In today’s Exponential Investor

  • What to do with $8.45 billion
  • Netflix: the new Blockbuster?
  • 7.4% APY on your “savings”

If you had a spare $8.45 billion lying around, what would you buy with it?

A few houses? A yacht? Some fancy cars? A new wardrobe, everything your family ever wanted… and their families… and their families.

Would you say, buy a company?

More specifically, would you buy MGM Studios, home to over 4,000 movies and 17,000 TV shows?

That’s what Amazon just did in what I consider to be the biggest deal in media, probably ever.

Amazon last week announced it’s signed a deal to buy MGM for $8.45 billion.

The reason for its deal is pretty obvious…

To become the King of Content.

As we discussed in Friday’s Exponential Investor podcast, quality content is everything to streaming companies.

Right now Amazon is looking to put its boot on the throat of its competitor, Netflix, and “out-content” the company into oblivion.

We all know Disney is the god of content in the streaming space. Decades of IP and generational content puts it at the top of the pecking order, and Disney will stay there for some time.

Acquisitions of giant franchises like Marvel and Star Wars also mean Disney easily survives the streaming wars. But Netflix… is on borrowed time.

Last month Netflix announced a slowdown in its subscriber growth numbers. Netflix still brought on millions of new subscribers, but that growth will diminish, and it’s even possible in the near future, reverse.

This is likely why Netflix is looking to get into gaming, which I wrote about last week here as well.

The thing is Netflix might be able to make a better go of gaming than it might in movies and TV content. Gaming may prove to be the most lucrative part of its business if it can get it right with a unique offering that Amazon and Disney don’t have.

But trying to continue to go toe-to-toe with Disney and Amazon will be a zero-sum game for Netflix. In fact, I suggest its streaming services as it is today may end up in the history books alongside Blockbuster.

Netflix’s gaming potential however may be the one shining light on a business that’s facing stiff and intense competition, even more so now from Amazon (while not quite the Disney-level “Content God”, it is fast becoming the “Content King”).

The Winklevii are the new “bank”

Last week I also wrote to you to explain the progress at which decentralised finance was sweeping through the crypto landscape.

I explained how if you know where to look you can achieve success in crypto financial networks on a scale that you can’t in the traditional markets.

One of those places where you need to be looking is in interest earnings on your savings.

Now I pointed out the Mode app last week from London Stock Exchange-listed Mode Global Holdings (LSE:MODE). I had found its onboarding process very easy to use.

But Mode (for now) only allows bitcoin purchases. So it’s still somewhat limited in its early days.

Another application I use is called Gemini. It’s also a crypto wallet, but this one is far bigger and more established.

Gemini is owned by the Winklevoss brothers, Cameron and Tyler. The twins who were original founders of Facebook but were squeezed out by Zuckerberg. Anyway, they’re pretty big in the crypto world now.

The Gemini platform is a trading and investing platform, and now also a crypto savings platform. Gemini also has a very easy to start onboarding process and we found it equally as straightforward to open an account as Mode.

Gemini also enables you to buy a whole lot more crypto than just bitcoin. But that’s something to dig into another time.

The important thing today is that Gemini is now offering high interest on crypto savings through its “Gemini Dollars”.

Using what it calls “Gemini Earn” you can earn 7.4% APY on your Gemini Dollar holdings. As Tyler noted in a tweet regarding the announcement,

This is more than 100x the interest rate your bank offers you for your cash deposits. Let’s go! [thumbs up emoji + rocketship emoji]

He’s right. Check your latest interest statement from your bank on your “savings” account. I bet it’s nowhere near 7.4%.

Look, here’s the thing. There are risks involved in crypto, don’t doubt that for one second. And these new platforms are exactly that, new. There are some early risks with these things that are different to your traditional bank account.

But just because somethings new and different to what you know, doesn’t make it bad.

Also, a company like Gemini is huge. It has substantial capital backing and is regulated in the US by the New York State Department of Financial Services.

Will Gemini fail? Who knows? But we also don’t know that your high street bank won’t fail either. Actually, my view is the likelihood of a high street banking failing is greater than an organisation like Gemini.

The key thing is the deposit guarantees in the event that a devastating event does take place. You don’t have those in crypto… at least, not yet. But they often do have other insurance and protections in place.

Now I’m not saying go out and lump money into Gemini, or Mode, or any new crypto savings platform. Do your research, ask the questions about protections, and then assess the risks vs the potential earnings available.

What you must understand though is this is the kind of competition the banking industry is facing now. Once we get past these initial hurdles of perception and reluctance for change, I think we’re witnessing a change in global finance the likes we’ve never seen before.

An organisation like Gemini I view as the new breed of bank. This is the kind of company I’d be thinking about backing well before the likes of any high street bank. Perhaps it’s time you started thinking the same way too.


Sam Volkering
Editor, Exponential Investor