The UpStream (Page 185)

Facebook Acquires WhatsApp for $16 Billion

posted Saturday Feb 22, 2014 by Scott Ertz

Facebook Acquires WhatsApp for $16 Billion

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.

Passwords, Other Information Taken in Kickstarter Data Breach but Credit Cards Safe

posted Sunday Feb 16, 2014 by Nicholas DiMeo

Passwords, Other Information Taken in Kickstarter Data Breach but Credit Cards Safe

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.

Nintendo Keeps Its Promise, Introduced Two Free-to-Play Titles

posted Sunday Feb 16, 2014 by Nicholas DiMeo

Nintendo Keeps Its Promise, Introduced Two Free-to-Play Titles

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 Launches Disney Accelerator Program for Media and Entertainment Startups

posted Sunday Feb 16, 2014 by Nicholas DiMeo

Disney Launches Disney Accelerator Program for Media and Entertainment Startups

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.

Date Set for Aereo Case to be Heard by Supreme Court

posted Sunday Feb 16, 2014 by Nicholas DiMeo

Date Set for Aereo Case to be Heard by Supreme Court

The Aereo saga has been an interesting one to follow. Battling legal issues, including appeals, since its inception, Aereo is looking to change the way TV content is consumed, and has even earned the backing of the Consumer Electronics Association. Now, Aereo will take on its biggest battle yet: squaring off against broadcasters in front of the Supreme Court.

After putting off expansion efforts in order to take on legal cases from all fronts, the company's efforts have now culminated in the ultimate court showdown. Broadcasters have pushed for the case to be heard in front of the Supreme Court, and now, after the Court agreed to it last month, we have a date set for the hearing. ABC TV will take on Aereo on Tuesday, April 22. The Supreme Court identifies the case as a "Copyright Act application to streaming of free broadcast TV programs via the Internet to paying customers."

What's also important to note about this case is the fact that Justice Samuel Alito has recused himself from the case. This is usually done when a Justice has a financial or other kind of personal interest involving the parties of the case. This is key because it could mean that the decision could wind up being a 4-4 tie, which would allow the lower court's decision in favor of Aereo to be upheld.

Aereo's CEO Chet Kanojia was optimistic about the case and is looking forward to the Supreme Court hearing.

We said from the beginning that it was our hope that this case would be decided on the merits and not through a wasteful war of attrition. We look forward to presenting our case to the Supreme Court and we have every confidence that the Court will validate and preserve a consumer's right to access local over-the-air television with an individual antenna, make a personal recording with a DVR, and watch that recording on a device of their choice.

So now that we have a date set, and the odds are slightly better for Aereo to come out victorious, hopefully we'll see another success for innovation to prevail. A decision in Aereo's favor would in turn benefit customers everywhere, by forcing Congress and the FCC to reassess the state of the broadcast industry. Kanojia has said from the beginning that he hopes Aereo will make TV more affordable to the average consumer in "a la carte packages" of channels, instead of hundreds of channels you might not watch but still have to pay for.

A complete schedule of hearings for the last two weeks of April is available for viewing online. You can also check out the source link below for more on the Aereo case, including key dates and decisions during the whole process, in the source link below. Hopefully, at the end of this, we'll see Aereo, and the consumer, as a winner.

Comcast-Time Warner Cable Merger Real, Worth $45 Billion

posted Saturday Feb 15, 2014 by Scott Ertz

Comcast-Time Warner Cable Merger Real, Worth $45 Billion

This week, rising media company Comcast announced a $45 billion merger with slumping media company Time Warner Cable. The agreement, which has been approved by both Board of Directors, would be entirely in stock where Comcast will trade 2.875 shares of Comcast for each of the 284.9 million Time Warner Cable shares. When the deal is complete, TWC shareholders will own about 23 percent of Comcast's common stock.

This merger has a lot of implications in the media industry. First, with Time Warner joining the Comcast family, that will add more chefs into the kitchen that is Hulu. While it is only a stock transfer, there will be a large collection of new shareholders, as well as an expected addition of new executives, that will have ideas different from the norm inside Comcast. There is no telling if this could be better or worse, but with Comcast's seeming disinterest with the brand, also operating a competitor, we might finally see either a full buy-in or abandonment of Hulu.

The new company would also have 33 million cable subscribers and almost as many broadband subscribers. Of course, with that many customers, this will give the new Comcast absolutely incredible buying power when negotiating prices with networks. Obviously there will never be any contention with the NBCUniversal networks, which are owned by Comcast, but it will mean a lot of trouble for the Big 3 competitors: News Corp. (FOX), Disney (ABC) and CBS.

The 33 million customers also means that the company will have even more power to control the content you receive and the price you pay for it. We know that several Internet service providers have trialed tiered bandwidth throttling plans, similar to what you get with T-Mobile plans: slowing your speed after you use the service too much. Perhaps we could see something like that come back now that Comcast has even more power.

Now, with all of this bargaining and pricing power, Comcast and Time Warner Cable say that this merger is a good thing for everyone involved. D. Marcus, Chairman and CEO of Time Warner Cable, said,

This combination creates a company that delivers maximum value for our shareholders, enormous opportunities for our employees and a superior experience for our customers. Comcast and Time Warner Cable have been the leaders in all of the industry's most important innovations of the last 25 years and this merger will accelerate the pace of that innovation. Brian Roberts, Neil Smit, Michael Angelakis and the Comcast management team have built an industry-leading platform and innovative products and services, and we're excited to be part of delivering all of the possibilities of cable's superior broadband networks to more American consumers.

Comcast also reminds people, in the hopes that the Federal Trade Commission will hear, that Comcast and Time Warner Cable have zero overlap in markets, meaning nowhere in the country will this create a market-level monopoly, like Verizon's purchase of Alltel created.

Will this argument be enough to get this merger past the FTC, or will this go the way of AT&T/T-Mobile? Sound off in the comments.

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