Paul Gluckman

BJ’s Wholesale Club expanded its assortment in Q3 in categories “where we were historically underpenetrated,” including “select consumer electronics” segments, said CEO Lee Delaney on a Thursday investor call. BJ’s timed its Black Friday deals to start earlier in November with “an enhanced focus on relevant categories,” including consumer tech, he said. “We feel great about our holiday assortment.” Online sales grew about 200% from the 2019 quarter, with three-quarters of the growth coming from the buy online, pick up in club offering, he said. “The growth in our digital platforms continues to surpass our expectations.” Online sales through 2020's first nine months were four times higher than in all of 2019, he said. Same-store general merchandise and services sales grew 13% in the quarter, “driven by strong sales of TVs, computer equipment and other home-related categories,” said Chief Financial and Administrative Officer Bob Eddy. He expects in Q4 BJ's will incur up to $35 million in COVID-19 costs, mainly from health, safety and sanitation protocols and staff incentive bonuses. “The current environment remains challenging and unpredictable,” said Eddy. “It remains extremely difficult for us to forecast how the fourth quarter or next year will play out in great specificity.” BJ’s hopes that “with the election behind us,” a new pandemic stimulus package “may have the potential to gain more momentum in Washington,” he said. “While we’ve had some good news in the race for a vaccine, it will most likely take many months to get enough people inoculated to improve the public health crisis.” Delaney has "no doubt" the pandemic is causing customers "to seek out value," he said. "The hope is as we move into the winter months, the public health crisis is more controlled, although that doesn’t seem terribly well aligned with the headlines and where we’re heading."

Granting DivX the import ban it seeks against LG, Samsung and TCL would exclude more than half the smart TVs sold in the U.S., LG responded (login required) at the International Trade Commission in docket 337-TA-1222. The ITC voted Oct. 14 to open a Tariff Act Section 337 investigation into allegations that LG, Samsung and TCL smart TVs and MediaTek, MStar and Realtek video processors infringe four DivX patents on adaptive bit rate streaming (see 2010140042). Samsung and TCL also filed responses Wednesday that were publicly redacted. Though DivX claims the market would continue to be adequately supplied with smart TVs despite the “disruption” of an import ban against three brand-share leaders, “it makes no products itself and provides no evidence that any third party could meet demand,” said LG. “Competition and consumers would suffer.” Smart TVs during the pandemic “have been increasingly relied on for consumer entertainment experiences, streaming video, and remote learning experiences,” said LG. “These technologies are ubiquitous in modern life.” LG “does not, and has not directly or indirectly infringed any valid and enforceable claim” of the DivX patents, said the manufacturer. DivX didn’t respond to questions.

IHS Markit expects 5G-related investment in China, France, Germany, Japan, South Korea, the U.K. and the U.S. to average more than $260 billion annually through 2035, it said Tuesday in a Qualcomm-commissioned report on the role of 5G in a post-pandemic economy. The “isolation” of lockdowns “underscored the importance of communication technology in keeping social networks connected and economic systems resilient,” said IHS. “Deepening deployment” of 5G and the products and services flowing from it will “fundamentally support and enable the emergent requirements of the post-pandemic world for connectivity, flexibility, and resiliency,” it said. The need for expanded connectivity during COVID-19 is “invigorating 5G investment growth” even as other investment activities are declining, said the researcher. It projects an 11% increase in global 5G investment and R&D through 2035, compared with its 2019 forecast. The contribution of 5G to online shopping can “enhance the customer experience, especially in the aftermath of COVID-19,” said IHS. The faster speeds and lower latency of 5G “can enable long-form video advertisements to deliver more features and product information,” it said. Augmented and virtual reality enabled through 5G “can become the perfect conduit for an immersive in-store experience by giving the customer a full view of all products on display,” it said. Also, when combined with artificial intelligence, “chatbots can provide an interactive experience that is better than having a personal shopper.”

October online and other non-store sales rose 3.1% sequentially, up 26% from October 2019, reported the National Retail Federation Tuesday. “Early holiday shopping provided a strong boost,” said NRF CEO Matthew Shay. “Consumers have proven their resilience and willingness to spend as we head into the heart of the holiday season.”

Baidu’s $3.6 billion all-cash buy of YY Live, the Chinese video streaming service, will render ad-free content a more “meaningful piece” of Baidu’s core business, said Chief Financial Officer Herman Yu on a Q3 investor call Monday. Once Baidu closes the transaction in 2021's first half, its ad-supported “legacy business, which has been dragging our mobile ecosystem growth, will become an even smaller piece” of the company’s portfolio, he said. Baidu has “substantial upside from growing nonadvertising revenue,” said CEO Robin Li. Ad-free revenue, as a share of Baidu’s “consumer-facing business,” is much lower than that of its “peers,” he said. “Adding YY Live to our portfolio will allow Baidu to gain immediate operational experience and know-how on building a large live video community,” plus speed its migration to ad-free revenue, he said. Li rationalized the deal amid growing saturation in streaming services, saying “it's only natural for us to integrate with a live streaming business such as YY and further monetize our existing user base and traffic” of 300 million daily active users.

“Many more markets” will go live in ATSC 3.0 in Q1, and “by the summer, we’ll hit the top 40,” Pearl Managing Director Anne Schelle told us. The broadcast industry’s original plans were to have stations in the top 40 TV markets up and running by year-end, but COVID-19 “put us back a bit,” she said. “I’m proud about the number of stations going up,” including “some big ones” going live with 3.0 in December, she said. Pearl TV and its partners in the Phoenix model market test bed project are poised to launch their first NextGenTV branding campaign to raise consumer awareness of the technology and promote its adoption for when people shop for TVs, Schelle noted. “Markets are launching” with 3.0 services, and it’s time to start engaging consumers, she said. The campaign begins Nov. 25 and runs through mid-January, said Schelle. It touts "stunning video," though Schelle said 4K and HDR likely won't become commercial realities before 2021. Service and device enhancements are inevitable as the launch progresses, said Pearl spokesperson Dave Arland, likening this stage of 3.0's debut to the first quarter of a football game. HDR is “not there yet,” partly due to COVID-19 delays, Schelle said. “You will see, I think in 2021, distribution on the various HDR formats from the networks.” Expect the NextGenTV logo to gain a much more ubiquitous presence after the campaign kicks off, said Schelle. We pored through the LG, Samsung and Sony links on the WatchNextGenTV.com consumer-facing website, plus the Best Buy and Amazon online stores, finding the logo mentioned only on Samsung’s e-commerce site. “That is going to change,” said Schelle. “They just haven’t updated it yet. It’s on their to-do list.” She expects more TV brands to jump into 3.0 at the virtual CES 2021 in January.

The direct-to-consumer (DTC) business has been Disney’s “real bright spot” amid the COVID-19 pandemic, said CEO Bob Chapek in a fiscal Q4 investor call Thursday, a year to the day after the launch of Disney+. The service added 16.2 million paid subscribers in the quarter ended Oct. 3 and had 73.7 million for the year, “far surpassing our expectations,” said Chapek. Disney+, already available in more than 20 countries, will launch Tuesday in Argentina, Brazil, Chile and Mexico and arrive in more overseas markets in the next year, said Chapek. Disney will update its global subscriber numbers at its Dec. 10 investor day, he said. The “full suite” of Disney streaming services, including ESPN+ and Hulu, surpassed 120 million paid subs in the quarter, he said. The pending launch of the Star-branded “general entertainment” streaming offering “will enable us to grow our business even further in the years ahead,” he said. Disney narrowed the operating loss in its DTC business by about $170 million from a year earlier, to $580 million, said Chief Financial Officer Christine McCarthy. “Higher results” at ESPN+ and Hulu drove the improvement, which was “partially offset by costs associated with the ongoing rollout of Disney+,” she said. Disney plans to continue ramping up its investment in DTC, said Chapek. “We will be heavily tilting the scale from linear networks over to our DTC business.” The studio was “very pleased” with the results of Mulan. Though Mulan “met with some controversy” globally after its Disney+ release, the company had “enough very positive results” before that controversy “to know that we've got something here in terms of the premier access strategy,” Chapek said, promising more details at next month’s investor conference. Disney faced a global backlash when Mulan’s closing credits thanked a Chinese government agency accused of human rights abuses in Xinjiang for its help in the production.

AudioEye ended Q3 with about 22,000 customers, a 500% increase from a year earlier and more than triple its customer accounts since Dec. 31, said Executive Chairman Carr Bettis on a Thursday investor call. The company markets online accessibility tools for the visually impaired and certifies websites for American With Disabilities Act compliance. Though demand for digital accessibility is strong, AudioEye has had new customer deals delayed because of COVID-19, said Bettis. “We've also continued to extend some more flexible pricing and other options to our customers on a case-by-case basis, to help them manage through the impact on their own businesses from the pandemic.” Customer renewals are down “substantially due to events that are out of our control, such as bankruptcy proceedings or outright business closures,” he said.

Remote working drove “significant increased usage” of Webex in fiscal Q1 ended Oct. 24, plus “solid adoption as customers look to us for a flexible work solution that also enables privacy and security,” said Cisco CEO Chuck Robbins on a Thursday investor call. Webex had nearly 600 million participants in October alone, “almost double the number we had in March,” he said. “We are reimagining every aspect of the collaboration experience” with built-in artificial intelligence technology, security and integrated workflow applications to “create a more intelligent work environment and to improve productivity,” he said. The stock closed 7.1% higher Friday at $41.40.

Semiconductor Manufacturing International Corp. has “deep regret” about the Trump administration imposing national security export restrictions on China’s largest chipmaker (see 2009080057), said SMIC Chairman Zhou Zixue on a Q3 investor call Wednesday. Though the restrictions “will have an impact on SMIC in the near term, we believe it’s manageable,” he said. “The company will maintain close cooperation with suppliers and customers and continue to maintain active communication with the relevant department of the United States government working to resolve possible differences.” SMIC supplies products and services only for “civilian end users,” said co-CEO Zhao Haijun. “SMIC strictly complies with the laws and regulations of all jurisdictions where we conduct business. Over the years, we have established good cooperative relations with well-known customers and semiconductor equipment suppliers in the United States and internationally.” The company is working with U.S. suppliers to apply for export licenses, he said: It risks longer delivery lead times for equipment and raw materials due to the restrictions.