Digital Gabe
Cutting Edge Commentary On All Things Media

FAANG Taking A Bigger Bite

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First of all, FAANG is now spelled with two As.  For years the one-A’d FANG was the acronym given to the four tech powerhouses who were driving various parts of the digital landscape – Facebook, Apple, Netflix and Google.  But now there’s a new A in town (Amazon), so the geekarazzi had to update the spelling.  Within that group Facebook, Apple and Google are very established.  These three companies have built and dominated their own swim lanes for the past decade or more.  But what about the “upstarts” on the list – Netflix and Amazon?

First let’s break down Netflix.  In this week’s Q1 earnings call the video streamer announced they had blown away Wall Street’s expectations by adding 7.4M subscribers in just the past three months.  Amazingly Netlfix added double the number of subs this Q1 compared to Q1’17 – so their business is accelerating at a rapid pace.  Most of this increase has come from overseas markets which means there’s almost an unlimited runway for growth into the future.  At this rate of growth today’s 125M subscribers could be 200M by mid-2019.  No wonder every other video content producer and distributor on the planet is getting nervous about these guys.

Now how about Amazon?  In his annual letter to shareholders Jeff Bezos announced that the company had surpassed 100M Amazon Prime subscribers.  While that sounds like an eye-popping number consider the fact that Prime isn’t even really the end goal for Amazon – it’s just the delivery mechanism.  Amazon’s true strategy is to use Prime to harness online buying by its members.  In 2017 Amazon Prime subscribers purchased 5B (with a B!) items.  So I guess their little Prime gambit is working, eh?

These are impressive stats to be sure.  Even though Amazon and Netflix are the newer kids on the FAANG block, right now they seem to be earning their rightful place of the Mount Rushmore of tech.

 

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