Entertainment Tech – Netflix, Apple and Team17

Netflix is taking talent from Auntie BBC just as Apple is parking its tanks on Netflix’s AstroTurf. Meanwhile, small video games companies are thriving in the UK. Things are moving in the tech realms of the very large and the very small, writes Victor Hill.

Netflix takes on the BBC

Netflix (NASDAQ:NFLX) has signed a very large cheque to bankroll national treasure Sir David Attenborough’s latest iteration of Blue Planet – until now produced and distributed by the BBC (in case you don’t know it – the poll-tax funded “neutral” British state broadcasting outfit). Sir David, who is an exact contemporary of HMTQ, almost rivals our monarch in international celebrity and affection.

The new series is called Our Planetand will be viewed by over one billion people. Its backers hope that it will be even more influential than Blue Planet II, which is widely thought to have changed attitudes about plastic waste in the oceans. Alastair Fothergill, the show’s producer, and an old BBC hand, believes that it will inspire new environmental legislation across the world by exposing the huge challenges to the ocean in the form of plastic waste and overfishing. Our Planet will become available via Netflix to its 154 million subscribers in 190 countries today (05 April).

The World Premiere of Our Planet took place last night (04 April) at the Natural History Museum in London and was attended by the Prince of Wales, the Duke of Cambridge and the Duke of Sussex who are all vocal supporters of conservation. Prince William famously interviewed Sir David before a live audience of international plutocrats at Davos in February.

Netflix has emerged as a much more potent platform for this kind of conservation-themed television. The BBC iPlayer only stores TV content for 30 days but Netflix subscribers will be able to access the programmes at any time over the next year or more from almost anywhere in the world. Many Netflix aficionados are in the 16-30 demographic that is deserting terrestrial broadcast TV altogether.

Subscribers to Netflix get access to a programme menu of original content funded by a production budget of about $12 billion last year. By comparison, the BBC’s entire license fee income last year was £3.83 billion (about $4.98 billion).

In creating Our Planet Netflix has not only borrowed the famous voice behind Blue Planet for the BBC but has recruited the entire team behind it and its predecessor series, Planet Earth (first aired in 2006). Ed Power, the Daily Telegraph’s TV critic, has described the series as epic in scope and visually dazzling. But he felt that it lacked the depth achieved by the BBC’s Natural History Team:

Our Planet feels like a sumptuous repackaging of Sir David’s greatest hits but without the rigour that deepens our understanding of the natural world.[i]

No doubt the BBC’s Natural History Unit will continue to produce world-class programmes about the natural world. But this event reminds us that Auntie just does not have the reach and scope to rival Netflix which has become the global market leader in providing original TV content across all genres.

ITV (LON:ITV), by the way, scares Netflix even less. Despite CEO Carolyn McCall’s best efforts, there is still no viable streaming model on offer.

Apple takes on Netflix

Apple TVPlus, the technology giant’s answer to Netflix, announced last week a slew of celebrity-dense TV shows. Some see this as a bid to transform the (nearly) trillion dollar company from a producer of communications equipment and software into a global entertainment provider. On 25 March Apple also unveiled a digital magazine available by subscription and a monthly video gaming service (that is, one that provides and manages computer games).

In part, this strategic shift is inevitable. Unit sales of iPhone handsets are now in steep decline as the global market reaches saturation. Meanwhile service revenues continue to grow. Last year Apple’s services revenues reached $37 billion – more than double their 2014 level. Some analysts think they could reach $50 billion by 2021.

At last week’s launch Apple TVPlus unveiled five new service lines. The Apple TVPlus video streaming service will host Apple’s own TV content. Apple TV Channels will sell access to other streaming services via a new TV app available in the Apple Store. Apple Arcade will provide subscribers with access to more than 100 exclusive games. Apple News Plus will give access to the content of over 300 digital magazines and leading newspapers. Lastly, the Apple Card is a credit card that is usable on Apple’s device, launched in collaboration with Goldman Sachs.


Of these new services only Apple News Plus was actually made available to consumers last week and then only to residents of the USA and Canada. Apple TV Channels will not be available until May while the gaming and video streaming service will not be available until the autumn. There is also very little detail available about Apple’s own-content TV material, much to the consternation of critics. As a result, the company’s shares actually dipped after the launch event.

Normally Apple products are available online and in stores within 30 days of the launch event. The new iPhone was available within 30 days of its launch in September. But rolling out services is a more complex business because of regulation. For example, in the EU, cultural quotas require that at least 30 percent of streaming services’ online catalogues be drawn from local artists. ApplePay, which enables users to make contactless payments with their iPhones, launched in the US five years ago but is still being rolled out on a country-by-country basis.

The third largest shareholder in Apple is Berkshire Hathaway (NYSE:BRK), run by the Sage of Omaha, Warren Buffett. When Mr Buffett was asked what he thought about Apple’s push into entertainment he sounded lukewarm. “Let’s hope they succeed”, he said.

British Gamers take on the world

From the very large to the very small.

Many of the games that will be available on Apple’s gaming channel are being produced by spare-bedroom start-ups. The UK is leading in this sector with clusters of gamers in London and certain other talent hot-spots such as Brighton, Cambridge, Manchester and Edinburgh. The ecosystem required for gamers is just right in the UK: a fast internet infrastructure, a sympathetic media – consider the BAFTA Games Awards which took place last night (04 April) at the Queen Elizabeth Hall – lots of creative talent and nurturing regulation. The government’s video tax games relief (VTGR) tax shield is credited with making a big difference.

There are an estimated 2,200 gaming boutiques in the UK contributing about £3.9 billion to the British economy[ii]. That’s more than the video and music sectors combined. They employ over 47,000 people. The UK is home to the fifth largest video games market in the world, behind only China, Japan, Germany and the US. The global games market was worth an estimated £106 billion last year.

Just one game, Grand Auto Theft V, has generated £4.7 billion since its release in 2013 for Rockstar North, located in Edinburgh. Improbable, one of the UK’s newest tech unicorns (privately held, but reportedly valued at £771 million), has created Spatial IOS software on which numerous open-world games are run.

Microsoft (NASDAQ:MSFT), maker of the Xbox, acquired Ninja Theory in the UK last year as well as Playground Games. But there is still no UK equivalent to France’s Ubisoft or America’s Activision or Electronic Arts.

If the UK is fertile ground for games developers, the problem is – as usual – that the publishers of those games tend to be foreign predators. The developer of the Fable series of video games was bought out by Microsoft; Bizarre Creations was acquired by Activision; and Bullfrog was acquired by Electronic Arts. All have now ceased to exist as independent entities. In response, just like in written media, some players are resorting to self-publishing and so-called free-to-play titles such as Epic Games’ Fortnite {sic} sequence.

Last night, Sony’s God of War received 10 nominations for this year’s BAFTA Game Awards. Rockstar’s Red Dead Redemption 2 also picked up six nominations, as did Florence– a game about a relationship played from the perspective of a young woman – and Return of the Obra Dinn, a mystery set on an abandoned ship. Video games are not all about killing cyborgs – emotional intelligence is in evidence too.

One AIM-quoted independent video games developer is Team17 (LON:TM17). While most of its rivals develop their own games in house, Team17 encourages clever teenagers to submit good games ideas. The company then applies its skills in artwork and coding. Recent games include Escapists and My Time at Portia. The company is cash rich with about £23.5 million in the bank and is trading on a P/E of 51. Henderson Smaller Companies Investment Trust has invested in Team17.

I admit that this is not really my thing – I’d rather settle down with a good codex and an accompanying CD. But the more I look into videogames the more I see it is an art-form –layering many established genres – painting, TV, video, graphics, iconography, music – one upon the other…It’s here to stay – and it’s a money-pit.

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I do hope I might have the chance to meet some of my readers at the Master Investor Show at the Design Centre, Islington in London tomorrow (06 April). I’ll be on stage or on panel discussions much of the day – but some of it I’ll spend wandering around and listening to exceptional speakers just like all of our thousands of attendees who represent every aspect of the investment universe. The one thing that everyone will have in common tomorrow is that we all have enquiring minds.

By the way, the book to which I contributed a chapter about the future of the Tory Party went live on Amazon yesterday and apparently someone from The Independent will be there on Saturday in hot pursuit…

Islington or not – have a great weekend.

[i]Daily Telegraph, Monday, 01 April 2019.

[ii]UK must do more to stay in the £106 billion game, by Tom Hoggins, Daily Telegraph, 20 February 2019.