From: FORTUNE Data Sheet - Friday Oct 12, 2018 01:24 pm
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October 12, 2018

“Sub-scale D2C efforts” isn’t a phrase you hear every day—doesn’t exactly roll off the tongue, does it? But the awkward phrase, used in a securities filing by AT&T this week, does accurately describe a lot about the future of TV and how we will be consuming entertainment more generally.

With Netflix as one of the obvious winners in the present and future landscape of video entertainment, rivals are getting ready to challenge the leader. Disney explained over the summer that it would base its coming subscription streaming service around its heavyweight brands like Star Wars and The Simpsons, which it’s acquiring in the Fox deal. AT&T this week outlined its coming service built around all of the content it got by buying Time Warner. Monthly prices are still TBD, but CNBC reported that Apple’s similar service will likely be offered free to consumers who buy the company’s hardware, at least initially. All of the upcoming services will follow the Netflix distribution model of letting viewers subscribe and watch directly over the Internet, without requiring a middleman like a cable or satellite TV service. Next year is going to be a bountiful, if confusing, time to be a TV lover.

The real challenge, of course, is that the day isn’t getting any longer and Americans have been watching seven to eight hours of TV a day, on average, for the past 40 years or so.

And that brings us back to AT&T’s “sub-scale D2C efforts.” In explaining to investors how it would finance its new mega-streaming service, AT&T cited improving efficiencies at newly-acquired Time Warner, including by possibly cutting back on some of the smaller streaming services Time Warner created. Those direct-to-consumer, or “D2C,” efforts have not attracted many viewers, leaving them “sub-scale” in size. AT&T didn’t name names, but Variety did, citing cartoon service Boomerang, Korean programming service DramaFever, and a DC comic book-inspired platform as facing possible elimination.

While some of the more ludicrous punditry predicts that viewers will spend just as much money on streaming services as they spent on old-fashioned cable TV (over $100 a month, last I checked), the more likely outcome is a winnowing. Even among the giants, some “D2C efforts” may wind up at “sub-scale.”

Aaron Pressman
@ampressman
aaron.pressman@fortune.com
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NEWSWORTHY

Rising concerns. The recent disappearance of journalist and Saudi Arabian government critic Jamal Khashoggi is creating a dilemma for tech companies that have major backing from the oil rich country. Uber CEO Dara Khosrowshahi said Thursday that he will not attend the Future Investment Initiative conference in Riyadh later this month. And Richard Branson said he was suspending talks with the Saudis about a major investment in his Virgin Galactic and Virgin Orbit startups.

Turn down the volume. All the market carnage in tech stocks over the past week is starting to derail the debuts of companies that had been planning to go public. Tencent Music said it is postponing its IPO, which had been expected in about two weeks, amid the drop in valuations for startups. Its parent, Chinese Internet giant Tencent, lost 7% on Thursday and is now down 34% this year.

Who can you trust these days? After purging a lot of fake Russian content, Facebook announced it had dumped another 559 pages and 251 domestic accounts for intentionally misleading posts, inauthentic behavior, and spam. The move was intended to rid the social network of "sensational political content" ahead of the mid-term elections next month. Elsewhere on the frauds and scams beat, Chinese payments services Alipay and WeChat Pay say they're seeing a wave of crime committed via stolen Apple IDs.

In need of teleportation. Speaking of Russia, a Russian Soyuz rocket ferrying two astronauts to the International Space Station on Thursday failed, forcing the men to make an emergency escape. While an investigation proceeds, there's no obvious way to get people onto the station. Another Soyuz capsule remains docked at the station and likely could be used to evacuate the three current residents, including American astronaut Serena Aunon-Chancellor, in an emergency.

Licked. It looks like it's about to get more expensive for Amazon and other shippers to send out packages via the U.S. mail. The Postal Regulatory Commission proposed new rates for next year, including the largest ever increase in the price of a first class stamp (to 55 cents from 50 cents) and parcel rate increases affecting Amazon of 9% to 12%.

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FOR YOUR WEEKEND READING PLEASURE

AT Kearney's Alex Liu: Taking On the Big League (Financial Times)
Alex Liu turned 60 this year and was spending most of his time away from his Las Vegas home even before he took over as managing partner of AT Kearney in May. Still, he turns out for full-contact rugby games. A scrum half ("given my size, agility and sneakiness") in a Harvard Business School alumni team, Mr Liu says rugby is a great equaliser: if you know what you are doing, size does not matter.

So Can We Terraform Mars or Not? (Nautilus)
Elon Musk wants to engineer Mars' atmosphere. Can he?

Ellie Kemper On Her Journey From Onion Headlines to Kimmy Schmidt to Memoir Writing (AV Club)
Ellie Kemper has made a career out of playing sweet, unflaggingly optimistic characters like cheery receptionist Erin on The Office and the Emmy-nominated title role in Unbreakable Kimmy Schmidt. Now that Kimmy has wrapped up its final season, Kemper has turned her sights to writing, releasing the charming nonfiction collection, My Squirrel Days, which contains stories ranging from field trips during her St. Louis childhood to going to the Emmys while sporting an unfortunate bang fringe.

Six Things Parents Can Do to Raise Kids to Be Confident Decision-Makers (Washington Post)
That $9 stuffed kitty became a symbol for all the times the needs, opinions and goals of others drowned out my own, and it launched me on a mission to help my daughter develop confidence in her own opinions, ideally long before she turns 27.

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FOOD FOR THOUGHT

Without an overarching law protecting privacy, the United States largely relies on industry-self regulation and a patchwork of legislation governing specific areas like healthcare records and your video rental history (for real ). An increasing problem is that when a person gives consent for a company to collect some of their information, the choice may actually affect many other people, who have no idea that their privacy has been compromised. That can happen, for example, when someone lets a social network access all of their contact information. A more serious case is arising out of the DNA genealogy services. Two new studies have found it's getting easier and easier to identify the DNA of people who have never submitted samples simply by matching their genetic data against people who did send in samples (Exhibit A: the Golden State Killer). Paul Raeburn delves into the situation in a piece for Scientific American:

"Your chance of finding someone that is a third cousin is about 60 percent in U.S. individuals with European ancestry," says Yaniv Erlich, the first author of the paper and the chief science officer of MyHeritage. He suggested it might be wise to encrypt genetic data to protect personal information, although that could complicate the type of searches police and researchers wish to make.

The technique relies on links between distant relatives. "Think of your family like layers of an onion," he says. Your closest relatives are parents, children and siblings. The next layer is first cousins, which you might have in higher numbers. Another layer and you reach second cousins, and so on until you could find yourself related to many third cousins you don't know at all. "When you go to very distant relatives, chances of a link are much higher," he says. These kinds of links were used earlier this year to identify a suspect in the case of the alleged Golden State Killer, who was connected to the crimes partially via the DNA of relatives in a genetic database.

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IN CASE YOU MISSED IT

The Stock Market Cleaned Out Billionaires Over the Past Week. Here's Who Lost the Most By Brittany Shoot and Glenn Fleishman

Exclusive: A Pair of Uber Executives Are Leaving to Join Electric Scooter Startup Bird By Polina Marinova

Pocket Plans to Turn Your Never-Ending News Reading List Into a Podcast By Rachel King

WhatsApp Bug Let Hackers Use Video Calls to Take Control of Accounts By Erin Corbett

Twitter Is Under Formal Investigation for How It Tracks Users in the GDPR Era By David Meyer

Oh No—Those Boston Dynamics Robots Can Now Do 'Parkour.' See for Yourself By David Meyer

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BEFORE YOU GO

There have been a ton of new smartphones introduced over the past month or so, from Apple's three iPhones to Google's updated Pixel line and Razer's second-gen effort. Reviewer Michael Fisher who goes by MrMobile, has been calling it "Phonetoberfest." But amid all the hype and promised improvements, there was one truly amazing-sounding feature that really caught my attention. Google says the Pixel 3 will be able to screen incoming calls and provide an immediate transcript, letting users know if the caller is a spammer or a legit caller. Sign me up.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.

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