Five on Friday: Bidding, Boosting and Bulking Up

Featuring Kroger, Peacock, WWE, Microsoft, Gannett and Facebook

Bidding, boosting and bulking up are the top stories in this week’s Five on Friday. Grocery store chain Kroger is debuting an annual subscription program called Boost by Kroger Plus to compete with Amazon and Walmart grocery delivery. Also, Peacock makes a bid for WWE Raw whose licensing agreement with Hulu expires in 2022, and Microsoft Teams is bulking up as the software company enters the metaverse. Speaking of Meta, Facebook is helping content creators avoid App Store fees, and Gannett posts a profit, thanks to a bump in subscriptions.

Kroger Ramps Up Subscription Offerings

In a world where giants like Amazon and Walmart are offering grocery delivery, what’s a supermarket giant like Kroger to do? Join the races.

Kroger is debuting its annual subscription program, Boost by Kroger Plus, to customers of the grocery chain, with some added benefits. The grocery giant is doing this in a boost to compete with Amazon, and their new subscription service is similarly priced with two tiers at $59 and $100. Kroger’s online shopping business more than doubled to $10 billion in 2020, and they have promised to double that by the end of 2023.

Supermarket News reports that members will get free delivery for grocery orders of $35 or more, much like Amazon Fresh. Depending on the tier a customer chooses, they could get delivery as soon as two hours. Those who sign up for either tier will receive a one-time welcome kit valued at over $100. The offer kit is designed to offset the first year’s membership cost, and will contain offers from Home Chef, Murray’s Cheese, and Kroger’s privately labeled brands.

Subscribers will also double fuel points for each dollar spent on groceries and general merchandise. Fuel benefits are one reason customers have chosen the chain over others, and the offering of double fuel points will surely be a draw, considering the rise in gas prices nationwide. Fuel benefits will still tap out at a maximum of $1 off per gallon. Kroger operates 1,600 fuel centers and was the nation’s #7 fuel retailer in the country. Kroger sold $9.5 billion in gas in 2020, Yahoo! Finance reports.

The program is currently only available in the greater Cincinnati area, as well as stores throughout the Atlanta, Columbus and Indianapolis regions. Nationwide rollout will come in the following months, possibly years.

“Kroger Boost is an accelerant to the Kroger Family of Companies’ rapidly expanding seamless ecosystem, which includes our new Kroger Delivery fulfillment centers,” Bill Bennett, vice president and head of e-commerce at The Kroger Co., said in a statement. “Through Boost, Kroger remains uniquely positioned to be ‘Fresh for Everyone,’ making grocery delivery accessible to every customer through the industry’s most affordable free delivery membership. Combine this with a 2X multiplier on our industry-leading fuel points program, and we’re confident we’ve built a truly differentiated membership program that our customers will love.”

Image courtesy of Kroger

Peacock Looking to Bid for WWE Raw

World Wrestling Entertainment, known as WWE, did their third-quarter earnings call this last week. During their call, they made the announcement that their contract with Hulu will expire in the second half 2022, creating an opportunity for a new streaming service to acquire the licensing rights. Hulu currently airs a next-day replay of WWE Raw.

Chief Revenue Officer Nick Khan said, “In terms of the Raw RIA rights, we know from the data that there is a substantial and recurring audience who watch the program via delayed viewing week-to-week on Hulu. When we closed the Hulu deal in 2018, the media landscape was quite different, as we all know.”

Hulu changed hands in ownership shortly after the 2018 deal. In 2019, Disney became the majority owner of Hulu. Disney owns 67% of the streaming service, and NBCUniversal owns the other 33%. NBCUniversal also owns Peacock, which puts both parties in an interesting situation. Disney will likely buy out NBCUniversal’s stake by 2024, and fully own Hulu.

Peacock absorbing and making a deal for WWE Raw would make sense, considering their past relationship with the wrestling league. Earlier this year, NBCUniversal’s Peacock inked a deal with WWE to get exclusive streaming rights, with a contract worth $1 billion dollars over five years. Subscribers on Peacock’s $5 tier will be able to access all live pay-per-view events, original series from The Undertaker and Steve Austin, in-ring shows, WWE archives, and more. After the deal was made, WrestleMania 37 became the most-viewed live event on the service, Cord Cutters News reports.

The addition to WWE Raw, if acquired from Hulu, would finish off Peacock’s access to WWE. However, Peacock may not be the only wrestler in the ring. Other streaming services like Amazon and Apple TV have been looking to beef up their sports offerings to draw in cord cutters.

“That bidding process is expected to be highly competitive, due in large part to the combination of traditional buyers and new buyers like Amazon, ESPN Plus and Peacock. They’re all looking for live with dedicated fans to quickly build up their subscriber bases,” Khan said on the earnings call.

Offers from other streaming giants may not be out of the question. Netflix has previously made WWE content and has been acquiring some properties. There are talks of a children’s animated project in the works, and an interactive horror movie with The Undertaker made its debut this year. While everyone has a piece of the WWE pie, Peacock is looking for the biggest share.

Image courtesy of Peacock

Microsoft Teams Bulks Up Offerings, Stepping into the Metaverse

If the pandemic hasn’t made it clear that Teams is ever going to go away, Microsoft is looking to bulk up its offerings even more. After helping keep offices and staff more in touch than ever, the Redmond, Washington-based tech giant wants to add some variety to your virtual meetings.

Microsoft is planning to integrate Mesh directly into Teams next year. Mesh is a collaborative platform for virtual experiences and will bring mixed reality and HoloLens into meetings and video calls. Other features Mesh will bring include Together Mode. Together Mode will help make meetings more interactive, bringing remote and hybrid workers together in a different way. Their aim is to help make 30 to 40 meetings less painful and keep people more engaged.

One new feature that Mesh will offer is the option of having avatars in a video call. Avatars can replace video images for meeting attendees who don’t want to turn on their webcam. They can interpret vocal cues to animate the avatar through AI, making it feel like it is a part of the meeting. In Microsoft’s blog post about the metaverse, the company said they plan to integrate more AI to mimic head and facial movements too.

Mesh will also be offering immersive 3D workspaces, allowing users and their avatars to meet at a virtual table. They will be best used on a VR or AR headset, but they will be open to anyone across multiple devices. Mesh will ship with pre-built workspaces, but companies can build and customize their own, Ars Technica reports. Virtual meeting spaces could look like a specific conference room, if not everyone is able to make it into the office.

Microsoft is also working hard to add in translation and transcription support. The goal is help users connect with minimal language or accessibility barriers. Employees could meet with international clients without the need for a translator. The Verge reports that Mesh will be integrated into the software the first half of 2022.

“Welcome to Mesh for Teams,” said Microsoft Technical Fellow Alex Kipman. “As a company whose focus is on productivity, on knowledge workers, it’s something that customers are really asking us for, and it’s coupled with the vision of mixed reality that we’ve been working on for 12 years. It’s all coming together.”

Image courtesy of Microsoft

Gannett Posts Profit for Second Quarter Since Acquisition

Gannett may have finally turned its luck around. After their recent earnings report, they announced that they have turned a profit for the second quarter in a row since their merger with New Media Investment Group.

Gannett owns more than 200 daily publications, as well as several hundred weeklies, and the national publication USA TODAY. Their reported net income for the period ending on September 30 was $15 million. USA TODAY reports that Gannett reported a total revenue of $800.2 million in their third quarter of 2021, down 1.8% from a year earlier. However, revenue rose 0.9%.

Gannett’s struggle to turn a profit is not a unique struggle, as print outlets continue to lose subscribers. Users are turning to digital subscriptions for most publications. In January of this year, Gannett set a goal of 10 million digital-only subscribers in five years. Their first quarter showed that they had surpassed 1.2 million digital-only subscriptions in their earnings report. At the end of their third quarter this year, they reported more than 1.5 million digital subscriptions, showing a 46% growth in revenue.

USA TODAY launched two premium subscriptions earlier this year, helping to increase revenue growth. First, they launched a paywall for premium content, and started looking more into investigative journalism, immersive storytelling, and more.  Their second venture was USA TODAY Sports+, which allows subscribers to curate and customer their sports news and content, with a variety of video, audio and augmented reality in seven different markets. Yahoo! Finance reports that Gannett expects to finish the year with more than 1.65 million digital subscriptions. That amount of growth will reflect growth of more than 50%.

Image: USA Today home page, Nov. 11, 2021

Facebook is Helping Content Creators Avoid App Store Fees

Creator driven subscriptions are on the rise. Facebook is taking it on in an interesting way. They have announced their plan to sneak around Apple’s platform fees, in their latest blow to take on the tech company.

Mark Zuckerberg of Meta said that the popular social network would give creators that were eligible custom links, allowing them to accept payment directly. This would allow creators – and Meta – to forego Apple’s infamous 30% cut of the subscription.

In a Facebook post, Zuckerberg says, “As we build for the metaverse, we’re focused on unlocking opportunities to make money from their work. The 30% fees that Apple takes on transactions make it harder to do that, so we’re updating our Subscriptions product so now creators can earn more.”

 The founder of the social network also said that creators would have more ownership of their audience and would allow them to download the email addresses of all of their new subscribers.

In this method of subscription promotion, Facebook wouldn’t be the one skirting the fee, leaving them operating under the conditions of Apple’s App Store. A spokesperson for Facebook said that they weren’t removing the ability for users to sign up for a subscription through Apple’s native payments system, trying to remove themselves from the grey area.

Creators who run Pages on Facebook that are eligible for subscriptions will be able to share a custom promotional link through text or email, which would point their fans to a payment portal. Facebook will be taking payments through their payment integration, Facebook Pay. In order to be eligible, a creator must have a page that has 10,000 followers or more, or more than 250 return viewers. Other requirements are 50,000 post engagements, or 180,000 minutes watched on Facebook Watch.

Facebook is also launching a bonus program that would allot creators between $5 and $20 for each new subscriber they sign up through the end of the year. They currently are not collecting any fees of its own creator payments through 2023, allowing creators more access to their money. Creators will currently keep all of the money they will get through subscription payments, minus taxes. Their custom links approach to duck App Store fees is interesting, since they had previously planned to take their own 30% cut of subscriber earnings. Facebook’s subscription feature is currently available in 27 countries, The Verge reports.