Global Tech Roundup: Netflix’s first decline, SAP is leaving Russia too, others

Guys, it’s the last workday of the week. So, those TGIF! excitements are in order. Welcome to another edition of Global Tech Roundup where we catch up on trending tech stories from across the world.

In this edition:

Netflix’s first decline

Streaming service, Netflix announced a shocking first decline in its operations Tuesday. The platform said it lost 200,000 subscribers in the first quarter (Q1 2022).

It’s a major loss for Netflix, whose stocks went down by 35%. The decline comes from a couple of factors: the result of shifting economic forces, increasingly fierce competition from other streaming platforms and the conflict in Ukraine.

The announcement also came with a warning – the American subscription streaming service and production company could lose 2,000,000 (two million) subscribers in Q2 2022.

Netflix boasts as the original disrupter in entertainment. But the streaming landscape is changing. Entrants like Disney+ and HBO Max sport their own compelling services, the development could force the company to adopt some of the revenue streams that have made the traditional media companies successful for decades: theatrical distribution, advertising-supported subscription services and perhaps consumer products.

Also plaguing the service, analysts say, is a lack of must-see content. While Netflix used to be the first stop for consumers, recent offerings like “Severance” from Apple TV, “The Dropout” on Hulu and “The Gilded Age” on HBO Max have prompted consumers to consider where the hits are rather than stick with their first streaming subscription.

Now, co-chief executive, Reed Hastings, is lending support to an advertising-supported tier to improve the company’s fortunes. Investors believe his thinking has changed.

“Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription,” he said. But he added, “I’m a bigger fan of consumer choice and allowing consumers who would like to have a lower price and are advertising-tolerant get what they want.”

Netflix is also trying to clamp down on password sharing among households — a worldwide phenomenon that the company believes accounts for 100 million unauthorised users. To combat this, the company started testing solutions in three markets in Latin America, with one option allowing current members to pay for additional households.

Netflix, with 221.64 million subscribers, still has the largest subscriber base of all the streaming services. But the company’s forecast of a loss of 2,000,000 subscribers for its second quarter shows that the slowing growth is likely to continue in the coming days.

SAP is leaving Russia too

German software company, SAP is the latest tech business to join the corporate exodus from Russia. The exit follows Ericsson’s suspension of operations and Nokia’s decision to stop business in the Eastern Europe country.

In a statement, the company said it is shutting down all cloud operations, after 30 years, in solidarity with Ukraine.

”We continue to believe that coordinated inter-governmental sanctions offer the best way to end the war in Ukraine, and we have implemented them without exception. In line with our responsibilities as an employer and provider of business-critical software, we have also gone beyond sanctions.

”Today we are announcing further steps toward an orderly exit from our operations in Russia, where we have operated for more than 30 years and have built an excellent team. As we wind down our operations, we will focus on responsibly managing the impact on these employees.”

As part of its cloud shutdown, SAP has given non-sanctioned companies the choice to have their data deleted, sent to them, or migrated to a data centre outside Russia.

In March, the company paused the sale of its products in the Russian market.

SAP’s business in Russia, where it has been operating for over 30 years, contributes only a small part of its global revenue. Its business in the region, including Russia, Belarus and Ukraine, makes up about 1.5% in total.

SAP said it will focus on managing the impact of its exit on over 1,200 employees in Russia. Chief Financial Officer, Luka Mucic said the business would finalise the wind down plan over the coming months.

CNN+ is shutting down, one month after debut

Warner Bros Discovery Inc. is shutting down the CNN+ streaming service just a few weeks after its launch, citing the determination of a new corporate parent to refine its strategy amid fresh questions about the growth of online video.

The decision comes in a week where Netflix Inc. reported its first subscriber loss in a decade – and sent media stocks cascading. The exit of CNN+ adds to the growing doubts about the public’s previously unquenchable hunger for streamed films and TV shows.

CNN+ surpassed 100,000 subscribers in its first week in business. But, it had hurdles to surmount, including new leaders who have vowed to aggressively cut costs and focus on a single streaming service.

CNN came under new management earlier this month, with the merger of its parent WarnerMedia and Discovery Inc., creating Warner Bros. Discovery. The team led by Chief Executive Officer David Zaslav has promised to find $3 billion in savings from the combination. CNN+, which spent about $500 million on its app, including marketing and talent, became an early target.

It’s not immediately clear how many CNN employees will lose their jobs as a result of the shutdown. There are 100 open jobs in other parts of the company. CNN+ hired at least 450 people, according to Insider, including journalists and engineers who worked on the streaming service’s technology. Laid-off employees will get nine months’ severance pay.

Andrew Morse, who led CNN+, will leave after a transition period. Alex MacCallum, general manager of the service, will run CNN’s digital operations. The service will cease operations on April 30, according to a statement Thursday. Customers will receive prorated refunds of their subscription fees.

CNN+ charged $5.99 a month. Executives described it as CNN’s most ambitious new venture since the founding of the network over 40 years ago.

Elon Musk secures $46bn funding for Twitter bid

Billionaire Elon Musk says he has secured $46.5 billion in financing to fund a possible hostile bid for Twitter and is including $21 billion of his own money as part of the package.

On top of that equity, Musk is raising a further $12.5 billion for the offer via a margin loan secured against his shares in Tesla, the electric carmaker that he runs as CEO. Morgan Stanley, the US investment bank, is leading a group of financial institutions providing $13bn in debt financing.

Musk’s move is a ‘direct response’ to shareholders’ poison pill defence against his initial offer. The tactic, commonly used by company boards as a bulwark against unwanted approaches, will allow existing investors in Twitter to buy shares at a heavy discount if anyone attempts to buy more than 15% of the company without the board’s backing.

The funding commitments were outlined in a filing on Thursday with the US financial watchdog, the Securities and Exchange Commission. The document confirmed that the world’s richest man was “exploring whether to commence a tender offer” for the shares in Twitter he does not hold. Musk already owns 9.2% of the social media platform and announced a $54.20-per-share bid last week.

A tender offer is viewed as a hostile bid because it bypasses the company’s board, which in a conventional takeover situation would be expected to recommend an offer to shareholders. Instead, Twitter’s board has moved to block Musk from increasing his shareholding without its approval.

Musk, who has more than 82 million followers on Twitter and is a prolific user of the platform, hinted at the weekend that he was considering a tender approach.

Twitter has yet to respond formally to Musk’s bid of $43bn lodged last week, apart from announcing the poison pill move.

Before launching his takeover bid, Musk had flagged a series of changes he might bring to the company – some more likely than others – including introducing an edit button for tweets and turning Twitter’s San Francisco headquarters into a homeless shelter. The latter suggestion – subsequently deleted by Musk – was supported in a tweet by the world’s second-richest man, Jeff Bezos.