syngenta, acquired for nearly 45 billion Swiss francs by ChemChina in 2016. Libra The new entity, Syngenta Group, will be based in Basel. The CFO will be Chen in this Lichtenstein, the current CEO of Adama Agricultural Solutions, which is currently 21,400 sq. m form has listed on the Shenzhen Stock Exchange and will also be integrated into the new Syngenta Group. According to Reuters, The size of the new failed” this reorganisation aims to facilitate headquarters and Ueli Maurer, the new group’s 2020 IPO on the trading R&D centre for head of Switzerland’s platform STAR Market in Shanghai. But Jeff Bezos’s company Federal Department of ChemChina denies this claim, accusing Blue Origin. It is Finance, in an interview with Reuters of “misinformation”. located in Kent, SRF regarding Facebook’s The oil tanker 600500/000553 near Amazon’s cryptocurrency and its SYNGENTA Chukotka in the port chances for success. headquarters. of Egvekinot, Russia, in October 2019. ISTOCK

In 2019, Russia reached a new pro- in 1987, when 11.416 million barrels transport duction record since the fall of the were produced per day. The 2019 figure AIRCRAFT RENTAL COMPANIES ON CLOUD NINE Soviet Union, with 11.25 million barrels was reached despite the OPEC+ deal, of crude oil produced per day. This is which predicted a reduction in Russian equivalent to 560.2 million tonnes, up production in 2019. In 2020, the Russian Nearly 800 copies 0.8% compared to 2018. Russia has Ministry of Energy is aiming for production of the 737 Max are grounded worldwide. nearly reached the amount produced of between 555 and 565 million tonnes. Here on the tarmac of a Boeing factory in Seattle.

THE FLOP sound SMART SPEAKERS WANT New York parking meters TO SPEAK THE SAME LANGUAGE and the 2020 bug The number of smart speakers around the world is expected to exceed the number Twenty years after the the meters had an end of tablets in 2021, according to US firm hysteria of the millennium date set to 1 January 2020, Canalys. To capitalise on this trend, +158% bug, aeroplanes still have which was not updated industry heavyweights have decided

GARY HE / REUTERS The rise in electric car not fallen from the sky. by French manufacturer to join forces to develop an open stand- sales in Switzerland in However, tens of thou- Parkeon, the global leader ard for all smart home objects, called While the B737 Max, grounded since the industry: Air Lease, AerCap and 2019 compared to 2018, sands of parking meters in parking meters, which “Connected Home over IP”. This project, March 2019, is proving very expensive GE Capital Aviation Services, which with a total of 13,000 broke down across New belongs to Astorg Partners, which includes Google, Apple and for Boeing – currently costing at least have no qualms about raising prices. vehicles sold – 6,000 York because of a 2020 one of Europe’s largest Amazon, aims to create a connectivity $10 billion for the aviation company – The rental cost per day for a 737 NG, of those were Teslas. bug. Thousands of drivers investment firms. Tickets standard based on internet protocol other groups are thrilled, particularly the predecessor of the 737 Max, went were unable to use their were still issued as normal (IP). The standard will help manufa aircraft rental companies. To minimise from $230,000 in January 2019 to credit cards to pay at me- and it is still unknown cturers develop products that work the impact of the grounded 737 Max $300,000 in September. These models ters. Authorities confirmed whether or not the tickets with all assistants, whether Alexa, on their finances, airlines are forced are already all rented out throughout that the software running will be cancelled. Siri or Google Assistant. to use rented aeroplanes. This is great the first part of 2020. AMZN GOOGL AAPL news for the top three companies in BA AL AER GECAS

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SCANS space MAXAR: THE FALL OF AN AEROSPACE GEM

A telecommunications satellite built by Maxar Technologies.

1 BN The increase in the number of people on Earth in 10 years, according to a report from Bank of America Merrill Lynch. MAXAR

Despite a slight rebound in 2019, Canadian entity MacDonald, Dettwiler the share price of Maxar Technologies and Associates (MDA) for CAD$1 billion CAPTURE THE PURE has lost nearly 70% of its value since (US$765 million). Specialising in spatial “I’m used January 2018. The space infrastruc- robotics, among other things, MDA is to mission ture specialist, once called the “star known for helping to build a part of the of the Canadian aerospace industry”, International Space Station. Maxar will ARTIFICIAL INTELLIGENCE impossible” is struggling, with $3.1 billion of debt keep its space robotics division based as of September. In order to regain in the United States, which develops Carlos Ghosn, its star status, the company (which robotics systems used in NASA’s Mars INVESTMENT OPPORTUNITY during a press became American in 2019) announced 2020 rover. conference in Beirut on in late December that it would sell its MAXR 8 January, after his incredible Artificial Intelligence (AI) is an exciting megatrend with the potential to change how industries operate and escape from Japan. consumers live their lives. From self-driving cars and smart cities, to security and fraud protection, AI provides limitless possibilities. While AI technology offers compelling investment potential, investing in AI requires in- depth expertise of this rapidly evolving industry to identify the top publicly listed AI companies throughout the world. THE IPO WisdomTree has partnered with renowned tech experts NASDAQ and the Consumer Technology Association A RESTAURANT CHAIN ON THE MENU (CTA) to develop a bespoke strategy that identifies and classifies companies directly involved in the AI value chain, providing a pure thematic exposure. After stealing headlines from brands, Jiumaojiu and Tai Er, made its main rivals, the NYSE and up 98% of its revenue. Jiumaojiu Nasdaq, in 2019, the Hong Kong has restaurants decorated in the stock exchange welcomed its first style of the Shanxi province and IPO of the year from a Chinese Tai Er has been very successful +3.25% To learn more about the growth drivers of this industry restaurant giant: Jiumaojiu in- with its fish-based menu. The IPO Global growth expected ternational Holdings. The group, should allow the group to triple its in 2020, compared to and the structure of the AI value chain, visit: based in Guangzhou, owns 328 number of restaurants by 2021, as 3% in 2019, according restaurants in China under five well as pay back some of its debt. to estimates from WisdomTree.eu/AI different brands. The two main 9922 Aviva Investors. WisdomTree Ireland Ltd is authorised and regulated by the Central Bank of Ireland. Our Conflicts of Interest Policy and Inventory are available on 12 request. The value of an investment may go down as well as up and past performance is not a reliable indicator of future performance.

Swissquote AI.indd 1 21/11/2019 16:40:08 SWISSQUOTE MARCH 2020 TRENDS SWISSQUOTE MARCH 2020 TRENDS HAPTX GLOVE

the country MOROCCO Free zones and qualified jobs Morocco, the subject of this magazine’s special feature in 2016, continues its industrial acceleration the figure policies. Free zones, which are vital to DAVID L. CALHOUN this strategy, are appearing all over the country to attract companies in A new pilot for Boeing the aeronautics and car industries, among others. Companies that set After a terrible year, Boeing has split up shop in Morocco receive tax and the innovation from its CEO Dennis Muilenburg. customs benefits. Big companies HAPTX GLOVE Company Position David L. Calhoun, previously senior that have been attracted to the HaptX CEO managing director at investment country are Renault, which has had firm Blackstone, replaced him on locations in Morocco since 2012, and Gloves of the future Launch Age 13 January. With an accounting PSA, since summer 2019. not 62 degree from Virginia Tech University, The policy creates jobs After two years of testing, the start- late 2018 and has already won over two systems communicated Calhoun spent the majority of his in a country where the up HaptX has raised $12 million to many big clients, such as Nissan and combined Nationality career – nearly 26 years – at General Population youth unemployment rate develop the next generation of hap- All Nippon Airways. These gloves can can simulate Projected cost American Electric, before joining the audience 36,029,138 is 25%. But it is unclear tic gloves designed for virtual reality render incredibly realistic sensations the pressure not measurement firm Nielsen in 2006, (2018) whether this strategy and telerobotics. This fundraising of touch thanks to an exoskeleton of an object communicated and then Blackstone in 2014. At Boeing, he will take the will pay off in the long also comes with a partnership with and a liquid that travels through the on your fin- helm of a company still embroiled in the 737 Max disas- GDP per capita term, as Morocco is still Advanced Input Systems, a company gloves. The flow and pressure of the gers and in your hand, as well ter. But many analysts believe that Calhoun’s expertise, $3,257 (2018) on the European Union’s specialising in human-machine inter- liquid are regulated by 130 devices as an object’s texture, shape, which is focused more on finance than engineering, is grey list of tax havens faces. The first prototype came out in called microfluidic actuators. These volume and temperature. not enough to overcome Boeing’s challenges. Howev- Growth and Canadian constructor er Calhoun knows the US aircraft manufacturer well: +3% (2018) Bombardier recently left he has been a member of Boeing’s board of directors the country after selling Main industry since 2009 and became chairman in October 2019. sectors its factories to US com- agriculture, pany Spirit Aerosystems. tourism, textiles and leather, phosphates

14 15 400 x 260 mm Swissquote, en

Statement USM stands for timeless design, subtle yet prestigious. Its simplicity grants freedom of style, its reduction creates space for maximum class. Visit our authorized sales partners or Configure your our USM Showrooms in Berlin, Bern, individual piece Düsseldorf, Hamburg, London, Munich, of USM online! New York, Paris, Stuttgart, Tokyo. SWISSQUOTE MARCH 2020 ANALYSIS SWISSQUOTE MARCH 2020 ANALYSIS SPECIALISTS’ VIEWPOINT

INTERVIEW

How can you explain the valuation gap between so low that even the slightest improve- “The potential for a the United States and the rest of the world? ment in economic conditions will result The main factor at play here is the in increased share prices. Given its profitability of US companies, which far current low valuation, the Japanese correction is very high exceeds the profitability of companies market also seems promising. However, elsewhere in the world. As long as this even though their valuation levels are profitability remains high (ed. note: attractive, emerging markets will likely in the United States” according to Factset, earnings per share see limited growth as long as the dollar After years of underperformance, European markets seem to be in of companies on the S&P 500 have on av- remains strong and trade relations erage grown 9.1% over the last 10 years), between the United States and China the best position to participate in the correction expected this year. the threats weighing on the US market continue to be tense. Cyclical values are inexpensive and therefore preferred. will not actually materialise. BY ANGÉLIQUE MOUNIER-KUHN Where is the Swiss market in terms of valuation? The Swiss market is expensive compared to other European markets, such as “Given its current low Germany, which is expected to perform valuation, the Japanese better in the months to come. But this market also seems overvaluation can nevertheless be explained by many high-quality and non- As the market saying goes, trees don’t grow to the higher than in the weeks before the 2007 promising” cyclical values in the Swiss Market Index sky. But according to research firm Morningstar, crash. As a result, the Price to Book ratio (SMI), such as Nestlé in the essential US stocks have already grown nearly six times (ed. note: market price per share divided consumer goods sector, and Roche and more than stocks in the rest of the world since the by accounting value per share) in the This profitability is largely boosted by Novartis in the health sector. last big market crash in March 2009. As a result, United Sates is currently 3.4, compared a technical factor: in 2019, the biggest the valuation gap between the United States and to 2.5 in 2007. Comparatively, the ratio buyers of US stocks weren’t institutional Most of your research is long-term. foreign markets has continued to widen over the is 1.8 in Europe, 1.3 in Japan and 1.7 on or private investors, nor passive funds, What are your predictions beyond 2020? past 10 years. US stocks are expensive. Is it time average in emerging countries. So the but rather US companies themselves Our internal research, as well as external to look towards other markets? We discuss this potential for a correction is very high through stock buyback programmes. studies, show that long-term market re- idea with Manfred Schlumberger, head of port- in the United States. By reducing the number of stocks in turns can be predicted based on current folio management at StarCapital. The research circulation, these programmes, which valuation levels. In five to 10 years, we team from this management company (a German However, it doesn’t seem likely that this reached a new record high in 2019, me- expect that emerging markets will gener- subsidiary of Swiss-based Bellevue Group), are will happen in 2020. For the market to chanically boost the earnings per share. ate the highest performances. This will experts in the links between valuation levels and turn around, either the economic situ- be the case for Russia in particular, stock performance. ation would have to deteriorate signifi- You’re expecting growth to rebound in 2020. where stocks are affected by the polit- cantly, the big central banks would have Which markets will benefit the most? ical climate and are now extremely af- Do you share the growing belief that to stop their accommodating monetary Europe seems well-positioned to out- fordable, but also for China and markets the US market is now too expensive? policies, or tensions between China and perform the rest of the world, partly in Southeast Asia. No matter which benchmark indices you the United States would have to get because the valuations are low, and also look at, valuations of US shares are not worse. We don’t expect any of these because the European indices are very MANFRED SCHLUMBERGER only more expensive than the rest of the scenarios to happen. Instead, we are exposed to cyclical values. In certain HEAD OF PORTFOLIO MANAGEMENT world, but also, if you look at historical predicting improved global growth and sectors such as industry, energy, materi- STARCAPITAL comparisons, they are now priced even continued support from central banks. als and finance, some valuations are

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ANALYSIS SWISSQUOTE MARCH 2020 ANALYSIS SWISSQUOTE MARCH 2020

In the latest version of its annual A sign of the times, study, entitled “Levelized Cost of the Mühleberg nuclear FOCUS Energy Analysis”, the bank Lazard power plant in the calculated that the levelised cost canton of Bern was shut down on December of energy – which measures the 19. Its operating cost net cost of electricity generation had become too high over the entire lifetime of a given given the investment system – has fallen 70% for wind required. power and 80% for solar over the past 10 years, thanks in particular A dark future to massive investment from China. “Over the same period, the cost for nuclear has increased 26%,” says Mycle Schneider, coordinator of the for nuclear World Nuclear Industry Status Report. The outlook for the sector is gloomy as a result The main reason for that has been in- of rising costs and competition from renewable creased safety measures introduced after Fukushima. energies. In its most recent edition, the World BY ANGÉLIQUE MOUNIER-KUHN Nuclear Report highlights a balance of power that is very unfavourable to the nuclear sector – which still represents 10% of the global energy mix – compared with renewables. The report states that “to protect the climate, we must abate the most or Austria and Luxembourg, excluded. It is widely accepted that on taxonomy,” says Nicolas Redon, carbon at the least cost and in the CHRISTIAN BEUTLER / KEYSTONE considering nuclear as a nuclear power emits little CO2, and who specialises in green finance least time”. It goes on to say: “nuclear sustainable energy source its supporters say that it is there- at the media platform Novethic. power is slow. It meets no technical Fwas out of the question. France, fore an indispensable energy source “That’s why nuclear is now in a sort or operational need that low-carbon Hungary and the UK, however, for combatting climate change. But of quarantine zone.” The European competitors cannot meet better, fought to make sure it was recog- the management of nuclear waste Commission has given itself two cheaper, and faster.” Germany, which plans to phase out market also provides an indication of nised as sustainable. Such battles still raises much uncertainty. years to assess how nuclear waste nuclear power by 2022, recently what is going on. In 2019, the MVIS are typical within the European affects its environmental objec- The known amount of investment announced that in 2019 it gener- Global Uranium & Nuclear Energy Union. On 18 December 2019, after tives and decide whether or not to decisions for the construction ated more public electricity from Index (25 companies generating over much political sparring and arguing include nuclear in the taxonomy. of nuclear reactors in 2018 was renewable sources (46%) than from 50% of their revenue from nuclear) with lobbies, the 28 member states Most European sustainable-finance $33 billion for roughly 6.2GW, which coal and nuclear combined (43%). lost 2%, while the Renewable Energy finally approved the “taxonomy” “There is no longer labels already prohibit investing is less than a quarter of the amount Industrial Index (“RENIXX”, com- project for sustainable activities. any economic in companies linked to the nuclear invested in wind and solar power. Mycle Schneider offers a strong prising the 30 biggest companies rationale behind sector, by setting exclusion thresh- As more and more projects are de- conclusion: “Whether the life of worldwide in the renewable-energies It’s a strange word for an important olds for companies whose nuclear layed and scrapped, the number of existing nuclear plants is extend- sector) gained nearly 60%. issue: helping the continent achieve nuclear, which activity exceeds 5% of revenue. reactors under construction world- ed or new plants are built, nuclear carbon neutrality by 2050 thanks to a continues to survive wide is down for the sixth year in is not an efficient way to address Since 2007, the total underper- harmonised classification system to only for political Regardless of what Europe decides, a row. A total of 46 reactors were the urgency of climate change. On formance of the MVIS nuclear index identify “green” activities. Simply put, global opinion on nuclear power under construction in mid-2019 – the contrary, it directs investment has been around 80% compared the taxonomy initiative aims to chan- reasons and thanks has been largely negative since the including 10 in China – versus 68 away from renewable options that with a global benchmark such as nel funds to the green economy. The to subsidies” Fukushima disaster in March 2011. in late 2013. are much more competitive. The the MSCI World. Back then, nuclear Commission will continue to make Mycle Schneider, coordinator of the Standard & Poor’s recently noted that reality is that there is no longer any operators saw their share prices adjustments to the proposal before World Nuclear Industry Status Report “concerns about the safety of nucle- Another sign of the times: in ten of economic rationale behind nuclear, peak at levels that seemed unat- it comes into effect in early 2022. ar plants and nuclear waste storage the 31 countries that have nucle- which continues to survive only tainable for many of them, such as solutions, an ageing global nuclear ar plants, more electricity is now for political reasons and thanks France’s EDF, whose stock is now Nuclear and gas have not yet been fleet (editor’s note: average age is generated from renewable sources to subsidies.” worth nine times less than in 2007, officially included in or excluded “The member states needed to over 30 years), and massively esca- (excluding hydro) than from nuclear. and Germany’s RWE, whose share from the taxonomy, while solid fossil compromise in order to avoid lating costs for many new projects Global electricity production from Low profitability, delivery delays, price is still four times less than at fuels (such as coal) have been blocking the entire agreement have added to the industry’s woes.” nuclear is below its 2008 level. skyrocketing costs – the stock its peak in January 2008.

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from crystals to hotels

Whisky, perfume, hotels and beauty products: the Zurich-based crystal group diversifies for growth. We take a closer look.

BY BENJAMIN KELLER

o you know the Lalique problem: crystal is no longer growing. brand? If not, that’s un- “It’s a difficult market,” said René derstandable, as most of Weber, analyst at Vontobel Bank. its products are reserved Yet crystal is in Lalique’s DNA. BY THE NUMBERS for the ultra-rich. Think crystal vases priced at A HISTORIC HOUSE €60,000 and €730 for a table clock When René Lalique engraved the 136.4 decorated with swallows. Lalique letters “RL” on his creations for the 2018 revenue also sold the most expensive bottle first time and created the brand in in millions of euros of whisky of all time ($628,000 at 1888 in Paris, the French jeweller Sotheby’s in 2014), as well as decor always favoured glass. He paired it from the renowned Orient Express, with other materials such as gold, to name just a few of the group’s precious stones, mother-of-pearl, most spectacular items. The crystal ivory, horn and enamel, which at the 720 maker is legendary, but not immune time was ground-breaking artistry. Number of employees to change. In fact, Lalique has evolved Upon René’s death in 1945, his son significantly in recent years. Marc decided to shift the brand towards crystal. The group, headquartered in Zurich 1888 and listed on the Six Swiss Exchange When René Lalique’s grand-daughter The bar at Villa René Year the company Lalique in Alsace. since 2018, no longer focuses solely became head of the company in was founded The premises houses on jewellery, decorative objects and 1977, she decided to continue in the a 5-star hotel, a two architectural pieces. Lalique has same vein. Marie-Claude also decided Michelin-star restaurant and a wine cellar. They significantly expanded its range of to break into what would become all act as a showroom products and its portfolio now in- one of the group’s flagship prod- for the brand. cludes perfume, cosmetics, whiskies ucts: perfume. In 1994, the company 1 and hotels-restaurants-showrooms. joined the portfolio of French group Number of factories, This diversification is inevitable for Pochet, specialising in luxury pack- at Wingen-sur-Moder growth. Indeed, Lalique has a scale aging. It was then acquired in 2008 in Alsace, France LALIQUE

22 23 24 ucts areproduced inthebrand’s Since 1921,all Laliquecrystalprod as otherobjects. famous skullsinallforms,as well create acollectionthatincludes his nessman) partneredwithLalique to Hirst. TheBritishartist(and busi temporary artists,suchasDamien some ofthemost“bankable”con art, thecompanycollaborateswith lery, artandhotels/gastronomy.In rior architecture,perfume,jewel production: decorativeobjects,inte divisions, allstemmingfromcrystal Today, theLaliquebrandincludessix CONTEMPORARY ART Lalique products. also functionasashowcasefor near Bordeaux.Theserestaurants two inAlsaceandoneBommes, rants locatedonancientestates: hotels withMichelin-starredrestau group recentlyopenedthreeluxury hotels andrestaurants.Indeed,the invested intoLalique,excluding markets.” Intotal,€30million was open newpointsofsaleinstrategic and diversifytheoffer, aswell invest infactorymodernisations trol, rescaledistributionnetworks, maintain strict,efficientcostcon ing. “Theplanessentiallywasto new directioninvolvedrestructur Roger vonderWeid. Asaresult,the Lalique wasstruggling,” said CEO “At thetimeofacquisition, tion capacitiesand...diversify. produc around theworld,increase acquisition weretoexpandthebrand TheLalique. renamed goals of the by SwissgroupArt&Fragrance, such asDamienHirst artists, contemporary “bankable”of themost withsomecollaborates companyThe ------growing fast(seeinsetbelow). Ultrasun sunproducts,whichare The Beautydivisionalsoincludes tract tocreateaperfumecollection. signed anexclusivelicensingcon and soonBrioni–thecompanyjust Bentley, Samouraï,Grès,AlainDelon Lalique perfume,butalsoJaguar, the beautydivision,whichincludes revenue. Theotherhalfcomesfrom brand makesup60%ofthegroup’s a Chinesefund).Theeponymous French groupBaccarat(boughtby crystal brandintheworldbehind Lalique isthesecond-largest and 3Dprinting. modern methodslikedigitalwork moulding fromawaxmodel)with lost-wax casting(aprocessof glassmaking techniquessuchas in France,whocombineancient together someofthebestartisans there in2011.Thefactorybrings A Laliquemuseumalsoopened strong traditionofglassmaking. Moder inAlsace,aregionwith historic factoryinWingen-sur- ANALYST ADVICE at Zurich Cantonal Bank. Cantonal at Zurich analyst ted,” Bürki, Daniel said expec than more costing and longer istaking Japan, but that shops in of crystal network its isexpanding group cess. “The suc hindered Hong also Kong in Tensions embargo. Iran the and East Middle the in conditions market 25%,by due difficult to dropped perfumes but Lalique (up 4%), well performed Crystal million. €35.5 3%, reaching down were division Lalique the turret. Sales of products from Glen The distillery whisky tish Scot the of acquiring cost the by explained be mainly loss can The expectations. analyst with par not on are results These lion. mil €70 up 5%,was reaching year. But revenue previous the million aprofit€1.3 to of pared com net loss of €0.8 million, 2019. a generated company The of half first the in dued results The Lalique group posted sub posted group Lalique The LICENSED PRODUCTSSAVE THEDAY PORTRAIT

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- - - everyday consumers,butalmost. dle.” That’snotquitewithinreach for offer startsat€65forascentedcan perfume andcostumejewellery.“Our and/or functionalproductssuchas it youngagain”withmoreaccessible also “democratise”thebrand,“making that thediversificationstrategywill brand, RogervonderWeid emphasises inevitably seenasaveryhigh-end of living”.AndwhileLaliqueisstill brand, “inotherwords,aFrenchway establish Laliqueasalifestyleluxury share. ThegoalsetbytheCEOisto Wyss; eachcompanyholdsa50% with SwissentrepreneurHansjörg was completedviaajointventure Roger vonderWeid. Theacquisition following acompletere-branding,” said 2020 inthesuper-premiumsegment, preparing torelaunchthebrandin ky distillery,TheGlenturret.“We’re functioning singlemaltScottishwhis would acquireaportionoftheoldest announced inMarch2019thatit Finally, theZurich-basedcompany SCOTCH WHISKY -

LLQ currently abit high. currently is price share the but believe recommend keeping shares, Analysts Asia. Southeast and Japan China, are for Lalique kets mar dervon Weid. priority The 2020,” in ting Roger CEO said star profitability our growing “We’re on gradually focusing 2018. 4.5% to in 1.5%, compared of margin aEBIT predicting year, current for the downwards outlook its revised group The of revenue. lots in bring also could business whisky the that perfumes. Bürki agrees, adding Lalique as well as growth, future products drive will Lalique’s licensed its and Ultrasun Bank, René Weber, at Vontobel analyst For upwards. is trending (Jaguar, Bentley, etc.)fumes per licensed from revenue And €15.5 million. reaching up 18%, were products sun of Ultrasun Sales well. is doing division beauty the Meanwhile, SWISSQUOTE MARCH2020 SWISSQUOTE

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test, suddenly pulled a design using the symbols adopted by protesters (umbrellas, gas masks and the Hong Kong flag). Google and Apple removed from their app stores a vid- Hong Kong eo game inspired by the Hong Kong movement, as well as an app that can track police as they move about is becoming the port city. “These examples are proof that even the biggest companies are not protected from the ire of the govern- a minefield ment,” said Irving Schenkler, management communication expert at the New York University Stern School of for companies Business. These companies are in a minefield, because if they concede to the demands of an authoritarian As demonstrations continue in the port city, government, they could damage their reputation in democratic countries. several groups find themselves involved in A Starbucks Coffee “The millennial generation is growing the conflict. in Hong Kong, a in these countries, and this segment collateral victim of BY JULIE ZAUGG, IN HONG KONG anti-Beijing protests of the population favours brands that (November 2, 2019). defend their values,” said Schenkler. XXX AHMAD MASOOD / REUTERS Given this peculiar context, companies are faced with a difficult decision: either protect their access to the gigantic Chinese market, Don’t you feel guilty drinking ers. Restaurant chains Genki Sushi, well as brands that actively made Indeed, being part of the pro-Beijing the honeymoon period was short- or maintain their customer bases your coffee?” This accusation The Cheesecake Factory and Shake life for the protesters more difficult,” camp could have consequences that lived. In early October, Beijing an- in Europe and the United States. was spray painted in yellow Shack, all managed by Maxim’s in said Terence Chong, economics pro- reach far beyond the Hong Kong nounced that Cathay employees who The US National Basketball Asso- “capital letters on a Starbucks in the Hong Kong, were also graffitied or fessor at the Chinese University of market. US video game giant had participated in the protests would ciation (NBA) paid the price when centre of Hong Kong at the beginning ransacked. Restaurants owned by Hong Kong, citing HSBC as an exam- Activision Blizzard found itself in be banned from working any flight to Daryl Morey, the general manager of December, not far from a demon- Japanese brand Yoshinoya suffered ple. In December, the British banking the eye of the storm in October, China. A call to boycott Cathay also of the Houston Rockets, tweeted in stration of nearly 800,000 people. a similar fate after its head partici group froze an account containing when it announced the suspension went around Chinese social networks. favour of the Hong Kong protesters. The cafe was also vandalised: pro- pated in a pro-Beijing march, and HKD 70 million (8.7 million Swiss of professional gamer Blitzchung for As a result, Cathay Pacific back- The tweet was quickly followed by a testers broke the windows, upended Chinese electronics groups Huawei francs) that was created to pay supporting the protesters. Using the tracked and fired around 20 employ- series of embarrassed press releases sofas and shattered coffee cups. and Xiaomi were also targeted. Seve protesters’ legal fees. In subsequent hashtag #BlizzardBoycott, thousands ees linked to the protests, while the from the NBA, distancing itself from ral branches of state banks Bank of weeks, HSBC branches were vandal- of gamers instantly posted screen- CEO was pressured to resign. Morey. After the tweet, the league lost The protesters, who have been on the China and China Construction Bank ised and set on fire several times. shots to Twitter, showing that they most of its contracts in China, while streets for more than seven months were set on fire. had cancelled their World of Warcraft Luxury brand Tiffany’s had to release gaining support from the US public. protesting against the increasing But violence wasn’t the protesters’ subscriptions. US senators criticised a denial after an advert showing a control of Beijing, were actually only weapon. “The protesters are very the company and a group of Blizzard Chinese model covering her right According to Schenkler, it is rare angry at restaurant group Maxim’s, Indeed, being part disciplined and well-organised, par- employees went on strike. eye with her hand (a symbol adopt- that a brand can truly capitalise on which operates the local Starbucks of the pro-Beijing ticularly via social networks, so they ed by the protesters in support of its political stances: “It only works cafe. In September, Annie Wu, the were able to boycott several brands However, brands that decided to a woman whose eye was injured by if the position corresponds with the daughter of the restaurant empire’s camp could have with remarkable effectiveness,” said support the protests, such as airline police) sparked outrage on Chinese company’s fundamental values, the founder, denounced the protesters consequences that Chong. Protesters created a colour- Cathay Pacific, didn’t fare much social networks. opinions of its main leaders, and its and called on Beijing to retaliate in a reach far beyond the coded map of the city: establishments better. The local company won praise public image.” As for the Hong Kong speech before the UN Human Rights Hong Kong market that supported the protests were from protesters when a pilot used BRANDS CENSORING THEMSELVES protests, this time, Starbucks, the Council in Geneva. marked in yellow and those against one of the protest slogans during an To avoid angering Beijing, many com- only brand with a reputation for them were marked in blue. Some of announcement to passengers, and panies decided to censor themselves. activism (on behalf of LGBT rights), Starbucks is just one of the brands “Protesters targeted brands that are these blue businesses saw their a union published a press release in California shoe brand Vans, which found itself on the wrong side, de- that have sparked ire from protest- strongly associated with China, as revenue fall more than 40%. support of the demonstrations. But was holding a trainer design con- spite its best intentions.

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The HBO Max video streaming platform will be launched in May in the United States. Notably, it will carry the House of the Dragon series, a prequel to the legendary DOSSIER Game of Thrones.

STREAMING IS COMING

Platforms are cropping up everywhere and users can stream everything from films to video games. The almost endless selection is entirely changing the way we consume cultural content.

BY BERTRAND BEAUTÉ

34. Infographic: streaming services take over the world

36. Traditional TV is putting up a fight

40. Interview with Gilles Marchand, director general of SSR

44. Podcasts... to the rescue?

46. Video games: the final holdout

49. Twitch and the future of TV

50. Sport, the new El Dorado for streaming services

52. The kings of streaming Dossier prepared by: Bertrand Beauté, 61. Video on demand, Ludovic Chappex and Grégoire Nicolet HBO a drain on energy

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With 28 billion streams, Canadian recording artist Drake is the most ickey Mouse fans, hold on more than 80% in the United States In a study published in June 2019, streamed artist of to your chairs. Entertain- through the streaming leader Spotify. the firm Digital TV Research estimat- the last decade on ment giant Walt Disney is ed that the number of Subscription Spotify. Ed Sheeran launching its streaming ser- Cloud gaming is only getting started, Video On Demand (SVOD) subscrip- and Post Malone M rounded out the vice in Switzerland on 24 March for with revenue of about $100 million tions would increase from 508 mil- podium. 9.90 Swiss francs a month. Available in 2019, while the video game indus lion in 2018 to almost 1 billion in the United States since November try as a whole is worth $150 billion. in 2024, for growth of nearly 90%. 2019, Disney+ has already started But the launch of Stadia in November off with a bang. Just 24 hours after 2019, Google’s cloud gaming service, But the success of streaming doesn’t its launch, the platform had landed looks likely to accelerate things stop there. Audio books, after long 10 million subscribers. Now it has (see p. 46). being shunned, are now thriving nearly 25 million. thanks to this new form of distribution. According to a Deloitte study “The success of Disney+ shows that published in December 2019, the people want on-demand services,” The number of audio book market is expected to says Thomas Coudry, analyst for the grow 25% to $3.5 billion in 2020. investment bank Bryan, Garnier & Co. Video On Demand Media content (written press and “In just a few years, streaming has subscriptions radio) is also massively migrating to revolutionised the way we consume would increase streaming services, with more and entertainment, whether it’s music, more podcasts and live shows. In video, or, increasingly, video games.” from 508 million early January, the press conference As evidence that there is no going in 2018 to almost given by former Renault-Nissan back, Apple formally announced in 1 billion in 2024 CEO Carlos Ghosn, after his dramatic June 2019 that it would discontinue escape from Japan, was broadcast iTunes, its iconic music software, to live and streamed over a countless focus on its streaming applications: number of websites. Apple Music, Apple Podcasts and Between music and video games, Apple TV. video streaming is growing fast. “Live streaming is the next web The planetary success of Netflix, revolution,” says Romain Tixier, A pioneer in the field, the music with more than 150 million paid co-founder of Yokotu, a London- industry was turned on its head by subscribers worldwide in the second based marketing agency. “For ex-

streaming, which now generates quarter of 2019 (up 24% in the past ample, we work with Warner UK to GETTY IMAGE nearly half of global recorded music year), shows that TV and cinema are develop private concerts available revenue. And that figure stands at following the same path as music. through live streaming.”

1993 1995 1997 2001 2003 2005

In Palo Alto, California, RealNetworks creates the Netflix is created. At the time, Rhapsody, the first online platform Myspace is created, becoming Three former PayPal employees Severe Tire Damage, a garage RealAudio format. RealAudio the company was just an online for purchasing music, is created, a place for musicians to freely create YouTube, the ubiquitous rock band started by IT workers, becomes a streaming pioneer, DVD rental service. offering music on demand for a publish their music. It was imme- online video sharing site. broadcasts live over the internet. with compressed audio flows monthly fee. diately successful. For a certain This was the first streaming of and the use of codecs. period, Myspace was one of the its kind in the world. most-visited sites in the world.

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That will reshape the world of sports which Apple TV+ service is free for broadcasting rights before other one year for owners of its devices sectors are affected. “It’s still too (iPod, iPhone, Mac, iPad, etc.). Quibi, “By releasing all early talk about it, but virtual reality the future platform set for launch A definition is coming. And it will be streamed,” in April, is exclusively designed of streaming the episodes from a says Julien Leegenhoek, a tech stock for smartphones. Developed by series in a single go, analyst at Union Bancaire Privée Jeffrey Katzenberg, co-founder From a technical perspective, Netflix created the (UBP). “All the fantasies of the in- and former CEO of DreamWorks streaming refers to a flow of ternet bubble are becoming a reality Animation, this streaming service data, allowing viewers, for ex- IMAGE PRESS AGENCY / NURPHOTO phenomenon of with streaming.” will provide original content, ample, to watch a continuously binge-watching" each video lasting no longer than playing video. Unlike downloads, Olivier Glassey, sociologist BINGE-WATCHING 10 minutes, for the mobile platform. the data is not stored perma- at the University of Lausanne This revolution is shaking up our nently on the user's smart- consumption habits. “By releasing To contend with the American phone or computer. Streaming all the episodes from a series in giants, the Japanese firm Rakuten is commonly associated with a single go, Netflix created the offers AVOD (or Ad-supported video services (Netflix, YouTube, Platforms such as Mixer and Twitch, phenomenon of binge-watching,” Video On Demand) service with etc.) and on-demand music not to mention social media including says Olivier Glassey, a sociologist the launch of Rakuten TV in (Spotify, Deezer, etc.). But this Facebook and Twitter, now stream specialised in new technology at Europe since late 2019. Will that technique is also used in many a wide range of live content. And the University of Lausanne. “It’s be enough to dent Netflix, Apple other applications, such as Amazon Prime Video is also getting a bit ironic. Video on demand was or Amazon? “Except perhaps in video-conferencing (Skype), live in on the game. In December 2019, supposed to give us more freedom, China, where specific platforms internet programmes (Twitch) the US online retail giant began letting us watch our series when are available, such as Tencent, and video-surveillance. streaming British football cham- and where we want. But the format Alibaba and iQiyi, the global cul- pionship games live, breaking the encourages us to pull viewing mar ture industry is dominated by the But the use of the term "stream- monopoly held by Sky and BT Sport. athons. As long as we can avoid United States,” Thomas Coudry says. ing” has gone far beyond infor- Between 2019 and 2022, Prime the spoilers at the office.” “And that’s not about to change, mation technology vocabulary. Video subscribers can stream because the barriers to break into Streaming has become a global With 34 nominations, 20 matches a year. Romain Tixier Companies have come up with a the market are so high.” cultural phenomenon that mainly Netflix looked set to dominate the 2020 predicts that “Amazon will buy variety of business models to convert refers to the entertainment and Golden Globes. In more rights to stream live sports as many customers as possible. To resist the windstorm of American media industry. That’s primar- the end, it had to events. And YouTube is also keenly For example in video, Netflix offers content, French television stations ily what we will cover in this settle for just two prizes, including interested.” Meanwhile, the NBA SVOD service to access its library. France Télévisions, M6 and TF1 for feature. Olivia Colman's has decided not to go through any However, Amazon has integrated its example have decided to join forces best actress win intermediary. In November 2019, the video service into a larger system to launch the platform Salto in 2020. for The Crown. association announced the launch called Prime, which includes audio But the €15 million they plan to in-

of its own subscription streaming and video content alongside faster vest annually in producing exclusive service, which will stream basketball delivery. This model is similar to content pales in comparison to the games live (see p. 50). the one implemented by Apple, in $15 billion spent by Netflix in 2019.

2006 2007 2008 2014 2019 2020

Scribd, a US platform offering Netflix launches its video-on- Spotify is created. The Swedish Sony creates PlayStation Now, Google launches Stadia, its cloud WarnerMedia joins the video-on- e-books and audiobooks, demand rental service accessible platform goes on to become the a service providing video games gaming service. Disney and Apple demand market with HBO Max, is launched. Dubbed the via personal computers. global leader in music streaming. on demand. enter the now-crowded and Microsoft will launch its video “Netflix for books”, it now video-on-demand market. game-on-demand service xCloud. has over one million users.

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STREAMING SAVED THE MUSIC INDUSTRY STREAMING SERVICES Global music sales are up thanks to streaming services. 20 TOTAL REVENUE OF THE MUSIC INDUSTRY (in billions of dollars) STREAMING SHARE TAKE OVER THE WORLD (in billions of dollars) 15

VIDEO ON DEMAND: THE UNITED STATES IS FAR AHEAD The US market is clearly the most mature, with revenue exceeding 10 €10 billion in 2019.

2019 REVENUE AVERAGE REVENUE PER USER (in millions of euros) (in euros) 5 United States 10,114 81 China 1,578 4 Japan 1,240 42 0 2004 2006 2008 2010 2012 2014 2016 2018 Germany 868 43 United Kingdom 863 49 Canada 388 55 THE OSCARS CHANGE IN NUMBERS Italy 374 47 WITH THE TIMES For the first time, Netflix becomes France 365 39 the most nominated production studio. 15 BN 80% Spain 266 41 NUMBER OF OSCAR NOMINATIONS IN 2020 The amount in dollars Netflix The percentage of revenue Switzerland 93 61 spent to produce original generated by streaming services Lionsgate / content in 2019 for the US music industry in 2019, Belgium 57 27 6 Roadside Attractions compared to 47% globally 8 Neon Universal Pictures / 11 TOP 10 MOST WATCHED TV SERIES IN 2019 X-RATED VIDEOS: Focus Features 60% 15,000 While Netflix produces three of the top 10 series watched STREAMING HEAVYWEIGHTS 12 Warner Bros. The share of video stream- In kilometres, the average in the United States, traditional channels are still in the fight. ing in global data flows, or distance a piece of digital data Just behind video on demand, pornographic 1.05 thousand billion billion (octet) travels, equivalent to 1 Lucifer 6 Game of Thrones content makes up more than one quarter of Sony Pictures 20 octets (1.05 zetta-octets) 37% of the Earth’s circumfer- Netflix HBO all streaming video. in 2018 ence, which is 40,000 kilometres

2 Friends 7 The Big Bang Theory Video on demand NBC CBS (Netflix, Amazon Prime…) Walt Disney / Fox 3 Grey’s Anatomy 8 Riverdale 34% Pornography 23 abc The CW 18% (Pornhub, Youporn…) 45 M 8 BN Video platforms The number of servers that The number of hours of video 4 Brooklyn Nine-Nine 9 How I Met Your Mother 21% NBC CBS 27% (YouTube, Dailymotion…) store data around the world streamed each month in the Other videos 24 Netflix United States in 2018, equivalent 5 Stranger Things 10 Money Heist (Facebook, Instagram…) to 900,000 years Netflix Netflix Sources: Statista Digital Market Outlook, Netflix, Recording Industry Association of America (RIAA), The Shift Project, Swissquote Magazine, The International Federation of the Phonographic Industry (IFPI), GreenIT, TV Time. 34 35 STREAMING SWISSQUOTE MARCH 2020 STREAMING SWISSQUOTE MARCH 2020

Young people don’t watch analyst at investment bank Bryan, Gilles Marchand on p. 40). But at a television any more,” says Garnier & Co. “Especially because time when Netflix and Amazon Prime Julien Leegenhoek, tech stock the arrival of new platforms such as are ramping up their original content, analyst at Union Bancaire Disney+ will expand the SVOD offer- that is no longer enough. “Privée (UBP). In Switzerland, the ing and encourage more people to amount of time 15–29-year-olds subscribe. This trend puts pressure A major turning point was when spend watching television has de- on players in the traditional tele Walt Disney, which has entertained creased by 50% in 10 years (barely vision industry, both paid and free, generations of children via the Disney more than 45 minutes a day in 2018), who now have to react.” Channel, launched its streaming ser- according to the Swiss Federal vice. As well as aggregating its older Statistical Office. productions, Disney is also offering exclusive content on its Disney+ In the US, the pioneer of streaming, “War has only just platform, such as The Mandalorian, almost every demographic group a Star Wars universe spin-off. It was is showing a declining interest in begun. And it will one of the first strong reactions from traditional television: paid television a traditional player. channels have lost more than 10 mil- be epic.” TRADITIONAL TV IS Julien Leegenhoek, analyst at lion subscribers in the last 10 years, And it won’t be the last. In December according to the latest release from Union Bancaire Privée 2019, US companies CBS and Viacom consulting firm Leichtman Research. finalised their merger. The goal was Even more surprising is that 74% of to become powerful enough to de- PUTTING UP A FIGHT US households are now subscribed to Like RTS in Switzerland, Canal+ velop an audience for its streaming one of the top three video on demand (Canalplay) and HBO (HBO Now), offering, CBS All Access. “We are be- services (Netflix, Amazon and Hulu), channels have started to offer coming one of only a few companies compared to 52% in 2015. “replay” offerings, giving viewers with the breadth and depth of con- on-demand access to programmes tent and reach to shape the future of “The decline of linear television is that have already aired on their our industry,” said Bob Bakish, CEO of inevitable,” says Thomas Coudry, an channels (see the interview with ViacomCBS, in a press release. Disrupted by Netflix, Amazon Prime, Hulu and Apple TV+, traditional television channels are preparing their streaming offers. BY BERTRAND BEAUTÉ AND LUDOVIC CHAPPEX

Since December 2019, Sex and the City 2 has been available on Netflix. Released in 2010, the film is the sequel to the Sex and the City original series HBO directed by Michael Patrick King.

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Globally, SVOD customers currently “The price is important, but the the US press. Before that, Shonda subscribe to 1.43 streaming ser- key will be content,” says Coudry. Rhimes, the showrunner behind the US STREAMING vices on average. This figure will According to BMO Capital Markets, wildly successful Grey’s Anatomy HEAVYWEIGHTS increase to 1.78 in 2024, according Netflix has planned to spend and Scandal, as well as Ryan Murphy to Digital TV Research. This pre- $17.3 billion on producing original (Glee, Nip Tuck), also joined Netflix. Netflix Nicknamed the diction leads several analysts to series and films in 2020, compared Basic: $8.99, Standard: $12.99, queen of American Premium: $15.99 network TV, Shonda believe that there won’t be enough to $15.3 billion in 2019 – much more “The inflation on content production Rhimes joined room for everyone. “At some point, than its competitors ($9 billion is enormous,” says Leegenhoek of Amazon Prime Video the Netflix team the industry will undergo a concen- for Amazon and $6 billion each UBP. Each platform needs to offer $12.99 in 2017. This star tration,” says Coudry. for Disney+ and AppleTV+). flagship content. Disney – which Access to the platform is included showrunner is in every Amazon Prime subscription, notably behind the boasts a massive catalogue and which offers other advantages such worldwide hit Analyst Dan Rayburn from US firm But Netflix has a major problem: strong franchises (Star Wars, Marvel, as fast delivery. Grey’s Anatomy. Frost & Sullivan sees things differ- the California company is losing big- Pixar, National Geographic, etc.) – ently: “The question is not whether name programmes. The iconic sitcom seems to have a significant advan- Hulu customers will pay for several Friends, a runaway success since the tage. Netflix, and Amazon to a lesser Basic: $5.99, Premium: $11.99 subscriptions. They simply won’t 1990s and the second most-watched extent, want to produce their own have the choice not to if they want series on Netflix in 2019, left the blockbusters. But this strategy is AppleTV+ content!” Rayburn believes that the platform in early January and moved very expensive.” $4.99 Purchasing an iPhone, iPad, Mac offers are complementary, because to HBO Max. The Office and several or iPod Touch gives a free one-year they all host very different con- successful NBCUniversal series And this causes serious problems subscription. tent. “I’m not saying that tomor- will do the same in late 2020 to join for TV fans: with so many platforms row everyone will subscribe to six Peacock, Comcast’s future platform. to choose from, viewers will have Disney+ platforms, but you’ll see that many to make choices: House of Dragons $6.99 households will soon have four or (HBO Max) or The Mandalorian Peacock five subscriptions.” A flightier audience (Disney)? The Witcher (Netflix) or Price unknown at this time.

HBO Netflix wasted no time in responding Lord of the Rings (Amazon Prime Launches April 2020. to these attacks. In August 2019, the Video)? “Since SVOD subscriptions showrunners of Game of Thrones – aren’t contract-based, the public will Quibi David Benioff and D.B. Weiss – left likely become more flighty,” adds Version with adverts: $4.99. Netflix is already feeling the effects Disney, where they were preparing Leegenhoek. “Each month, they could Without adverts: $7.99. Netflix: the end Launches 6 April 2020. of the golden age of the launch of Apple TV+ and Netflix has a new Star Wars trilogy, and joined subscribe to a platform, binge-watch But the biggest moves are still especially Disney+, which both came Reed Hastings’ empire in a move content, then move to the next plat- HBO Max to come, and, as always, will be in on the scene in November 2019. In planned to spend that cost $250 million according to form the following month.” $14.99. Launches May 2020. the United States: NBCUniversal Q4 2019, the California company only (Comcast) has announced it would gained 550,000 new subscribers in $17.3 billion on launch its SVOD service, Peacock, North America (the US and Canada), in April 2020. It will be joined by well below the 1.7 million it gained producing original the long-awaited HBO Max from the year before. “Our low membership series and films the WarnerMedia group, expected growth in UCAN is probably due to our in spring 2020, which will include recent price changes and to US com- in 2020 flagship titles such as Westworld, petitive launches,” said the company Chernobyl, The Sopranos, Sex and in a letter to shareholders published the City and the massive hit Game on 21 January. of Thrones. It will also host original content, such as a spinoff series “For about a decade, Netflix was Whatever happens, the battle for from the Gremlins universe, which more or less the only player in the the top has begun. And Disney is is currently in production. market,” says Thomas Coudry. “To- bringing out the big guns. In addi- day, it must compete with newcom- tion to offering its large catalogue “The expression ‘streaming wars’ has ers. But not all platforms are direct of content at an affordable price Released on Netflix become widespread, and it isn’t just competitors. Disney and Netflix, for ($6.99 per month, much lower than in 2019, Friends a figure of speech,” says Leegenhoek. example, have fairly complemen- Netflix’s prices), the firm owned by will hit HBO Max in 2020. This “In terms of the players involved, tary approaches to content, which Bob Iger is on the offensive. For the transfer will cost the number of platforms and the encourages people to subscribe to past several weeks, for example, WarnerMedia colossal investments expected, the several services. In the US, for ex- Netflix ads have been banned on all $425 million over

HBO five years, according war has only just begun. And it will ample, households subscribe to of the group’s television channels to US media. be epic.” an average of 1.7 SVOD services.” (ABC, Disney Channel, ESPN, etc.).

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INTERVIEW SSR ENTERS THE STREAMING BATTLE The Swiss broadcasting corporation will launch a new on-demand content platform this autumn. SSR’s Director General Gilles Marchand granted us an interview at the company’s Bern headquarters. BY LUDOVIC CHAPPEX, PHOTOS : OLIVIER VOGELSANG

The SSR director general wants to raise the bar on VOD.

e find ourselves in the on the 10th floor of the group’s head- forward, because for the first time able to access reports from various of content. But you will still be able In terms of producing office of Gilles Marchand, quarters. Marchand is known for his in the history of SSR, programmes language regions. We will also offer to watch tennis on rts.ch, for exam- fictional content, do you around the large wooden sense of anticipation and his sharp will no longer be organised by lin- selected content from events with ple. All of our regional portals will think the day will come W conference table that also knowledge of the media world in guistic regions but instead organ- which we partner. continue to be free to access. when SSR could compete serves as a desk, where some of Switzerland and beyond. He de- ised by subject. They will be offered with the best Danish series? SSR’s future is decided. In a corner scribes the future of SSR, which in original languages with subtitles Viewers register for free to access Will the new platform That’s the goal! There’s also very of the room, two televisions are is focused on streaming, and the for all of Switzerland. We believe the platform and will be able to offer exclusive content? high-quality television coming from mounted high on the wall, both digital challenges in the audio-visual that we have a lot of content that choose the language of the interface The idea is more about offering another Canada, Belgium and Israel. I think showing SSR channels. On Monday landscape that are to come. all regions can enjoy. so that we can suggest interesting way to watch our productions. All con- it’s possible to aim for that level 27 January, tennis is playing with content. The data collected will be tent will be broadcast via our tradition- of content. But until now in no sound. Rafael Nadal is sizing up SSR will launch a large streaming What will the content be? secure and not sold. The goal is to use al linear channels and then made avail- Switzerland, the production volume Nick Kyrgios in the Melbourne night. platform in autumn 2020. What is Primarily fiction and documentaries. technology to serve public demand. able for streaming on demand. Viewers was too low to gain enough expertise “I brought this table with me from the goal of the new service? These two genres lend themselves will be able to access the catalogue in in the matter. By increasing invest- RTS,” said the Lausanne native and Viewers today are looking for more à well to on-demand viewing and What about sporting events various ways: via the internet, applica- ments in fiction, as well as system- former director of TSR (Télévision la carte options and fewer traditional thematic grouping. For example, if and news? tions, and even traditional televisions. atic dubbing and subtitling, we will Suisse Romande) with a smile. linear channels. With this project, we you search for the word “pandemic” We will not include those on this We’re currently talking with telecoms become more knowledgeable as we Appointed Director General of SSR are meeting a strong demand from – a current news topic (ed. note: at platform. Linear broadcasting companies and everyone interested in broadcast the same series to all in 2017, he is now located in Bern, our audiences. It will be a big step the time of writing) – you would be channels are perfect for this type carrying this offer. regions of the country.

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the rise. This situation is problematic NZZ, Ringier, Tamedia and CH Media. Is SSR involved in any because our financing model is mixed The goal is to develop a single international digital projects? – historically 75% of revenue is from subscription system where users TV5 Monde will develop a sizea- royalties and 25% from commercial can access content from the ble à la carte digital offer called revenue. As it’s illegal to run adver- various participants. TV5 Monde+, and we will be closely tising on digital channels, we are tied to that. This platform will host losing revenue. So we are blocked programmes for which the global on this point. rights are free. Canadian groups in particular are very involved in Does this situation seem unfair, this project. In terms of heritage, given that most media also it is a way to showcase the best produce video and sound? Francophone content in an on- I’m not saying it isn’t (laughs). “Take the Disney demand format. This is actually a current topic. The bigger overall question is how catalogue, in my What do you think of the will various national media coexist Salto on-demand video in a minuscule market that is under honest opinion in service, including the French attack by various international order to compete broadcasting groups TF1, M6 players? Some publishers believed – and France Télévisions, due maybe they see things a bit differ- with such an to be launched this year? ently now – that SSR’s digital devel- I think that for national operators, opment would make them lose even avalanche, it’s in whether public or private, it is in Gilles Marchand more money, so they shut down that their best interest to band together outside SSR’s your best interest headquarters possibility. We tell them: we’re not to resist the advances of global cat- in Bern. your competition. The real danger is to consolidate the alogues. Take the Disney catalogue international platforms coming from that’s coming now, in my honest the United States. best national opinion in order to compete with such an avalanche, it’s in your best To compete with GAFA which content” interest to consolidate the very best have massive advertising national content. Could SSR gain international future. But we already have quite a ting-edge when it comes to audio. In revenue, have Swiss media fame? How would you challenge with video, so it’s hard to Italian Switzerland, RSI has a studio outlets decided to bury the In terms of increased competition achieve that? imagine a common entry point for open to YouTubers. hatchet and work together? between broadcasters, what When we are minority co-producers all languages. I’ve been calling for cooperation do you think the future of sport of a series with French or German Are listeners’ consumption like this for a long time. It would will be at SSR? Will the Swiss broadcasters, the series is never Within SSR, many digital innova- habits very different in German put us in a better position to defend public service broadcasters still filmed in Switzerland, and the cast- tions are coming from RTS. Switzerland compared to Switzerland’s media positioning. Another very concrete example: show high-level competitions in ing is determined by the country that They include the show Nouvo, Romandy? We’re too small to tear each other Swiss Radioplayer launched in 2018. five years? provides the most financial support. the Play RTS app and the new Sometimes. For example, it’s inter- down. By bringing together digital This app is a hub for many Swiss It depends on the type of sport. So to make a name for ourselves programme about video games esting that Instagram is so powerful content creators from SSR and other public and private radio stations. It Yes for the Olympic Games, the internationally, we have to be able that has just launched on Twitch, in German Switzerland and less so publishers, we could attract more creates a critical mass – useful for World Cup and very Swiss sports to produce content in Switzerland. among many others. German in Romandy. Conversely, Facebook re- Swiss advertising. convincing auto manufacturers to such as skiing. But it will be very That’s also one of our goals: to show- Switzerland doesn’t seem quite mains very popular in Romandy, but is use our audio station as the default difficult for the UEFA Champions case Switzerland in something other as open to experimentation. losing ground in German Switzerland. But this doesn’t seem like programme in their vehicles. League, for example. Now, there than the news. It’s a type of “soft Why do you think that is? It is possible that cultural influences it’s on your roadmap... is an incredible bidding war to ac- power” that we’re trying to develop, You’re right, Romandy is quite the from France and Germany, respec- Publishers need to recognise that We are also partners in the Initiative quire TV rights, due to new players which also corresponds to our inter- pioneer. That’s the case currently in tively, are playing a role here. this is an attractive potential gain for Media Innovation (IMI), a centre of on the scene, including Swisscom. national plans. the fields of artificial intelligence for them. That’s not entirely the excellence at EPFL that works with and archive management. In terms of Getting back to SSR platforms, case yet. various publishers and universities, In my view, the rights holders are Will podcasts be included AV, I think it comes down to location. what segment of your viewers as well as RTS. We have several wrong to think in the very short on this new platform? Romandy channels are more interna- watch your channels on your Nevertheless, aren’t there some ongoing projects, particularly a very term. If people ever have to pay It will primarily be a video platform. tionally-focused because of their ties website? technological projects that you interesting project about algorithms to access every single match, the The user experience distinguishes to the French-speaking world. That It’s increasing all the time. Our pen- could lead together? Or some that can track fake news. This inno- audience will fall. Rights holders between video and audio rather said, German-speaking Switzerland etration rate via linear channels is potential shared goals? vation will be of interest to both print will then have a problem with their clearly. I’m not categorically reject- has also achieved plenty of innova- decreasing, which is the case all over Of course. For example, SSR is part and AV media. It will be available to sponsors, who will complain about ing a potential audio platform in the tion in recent years. It is very cut- Europe, and on-demand viewing is on of a Swiss digital group that includes all partners. not reaching a big enough audience.

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when it has to share its revenue.” duction and monetisation tools Is this enough to keep the company "Our growth in podcasts is just Indeed, while the music industry for podcast creators. With these in the black for an extended period phenomenal," Ek is happy, Spotify is unable to turn acquisitions, Spotify now owns of time? In a letter to shareholders said in 2019. For a profit, despite its 250 million the entire value chain: production sent in October 2019, Spotify wrote Spotify's CEO, this format represents monthly users (113 million of (Gimlet and Parcast), broadcasting that podcasts will convert free his platform's future. which have paid subscriptions) (Spotify) and content monetisation users into paid subscribers at a and an annual revenue of nearly (Anchor). And Spotify doesn’t plan rate that is “almost too good to €5.3 billion in 2018. to stop there. According to The Wall be true”. Nevertheless, the com- Street Journal, Spotify also hopes pany, which now has more than To reverse this trend, the global to acquire The Ringer, an American 500,000 podcasts available, faces music streaming leader, ahead of sports podcast site. a daunting rival in Apple. Apple Music (60 million users) and Amazon Music (55 million), has no choice but to find other sources of revenue. How about producing music directly? That would mean According to a Deloitte study, this market war with major labels such as Universal, Sony and Warner, which is expected to grow 30% in 2020 are Spotify’s main partners. Organ- ising concerts maybe? The industry is dominated by giants Live Nation and Ticketmaster. “We are really expanding our mis- Until now, Apple settled for simply sion beyond music to everything hosting and distributing audio con- So instead of throwing itself into audio,” explained Spotify co-founder tent on its platform Apple Podcasts. difficult battles, Spotify has de- and CEO Daniel Ek in an interview However, according to Bloomberg, cided to focus on a booming audio with CNBC. A strategy endorsed by the Cupertino company is currently format: podcasts. A word combin- Leegenhoek: “Spotify aims to be- working to create podcasts tied to TORU YAMANAKA / AFP TORU YAMANAKA ing pod (like iPod) and cast (from come a kind of Netflix for audio, in its original series on Apple TV+. broadcast), podcasts are audio that it will produce its own content content that is either streamed or just like Netflix creates its own The goal is to create a virtuous cir- downloaded, which can be a docu- films and TV series. As a result, cle between video and audio. Since mentary, fiction or news. Created Spotify won't be required to pay out June 2018, Google has also had its in 2017, The Daily podcast from the majority of its revenue in roy- own application for podcasts, but The New York Times has two million alties.” According to Ek, podcasts for the time being, the Mountain listeners per day. could eventually make up 20% of View company only hosts content PODCASTS... reak out the bubbly! Defying total listening time on Spotify. and doesn’t create it. all expectations, in Q3 of According to a Deloitte study 2019 Spotify generated a published in December 2019, this TO THE RESCUE? B profit. In its 14 years of market is expected to grow 30% existence, this is only the second in 2020 to reach $1.1 billion in time that the global leader in online revenue. So, it’s a niche market, music has been in the black. But but a booming one. To break into AUDIOBOOKS GAIN CREDIBILITY Feeling cheated out of the spoils of the it’s likely the celebrations won't the industry, Spotify announced in music industry, Spotify is looking to create last. The Swedish company, which February 2019 that it was acquiring will publish its results in February, two American companies special- “Streaming dominated this year’s fair.” In the closing original audio content. This booming speech for the 71st Frankfurt Book Fair, the fair’s CEO industry is attracting many players. expects to fall back into the red in ising in podcasts: Gimlet Media for Juergen Boos said it himself: audiobooks are gaining the upcoming quarters. $230 million and Anchor for more more and more ground on printed books, thanks to BY BERTRAND BEAUTÉ than $100 million. In March, it will smartphone streaming. In the United States, audiobooks “Spotify pays most of its revenue acquire a third company, Parcast. already make up nearly 10% of the publishing industry, (ed. note: between 50% and 75% and according to a study from consulting firm Deloitte, depending on the label) to music Created in 2014, Gimlet produc- the global audiobook market is expected to grow by 25% in 2020, reaching $3.5 billion. The leading company in labels in the form of royalties,” said es many podcasts, particularly the industry, Audible, was acquired by Amazon in 2008. Julien Leegenhoek, tech stocks an- the very popular audio thriller Scribd, often described as “Netflix for books”, offers an alyst at Union Bancaire Privée. “And Homecoming, as does Parcast, alternative to the e-commerce giant. There are also a for Spotify this situation is not ideal which is also an audio content few audiobooks available on music streaming platforms in the slightest. It feels cheated creator. Anchor develops pro- Spotify and Deezer.

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The advantage of Stadia was that lack of original content, Stadia didn’t gamers only needed a controller convince serious gamers to immedi- (provided) and a sufficient inter- ately sell their PlayStation, Xbox or net connection to use the service. gaming PC, it is still the most accom- Actual game play (real-time delivery plished and accessible cloud gaming of graphics, sounds, etc.) is han- offer currently on the market (right

GOOGLE STADIA dled entirely remotely, via powerful now, Stadia is available in 14 coun- servers located far from the end tries, including France and Germany, user. However, unlike streaming a but not yet in Switzerland). Overall, video on demand, such as a TV show, people who tested the service in with games, use has an impact on good conditions (i.e. with fibre optic the data flow: every time a player broadband) recognised the steadi- moves the controller, a signal is ness, graphic quality and fluidity of transmitted via the internet which the games. However, these qualities then initiates the corresponding are lost as soon as you connect action on screen. This is the root of to Wi-Fi and the latency becomes the problem: latency. Every gamer’s catastrophic, ironic for a company sworn enemy, these few dozen milli- that was aiming to move away from seconds of waiting for the screen fixed hardware and offer a nomadic to catch up are seen as prohibitive multi-platform experience. This is VIDEO GAMES: for experienced players, and the why many of the industry players latency becomes even more intoler- are eagerly awaiting 5G, which signifi- able during competitive games with cantly reduces latency. multiple players. This is the paradox at play with Stadia: its goal was to convince THE FINAL serious gamers, but the current technological limitations of cloud “We are very gaming seem to cater to casual gamers instead. French start-up sceptical. Cloud Shadow and a few other pioneers that HOLDOUT gaming is still also decided to target gamers are encountering the same challenges. After music and TV series, video gaming is far from being But the game is not over yet. The the last big industry to make the switch to Google Stadia is dead on arrival.” comparable to $9.90 monthly subscription for streaming. But there are technical obstacles So said David Cole, founder traditional games.” Stadia Pro gives users access to the to overcome. and CEO of DFC Intelligence, a Uwe Neumann, analyst at Credit Suisse entire catalogue (22 games on its well-known analytics firm in the launch) at a reasonable price. This BY LUDOVIC CHAPPEX “video game industry. His comment, could tempt people who don’t yet reported by the site GameDaily.biz, is a have a console or the latest PC at bitter summary of the dissatisfaction home, especially since a free version, gamers felt about Google’s new game Uwe Neumann, a technology and tele- with the possibility of buying games streaming platform, launched in coms analyst at Credit Suisse, agrees individually, will launch in 2020. In November 2019. that Stadia is no real game-chang- January, Google also entered into er for the industry, at least in the a partnership with UK operator BT, Before launching its platform, Google short term: “We are very sceptical. which now includes Stadia with its did set the bar high, promising that This technology is still far from internet packages. This new model In November, Google launched Stadia, its Stadia would provide a gaming expe- being comparable to the traditional could be replicated elsewhere. on-demand video rience comparable to consoles such downloadable game. I don’t expect game platform that as the Microsoft Xbox One and Sony us to see performance improve until While the spotlight in recent months streams 22 titles, PlayStation 4. In theory, gamers would at least 2021–2022.” Other industry has been on Stadia, Google remains including Assassin’s Creed Odyssey. be able to play the latest blockbusters experts agree. far from having free reign over the in 4K and at 60 frames per second, in industry. Even though it is still a ideal conditions as long as they had But in fairness, while for the reasons growing market, cloud gaming al- sufficient internet bandwidth. mentioned above, as well as the ready generates half a billion dollars

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in revenue globally, and according video games will not be widespread its own service. Nintendo, as usual, to various studies, revenue could ex- before 2025.” But it can’t hurt to prefers to wait. CREDIT ceed $4 billion by 2024. It is certainly experiment beforehand, right? far from the $200 billion in revenue Perhaps unexpectedly, US tech that was expected for the entire vid- giants are also throwing their hats TWITCH eo game industry by the same date, into the ring. Almost all of them have but that doesn’t stop industry heavy- their own projects, with various de- weights from actively preparing. Cloud gaming already grees of completion. Apple launched generates half a its Apple Arcade platform last year, AND THE FUTURE OF TV Paradoxically, Sony was one of the which gives users access to play first to offer an operational stream- billion dollars in around 100 games via a subscription ing platform. Since 2015, PlaySta- service. In this case, Apple is clearly tion Now has allowed PlayStation 4 revenue globally targeting casual gamers, as the offer Once confined to gaming, live video streaming platforms and PC owners to stream hundreds is designed for mobile games on iOS. are now for all types of content. of games from the PS2, PS3 and PS4 Rumour has it that Amazon could catalogues for €9.99 per month. also join the fun in 2020. The owner BY BERTRAND BEAUTÉ The service has more than one This is most likely the view of of Twitch (see p. 49) would then be million subscribers. It is surpris- Microsoft, which last year officially able to build an attractive ecosys- ing because the Japanese giant, unveiled its XCloud project, which tem for players. Finally, Facebook which is preparing PlayStation 5 will allow players to stream Xbox has also taken a step towards cloud he news came as a sur- emerged in the wake of Twitch’s beyond gaming into other types of for release end of this year, doesn’t games. The launch is expected for gaming, acquiring Spain-based indus- prise. On 10 October 2019, success: Google launched YouTube programmes, such as gaming talk appear to truly buy in to the cloud 2020. Nvidia is preparing its GeForce try pioneer PlayGiga in late December Donald Trump launched Gaming in 2015, and Microsoft shows, performances and live dining gaming boom in the medium term. Now platform, which is currently in for €70 million. The Mark Zuckerberg T his own Twitch channel. followed with Mixer in 2016. But shows. Now you can find anything Neumann said: “We talked to Sony the beta stage, and game publisher company also owns Oculus, which Already very active on Twitter, the they are no match for the original. on Twitch. Even atrocities such as recently. They said that streaming Electronic Arts has also announced sells virtual reality headsets. US president wants to make the In 2018, over 10 billion hours were the German synagogue shooting, video platform a driving force for his viewed on Twitch (75% market livestreamed last October. campaign. And yet, on multiple oc- share), with YouTube Gaming (17%), casions, Donald Trump has accused Facebook Gaming (4%) and Mixer But it’s working, and now Google video games of being responsible for (3%) trailing behind. is following suit. In May, the Moun- mass killings in America. And Twitch tain View company closed YouTube is none other than the preferred In August last year, Mixer made a Gaming to integrate it into YouTube. platform of gamers… move to get back in the game by “The idea is to develop live stream- recruiting Twitch’s biggest streamer, ing in all areas, it’s a practice that Founded in 2011, the company “Ninja”, an expert on the Fortnite is really going to take off,” says provides a forum where gamers game with 14 million followers. Tixier of Yokotu. He sees this type can share their game-playing with Google has adopted the same strat- of direct streaming as the future of other viewers. But unlike YouTubers, egy and recruited two top streamers TV: interactive television where all who upload pre-recorded videos, from Twitch in 2019: “CouRage” viewers will be able to comment on Twitch users stream their videos and “Lachlan”. shows in real time and influence how live. “Twitch’s strength is not just the shows play out. live steaming, it’s interactivity,” says “So far, these transfers haven’t Romain Tixier, president of Esport changed the balance of power The success of “Bandersnatch”, Strategy and co-founder of Yokotu. because gamers are highly attached a special episode in Netflix’s “Viewers can chat with players and to the platform,” says Tixier. “The im- Black Mirror series, is proof that have an impact on the games they portant thing for Microsoft, though, there is an interest in this type of watch by commenting and giving ad- is not the immediate audience, but format. In that episode, viewers vice to the streamers in real time.” rather making a name for itself. could decide what the hero did Developed by Mixer will be integrated into the next by answering questions like Ubisoft, Just Dance 2020 is available on The concept quickly became a big next version of Xbox. It will be in a choose-your-own-adven- Wii, PlayStation 4, hit: three years after its launch, important for players to know ture book. After that test, Netflix Xbox One, Nintendo Twitch had one million users at- what it is.” Mixer’s audience will launched an interactive series Switch consoles, as well as the Google tracting 45 million unique viewers likely expand in step with sales called You vs. Wild in April 2019, Stadia streaming a month. Those impressive figures of the console. where viewers set off on adven- platform. led Amazon to spend $970 million tures with the famous survivalist to acquire the company in 2014. But Twitch has a plan. The compa- Bear Grylls. His survival of the ex- A number of competitors have ny has responded by branching out pedition depends on their choices. GOOGLE STADIA

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Never, never, never.” It's a firm no from Reed Hastings. “We PIRATING MAKES A COMEBACK will not stream live content, we will not air sports compe- An NBA game? A Champions League match? The Wimbledon SPORT: THE NEW titions,” said the Netflix CEO final? In just a few clicks, you can illegally watch any "in 2018. While Hastings hasn't gone sporting event you want for free on the internet. And it's back on his word, his competitors not limited to sport... TV series and films are also pirated. EL DORADO FOR are ready to fill the gap left by the For example, just a few days after it launched on Disney+, global leader in video streaming. The Mandalorian was already available on pirating sites.

While the extent of pirating is difficult to determine, the For example, Amazon Prime Video latest report by Sandvine, a Canadian networks expert, STREAMING SERVICES has streamed American football estimates that video pirating has increased during the (NFL) matches live on its platform last two years. This is due to the fragmented offer. Unlike since 2017 and the e-commerce the music industry, where services such as Spotify and giant also acquired the rights to Apple Music allow users to listen to all existing music, the broadcast sports such as tennis video-on-demand and sports industries are quite divided. A viewer that wants to watch both Money Heist (Netflix) (the French Open, as well as other and The Morning Show (Apple TV+) must either pay for two ATP tournaments), football (20 subscriptions or stream illegally. Cam Cullen, vice president Premier League matches per year) of Sandvine, said to Les Echos: “Pirating will increase in 2020 and golf. with the arrival of Disney+, Peacock and other services.”

"Amazon will greatly increase its The Disney group, which is the parent type of content. For Amazon, I believe sports broadcasts" company of channels ESPN and sport is a marketing ploy, a loss lead- Romain Tixier, co-founder of Yokotu, ABC, holds a massive portfolio of er designed to attract new clients to a digital marketing firm sports rights around the world, and other Amazon services.” the entertainment empire doesn’t “Amazon will greatly increase its want to miss out on sports stream- For major players such as Disney sports broadcasts,” predicts Romain ing. The group didn’t have to think and WarnerMedia, which owns Tixier, co-founder of Yokotu, a digital twice before spending $2.6 billion in HBO Max, the situation is slightly marketing firm in London. “Other 2017 to take a majority stake in the different. These groups, which own market players, such as YouTube and company BAMTech, a specialist in traditional television channels ded- Twitter, are also interested, because the technology that broadcasts live icated to sport, don't want to go all sport is the content that draws in sports events on the internet. Disney in on streaming, to avoid losing their the biggest audiences.” In 2019, has since launched ESPN+, the audience. However, at the same time, eight of the 10 largest audiences streaming version of its ESPN net- they are developing their stream- for US television were for sporting work, and in November 2019 began ing offers in order to stave off the events. Specialised platforms have offering a subscription that includes competition. also sprung up, such as the UK- Disney+, ESPN+ and Hulu for $12.99 based DAZN, which hopes to be the per month, which is the standard This competition could come from “Netflix of sport”. subscription price for Netflix. the sports associations themselves.

FRANCK FIFE / AFP Last November, the NBA basketball But the video-on-demand pure And thus the streaming war con- league in the US announced it was On January 24, an NBA game was players will have to compete with tinues. However, Thomas Coudry, launching its own subscription held in Paris. It After revolutionising the way the world the giants. In late July 2019, Randall analyst at investment bank Bryan, streaming channel, NBA TV, for $6.99 was a first, and watches films and television series, Stephenson, CEO of telecoms oper- Garnier & Co., remains cautious: “For per month, or $59.99 per year. A first the game, which pitted the Charlotte streaming platforms are increasingly ator AT&T, announced that live sport video-on-demand experts, entering for a major sports league, it could in- Hornets against the interested in livestreaming events, would be an “important element” of the sports market is a real challenge. spire others to do the same. Accord- Milwaukee Bucks, particularly sports competitions. the HBO Max platform that will be Live broadcasting isn’t part of their ing to the Financial Times, UEFA is was broadcast live available this spring. According to DNA and the world of sports rights researching the possibility of directly on the NBA TV BY BERTRAND BEAUTÉ streaming channel. the US media, HBO Max will broad- is a very fragmented industry that is broadcasting its flagship competi- cast American college basketball extremely expensive. As a result, it is tion, the Champions League, via OTT matches, highly popular in the US. very difficult to turn a profit with this on its UEFA TV platform.

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AND ALSO…

American actor Gaten Matarazzo stars as SPOTIFY Dustin in Netflix’s THE UNDISPUTED LEADER flagship series Stranger With 113 million paid subscri- The kings of Things. The fourth bers, surging 31% in the past season will air in late year, Spotify is hands down the 2020 or early 2021. world leader in music streaming, ahead of Apple Music Streaming (60 million users) and Amazon Music (55 million). However, unlike its colleagues, the Swedish company cannot hide its losses The streaming market is dominated by behind other business activities. Although the company has signi- a handful of American giants. But a few ficantly improved its profitability, operators, mostly from Asia, stand out. it still lost €78 million in 2018. FOUNDED : 2006 We take a closer look. HEADQUARTERS : STOCKHOLM (SE) EMPLOYEES : 3,500 BY BERTRAND BEAUTÉ, LUDOVIC CHAPPEX AND GRÉGOIRE NICOLET REVENUE 2018 : € 5.259 BN CAPITALISATION : $25 BN SPOT

THE TRADE DESK THE ADVERTISING SPECIALIST ’Through the company’s platform, advertising buyers can manage Netflix, the entertainment multinational their digital ad campaigns across FOUNDED a wide range of devices. Analysts Champagne and galas. The stars were out on where it operates, such as La Casa de Papel 1997 expect The Trade Desk to benefit 17 January for the inauguration of Netflix’s in Spain, Dark in Germany, Atelier in Japan, HEADQUARTERS from the significant growth on new Paris offices. CEO Reed Hastings himself 3% in Brazil and Sacred Games in India. LOS GATOS (US) the VOD market. EMPLOYEES FOUNDED : 2009 came to the French capital to pose along- To move forward with this strategy, in 6,700 HEADQUARTERS : VENTURA (US) side Paris mayor Anne Hidalgo and French November 2019, Netflix announced a pro- EMPLOYEES : 1,200 REVENUE culture minister Franck Riester. Why all duction agreement with the Korean company 2019 REVENUE 2018 : $477 M the fuss from Netflix’s boss for what boils CJ ENM. In its letter to shareholders publi- $20.1 BN CAPITALISATION : $12.3 BN down to a small subsidiary? Because growth shed on 21 January, Netflix pointed out, CAPITALISATION TTD outside North America has become imperative “local originals were the most popular titles $150.3 BN NFLX TENCENT MUSIC for the video-on-demand (VOD) leader. The in many countries, including India, Korea, THE CHINESE BEHEMOTH launch of Disney+ has impacted the com- Japan, Turkey, Thailand, Sweden and the UK.” Listed in New York since 2018, pany’s bottom line. In Q4 2019, Netflix only Tencent Music owns the three brought in 550,000 new subscribers in the Even though they plan to hassle Netflix largest Chinese music streaming United States and Canada, well below the the world over, Disney+ and Apple TV+ services: QQ Music, Kugou and 1.7 million customers it drew the year before. produce little content outside the Kuwo. True, QQ Music’s user base is developing, but Tencent United States. The only rival to do so is Music’s growth is mainly driven And so the company is seeking solace Amazon, but to a much lesser extent. And by its social entertainment abroad. At the end of 2019, Netflix surpassed despite having more subscribers abroad than services, including its karaoke the 100 million subscribers mark for the first in the United States, Netflix’s US base still platform WeSing, and its Kugou time outside its home territory, compared accounts for the largest share of its revenue. Live and Kuwo Live apps where with 67 million in North America. That repre- users can watch livestreams sents nearly 28 million more customers in On average, an American customer makes of concerts and TV shows. FOUNDED : 2016 one year, of which 14 million are from the the company $151 per year, compared with HEADQUARTERS : SHENZHEN (CN) Europe, Middle East and Africa region – fi- $124 in Europe. Most analysts, such as EMPLOYEES : 2,400 gures that exceeded analysts’ forecasts by far. Bernie McTernan from Rosenblatt Securities, REVENUE 2018 : $2.76 BN One of the reasons for its success is that recommend purchasing shares, although CAPITALISATION : $20.85 BN Netflix produces content in every country some fear the growing competition. TME NETFLIX

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RAKUTEN THE AMAZON LOOKALIKE Known in Europe for buying PriceMinister in 2010, the The team of the series Japanese e-commerce giant Homecoming, a Rakuten is following in Amazon’s AFP successful psychological footsteps and is entering the Apple, catching up fast thriller available on world of streaming. Its video-on- Prime Video. demand service Viki, focused on Apple’s announcement in June 2019 that long after Prime Video and Netflix, Apple TV+ Asian content, is popular with it was killing iTunes sent a strong message: is behind the game. However, when it comes young people. In October 2019, the group launched Rakuten TV downloading is a thing of the past – make way to podcasts, it is a real pioneer. iTunes in Europe, a free, ad-supported for streaming! Apple will replace its famous added a special tab just for podcasts back video-on-demand (AVOD) service. software with three apps: Apple Music, in 2005. But the California-based com- FOUNDED : 1997 Apple TV+ and Apple Podcasts. iTunes forever pany rested on its laurels, happy merely HEADQUARTERS : TOKYO (JP) changed the music industry when it hit the distributing content. Today, Apple hosts EMPLOYEES : 17,214 market in 2001. But the advent of streaming – 550,000 podcasts, retaining its leading REVENUE 2018 : $10.117 BN with the creation of services such as Pandora position, but Spotify is nipping at its heels CAPITALISATION : $10.86 BN 4755 in 2000, Spotify in 2006 and Deezer in 2007 with 500,000 podcasts. – put an end to the tech giant’s position as su- Amazon, the prime power FOUNDED preme leader. Since its launch in 2015, Apple That being said, Apple has an advantage 1994 IHEARTMEDIA Patrick Stewart no longer wanted to don Music has risen to second place in the global over the market’s pure players: streaming RADIO STREAMING FOUNDED the costume of Jean-Luc Picard or set foot HEADQUARTERS streaming market, with 50 million users. But is a non-core business activity that mainly 1976 SEATTLE (US) America’s radio giant iHeartMedia back aboard the Enterprise 26 years after is going through a rough patch. that is still far behind the undisputed leader, aims to lock customers into its ecosystem. EMPLOYEES HEADQUARTERS the end of Star Trek: The Next Generation. The company nearly went Spotify, and its 113 million paid subscribers. The Apple TV+ platform is almost free – CUPERTINO (US) 750,000 But Amazon must have had some powerful bankrupt in 2018 before picking buyers of iPhones, iPads and other Mac EMPLOYEES REVENUE itself up slightly. Its streaming 137,000 arguments, because the British actor is back 2018 In subscription video-on-demand (SVOD), products receive free access. Most analysts $232.9 BN in the series Star Trek Picard, with a premiere platform, iHeartRadio, compiles Apple faces the same situation. Released recommend buying shares. REVENUE content from the 850 radio sta- 2018 on Prime Video on 24 January. Just like that, CAPITALISATION $265.6 BN $906 BN tions owned by the group along the online retail leader has coasted to the with hundreds of others from a CAPITALISATION AMZN variety of media sources. $1,393 BN top of the streaming game within the space of a few years. FOUNDED : 1972 AAPL HEADQUARTERS : SAN ANTONIO (US) How? Amazon Prime. Launched in the United States EMPLOYEES : 18,300 REVENUE 2018 : $6.33 BN in 2005, this service (not available in Switzerland) CAPITALISATION : $1.17 BN first offered fast delivery of items purchased on IHRT Amazon for an annual membership fee. Charging users $119 per year in the United States, the programme now includes other benefits. All members WWE THE ONLINE WRESTLER enjoy free access to Prime Video and Prime Music. World Wrestling Entertainment In 2018, Prime surpassed the symbolic threshold specialises in organising en- of 100 million subscribers worldwide. In his letter tertainment events, primarily in to shareholders, Amazon boss Jeff Bezos stated wrestling. Now WWE has its own that the series and films available on Prime Video streaming service, WWE Network. are the main draw and the reason most people join However, the number of subscri- Amazon Prime, and the content also keeps online bers to the platform fell in 2019, as did the group’s share. retail customers loyal. FOUNDED : 1952 HEADQUARTERS : STAMFORD (US) Since 2018, Prime members have also been able EMPLOYEES : 800 to download video games for free via Twitch Prime. REVENUE 2018 : $930.2 M CAPITALISATION : $4.94 BN On the set of the This service could switch to streaming in the near WWE See series, one of future, as there have been murmurs that Amazon is the original content planning to launch a cloud gaming platform in 2020. available on Apple TV since the launch Analysts at Jefferies recommend buying shares,

of the platform in APPLE setting a price target of $2,300, compared to the November 2019. current price of $1,850.

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IQIYI THE CHINESE YOUTUBE Roku, the face of new TV Founded by China’s leading internet search engine Baidu, Still unknown in Europe, Roku has made a place for iQiyi is one of the world’s largest itself in the United States in an industry normally video streaming websites with dominated by giants such as Google and Apple. What over 500 million active monthly XXX does it do? Its connected box lets users watch a wide users. The company’s IPO on RICHARD B. LEVINE / NEWSCOM the Nasdaq raised $2.25 billion selection of web content on a television set. Basically, in 2018. through its partnerships with streaming operators FOUNDED : 2010 such as Netflix and Hulu, the Roku system makes HEADQUARTERS : BEIJING (CN) switching from one service to another almost as easy EMPLOYEES : 8,600 as changing the channel. REVENUE 2018 : $3.6 BN CAPITALISATION : $16.36 BN IQ FOUNDED With all the SVOD platforms on the market, analysts 2002 expect that consumers will increasingly have several HEADQUARTERS LOS GATOS (US) subscriptions going at the same time. And Roku would SIRIUS XM Roku’s course has benefit from that. The majority of analysts recom- THE US WEB RADIO STATION EMPLOYEES more than doubled 1,100 mend buying shares, forecasting revenue growth from Who remembers Pandora? When in one year. $743 million in 2018 to $1.6 billion in 2020. the platform launched back in REVENUE 2000, it was a pioneer in music 2018 $743 M streaming with its web radio service that adapted to liste- CAPITALISATION $14.9 BN ners’ music tastes. But Spotify drove Pandora into the red. In ROKU September 2018, Sirius, the US Disney, the ogre of the entertainment sector satellite radio leader, decided to buy the company for $3.5 billion “Disney is an amazing company... the standard Netflix subscription. in a bid to convert to streaming. We admire them.” A good sport, With that positioning, Disney+ FOUNDED : 2008 Reed Hastings did not hide his appears to be some sort of ogre HEADQUARTERS : NEW YORK (US) EMPLOYEES : 2,500 admiration when asked about his for Netflix and all future operators REVENUE 2018 : $5.8 BN new competitor Disney+, launched such as HBO Max and Peacock. FOUNDED CAPITALISATION : $31.54 BN in November 2019. “I’ll subscribe, “Obviously there will be a lot of 1923 SIRI

they’ve got great shows,” the players out there,” Clark Spencer, HEADQUARTERS Netflix boss even said. However, president of Walt Disney Animation BURBANK (US) COMCAST Disney could actually pose a Studios, told AFP, “but I think for EMPLOYEES Disney has an THE EUROPEAN DREAM threat to the leader of SVOD. us having that depth of that library 200,000 impressive catalogue, with all the brand’s A latecomer to streaming, with and the storytelling talents that REVENUE 2019 franchises. Here, its SVOD Peacock service sche- We often tend to forget it, but sit within the studio, it’s really $69.6 BN the animated film duled for release in the spring, The Indestructibles, Mickey’s parent company is no going to be what sets us apart.” CAPITALISATION Comcast dreams of becoming produced by Pixar. novice when it comes to streaming. $260 BN a Netflix-style international success story. In 2018, the As owner of Hulu, ESPN+ and FX+, Disney is targeting 65 to 90 million DIS group bought Sky UK, the British the group already has a strong subscribers to its platform wor- telecommunications operator, to position in the United States. The ldwide within the next five years. strengthen its position on both launch of Disney+, the new star Analysts, who recommend buying sides of the Atlantic. in the empire, expands this offer shares, believe Disney will beat FOUNDED : 1963 with a vast catalogue of all the that goal. Bernie McTernan from HEADQUARTERS : PHILADELPHIA (US) franchises from the Disney galaxy: Rosenblatt Securities believes EMPLOYEES : 184,000 REVENUE 2018 : $94.5 BN Marvel, Pixel, Star Wars, National that the company will have more CAPITALISATION : 200.35 BN Geographic and all the Walt Disney than 35 million subscribers by CMCSA productions since the studio was September of this year. Digital TV created in 1923. And all this for Research expects Disney+ to have the ultra-competitive price of 100 million subscribers by 2025, $6.99 per month in the United compared with 236 million for

States, compared with $12.99 for Netflix. DISNEY+

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VIACOMCBS THE NEW GIANT Alphabet CEO Sundar In December 2019, the conglom- Pichai in Brussels on RealNetworks, erate Viacom and the network January 20, 2020. CBS combined their strengths to rebirth of the inventor FOUNDED become ViacomCBS. According to 1994 the Swiss bank UBS, this merger An industrial saga for the internet era. Here’s the HEADQUARTERS will enable the group’s two VOD short version of the RealNetworks story – let’s SEATTLE (US) services (CBS All Access and LAURIE DIEFFEMBACQ / NEWSCOM step back in time. In 1994, a former Microsoft EMPLOYEES Pluto TV) to rival Netflix and employee, Rob Glaser, founded a startup that 534 Disney, thanks to the $13 billion that the group could spend on made software. A year later, the company REVENUE 2018 creating content, compared with launched its RealAudio solution, considered the $69.5 M the $15 billion spent by Netflix in foundation stone of streaming. In 2001, when CAPITALISATION 2019. Moreover, ViacomCBS has Netflix still only rented DVDs, the company intro- $55.3 M an enormous library of 140,000

duced a paid subscription video service, RealOne. RNWK shows including CSI, Criminal The subscription unlocked access to a library Minds and The Big Bang Theory. of premium content provided by ABC News and CNN. FOUNDED : 2019 Then in 2003 came the launch of Rhapsody – the first HEADQUARTERS : NEW YORK (US) EMPLOYEES : NOT AVAILABLE subscription music streaming service in the United REVENUE 2018 : NOT AVAILABLE States – with a library of 500,000 songs through CAPITALISATION : $9.87 BN license agreements with music industry heavyweights. VIAC FOUNDED 2015 But paid streaming services were only in their infancy in those days, and the company was hit hard by the NAVER HEADQUARTERS THE KOREAN GOOGLE MOUNTAIN VIEW (US) development of YouTube (Google), iTunes (Apple) and Alphabet, the thrill of cloud gaming In Korea, no one reads comics on EMPLOYEES Windows Media Player (Microsoft). RealNetworks then paper any more – they use their 98,771 spent over a decade wandering the desert. Google isn’t exactly a novice when it comes games (Red Dead Redemption 2, Destiny 2, smartphones. The search engine REVENUE Naver, hailed as the Google of to streaming. The Mountain View company, NBA 2K, etc.). Included in the Founder’s 2019 $161 BN But in 2012, its subsidiary Rhapsody bought music South Korea, is a leading provider lest we forget, purchased YouTube back Edition pack: a controller and a small, streaming site Napster. Instead of taking on Spotify, of these webtoons. The company in 2006. The ubiquitous video hosting site round Chromecast dongle that plugs into CAPITALISATION also has an SVOD service called $1,007 BN Rhapsody refocused Napster on selling its technology boasts incredible statistics: billions of hours your TV’s USB port. Naver TV Cast. GOOGL under a white label. Its infrastructure became the base of video watched daily around the world. Ac- FOUNDED : 1999 for streaming services such as iHeartRadio (see p. 55). cording to a Statista study, YouTube made up But the platform has been under fire since HEADQUARTERS : SEONGNAM (KR) That strategic move turned out to be a good one. EMPLOYEES : 2,800 37% of worldwide internet traffic on mobile it launched. The system isn’t as responsive Rhapsody has been turning a profit every quarter since REVENUE 2018 : $4.75 BN devices in March 2019 – total domination. as expected, especially when using a WiFi 2018. Does that mean RealNetworks, which owns CAPITALISATION : $22.77 BN We also can’t forget Google Play, another connection, and many users complain of 035420 84% of Rhapsody, should be revived? The markets flagship product, that also contains lots of latency times. Google announced that it aren’t there yet. The company’s capitalisation half content (films, TV series, music, books, etc.). would eventually expand its offer to more FACEBOOK melted away in 2019 to $55 million, down from nearly than 120 games, without providing much THE PLAYER IN BLUE $3 billion when the internet bubble was at its biggest. In December 2019, Facebook an- But a much less popular Google platform further detail. nounced that it had acquired the was making headlines recently. The US Spanish cloud gaming platform group is suffering blowback from its failed If the technical difficulties can be overco- PlayGiga. Although nothing sug- streaming video game service Stadia (see me, video game streaming could result in gests that this acquisition fore- also p. 46) that launched in 14 countries some fascinating opportunities for Google. shadows a foray into video game in November 2019. Google is not currently The behavioural data gathered on Stadia streaming under the network’s blue banner, such a move would providing an official number of subscribers, users could feed into Google’s main revenue make sense. Mark Zuckerberg’s but it seems quite low compared to the num- stream: advertising. Online gaming could creation already has Facebook ber of subscribers for other industry giants, give Google a better understanding of com- Gaming, but the livestreaming such as Sony and Microsoft, when they munity spirit and it could make up for lost channel is struggling to carve launch a new console. On paper, the project time on social networks – Google+ never out a slice of the market largely does seem promising. For €9.99 per month, having proved able to compete with Twitter dominated by Twitch (see p. 49). gamers can stream 22 of the latest popular and Facebook. FOUNDED : 2004 HEADQUARTERS : MENLO PARK (US) EMPLOYEES : 43,000 REVENUE 2018 : $55.84 BN Rob Glaser, founder and CAPITALISATION : $612.75 BN CEO of RealNetworks FB JEFF CHRISTENSEN / REUTERS

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DISCOVERY A FULL DOSE OF NATURE In April 2019, the Discovery Group, known for its Discovery

MARCO VERCH Channel and Animal Planet networks, bought the VOD rights on content from the BBC’s Natural History division (except in the United Kingdom, Ireland and China). This deal will enable Discovery to launch its SVOD

A demonstration booth service in 2020, focusing on the niche market of natural history, Video on demand: for Microsoft’s xCloud project, which allows travel and science. streaming Xbox games FOUNDED : 1985 on smartphones HEADQUARTERS : NEW YORK (US) a drain on energy (August 22, 2019). EMPLOYEES : 9,000 REVENUE 2018 : $10.533 BN CAPITALISATION : $15.46 BN Video streaming is becoming more and more popular. DISCA But it’s generating as many greenhouse gas emissions as Spain. BY BERTRAND BEAUTÉ FOUNDED NVIDIA 1975 THE GAMING PRO Microsoft, streaming for gamers HEADQUARTERS Nvidia’s streaming video game REDMOND (US) platform, dubbed GeForce Well established in the video game world for EMPLOYEES NOW, has been available in 148,465 nearly 20 years (the first Xbox came out in 2001...), beta version for several years. y turning from DVDs to subscription video on demand is the etc.) through networks (cables, fibre Microsoft is preparing to update its offer with new REVENUE This experimentation phase is 2019 expected to lead to a market streaming, we thought we biggest emitter of greenhouse gases optics, modems, 4G, etc.). But all options in the cloud. Last year, the Redmond group $125.8 BN offering in 2020. The service will were reducing entertain- in the video sector (34%), followed of those processes consume large launched a beta version of its streaming plat- CAPITALISATION be available via Windows, Mac ment’s environmental impact. closely by pornographic sites such as amounts of electricity. form called xCloud, which is somewhat similar to $1,284 BN and Android smartphones. Users B We were wrong. “Digital entertain- YouPorn and Pornhub (see infograph- Google’s Stadia. But the notable difference is that MSFT will be able to play hundreds ment gives the illusion that it has ic on p. 34). The reason: video size. According to The Shift Project, data Microsoft gamers will be able to access the entire of games, accessible via their no impact on climate, because the Ten hours of high-definition video centres are responsible for 19% of catalogue of games, which is quite expansive. The personal libraries. pollution is invisible to users,”says requires more data transfer than all total energy consumption for digital service is expected to be available sometime this FOUNDED : 1993 Frédéric Bordage, founder of Green English Wikipedia articles combined. technologies, networks 16% and year on PC, Android and iOS. HEADQUARTERS : SANTA CLARA (US) EMPLOYEES : 13,277 IT, an eco-IT firm. But once users At that rate, the arrival of cloud user terminals 20%. So how can REVENUE 2018 : $11.716 BN become aware of the real impact of gaming, which is even more con- we reduce our impact? “The best With this launch, Microsoft has the chance to build CAPITALISATION : $147 BN digital technologies, we may start tent-heavy than video, is bad news. solution is to borrow DVDs from the an attractive ecosystem around streaming games. NVDA to see some tech-bashing, just as library,” says Frédéric Bordage with a The US company owns the Mixer platform, a com- people now feel ashamed to fly.” grin. “But streaming is not the main petitor of Twitch, where users can broadcast their SONY issue. The most important thing is to THE PIONEER OF CLOUD GAMING games live. But Mixer stands out because users can It’s undeniable: the IT sector pollutes. hold on to our digital devices as long actually interact with the platform; watchers can The inventor of PlayStation was one of the first to take on According to a report published in as possible.” participate in the live feed by taking over control the concept of cloud gaming. September 2019 by The Shift Project, from the original player. But as it stands now, PlayStation Now, which offi- digital technologies currently gen- Production of smartphones, TVs and Mixer makes up less than 5% of all content cially launched in 2017, allows erate 4% of global greenhouse gas “The best solution other tablets is responsible for 45% watched, compared to 70% for Twitch, according gamers with a PC or PlayStation emissions, which is more than civil air of digital emissions. Not to mention to data from Stream Hatchet. 4 to stream games from the is to borrow DVDs PlayStation catalogue for a transport. And that figure could double it uses up reserves of rare metals, monthly fee without having to by 2025. But what about streaming in from the library” such as cobalt (see the November To launch these new services, Microsoft can make install them. The fluidity of the particular? While no study has been Frédéric Bordage, founder of Green IT 2018 issue of Swissquote Magazine). use of Azure, its powerful in-house infrastructure experience is directly dependent dedicated to the subject in its entirety, “The arrival of new streaming ser- in cloud computing. xCloud runs off of 54 Microsoft on the speed and stability of the online videos are singled out. In 2018, vices, coupled with the roll-out of data centres spread across 140 countries. user’s internet connection. viewing of online videos generated 5G, is a great formula for selling new FOUNDED : 1946 300 million tonnes of CO2 equivalent: machines,” says Bordage. “The race HEADQUARTERS : MINATO (JP) that’s as much as Spain, or 1% of to acquire new equipment is cata- EMPLOYEES : 114,400 REVENUE 2019 : $78.1 BN global greenhouse gas emissions. All that data is stored in huge sever strophic: with increased high-speed CAPITALISATION : $87.33 BN farms throughout the world, and then internet access, platforms will start 6758 With services such as Netflix, delivered to our terminals (computer, offering more HD content and more Amazon Prime and now Disney+, smartphone, tablet, connected TV, people will replace their TV sets.”

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1GALLERY GALLERIES, IMPROVED TO READ, 1Gallery is one of those nice-to-have, Free, in-app practical apps that aim to be better than purchases the default application they intend to TO DOWNLOAD replace. As the name indicates, the app goes beyond simply managing Android photos – 1Gallery boasts advanced features, such as an integrated photo and video editor and the ability to save BUILDING A RESILIENT photos in a password-protected location. TOMORROW HOW TO PREPARE FOR THE COMING CLIMATE DISRUPTION BATTERYGURU By Alice C. Hill and Leonardo Martinez-Diaz A STETHOSCOPE Given the fact that dramatic global FOR YOUR BATTERY climate change is currently under way Google Play Of course, BatteryGuru isn’t the first or and that it is only its exact scope that Free the last app that monitors your batteries. remains unknown, Building a Resilient But this completely free new app bene- Oxford University fits from a clean, aesthetically-pleasing Press, 2019 Tomorrow details the policies we need in CHF 25.- order to face climate change, as well as design and also includes all the features the costs and upcoming opportunities expected from a battery monitor, includ- to do so. The book is raw and direct, but ing detailed statistics, a dashboard, and essential for decision-makers and for- a full health report. ward-thinking investors. It’s full of concrete lessons that the authors learned from their personal experience as former WHAT THE GOLF advisers in the Obama administration. CRAZY GOLF how long is forever? More than an arcade game, What the Apple Store Golf is a fun improvisation-based game Free trial, in-app in which golf is just a pretext to rethink purchases RED MEAT REPUBLIC the laws of gravity – and the rules of A HOOF-TO-TABLE HISTORY OF arcade games in general. Cats, cars, HOW BEEF CHANGED AMERICA flowerpots and cows... Any object you By Joshua Specht can imagine collides with other objects in a vibrantly coloured fantasy-world Since at least the late 19th century, twist on bowling. Americans – rich and poor alike – have had access to plentiful and cheap beef served at almost every meal; an abun- MINDNODE 6 dance that isn’t a coincidence. Rather, MAP YOUR THOUGHTS Princeton University it’s a result of the expropriation of the MindNode is a mind-mappin applica- Press, 2019 Great Plains by colonists and the power CHF 30.- Apple Store tion, or a way to graphically and intui- of the “meat packers” in Chicago that Free, in-app tively represent a thought process. For took control of the beef market using purchases example, you could map a goal and all the tools of modern capitalism, such as the different ways to reach that goal, scientific management and standardi- whether it’s a recipe or a long-term fi- sation of procedures. An unknown but nancial objective. Released this spring, fascinating part of the story of capital- the sixth version of MindNode includes ism, brilliantly told by young historian Joshua Specht in his first book. several improvements, such as better support for external screens.

HYT-Ad-SQuote-200x260-H5k.indd 1 03.02.2020 11:10:44 K-BEAUTY SWISSQUOTE MARCH 2020 K-BEAUTY SWISSQUOTE MARCH 2020

otion containers shaped Japan, then to Southeast Asia and more than 30 brands, generates 70% like mandarins, pandas and finally to China. In the past five of its revenue in South Korea. “But octopi. Vials filled with snail years, these products have made the market is saturated,” said Roll. Lslime. And a rose mask that feels their way to the West.” This is one “In the future, most growth will come like a bubble bath. With its acid drop manifestation of Hallyu, a craze from international markets, particu- look, the TonyMoly shop in Hong Kong for Korean culture, which grew from larly China.” China already makes up looks more like a sweets shop than the popularity of K-Pop groups and 42% of the group’s exports. Further- a place to buy cosmetics. TV stars with perfect skin. more, such a heavy dependence on the Chinese market isn’t without risk It is one of the success stories (see inset on p. 66). of K-Beauty, a trend from South Korea. Exports of Korean beauty “Korean women Korean cosmetic products owe products quadrupled between care for their their success to a clever marketing 2014 and 2018, going from $1.6 strategy. “The colourful, fun, almost to $6.3 billion. In total, the industry skin almost childlike aesthetic and affordable is worth $13 billion, according to obsessively” prices make these products very London economic intelligence Michael Hurt, a Korean culture expert at popular with young people,” said the firm Mintel. Hankuk University of Foreign Studies analyst. K-Pop groups, who often serve as ambassadors for these “For a long time, these brands were brands, further increase their popu- only available domestically,” said Today, the Korean market is still larity with teenagers. Martin Roll, a leading expert on the main source of revenue for the Korean brands. “But about a decade industry. The AmorePacific Group, K-Beauty is also known for using ago, they began exporting, first to which dominates the segment with surprising ingredients, such as snail

COMPANIES TO WATCH The trendy K-Beauty cosmetics industry is now worth AMOREPACIFIC $13 billion K-Beauty giant With more than 30 brands in K-Beauty: its portfolio, the Korean group dominates the K-Beauty market. As a result, AmorePacific was considerably affected by cosmetics get China’s boycott of Korean products. Sales fell more than 20% between 2016 and 2018, but they have started to recover. The a fresh revival company plans to open 40 new Sulwhasoo shops in China this Korean beauty products have taken over the world. year, bringing the total to 202, as With a kawaii aesthetic and made from exotic well as 100 new Innisfree shops, ingredients, the cosmetics are particularly according to Woochang Chung, analyst at Mirae Asset Securities. popular with young people. This is in addition to online shops specific to these brands on BY JULIE ZAUGG, IN HONG KONG Chinese e-commerce portals such as JD.com and Tmall. HEADQUARTERS: SEOUL (KR) EMPLOYEES: 11,554 REVENUE (2018): W 5,278 BN (CHF 4.4 BN) KRX: 090430 DR

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saliva, horse oil, ginseng and bee foundation. More recently, K-Beauty venom, for their hydrating or an- invented zombie masks, which ti-ageing properties. Several brands contain egg whites and make your F&F play up their Korean heritage. face look like a zombie’s. But the Skin specialist Innisfree sells creams made from smartest move was to convince This group owns the brand Banila, volcanic rock and Jeju Island ca- consumers to follow a daily 10- whose cosmetics can create mellias. Sulwhasoo creates potions step routine, including cleansing the “glass complexion” effect made from fermented herbs used lotion, serums, masks and extracts. that K-Beauty fans seek. Sold in in traditional Korean medicine. This ceremonial process is said to small colourful containers, these produce “glass skin” that is bright products are regularly promoted by K-Pop stars. The group also K-Beauty has also developed several and almost translucent. owns several sportswear brands, innovations that have revolutionised such as MLB and Discovery, the beauty world. “Korean brands which are very popular in South invest lots of money into research In the past three Korea. It also owns Lost Garden, and development and are always a wine bar in Seoul city centre. putting new products on the market,” years, L’Oréal, These advantages made F&F less said Liz Flora, who specialises in the LVMH and Unilever vulnerable to fluctuations in the Asian cosmetics market for research Chinese market compared to its firm Mintel. “They invented BB cream each acquired a competitors. In 2018, revenue (ed. note: a combination of hydrating Korean brand grew 19%. lotion and foundation), which is now HEADQUARTERS: SEOUL (KR) a beauty staple.” EMPLOYEES: 221 “Korean women care for their skin REVENUE (2017): W 669 BN (CHF 561 M) KRX: 007700 They also invented the Cushion almost obsessively,” said Michael Compact – a sponge soaked with Hurt, a Korean culture expert at foundation – that combines the Hankuk University of Foreign Studies benefits of a powder and a liquid in Seoul. “It would be unimaginable ABLE C&C

Japanese group Affordable cosmetics AKB48, transformed This group owns several cult into K-Beauty pop brands that target the afforda- stars, here at KCON ble segment, including Missha, CONCERNS ABOUT CHINA 2019, an annual A’Pieu and Honesi, as well as event celebrating Korean culture a minimalist line designed for In 2017, Beijing decided to emerged, such as Caisy, (Japan, May 18, 2019). the Chinese market. Heavily boycott products from South Longrich and Herborist. affected by decreased sales in Korea to protest the launch Less expensive and better China since 2017, Able C&C lost

of Seoul’s anti-missile sys- established in China, these KEIZO MORI / NEWSCOM 19 billion won (16 million Swiss tem. The number of Chinese brands could outperform francs) last year. Nevertheless, tourists also dropped from their Korean counterparts, an aggressive expansion strategy 8 million in 2016 to 4.8 mil- according to Woochang in South Korea, with notably the lion in 2018. Chung, analyst at Mirae opening of a multi-brand shop Asset Securities. for them to leave the house without fact made up of lots of smaller com- the aisles to discover new products,” called Nunc, as well as a push “This episode led to a signifi cant drop in sales for Korean However, Liz Flora notes several layers of creams and lotions.” panies that were acquired through said Roll. in Japan, grew sales 24% in the cosmetics groups,” said Liz that after two years of At work, women are expected to wear the years.” Besides a handful of first nine months of 2019. Flora, specialist in the Asian shortages, the Chinese- elaborate make-up. high-end names like Laneige and The success of Korean beauty HEADQUARTERS: SEOUL (KR) cosmetics market at Mintel. Korean conflict has faded Sulwhasoo – which have shops that products hasn’t gone unnoticed by EMPLOYEES: 362 REVENUE (2018): W 346 BN (CHF 290 M) Flagship K-Beauty brands and sales of Korean cos- The 10-step routine is a product of look like museums with spas and Western giants. Most have intro- KRX: 078520 such as Laneige, Sulwhasoo metics have rebounded in this philosophy. To popularise the tea salons – most cosmetics prod- duced K-Beauty innovations in their and Innisfree saw their China. To grow business in share prices drop 10% on China, these brands have method, Korean brands recruited ucts are sold in multi-brand shops. cosmetics lines, such as BB creams the Baidu index, which adopted an aggressive influencers to produce elaborate and cushion compacts. In the past measures the popularity sales strategy on social net- tutorials showing consumers how These shops, true treasure troves, three years, L’Oréal, LVMH and Unilever of brands on the Chinese works such as WeChat and to use this lengthy list of products. are grouped together in certain areas each acquired a Korean brand. In late search engine. e-commerce portals such as of Seoul and have become tourist November, Estée Lauder announced Tmall. They have also devel- Korean companies also developed attractions, particularly for Chinese the acquisition of Have & Be, the Chinese brands inspired oped products specifically by K-Beauty have also for the Chinese market. a unique buying experience. “Most visitors. “Consumers feel like they’re company behind cult line Dr. Jart+. brands are small,” said Roll. “Even the taking part in a treasure hunt, comb- Launched in 2004 by a dermatologist, big groups like AmorePacific are in ing through hundreds of brands in Dr. Jart+ invented BB cream.

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hat do Kylie Jenner, companies. “Producers’ desire to sell the already impressive performance Budweiser and The directly to customers is a structural of the S&P 500 sub-index of tech Economist all have in change that is becoming more and companies. With an offering price of Wcommon? They all have an online more common.” According to the $17 in spring 2015, the stock was shop on Shopify. Canadian bank CIBC, Shopify has an worth $476 on Wall Street by the end available market of 10 million cus- of January – 28 times higher. In autumn 2019, fifteen years after tomers in the United States, Canada, launching its first solution to help Australia and Europe, and over Before moving into the limelight, users create e-commerce websites, 50 million worldwide. the B2B company was flourishing in the Ottawa-based company an- the shadows. Although he blends in nounced that it had over one million perfectly with today’s trendy CEOs, merchants on its platform – compa- with his signature hat and casual nies of all sizes, from 175 different The Canadian style, Tobias Lütke, co-founder and countries. Shopify offers its plat- CEO of Shopify, has never succumbed form and all the basic tools for a company will end to the sirens of Silicon Valley. The subscription of $29 a month, plus 2019 with net thirty-something entrepreneur from 2% per transaction. In just a few income up 50% Germany decided to keep Shopify’s clicks, individual entrepreneurs can head office in Ottawa, where a open an online shop and sell their quarter of the company’s 4,000 em- pro-ducts through all web channels. ployees currently work. And Cana- Canada’s More expensive packages allow Thanks to the favourable environ- dians are thankful for that. The tech SMEs and larger companies to man- ment, Shopify became a star on Wall start-up’s sensational success has age their inventory and deliveries, Street last year. Its stock gained helped heal – at least partially – the build their customer relations and 187%, or nearly four times more than humiliation caused by the collapse of Shopify takes gain access to tools for analysing and monitoring their business.

on Amazon FAST GROWTH ANALYST ADVICE When Shopify went public in Toronto and New York in 2015, the platform’s subscribers numbered in the tens of THE STOCK IS ALREADY VALUED HIGH Shopify is a platform where users can create their own thousands only. In 2018, the compa- online shop. Already a star on Wall Street, the company ny sold $41 billion worth of products Although analysts admire merce itself. But Shopify is Shopify’s business model not expected to turn a profit is now looking to expand internationally. (1.5% of global online sales). If its – particularly its recurring until 2022. CIBC analysts were outlook is correct, the Canadian com- subscription revenue – and its cautious in their latest research BY ANGÉLIQUE MOUNIER-KUHN pany will end 2019 with net income desire to expand internation- report, noting that the current up 50%, to over $1.5 billion. ally, opinion is divided as to share price already reflects whether the stock will appreci- solid growth prospects. They “Shopify’s model caters to a very ate after its astronomic growth. advise neutrality, with a hold recommendation. They write: concrete market need: selling directly The company’s market cap “The valuation will need to to the consumer,” says e-commerce ($51 billion) exceeds that of come back to more attractive specialist Dominique Locher, former eBay, Twitter and Spotify, and levels before we recommend CEO of LeShop.ch and board mem- its revenue is growing three that investors start buying ber at several foreign distribution times faster than e-com- Shopify again.”

68 69 SHOPIFY SWISSQUOTE MARCH 2020

Shopify’s founder and current CEO, IN NUMBER TH Tobias Lütke, with his signature cap. 48 INTERNATIONAL Here at a technology 1 M conference organized by the Number of Shopify Wall Street Journal subscribers (Laguna Beach, EXHIBITION OF California, 2018). $1 BN INVENTIONS Revenue for 2018, up 59% on the previous year GenEVA

UNDER THE PATRONAGE OF +4,000 THE SWISS FEDERAL GOVERNMENT, Number of employees OF THE STATE, THE CITY OF GENEVA AND OF THE WORLD INTELLECTUAL PROPERTY ORGANIZATION WIPO

COLLISION CONF $51 BN Market cap Take advantage of telecoms giant Nortel in 2013 and by “MAKING COMMERCE BETTER” recurring problems with BlackBerry. Bolstered by its success, Shopify is this international positioning itself as an alternative to Amazon (the as-of-yet undisputed platform to leader in e-commerce, with over 50% + $1 BN network with “Shopify will market share in the US) for third- Sales exceed this party merchants. In almost messianic figure in 12 different the key players become more language, the Canadian company says countries competitive with it wants to “make commerce better from the world of Amazon by allowing for everyone” by helping “people become independent”. Locher says: innovation. merchants to “In addition to user-friendliness and deliver to 99% of cost transparency, Shopify offers continental USA in merchants the advantage of being able to keep their brand identity. With two days or less” Amazon, they lose that freedom, and 25-29 their products are in competition with first step was taken in September, lots of other similar products. Still, with the $450-million purchase Legend has it that the self-taught Amazon receives 150 million unique of 6 River Systems, a US company programmer got the idea for Shopify visitors each month, which is huge.” that specialises in the automated MARCH 2020 when he was unable to find an effi- management of storage facilities. cient solution on the market and had Shopify looks more determined “Shopify will become more com- to develop software himself in order than ever to scale up. Last year, the petitive with Amazon by allowing PALEXPO to create an online snowboard shop company launched its first market- merchants to deliver to 99% of the with two friends. That was in 2004. ing campaign in Canada and the US continental USA in two days or less,” The website eventually launched, but in order to boost its visibility. It also said Goldman Sachs. Lastly, to expand Tobias Lütke quickly understood that announced that it wants to invest internationally, the platform is now his software was more valuable and $1 billion over five years to develop available in some 20 different lan- had a lot more potential than for just its own fulfilment network in the US, guages, including German, Chinese surfing the slopes. modelled on Amazon’s network. The and Brazilian Portuguese. SHOP

70 PORTRAIT SWISSQUOTE MARCH 2020 PORTRAIT SWISSQUOTE MARCH 2020

thodox accounting methods. All Len Sherman, an economics profes- of this led to a loss of confidence sor at Columbia University. Masayoshi Son announcing the 2019 from investors. results of SoftBank, Son’s portfolio reflects his ambi- of which he is WeWork is one of the flagship invest- tions. “This fund is made up al- founder and current CEO (Tokyo, ments of the Japanese investment most entirely of companies with May 9, 2019). fund Vision Fund, which has injected the potential to revolutionise their nearly $11 billion into the co-working industry,” said Miles Tabibian, an RODRIGO REYES MARIN / NEWSCOM company since 2017. Wanting to expert in real estate investments for keep it afloat, Vision Fund invested US incubator Plug and Play. Vision another $9.5 billion in October. Fund includes the ride-hailing app Uber, the instant messaging plat- The fiasco brought to light the risky form Slack, the mobile payments management of the $100-billion system Paytm, the big-data medical investment fund. It is the work of start-up Guardant Health, and the Masayoshi Son, a Japanese busi- global leader in sensors for auton- nessman with Korean origins who omous vehicles Cambridge Mobile is continually described as either a Telematics. visionary or a madman. He emigrated to the United States at 16, making his first million by importing Japa- nese arcade games, such as Space The Japanese Invaders and Pac-Man while still a entrepreneur is student at Berkeley. quite forward- thinking, with In 1981, at the age of 24, Son found an outlook ed SoftBank, a software reseller. But he quickly moved to venture stretching to the capital, investing $100 million in next 300 years Yahoo! in 1996. His biggest break came in 2000, when he purchased a But the crux of the portfolio is Arm, 32% stake in e-commerce platform a UK-based semiconductor manufac- Alibaba for $20 million. This stake turer that was acquired by SoftBank is now worth nearly $135 billion. Son for $32 billion in 2016. The com- then acquired shares of telecoms puter chips are the backbone of the group Sprint and video game develop- ecosystem Masayoshi Son seeks er Supercell, and participated in the to create. acquisition of Vodafone Japan. Masayoshi Son: Indeed, the Japanese entrepreneur In 2017, Masayoshi Son really picked is quite forward-thinking, with an up speed with the launch of Vision outlook stretching to the next 300 Fund, an investment fund for new years. He imagines a technological the megalomaniac technologies. The Abu Dhabi and revolution, led by companies financed Saudi Arabia sovereign funds invest- by his fund, that would lead up to a With his SoftBank Vision Fund, the n September 2019, it was as if ed $60 billion into Vision Fund. The tipping point when artificial intelli- entrepreneur has built a portfolio of a bomb exploded: the famous rest came from SoftBank, Apple, gence will exceed human capacity. visionary coveted tech companies such as Uber New York start-up WeWork, Foxconn and Qualcomm. which operates co-working But the veneer of these techno-fu- and Slack. But the brutal fall of WeWork, Ispaces, indefinitely postponed its Located in an upmarket London turistic delusions of grandeur has one of his other companies, has brought highly anticipated IPO one day before neighbourhood, the fund is governed started to crack, as evidenced by to light how fragile Masayoshi Son’s empire the expected date. The valuation of by a “winner-takes-all” philosophy. the WeWork debacle in autumn 2019. actually is. Read on for further details. the company, which reached $47 bil- It has colossal sums of money at its “The Vision Fund showers companies lion in early 2019, fell to $8 billion. disposal, which can be used “as a with millions of dollars, pushing them

BY JULIE ZAUGG One week earlier, WeWork’s capri- weapon by a handful of companies, to grow at a rate that is too fast for cious CEO Adam Neumann resigned chosen to take over the world, to their business models to catch up,” after news broke out about his unor- convey competitive advantage,” said said Sherman.

72 73 PORTRAIT SWISSQUOTE MARCH 2020

VISION FUND IN NUMBERS ballooned from 2,100 to 8,000 in just only a ten-minute conversation with one year, after receiving $1 billion the CEO. “Vision Fund operates like a from Vision Fund. To attract agents, dictatorship,” said Damodaran. “One $100 BN Compass promised a 90% commis- man decides everything, doesn’t The amount raised by Vision Fund, making it one of the world’s largest sion rate, which is significantly more consult with anyone else and doesn’t investors in tech companies than the standard 70% at tradition- do his due diligence.” al real estate agencies. The group struggled to absorb the growth and SoftBank has paid the price for this sales slumped. behaviour. With upwards of $166 bil- $45 BN lion in debt, the company recorded Saudi Crown Prince Mohammed a loss of $6.5 billion in Q3 of 2019 bin Salman’s contribution. According as a result of the WeWork and Uber to Masayoshi Son, it took “Vision Fund operates concerns. “These scandals left lasting 45 minutes to convince him like a dictatorship. damage on Vision Fund’s reputation,” One man decides said Goyal, who noted that SoftBank everything, doesn’t shares have been nearly stagnant $800 M consult with anyone since 2016. The average amount invested else and doesn’t do in each business Many analysts believe that the un- his due diligence” fortunate surprises aren’t over. Other Aswath Damodaran, professor companies in Vision Fund’s portfolio of finance at New York University x1.5 Stern School of Business could go under, such as Indian hotel In the space of two years, by mid- portal Oyo. “The company recruits 2019, Vision Fund had invested small hotels to sell rooms exclu- 1.5 times more than all of the 200 Very few Vision Fund investments are sively on the Oyo site. In return, the largest US venture capital funds less than $500 million. “This artifi- hotels receive a guaranteed monthly over the same period cially inflates the valuation of the stipend,” said Sherman. But Oyo’s companies that receive the funds,” business model is unclear. “Besides said Atul Goyal, analyst at Jefferies. the name recognition, it has little to $18.5 BN The problem with these bubbles is offer the hotels joining the platform,” The total amount invested that they burst... Uber and Slack saw said Damodaran. Furthermore, by in WeWork their share prices lose up to 40% of guaranteeing monthly revenue, Oyo their value since they went public in also takes on all of the risk associat- spring 2019. ed with the hotels’ operations. Even Thanks to the funds provided by Son, more problematic is that the millions “WeWork launched into a frantic In a move that defies all logic, the provided by Vision Fund encouraged expansion, attracting clients with fund sometimes provides financial the start-up to recruit thousands of short, cheap rental contracts,” said support to several start-ups in the hotels in India, China and the US, the economics professor. Founded same industry that are all hoping to many of which are unprofitable. in 2010, the start-up now operates be the market leader. For example, 848 locations on five continents. the portfolio includes four ride-hailing In recent months, Oyo has either services (Grab, Didi, Ola and Uber). suspended or reduced the monthly But this growth is built on a frag- Some of these start-ups do not have payments to some hotels. In early ile foundation. “Most of WeWork’s clearly identifiable sources of reve- December, 172 Chinese hotels came buildings have 10 to 15-year leases, nue, such as dog-walking app Wag or together to file a complaint, threat- but the company rents co-working robot pizza delivery service Zume. ening legal action. Earlier last spring, spaces by the month,” said Aswath hundreds of Indian hotels affiliated Damodaran of New York University Many observers believe that these with the platform went on strike, stag- Stern School of Business. “If there shortcomings are the result of ing a sit-in in front of the Oyo offices. was a recession, WeWork could find Son’s personality. “His success itself with millions of empty square with Alibaba in 2000 has gone to These issues haven’t tamed metres on its hands.” his head,” said Sherman. “He thinks Masayoshi Son’s appetite – he is he is always right when choosing launching a second Vision Fund Compass, an online real estate winning start-ups.” Son relies on also worth $100 billion. SoftBank platform, has also grown too quickly. his instinct and doesn’t hesitate to has already promised to contribute The number of real estate agents invest millions in a start-up after $38 billion.

74 RUBRIQUEAUTO SWISSQUOTESWISSQUOTE MARCH MARS 20162020

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TRIED AND TESTED DELIVERING FOR UBER EATS BY BENJAMIN KELLER

The California meal delivery service has expanded to Switzerland. Our reporter stepped into the shoes of a food delivery cyclist in Lausanne.

I’ll handle the delivery guy,” and 1.5 Swiss francs per kilometre without an electric bicycle in a hilly said the McDonald’s employ- travelled between the restaurant city like Lausanne – but on the other ee to his busy coworker. The and the destination. Bonuses are hand, it’s exercise and environmen- “delivery guy is me. I’m deliver- offered, particularly if it’s raining tally-friendly. Third: I take more risks JAKUB PORZYCKI / AFP ing Big Macs for Uber Eats. It’s not (up to 30 Swiss francs per day). than usual in traffic. And fourth: an ideal gig for a vegetarian. But I never accept pizza deliveries. But wanted to know what it was like to I’m no fool, so I wait for a sunny day. the problem is that you never know deliver for the California company I open the app for the first time at in advance what you’ll be deliver that brings together restaurants, 11.30 a.m. on a weekday. After five ing. Or where, for that matter. delivery people and customers via minutes, my telephone buzzes. I an online platform. I put all the food accept the order. A pizzeria 2.5 km packages in my bag, click “Start” on away from my house. I put on my my mobile, jump on my bike and pedal enormous insulated square back- After five minutes, to my third customer of the day. pack (Uber leases them for a de- my telephone posit of 120 Swiss francs) and get A competitor of Smood.ch and Eat. started. I have to pick up two pasta buzzes. I accept the ch, Uber Eats launched in Switzer- dishes and a pizza. The pizza is hell. order. A pizzeria land in late 2018, first in Geneva I need to hold the bag horizontally and then in Lausanne and Zurich. on a metal stand that I attach to the 2.5 km away from This service has faced criticism for handlebars. And to make matters my house several reasons, including working worse, I take the wrong street on my conditions for delivery drivers, who way to a customer’s house. The 2.2 are paid per delivery and consid- km trip takes me 24 minutes. My sal- I completed three deliveries in ered “self-employed” workers. For ary comes out to 8.81 Swiss francs. one day, all for McDonald’s. In total, example, they don’t receive any I earned 34.20 Swiss francs for type of benefits. Anyone can sign BADLY PAID AND STRESSFUL 2 hours and 48 minutes of work. up in just a few clicks. All you need I made a number of observations It wasn’t as awful as I’d imagined. is a Swiss identity card (or work during this baptism of fire. First: The idea in itself is quite a good one, permit), proof of a clean criminal the pay is terrible. The trip to the and I liked the deliveries by bike, record, and a form for the Cantonal restaurant isn’t included in your but not under the conditions set by Consumer Office – as well as other earnings. What’s more, the time Uber. On that note, the rain bonus is documents for motorised vehicles. between the order and the delivery particularly bad, because it entices The base salary is 4 Swiss francs was 42 minutes. That comes out to people who really need the money to pick up the food at the restau- 13 francs per hour. Second: the work to take excessive risks. I’m lucky rant, 1.5 Swiss francs to deliver is tiring and stressful, especially that I’m not in that situation.