The UpStream (Page 119)

Activision Blizzard Purchases King for $5.9 Billion

posted Wednesday Nov 4, 2015 by Scott Ertz

Activision Blizzard Purchases King for $5.9 Billion

The world of casual games has changed a lot in the past few years. While not long ago companies like PopCap and Yahoo! Games ruled the marketplace, today the landscape is dominated by companies like Zynga and King. But, while Zynga has had trouble keeping on top, losing that position to King in 2013, the latter has continued to see successes. In fact, 2014 saw $1.4 billion in revenue from their Candy Crush franchise.

In 2009, Electronic Arts saw the writing on the wall and purchased Playfish for $300 million, and PopCap 2 years later for $750 million (base). 2 years later, though, EA shut down Playfish, upsetting many with the loss of games like SimCity Social. While many saw this as an attempt by EA to exit the casual space, it actually turned out that they were attempting to focus their efforts into the more popular and profitable PopCap.

In an attempt to compete with the more established EA in the social marketplace, Activision Blizzard announced this week that they have acquired King Digital for an astounding $5.9 billion. Activision Blizzard CEO Bobby Kotick said of the acquisition,

The combined revenues and profits solidify our position as the largest, most profitable standalone company in interactive entertainment. With a combined global network of more than half a billion monthly active users, our potential to reach audiences around the world on the device of their choosing enables us to deliver great games to even bigger audiences than ever before.

Riccardo, Sebastian, and Stephane are some of the best minds in the business, and we have long-admired King for consistently creating incredibly fun, deeply engaging free-to-play games that capture the imaginations of players across ages and demographics. Activision Blizzard will provide King with experience, support and investment to continue to build on their tremendous legacy and reach new potential. We share an unwavering commitment to attracting and developing the best talent in the business, and we are excited about what we will be able to accomplish together.

King CEO Riccardo Zacconi added,

We are excited to be entering into this Acquisition with Activision Blizzard. Since 2003, we have built one of the largest player networks on mobile and Facebook, with 474 million monthly active users in the third quarter 2015, and our talented team has created some of the most successful mobile game franchises. We believe that the Acquisition will position us very well for the next phase of our company's evolution and will bring clear benefits to our players and employees. We will combine our expertise in mobile and free-to-play with Activision Blizzard's world-class brands and proven track record of building and sustaining the most successful franchises, to bring the best games in the world to millions of players worldwide. We are very much looking forward to working with Activision Blizzard. We have two teams that, together, will have an amazing footprint, innovative technology, and leadership across platforms, and unique, established IPs to delight one of the largest networks of players in the world.

What will this newly combined company be able to accomplish? There is no real telling, but they are adding a group of incredibly talented developers, designers and game creators to the family. Perhaps it will breathe some creative life into the company - something that is desperately needed as they trudge down the road of annual iterations as opposed to creating new, exciting content.

What do you think? Is this massive purchase good for Activision and King? Let us know in the comments.

A New Era for IBM Starts Today

posted Monday Oct 26, 2015 by Scott Ertz

A New Era for IBM Starts Today

IBM is a company that everyone knows. Everyone has an impression of who the company is and what they represent, and that vision is based on when they were introduced to the company. If you were introduced to the company in the early 1900s, you know them as the company that manufactured time punch machines. If your introduction came in the mid 1900s, you likely think of them as the company that made other machines you used in your daily life, such as typewriters and tabulators. If you learned of the company in the late 1900s, you likely knew them mostly as the term "IBM compatible" when it came to computers. Microsoft hadn't quite made its own name, so instead of a Windows computer or PC, you had Apple, Tandy and IBM-compatible computers. That brand dilution led to the impression of the first 10+ years of the 2000s, that of the company that made antique looking computers, likely the ones you used in school.

If you were to learn about the company today, though, your association is probably with artificial intelligence and machine learning, likely because of Watson. What most people don't know, however, is that IBM has always had a massive interest in artificial intelligence of all sorts. In fact, the first practical usage of AI was demonstrated by Watson's namesake, CEO Thomas Watson Jr. in 1956. That demonstration was of an IBM machine playing checkers against a human player, and learning about the game the more it played. Obviously that technology eventually evolved into Deep Blue, which famously beat a chess master at the game repeatedly. While there were other chess-playing computers, the difference with Deep Blue was it learned lessons about opponents merely by playing.

Today, Deep Blue has evolved into Watson, which famously beat Jeopardy master Ken Jennings. This was done by adding Natural Language Processing to the system, allowing Watson to listen to Alex Trebek and understand the question being asked even though it is posed as a statement. From there, Watson was able to answer in the form of a question. That was about all Watson could do at the time, though, meaning it had no real world application. The point of the outing was to prove the technology, and that they did. Since then, Watson has grown up, learning through machine learning, and enhanced with new APIs.

Today, Watson is capable of analyzing just about any data with Watson Analytics, including powering all of the data for The Weather Company. In fact, because of Watson, TWC has changed their modeling from a 6 hour cycle in 2 million locations to a 15 minute cycle in 2.3 billion locations. This has created a scenario where they can provide hyper localized weather data and forecasts that are up-to-date on mobile. On their previous data model and processing system this would never have been possible. The data is so accurate and localized that both Android and iOS use it as their native data provider.

The problem that IBM has to overcome is the damages of their past. The consumer computer industry tainted the view of a whole generation against IBM. Unfortunately, that is the generation that is leading the charge for the insight economy, and they are currently choosing Microsoft Azure and Amazon Web Services over the offerings of IBM and Watson. This week's event, IBM Insight 2015, is trying to change that perception. Rather than using Watson as the spokesperson for the company, they are putting real people in front of the attendees who can speak on what choosing Watson has done for their business. In today's technology industry, there is nothing better than a heartfelt success story in selling a product or service.

The question is, can IBM use this event to jump-start a new era of perception for the company and its technology? If the general tone of this event is any indication of the culture change inside of IBM, I think they can pull it off.

Microsoft Moves the Needle With Surface Again

posted Wednesday Oct 7, 2015 by Scott Ertz

Microsoft Moves the Needle With Surface Again

When Microsoft announced the first Surface devices, they changed the PC industry in several ways. First, this was Microsoft's entrance into a new paradigm: competing head-to-head with their own partners. Some saw this as a mistake for Microsoft, feeling it could drive manufacturers to adopt Chrome OS. Microsoft saw it as an opportunity to push the industry in new and interesting directions. As it turns out, that was the second change: a whole collection of new hardware types and styles emerged.

The Surface was part tablet, part laptop, part Ultrabook and all powerful. Microsoft's aspirations for the new device family was not what most journalists believed. Microsoft wasn't trying to hurt their OEMs, but instead wanted to create a technical specification for other manufacturers to get behind. Because of the Surface, HP, Lenovo and even Apple are chasing the successes Microsoft has had in the space. Since then, Microsoft has done this with other product categories, most specifically the Microsoft Band.

The Product

This week, at Microsoft's #Windows10Devices event, the company unveiled a new entry in the Surface family, the Surface Book. With this product, Microsoft is making more changes to the industry. First is, again, their relationship with OEMs. While the Surface pushed manufacturers to try new things with hardware, with the Surface Book, Microsoft is telling OEMs, "If you're not interested in innovating in traditional PCs, we will."

The result was astounding. In a room filled with tech journalists that have proven several times that, no matter how exciting an announcement is, they will remain silent in the room, people were cheering and saying "I want one of those!" When was the last time a laptop actually got people excited, save for the rare gaming laptop? To my recollection, it has been many, many years, and yet Microsoft managed to do it with their first device.

The Intent

The good news for existing hardware companies like HP and Lenovo is, there is only one Surface Book. That means retailers will only need a single display position to carry the device. This leaves plenty of space for everyone else to design and launch products that can compete with the likes of the Surface Book, while separating themselves from the rest. This is a shot across the bow of many companies, some of which will respond, some will cease to exist - it is up to them which way they go.

The Result

The likely result is a culling of the herd. There will be some second tier laptop companies that will not survive because they are incapable of adapting. The rest will adapt and begin to produce exciting hardware, trying to fill the gaps left by the Surface Book. For example, not everyone will be happy with a laptop whose lid does not close 100%, no matter how cool the device is. That would be a perfect place for HP or Lenovo to swoop in and save the day. On the other hand, not everyone wants a premium piece of hardware, giving Acer a perfect place to swoop in and offer a budget-friendly competitor.

On the other hand, we have seen something like this before with very different results. When Google purchased Motorola's mobile division, Samsung's response was not to compete, but instead to develop Tizen. Most of us didn't think Tizen was going to be anything of any success, but Google decided not to risk the exposure and, instead, sold the division off to Lenovo. The problem is that productivity is a different marketplace from mobile. It is unlikely HP would try for their own operating system, especially considering they already sold a viable one to LG.

The thing that makes a laptop useful is productivity, which in the real world means access to Microsoft Office, Adobe Photoshop and development tools. The likelihood of a company, even as big as HP, getting the support of productivity companies behind a new, limited-reach operating system is slim at best. There is little hope for any of the OEMs to magically succeed with Chrome OS, partially for the same reason and partially because they have yet to have any notable success to date. Linux is also not really a viable option for a myriad of reasons too numerous to discuss here.

The End Game

Personally, as someone who replaced a laptop with a Surface Pro since near launch without ever considering replacing it, even I am excited about this new device. In fact, it is likely you could see one appear in the studio shortly after its launch. I am excited about the insane hinge, the discrete graphics card and the blazing fast data transfer speeds. Why it took so long for someone to realize that laptops can still be sexy is unimaginable, but I think we can all be glad that it has finally happened.

Songwriter Claims Minor Income from Massive Pandora Streaming Count

posted Saturday Sep 26, 2015 by Scott Ertz

Songwriter Claims Minor Income from Massive Pandora Streaming Count

It's official: streaming is an important part of the music industry. In fact, it recently overtook CDs in overall revenue making it the business model to beat. However, not everyone is happy with this change in the way business is done. Take, for example, Taylor Swift, who very publicly removed her music from streaming services with an annoying message, and attacked Apple when they re-launched Beats Music as Apple Music.

This week, a new voice in the debate was revealed. You have likely never heard of Kevin Kadish, but you were unable to avoid his 2014 megahit All About That Bass, which he co-wrote with author Meghan Trainor. He said at a roundtable discussion at Belmont University and led by the House Judiciary Committee, that he received just $5,679 for 178 million streams of the song. That works out to about $32 per million streams.

So, why was Kadish there, speaking to members of the US Congress? Because, for reasons beyond any rational comprehension, they set the rates for what is paid per play. Yes, you read that right - the rate is not negotiated with the artist or with the publisher as it is for Netflix or Hulu, but instead is a set rate decided upon by the federal government. As a result, for the height of this guy's career, he was paid essentially nothing.

These laws date back to 1911, when music was distributed on piano rolls, and in fact the industry term is still "mechanical licenses" in reference to those automated pianos. Kadish, along with others, believes that a law like this is not only outdated but ridiculous, and has urged Congress to do away with it. In its place, he is asking for the Songwriter Equity Act to be passed, that would establish a "fair rate standard" for these licenses.

It seems surprising that these musicians are still asking that their rate be regulated, as opposed to allowing their representatives to negotiate on their behalf. I guess the musicians believe that they are worth more than $32 per million plays, but not enough that they should have a say. No wonder Netflix, Hulu and Amazon have no issues with their business and music services seem to be under constant fire.

Australian Tribunal Disagrees with US Court - Facebook Friends are Real

posted Saturday Sep 26, 2015 by Scott Ertz

Many years ago, a US judge deemed that Facebook "friends" were not real friends, and could not be admitted in court. That ruling made sense, especially for the time, when friends would have included celebrities and the like, with Facebook having not implemented personality Pages quite the way they exist today. Either way, even today, many of us can list off people in our Facebook "friends" list that we do not actually know. Personally, I have dozens, and that's okay.

An Australian Tribunal decided this week that the service has changed enough in the past few years, and made a very different ruling. In fact, it turns out that the act of "unfriending" someone on the social network can be considered humiliation. This ruling comes in a case between Rachael Roberts, an employee of a real estate agency in Tasmania. She claims that she was "belittled and humiliated" by sales administrator Lisa Bird and her husband James.

The listed offenses were horrible, including not being able to change the AC in the office and being referred to as "a naughty little schoolgirl running to the teacher." Clearly this was a serious case of harassment that deserved the government's attention, but was overshadowed by being unfriended on Facebook. That was enough to push it over the edge of acceptable. The commission said,

This action by Mrs. Bird evinces a lack of emotional maturity and is indicative of unreasonable behavior.

Nicole Wells, a member of the commission, added,

I am of the view that Mrs. Bird took the first opportunity to draw a line under the relationship with Ms, Roberts on 29 January 2015, when she removed her as a friend on Facebook as she did not like Ms. Roberts and would prefer not to have to deal with her. I am satisfied that the evidence of Ms. Roberts, as to the incident on 29 January 2015, is to be preferred and that the allegation of unreasonable behavior by Mrs. Bird in Allegation 17 is made out.

Okay, let's try and sum this up. A couple works with someone they truly do not like. In an attempt to not have to infect their personal lives with this person, they removed her on Facebook, keeping them from having to see her posts, likely about the barista at the coffee shop humiliating her by spelling her name Rachel. This act, which would be similar, I suppose, to not answering a phone call from a co-worker in your personal time, was considered workplace bullying.

In the end, I suppose the only solution is to not add your co-workers on Facebook. In Australia.

New Call of Duty to be Half Game on Legacy Consoles

posted Saturday Sep 26, 2015 by Scott Ertz

New Call of Duty to be Half Game on Legacy Consoles

It was a shock to many of us when Activision announced support for Xbox 360 and PlayStation 3 in their upcoming Call of Duty: Black Ops III. It seemed likely that the end of AAA titles on legacy hardware was a thing of the past, yet here we had Activision promising a flagship product still in development for older hardware. There was always a catch coming, though, we just didn't know what it might be.

This week Activision let the air out of the sails of many people who have yet to upgrade their hardware: the title will be only half of the full game on legacy hardware. In fact, the game itself will be missing; there will be absolutely no campaign mode when played on Xbox 360 or PlayStation 3. Instead, players will only have access to multiplayer and zombie survival mode.

Obviously, since the title will be limited in capability as well as graphics and power, the title will not sell for full retail on the older consoles. Unfortunately, the game will only be discounted by $10 for the lack of content and capability. That is certain to get owners of last generation consoles to really think about their decision to purchase the title. It is also possible that this is the game that will finally drive these gamers to upgrade their hardware.

It is also likely that, since this game is not capable of running on older hardware, it is the end of new games coming out on the 360 or PlayStation 3. We will likely only see next year's entry in franchise, as well as other high-profile games from Activision, bypass the last generation and only support current generation hardware: Xbox One, PlayStation 4 and PC.

Is Call of Duty: Black Ops III enough to get you to upgrade from your older console to current generation gaming? Will bundles possibly play into your decision? Let us know in the comments.

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