Emerging Tech and Media Newsletter (June 4 — June 10)
Curated and written by Brian Guenther
The fifth edition of this newsletter contains the following…
- Apple and Smart Devices: updates to Apple Watch and Siri; new smart device from Amazon; Xbox will support voice assistants.
- The Feed: Instagram-centric this week with stories about video, threading, Instagram experiences, the algorithm, and comments.
- Media Channel: Amazon competing for content; Facebook competing with Twitch and game streaming; audiobooks as an emerging publishing category.
- Alternate Reality: ARKit 2.0, Memoji, and file formats; a Magic Leap update; location-based virtual reality experiences.
- Words on the Blockchain: Coinbase making more moves; a new smart contract exploit in plain sight.
- Other Stuff: YouTube burnout; another spin on the gaming phone; the death of the video game console; a psychopathic AI.
- Recommended Media: more Naval Ravikant but this time in video form.
Apple and Smart Devices
Apple held its Worldwide Developers Conference (WWDC) in San Jose, so naturally there are a few stories worth mentioning. Refer to this round-up by VentureBeat if you want to catch-up on a high-level summary of the announcements and other subjects of interest. This section will focus on stories related to smart devices.
Apple introduced a new Siri capability called Shortcuts, which let iOS users create customized commands for Siri that can connect to any app. This capability is reminiscent of a previous Apple acquisition and similar functionality introduced in Alexa and Google Assistant. It is a more advanced feature, so uptake is likely to be lower than expected for an Apple feature.
Apple also announced watchOS 5, a major update for the Apple Watch that adds a walkie-talkie feature, support for Siri shortcuts, interactive features for notifications, support for web page loading, support for podcasts, and a few other features. All in all, the Apple Watch is becoming a more powerful and more useful smart device. In a lot of ways it is converging towards the phone, and might eventually replace it for a lot of tasks. A “post-phone” world is becoming increasingly realistic.
Amazon continued the expansion of its Fire hardware line with the introduction of the Fire TV Cube. The $120 box is launching in two weeks and combines a media center with a smart speaker. This combination could open up a new set of customers who are looking to replace video dongles or do not want to add another speaker to the living room. As the market leader in the smart speaker category, it is important to stay ahead of the competition and flesh out a hardware ecosystem. Amazon certainly has a penchant for long-term investment and aggressiveness in new categories.
The Xbox One is another product looking to dominate the living room and reports indicate that it will be gaining support for both Amazon Alexa and Google Assistant. The current console generation has been tough on Microsoft, as the PlayStation has outpaced it significantly, but the company remains committed to the Xbox brand. Voice assistants are not difficult to add to a variety of products and it is now likely that voice interfaces will become ubiquitous in consumer electronics.
The Feed
Instagram is currently the most dynamic social media platform as it gains hordes of users and influencers, introduces new features, and evolves in terms of content and conventions. This week’s section on social media is dedicated to Instagram, as the stories around the service were informative about the state of social media in general.
There were reports this week that Instagram will raise the limits on videos from one minute to up to an hour, as well as introduce a curated video hub on June 20th. Given the immense popularity of video and video streaming, these moves position Instagram as a competitor to YouTube and Twitch. This will lead to extensive experimentation by brands and influencers and we will have to wait and see how users respond. I am bullish on the development though. Instagram is architected differently than YouTube in that following relationships are critical and there is less algorithmic influence. This will likely better align the incentives of Instagram and content creators.
Speaking of the algorithm, for the first time details were given about how Instagram’s algorithm organizes feeds. The primary factors for the algorithm are interest (the likelihood that a user will engage with a post), recency (age of a given post), and relationship (the history of a user’s interactions with a poster). These factors aren’t particularly novel and strike me as the logical factors to maximize engagement for a social media service. Algorithmic sorting has proven controversial in social media though and Instagram has taken a stand, stating that there will be no way for users to choose a reverse-chronological feed.
Instagram also uses an algorithm to influence what comments are surfaced to users and it prioritizes comments by celebrities, athletes, influencers, and brands. It also prioritizes comments by people relevant to individual users. Prioritizing public personalities is a sensible and effective strategy as, all else being equal, these figures are far more interesting than unknown strangers. This also leads to fascinating windows into the personalities and relationships of these figures, as it makes their interactions visible. It turns out they are people too and react just like everyone else.
A restaurant in Boston introduced what they believe is the first table dedicated to creating Instagram experiences in the United States. The custom furniture cost $10,000 and includes features to create perfect photographs including moveable arm lights, adjustable light intensity, and adjustable color temperature. This is more than a clever gimmick. Artfully arranged plating and expensive or unusual food is a frequent sight in my feed. Food photography was embraced early on as social media content, and this has only persisted. Restaurants can choose to discourage this or they can lean into it and benefit from the free exposure. Many restaurants will choose the latter. Beyond custom locations meant for photography, restaurants have also created special menu items just for social media sharing.
The Atlantic had an interesting piece on how Gen Z is using Instagram’s threading feature. The story claims that this younger generation avoids the open web as much as possible in favor of the comfortable confines of social networks. This has led to the rise of accounts which specialize in threaded messages about how-to topics that have been staples for search engines, such as first dates and taking care of hair. Instagram threads and how they are being used is similar in principle to Twitter threads and tweetstorms, which are becoming a popular way to disseminate ideas and arguments. Social media threads are, by virtue of the platform that they are on, quite pithy which means that they are very shareable and consumable. Last week I featured a tweetstorm, and I’ve engaged with tweetstorms addressing everything from book reviews to philosophies of life. Threads are increasingly competing for attention with blog posts, both for writers and for readers.
Media Channel
The rise of streaming media and corresponding retreat from traditional cable bundles has led to an arms race for exclusive rights for content. This has been playing out for some time when it comes to sports licenses, as broadcast and cable networks fought a similar battle against one another. But now, Amazon is getting deeper into the game by securing exclusive rights to 20 Premier League soccer (ahem, football) matches. While the specific matches are of lower value than those held by its competition, it still marks Amazon’s ambition and growth strategy for online video. Amazon also secured a first-look deal with Jordan Peele over television projects, continuing a trend of various online video companies competing for proven talent. This competition will strongly favor the creative talent and, in the end, consumers will benefit as well with more high quality content.
Facebook is also looking to attract talent for its streaming platform for gaming, launching the Level Up program and a corresponding portal that will feature streaming channels in a manner similar to how Twitch operates its platform. The program is aimed at helping newer streamers attract a community and start monetization. Twitch and YouTube are already far ahead of Facebook in this market, but Facebook is dedicated to making this work. With its ability to control the visibility of content within the newsfeed and target it precisely at the right audience, Facebook has the tools to make streamers successful. However, Facebook has to balance the engagement of users and its desire to monetize the newsfeed with ads. Streaming content is an unknown at this point. Regardless, it will be hard for Facebook to move Twitch’s successful streamers from their comfortable perches. Perhaps Facebook can anoint a new class of successful creators native to their platform while they kickstart it.
Audiobooks (and podcasts) are becoming big business in the publishing industry, reaching upwards of $2 billion in sales in 2016. Between 2012 and 2016, audiobook unit sales increased from 42 million to roughly 90 million. This growth is leading to developments in the publishing business. For example, Michael Lewis is a well-established author whose books have been adapted to movies and who has long-standing publishing relationships. However he just signed a deal with Audible (Amazon’s audiobook division) to publish four audio original stories. This is just one example of Audible investing in original audio titles. Authors are seeing surprising amounts of success with the audio format, sometimes far exceeding print sales. Given the emergence of smart speakers, wireless headphones, mobile playback apps, and cloud synchronization it is reasonable to assume that this market will continue to grow and audiobook rights will become even more important to authors going forward.
Alternate Reality
Apple used WWDC to announce ARKit 2.0 and a universal file format for AR, developed in collaboration with Pixar. The demonstrations of the new version of ARKit 2.0 were entertaining but didn’t materially inflect the potential of the technology. This eye-tracking demonstration on Twitter was more inspiring. The iPhone userbase has not embraced AR apps yet, as the category has only reached 13 million installs within 6 months of launch. Roughly half of those installs were for AR games. The technology and user experience around mobile AR experiences has not been well explored by app developers, and I expect the pace to remain slow.
The arms race for better emoji features continues, as Apple also announced Memoji and a slew of new Animoji characters at WWDC. Memoji are Animoji that individual users can personalize based on their preferences, similar in principle to Snap’s popular Bitmoji. This video demonstrates how the process works. Giving users more ways to communicate and express themselves is well-aligned with what users want on their phones.
Magic Leap gave its second Live presentation, detailing the Magic Leap One Creator Edition AR headset and an intended 2018 launch. The hardware for the One was shown off in detail, but its operation was not demonstrated. The hardware looked well-designed, but was clearly not ready for mass market adoption. The glasses are bulky and a tethered portable computer has to be worn in a position where it can “breath.” Another significant caveat is that it is meant for indoor use only. The lack of key details (a live interactive demonstration, details on price, and a release date) indicate that there is still a lot of work to be done before this ships. The presentation contained enough content to be interesting but not enough to eliminate my skepticism around Magic Leap’s first consumer headset.
Virtual reality is closely associated with home PCs and hardware such as the Oculus Rift. However, a number of companies recognize the high hurdle of owning a VR-ready rig and are looking to open up VR to a wider audience by opening retail experiences somewhat akin to video game arcades. A Terminator Genisys-themed experience will be opening locations in the US and internationally. Over 100 hundred Dave & Buster’s will open a Jurassic World-themed VR experience this week, just in time for the new movie. The Void, a company operating locations across the world featuring a Star Wars experience, will be expanding and will also offer a new horror experience. The expansion of location-based VR is attributable to venture style investments as well as deals with film studios, who likely see it as part of marketing new movies and associated IP.
Words on the Blockchain
Coinbase keeps making an appearance in this newsletter, week after week, which is a testament to how quickly the company is moving to capitalize on the hype around cryptocurrency. It is not the only significant company to discuss when it comes to crypto, but it is one that exemplifies many of the important trends in the space. This week Coinbase bought Keystone Capital, a registered broker-dealer. Coinbase hopes to use this acquisition to gain broker-dealer status and position itself to trade traditional financial products and sell registered tokens in the future. A regulatory agency will have to approve that status, so Coinbase still has some work to do though. The company’s strategy has been consistent considering its other moves into professional trading and institutional services. Coinbase is also preparing to expand into the Japanese crypto market.
Stolen currency and scam stories abound in the crypto market, but this is first time I’ve seen a story about a public backdoor being used to swipe millions in cryptocurrency. The story is somewhat involved, but it distills down to a dispute between two companies involved in a business deal. The deal was done using cryptocurrency that had a function that allowed the issuing company to withdraw at any time. This function was visible in the public source code, but it escaped scrutiny. That was until it was used to unilaterally withdraw $6 million worth of cryptocurrency that was central to the business deal. The story illustrates yet another way in which emerging markets can fail, and highlights the importance of industry norms and trust. Traditional finance features no shortage of lengthy legal documents that are understood to be standardized and aren’t always broadly scrutinized in detail. Smart contracts are not at that stage yet.
Other Stuff
The massive popularity of YouTube, Twitch, and Instagram has created a new class of independent content creator native to those platforms. Many youngsters now aspire to follow their YouTube idols into content creation. But this new career path isn’t without its drawbacks, as a number of prominent YouTube creators have experienced mental health issues recently. The influence of YouTube’s algorithm makes success fragile and volatile. The ever-increasing amount of amateur and professional creators makes the competition intense. Audiences demand new content and can become vocal when it isn’t available regularly. This can place considerable stress on content creators and burn them out. But the public-facing nature of the job means that this can fuel further backlash, as the job is perceived in idealized and unrealistic terms. As the high-profile suicides of Kate Spade and Anthony Bourdain shine a spotlight on depression, it is important to recognize that celebrity and fandom doesn’t solve every problem and can mask serious issues. Youngsters in thrall to YouTube stars such as Logan Paul need to learn this lesson. This is not unique to YouTube though, as Twitch streamers have also suffered from their work. In one case a streamer died during a 24-hour charity broadcast.
Ahead of E3 the CEO of Ubisoft gave an interview in which he stated his belief that video game consoles as we know them will last only more generation before giving way to cloud-based streaming. There have been a few attempts at making this model work already, but statements by Microsoft at its E3 conference suggest that is something it is actively working on.
MIT is working on a project to train a neural network, dubbed Norman, using images associated with violence and death. The project was successful, as Norman’s identification of images in a Rorschach test revealed its traumatized perception. The research team is not done yet though, as they will now work on fixing Norman and give it a more normalized perception of the world.
Competing with Apple and other smartphone manufacturers such as Samsung can be brutal, leading to periodic attempts to differentiate phones for narrow, niche markets. There have been multiple attempts to make gaming-centric phones, and Asus is making another with the newly announced Republic of Gamers phone. The phone is visually striking, with the kind of design one would expect to appeal to hardcore PC gamers. The Android phone has powerful hardware and accessories that include a desktop dock allowing the phone to power a monitor, mouse, and keyboard. The recent success of PC port games including Fortnite and PUBG indicate that perhaps the time is right for this kind of phone. The Chinese market is much more adept at hardcore (in terms of UI) mobile games, so this phone may see success there.
Recommended Media
Last week I recommended a tweetstorm by Naval Ravikant and this week I am recommending the Periscope version. Naval basically gave a masterclass in social media influence, as he not only provided a well-received bundle of wisdom but he also walked through the choices he made in the delivery of that content. Even if the message isn’t attractive, I believe the manner in which the message was delivered is revealing.
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