Emerging Technology and Media Newsletter (May 28 — June 3)
Curated and written by Brian Guenther
The fourth edition of this newsletter contains the following…
- Fun and Games: Battlefield V announced; popular streamers are getting PUBG skins; PUBG sues Epic for copyright infringement; notable investments and an acquisition; yet another major game gets a battle royale mode.
- The Feed: social media controversy leads to the cancellation of a network TV show; Facebook gets into specialized hardware; Facebook changes its presentation of trending news.
- Media Channel: MoviePass acquires a production studio; Apple is becoming a music publisher; a popular gaming company does a publicity stunt livestream; news about various skinny bundles; the rise of fitness streaming.
- Alternate Reality: one of the leading social media companies is launching developer tools for the first time; the World Cup is being broadcast in VR, for free.
- Words on the Blockchain: TRON moves away from Ethereum; the leading crypto wallet provider reaches a huge milestone; a game crowdfunding company acquires a blockchain company to build a decentralized publishing platform.
- Other Stuff: a potential partnership between two companies recently engaged in a bitter lawsuit; hospitality workers strike for fear of losing jobs to automation.
- Recommended Media: the Mary Meeker KPCB Internet Trends 2018 presentation; a very popular and pithy tweetstorm about how to get rich.
Programming note: there is no original essay featured this week. I have a number of interesting topics in mind that I am in the process of developing, so stay tuned!
Fun and Games
The Battlefield franchise is one of the largest modern franchises in gaming and each new entry garners a lot of attention. The latest entry in the franchise is particularly interesting because it indicates how its publisher, Electronic Arts, is responding to the backlash around Star Wars Battlefront II as well as the rise of the battle royale category. Battlefield V is the latest game and it debuted with a teaser trailer that was immediately controversial for its depiction of a female character in the middle of the action of World War 2. This controversy died down quickly, as it should, because it was ridiculous. The more significant development was that Battlefield V is ditching some of the common monetization mechanisms that have become a hallmark of AAA shooter games — loot boxes and premium passes. This could be the result of recent or pending regulation around loot boxes or the backlash to Battlefront. I’m confident that there will still be plenty of premium aspects to the cosmetic system, though these details remain to be seen. The other notable development was that Battlefield V does not have a battle royale mode, though it does have a number of interesting multiplayer modes such as Grand Operations (multi-round, time-limited matches) and Airborne (siege matches). I personally believe that they just couldn’t get battle royale together in time for E3 and so don’t want to comment on it or commit to it. It is hard to adjust large-scale efforts that involve multiple platforms, even if you have an abundance of resources. The strategy of incorporating battle royale into the Battlefield franchise is a no-brainer.
Related to the unexpected change in monetization mechanisms in Battlefield V, PUBG is getting a new type of loot box: streamer-themed skins with a fixed price. Two of the most popular Twitch streamers, Shroud and DrDisrespect, are getting their own skinned weapons and these skins will be available for direct purchase through specific loot boxes. Ordinarily, loot boxes contain randomized gear and that is the key to their success (and why some criticize them as gambling). PUBG hasn’t done a great job with their loot box system with too few quality skins and a high price for unlocks. This move is a shift in strategy, and a smart one at that. These particular Twitch streamers are enormously popular and the attention (and money) they garner from this promotion as a result may help PUBG recapture streamers from the more popular Fortnite. Fixing the odds on the crates will likely leave money on the table but will convince players to engage in the system who would otherwise be reticent.
PUBG was also in the news because the company filed a copyright infringement suit against the Korean division of Epic Games. There has been some noise within the industry about copyright issues between the two companies, so this isn’t surprising. It is interesting that Tencent is a major stakeholder of both games, and that the gaming industry hasn’t historically respected the protection around the kinds of things that are mentioned in the lawsuit such as weapons, player count, and health regeneration. I doubt this will result in anything more significant than a settlement.
Two gaming companies received significant investments this week: Bungie and Voodoo. Bungie has a long history in the gaming industry and taking $100 million from NetEase makes a lot of sense when you consider the growing importance of the Chinese gaming market. Bungie is capable of producing some of the best games in the business and getting local support in China will be a big advantage. Voodoo is a very different company from Bungie in that it focuses on more casual, mobile games. It reportedly has 150 million users and its games were downloaded over 300 million times in 2017. The $200 million investment from Goldman Sachs will likely be used by the studio to bulk up its staff and marketing efforts. This kind of funding can also open up a lot of M&A options.
Zynga announced another major acquisition — the acquisition of Gram Games for $250 million. Gram Games is known for its hit game Merge Dragons. The acquisition is a continuation of Zynga’s recent strategy of picking up developers around the world with proven franchises. The company has been on a roll in recent quarters.
Finally, Tencent’s Honor of Kings will be receiving a battle royale mode. Battle royale has been introduced in many types of games at this point, so this is not surprising. It is interesting to see how much Tencent has riding on battle royale, considering it has a stake in Epic Games, has deals with PUBG, and operates multiple battle royale games itself. The gaming market periodically goes through phases like this, but this particular fad has been moving at hyper-speed.
The Feed
The modern revival of the ABC show, Roseanne, proved short-lived as controversial tweets by the show’s eponymous star prompted ABC to cancel the show abruptly. Further tweets even led to a pretty humorous exchange by the pharmaceutical company Sanofi. The whole affair demonstrates the brittle social media environment of today and how insensitivity can result in potent backlashes. When Facebook and Twitter started to gain popularity, there were many people who lost their jobs because of their social media behavior. This is one of the most prominent examples of how a personal social media presence can have professional consequences.
Facebook is getting into the semiconductor business in order to create computer chips that will be more efficient at analyzing and filtering live video content. Facebook, as one of the largest aggregators of data in the world, has the special computing needs and the scale necessary to make hardware investments such as this pay off. One of the uses for this technology will be to prevent or remove sensitive content such as murders and suicides.
Facebook is also making changes to how it handles trending news, which has proved controversial in the past. The existing Trending News box will be removed and instead Facebook will be introducing special labels for breaking news content from certain partners. Facebook will also be launching a new section called Today In that will curate breaking news and relevant local news. Facebook Watch will gain a new section for news content as well. The effectiveness of these changes remains to be seen. In one sense, using news publishers to break news is an effective solution as it offloads the burden from Facebook. But the provider of the news isn’t necessarily the problem — it is the visibility of the news content and how it is prioritized relative to other content on Facebook.
Media Channel
MoviePass is everyone’s favorite movie company right now, as it offers an unbeatable deal to consumers at great expense to the company. This has led to a lot of speculation that the company won’t be able to sustain itself and will run out of cash. This week, the parent company of MoviePass acquired a film production company and used it to form a new production studio called MoviePass Films LLC. Coupled with its previous purchase of Moviefone, it looks like MoviePass is trying to gain more influence over how consumers are exposed to movies and distribute its own content to subscribers. It resembles the strategy of an aggregator like Netflix, and it could actually work. However, Netflix gained its dominant position slowly and from a position of strength whereas MoviePass is a victim of its own success. The key question is whether or not MoviePass can manage its growth long enough for it to gain enough leverage in the film industry to extract more favorable terms.
Apple looks to be setting up a music publishing division, which would put Apple in the business of licensing music and developing artists. Apple Music’s 40 million (and growing) paying subscribers gives Apple a lot of clout, as does its enormous war chest of cash. This move makes a lot of sense as it would facilitate exclusive content for the Apple ecosystem and create differentiation for Apple Music relative to rivals such as Spotify.
In the lead-up to E3, the major gaming industry trade event, a major developer pulled an interesting livestreaming stunt. Bethesda, which has developed and published beloved games in the Elder Scrolls and Fallout franchises, ran a 24-hour livestream on Twitch which consisted of a “Please Stand By” graphic. The stunt pulled in two million unique viewers and demonstrates the power of Twitch as well as the power of a good publicity stunt. The actual reveal was almost less interesting. As Twitch matures, I expect that all major game companies will maintain a presence on the platform.
Cable bundles have earned a lot of enmity from customers over the years and we now live in an age where customers can cut the cord or opt for skinnier versions of these bundles. AT&T, which is attempting to take over Time Warner, is planning to offer one of these “skinny bundle” services. AT&T reportedly has 1.5 million subscribers to DirecTV Now, compared to the 800K subscribers for Hulu’s own version of the skinny bundle. AT&T’s new skinny bundle will run $15 per month, significantly less than the competition. Meanwhile, it appears that Verizon is cancelling its own streaming TV service.
Time ran an interesting piece about the rise of fitness streaming. The piece digs into Peloton, mobile apps that offer training content, and the relationship of celebrity trainers with social media. This is another example of an old mode of consuming a specific kind of content getting upended by digital media. The experience of working out at a gym can be difficult or inconvenient and streaming offers private and personalized alternatives. Unlike gaming content though, no platform has aggregated this content and standardized ways to reward content creators or build communities.
Alternate Reality
Snap is going to be offering a variety of development tools to third party developers, opening the door for a potential platform strategy for the company. The tools that are going to be offered include a login option (similar to Facebook Connect), Bitmoji avatar support, access to Snap’s camera software, and a pathway to share content back to Snapchat. As Snapchat struggles to compete against Facebook’s plethora of apps, most notably Instagram, this kind of effort makes a lot of sense. Courting developers and opening Snapchat up could create differentiation and stickiness that will allow the company to compete more effectively. Developers so far have had limited capabilities on Snapchat, as the company has only facilitated the creation of lens through the Lens Studio.
This week Snapchat also added its first lens based on sound recognition. The continued development of Snapchat’s AR capabilities is worth watching, particularly how customers actually use them and how gimmicky they are.
For those of us in the US, it might be hard to remember that there is a World Cup coming up because the US is not in it this time around. However, the World Cup is almost here. The BBC has announced that it will broadcast over 30 matches in VR with support for Apple, Android, Gear VR, Oculus Go and PlayStation VR. The experience that is being offered is compelling as it allows viewers to see the action from a virtual private box or behind the goals themselves. Engagement with this VR content will be very telling, as it for one of biggest cultural events possible, is across many platforms and is free for consumption.
Words on the Blockchain
TRON, one of the largest cryptocurrencies by market capitalization, has launched a beta for its independent public blockchain. TRON is transitioning away from the Ethereum blockchain, claiming that its internal tests have shown that the new network is significantly faster than Ethereum’s. Given how early many crypto projects are in terms of development and commercialization, moves such as this are going to be attempted. The success or failure of this transition will inform how often.
Blockchain, the leading company for free cryptocurrency wallet software, reached a significant milestone this week. Blockchain has provided over 25 million wallets to customers, surpassing Coinbase’s 20 million. Compared to more traditional financial services companies offers some context. TD Ameritrade has 11 million accounts and Charles Schwab has 9 million. The comparison isn’t necessarily apples to apples though.
The crowdfunding platform behind successful games such as Pillars of Eternity 2, Fig, has acquired Ownage, a blockchain company. Ownage will be assisting on the development of Shard, Fig’s decentralized publishing platform. Fig has a lot to prove as a crowdfunding platform, as its list of projects is relatively thin. While there are scant details on Fig’s new platform, I’d speculate that they are going to model aspects of it after ICOs.
Other Stuff
Uber and Waymo are discussing a partnership for driverless cars after recently settling a high-profile lawsuit. The partnership is very sensible given Uber’s struggles with driverless cars and the poor fit developing the technology is for the company’s long-term strategy.
Over 50,000 union workers in the Las Vegas hospitality industry have threatened to go on strike. As of the time of this writing, the unions had not followed through on the strike and had a tentative agreement with one of the major companies involved. One of the issues at stake is protection for the workers from job automation. Fear of automation and subsequent loss of jobs is a trend worth watching, as it is unclear how such automation would impact jobs in the long-term. We should at a minimum empathize with those impacted by the progression of this technology.
Recommended Media
KPCB presented and published the 2018 Internet Trends presentation, which is a highly-anticipated event each year. This year the presentation runs 294 slides and once again includes sections dedicated to China and the USA. It is well worth a full read as it is hard to find a better distillation of important trends with supporting data and analysis.
Naval Ravikant (here he is on Twitter) published a tweetstorm titled “How to Get Rich (without getting lucky)” which went viral throughout tech industry Twitter. Tweetstorms are an emerging art form and this particular one is worth reading, especially considering its brevity.
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