The UpStream (Page 180)

Even with the impending Supreme Court case only 2 months away, the U.S. District Court in Utah has decreed that Aereo's Internet rebroadcasts are not legal within its jurisdiction. This ruling will shut down operations, at least temporarily, in Colorado and Utah and prevent further markets to open in Oklahoma, New Mexico and Wyoming. These bans are in addition to New York, which has already decreed the practice illegal.

Judge Dale Kimball said, in regards to the ruling,

Based on the plain language of the 1976 Copyright Act and the clear intent of Congress, this court concludes that Aereo is engaging in copyright infringement of Plaintiffs' programs. Despite its attempt to design a device or process outside the scope of the 1976 Copyright Act, Aereo's device or process transmits Plaintiffs' copyrighted programs to the public.

This leaves Aereo with injunctions against them in 3 of their major markets: New York, Salt Lake City and Denver. Their bigger problem, however, is the dangerous precedent this sets heading into the Supreme Court case. The prosecution will be able to argue that judges in multiple parts of the country have ruled independently that this business model violates copyright law.

Now, this argument has not gone well in previous cases. For example, many states had agreed not to recognize same-sex marriages from other states where it is legal. The Supreme Court found that unified decisions do not indicate accuracy, so there is a good chance that this ruling will have no bearing on the outcome in April.

After being in a partnership for years, Verizon and Vodafone Group finally parted ways on their collaboration, Verizon Wireless. Vodafone, who owned 45 percent of the joint venture, sold it to Verizon proper for $130 billion in cash and stock. This leaves Verizon as the sole owner of Verizon Wireless: a goal they have had for a few years now with no help from Vodafone.

The transfer of power entirely to Verizon might well allow Verizon to offer more combined capabilities, such as bundling with landline, FiOS, etc. Last year, Verizon had mentioned the ability to offer "seamless and integrated services" following a complete ownership stake in VZW and had hoped for more financial flexibility, leading to more efficiencies in the company and, hopefully, more options for customers.

Vodafone, on the other hand, now has an influx of capital on its hands. Vodafone is known for investing in communications companies, such as VZW, and will probably use this newfound money to invest in new European companies. It is even possible they could invest in cable or landline companies, creating a scenario similar to the Verizon group they are leaving in the US.

The agreement to finally get out of the Verizon Wireless family might have to do with reports that AT&T has been in discussions to purchase Vodafone. AT&T representatives said last month that they had no intentions to enter into any agreement with Vodafone within the next 6 months, unless another bidder came forward. An AT&T-owned Vodafone would certainly never be allowed if Vodafone owned any of VZW.

A week after Rakuten purchased Viber, Facebook, not to be outdone in the expanding messaging market, has agreed to purchase WhatsApp. For those who might not know what WhatsApp is, the simple answer is a mobile app that allows people to send unlimited international text messages for $1 per year.

There are, obviously, a few oddities about this purchase. First, it is always surprising to hear that people are using SMS internationally. Clearly, when having to pay for a service for SMS when services like KIK are free, there must be something going on. In this case, it has a lot to do with device integration and service stability abroad. SMS is built-in on the phone, whereas KIK is not.

However, Facebook messenger is integrated into many devices and looks just like a standard text message. This purchase might be a way to allow Facebook to live on both sides of the integrated messaging system for phones worldwide.

The other major oddity is the massive pricetag. When Facebook skirted regulations a little to purchase Instagram during their IPO quiet period, the pricetag was $1 billion. That number seemed inflated, but since everyone seemed to be using the service, plus Twitter was actively trying to purchase the company, it made sense. A large userbase, one that was being stolen almost directly from Facebook, plus their biggest competitor in tasks for a buyout equals a bigger cost than its actual value.

So, with Instagram being overinflated at $1 billion, how did we get to $16 billion for a niche messaging app? Mark Zuckerberg, Facebook CEO said,

WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable. I've known Jan for a long time and I'm excited to partner with him and his team to make the world more open and connected.

Jan Koum, WhatsApp co-founder and CEO, said,

WhatsApp's extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide. We're excited and honored to partner with Mark and Facebook as we continue to bring our product to more people around the world.

So, lots of people means lots of value? I suppose, with Instagram being a free service and WhatsApp being a paid service, there will be a differing value on engagement. On average, tech startup multipliers range in the 6-10x range, meaning that the value of the company is 6-10 times the annual revenue of the company. With nearly 1 billion users and the high-end of the range, we can account for about $10 billion; so where did the other 6 come from?

First, Facebook is known for purchasing top development talent. While I have never used WhatsApp, I can assume there are people on the team that Zuckerberg wants on his team. That will increase the price some. In addition, there is a lot of interest in the messaging market, as we discussed last week. With uncertainty in the market and a large purchase last week, that will make the price spike as well.

So, is the $16 billion price reasonable or completely insane? Let us know your thoughts in the comments.

When things are popular, they get hacked. Last Wednesday was no exception for the crowd-funding site Kickstarter, as the company officially announced on Saturday that it fell victim to a security breach where passwords and other user data were stolen from the site.

Thankfully no credit card information was taken, though email addresses, usernames, mailing addresses, phone numbers and encrypted passwords were snatched up during the breach.

In the blog post, Kickstarter said,

While no credit card data was accessed, some information about our customers was... Actual passwords were not revealed, however it is possible for a malicious person with enough computing power to guess and crack an encrypted password, particularly a weak or obvious one.

Obviously everyone should change their passwords here, and also change any other place where you use the same password or a slight variant. Kickstarter has offered solutions for those needing to securely store passwords and has encouraged users to select different passwords for each site they use. Those using Facebook to connect to Kickstarter need not worry, as the site reset all Facebook login credentials.

Additionally, Kickstarter recognized two users' accounts who were compromised and have reached out to them to secure their accounts.

Kickstarter ended its blog post by apologizing for what happened.

We set a very high bar for how we serve our community, and this incident is frustrating and upsetting. We have since improved our security procedures and systems in numerous ways, and we will continue to do so in the weeks and months to come. We are working closely with law enforcement, and we are doing everything in our power to prevent this from happening again.

Again, with data breaches and hacks becoming a more common occurrence, people everywhere should take these situations as lessons in online protection and make sure they do everything in their power to protect their accounts. Systems like two-step authorization or device recognition can go a long way to ensure your data is safe and changing up your passwords frequently is highly recommended.

Remember that rumor about the free-to-play game Nintendo was going to serve up by March? Well, we have some information on that this week. Rather, Nintendo has announced two insanely different free-to-play 3DS games that we will be able to experience. Those games are Steel Diver: Sub Wars and Rusty's Real Deal Baseball.

Here's the details of Steel Diver, right from Nintendo direct (no pun intended).

Steel Diver is a new action-packed submarine combat game from Nintendo that immerses players in the 3D action with unique game controls and lush 3D environments. The player can choose from three different submarines, each with touch-screen control panels that players will have to master to guide them through treacherous undersea caverns while engaging enemy submarines, dodging depth charges and battling massive sea creatures. Steel Diver also takes advantage of the built-in gyroscope of the Nintendo 3DS system. The combination of 3D game play and one-of-a-kind controls makes for an immersive combination that must be experienced to be believed.

The game is essentially like the title says; it's a naval game that has you blowing up enemy submarines in different game modes. Level up and unlock more subs and other features, like crew members who give the player extra stats and abilities. Luckily, micro-transactions are not the key here, with Nintendo opting for a free and premium version instead.

The game has all the features you'd expect from free-to-play titles. The free version will give you two total submarines to choose from, a handful of crew members, limited customizable submarine patterns and two single-player missions. The premium version is also available, which gives you 18 total submarines, 30+ crew members, fully customizable sub patterns and all of the single-player missions. The good news is that both versions feature online and local multiplayer modes and free and premium players can actually play in the same servers, as they are not separated online. The game is available now through the Nintendo eShop.

The second game is Rusty's Real Deal Baseball and is sure to ring up a strike with Nintendo lovers everywhere (total pun intended).

Feel the crack of the bat in a collection of baseball-themed minigames! Then, take a breather and haggle with hilarious ol' Rusty to lower the real-life Nintendo eShop* price of additional batting, pitching, and fielding minigames, plus a whole lot more! Knock it out of the park in a series of baseball-themed minigames that will have you swinging at disappearing fastballs, bringing down UFOs with the help of some rubber tires, or even becoming an umpire and ringing up batters. But before you play ball, you'll have to haggle with that miserable mutt, ex-pro baseball player Rusty Slugger, to lower the actual Nintendo eShop* purchase price of each minigame! Don't worry, you can use weird in-game items like donuts and nose hair trimmers (that's not a typo) to help you get the lowest price possible.

In this game, a dog named Rusty runs a baseball camp that is split into episodes. You play through these episodes which contain different baseball-themed events. Things like hitting home runs, catching balls and the like all grant you special items. As you move through the game, more episodes and games become available through the use of micro-transactions. However, Nintendo has taken an interesting approach to the dreaded micro-transactions that we're used to. Instead of set prices for each in-game item, you can actually haggle with Rusty to lower the prices. The items have their own individual strategy on how to negotiate Rusty down to the lowest possible price.

Adding to the interesting aspect of the game is the fact that you can give rusty some of the items you've acquired during the minigames you've played, which will help lower the price substantially. In essence, your price for the extra items are determined by some skill, your playtime and a little bit of luck. Rusty's Real Deal Baseball will be available some time in April.

I'm currently updating my 3DS so I can download Sub Wars and give it a spin. Are you picking up either of these games? Let us know in the comments section below.

Disney has gone head-first into the digital and tech worlds this week by announcing Disney Accelerator, an incubator program that is partnered up with Techstars. The mission is to educate, mentor and seed start-ups in the consumer and entertainment space, on a three-month revolving cycle.

This program is perfect for startups who already have a great idea but just need the contacts in business to make it happen. It also benefits Disney, as the company will be able to see great products during the development process and will also be able to witness innovation as it happens. The trade-off is that the startups will have access to a huge Disney catalog of technologies, stories, characters and any other media from the Disney labs.

Kevin Mayer, Disney's EVP for corporate strategy and business development, said in a statement,

We are an innovative and forward-thinking company, but there is also real value in being friendly to outside ideas. We want Disney Accelerator to be a part of how we profitably and defensibly grow our business.

The Disney Accelerator will include $120,000 in funding to each of the ten companies Disney accepts into its Los Angeles incubator, along with mentoring from some of the greatest names in the media and entertainment spaces.

Participants will receive $120,000 in investment capital to develop their ideas, along with mentor support from top Disney executives including Chairman and CEO Bob Iger, and leaders from Pixar, Marvel, Lucasfilm, ESPN and Walt Disney Imagineering, among others. Additionally, entertainment industry leaders, venture capitalists and Techstars' extensive network of entrepreneurs, investors and executives will team up as mentors for Disney Accelerator.

Applications are currently being accepted and the program will begin on June 30th, ending in September with an Investor Demo Day, which allows the companies to show off the product or idea to venture capitalists and other business people. The deadline is April 16 for those interested in signing up and giving it a go. I personally can't wait to see which companies are picked and what ideas potentially make it to market through this program.