The UpStream (Page 209)

Pirate Bay Founder Creating NSA-Proof Mobile Messenger

posted Saturday Jul 13, 2013 by Scott Ertz

Since the NSA PRISM program was first exposed, there has been a lot of discussion about how secure our data really is. Once Microsoft's recent revelation that Skype communications, text, audio and video, had their encryption circumvented, an obvious market opened itself up: an NSA-proof messenger.

While Apple has repeatedly said that iMessage is encrypted, so is Skype, and an American company, under NSA order, could still circumvent their own encryption again. So, what is the solution? A non-American messenger who highly encrypts their data. That is the dream of Peter Sunde, one of the co-founders of The Pirate Bay.

The program, called, is currently being crowd funded. If the project gets funded, the app will be free with a paid version for features, such as picture messaging. It will also be the first of what I suspect will be many new products that will sprint up around the idea of personal privacy. It might even indicate a shift in public opinion about online security that could affect companies like Google and Facebook negatively.

Zynga Hires Don Mattrick as CEO, Hopes for Big Changes

posted Saturday Jul 13, 2013 by Scott Ertz

Zynga Hires Don Mattrick as CEO, Hopes for Big Changes

Last week, as Microsoft's Xbox leader left the company, he joined the flailing social gaming company, Zynga. The company has been in trouble lately, with studio closures and having enormous trouble keeping employees and customers alike.

The hiring of COO David Ko represented a big turnaround for the company, even posting a profit. Unfortunately, Ko's leadership has not been enough, hence the switch in CEOs. Pairing Ko and Mattrick is quite possibly the best thing that could happen to the company. Ko has been known for cutting dead weight, whether a popular decision or not, and Mattrick was able to help make Microsoft the dominant force in the gaming industry with innovative features and must-have titles.

At the same time as this shake-up, Zynga is also in the process of getting into a new market: online gambling. While neither leader has any real experience in that industry, Mattrick does have a lot of experience with differing markets and, of course, creating a gaming economy.

Another major benefit Mattrick brings to the company is game depth. Zynga is not known for having particularly deep games, but Xbox certainly is. Microsoft's studios, under Don Mattrick's leadership, have produced games so engaging that their very existence has literally limited the capabilities of future gaming hardware. In a company dominated by casual, passing interest titles that only turn profit through long-term engagement, getting rid of the passing interest aspect would be helpful.

Hopefully, for Zynga and their stockholders' sakes, this change will work out. Something has to work for them eventually, right?

Hulu Abandons Sale Again

posted Saturday Jul 13, 2013 by Scott Ertz

Hulu Abandons Sale Again

In a move that literally no one should be shocked about, Hulu's ownership group, Comcast, Disney and News Corp., have once again decided to take the company off the market and, instead, spend money to make it successful.

While the news is definitely a let down for potential buyers, it is something totally expected by everyone else. This is, after all, not the first time Hulu has been for sale and suddenly revoked. The last time was because Disney was not happy with any of the offers, this time it appears Disney and News Corp. together weren't happy with the offers.

Chase Carey, president of News Corp. division 21st Century Fox, said,

We had meaningful conversations with a number of potential partners and buyers, each with impressive plans and offers to match, but with 21st Century Fox and Disney fully aligned in our collective vision and goals for the business, we decided to continue to empower the Hulu team, in this fashion, to continue the incredible momentum they've built over the last few years.

Let's all hope that this claimed commitment to improvement is legitimate. The three current owners have committed to adding a total of $750 million, planned for expansion, marketing and programming. One good use of some of the cash would be original programming. Amazon has committed to 5 new shows, and Netflix seems to be launching new series regularly, some even featuring big named actors.

Both have gotten new membership due to the original programming, but both have properly marketed the programming options. Hulu has had original programming, but has failed to market to non-members. With an injection of cash, Hulu could improve its offerings and market their benefits to non-members.

The decision to cancel the sale, however, does not mean that ownership changes are not possible. Time Warner was interested in purchasing a stake, as opposed to the company, and those talks may not have ended. A fourth owner, as a content producer, not investor, is something that could help the overall company, as well. Added content and home-spun marketing, plus the potential of bundled-pricing for subscribers, could certainly improve the outlook.

AT&T Tries Merger Again, Now with Leap Wireless

posted Saturday Jul 13, 2013 by Scott Ertz

AT&T Tries Merger Again, Now with Leap Wireless

It has only been two years since AT&T began its failed bid for T-Mobile USA, which was, of course, eventually thwarted, giving T-Mobile money to upgrade its network to attempt to compete. Down but not out, AT&T has continued the search for a suitable spectrum donator, now landing on Leap Wireless, who operates the Cricket brand.

Unlike the $39 billion it offered for 4th place operator T-Mobile, AT&T has offered $1.2 billion in cash for Leap Wireless. This value represents a premium of 88% over the stock price, closing Friday at $7.98. After the announcement, Leap's stock price rose to nearly $17 per share, indicating excitement from the market about the merger.

This announcement comes in the wake of Sprint and T-Mobile both finding suitable merge partners, opening up the question as to how AT&T and Verizon would continue their own expansions in an even more competitive marketplace. The only thing about this particular purchase is that it doesn't really affect AT&T in any positive light. Leap doesn't own enough unique spectrum in enough markets to really give AT&T any wiggle room but does have $2.8 billion in debt and only 5 million customers.

What Cricket would give AT&T, however, is a foothold in the growing prepaid market. AT&T's GoPhone has not had a lot of success in the market, but Cricket has. Coming under the AT&T umbrella could mean a national roll-out of the brand name and product offerings, which has appealed to the core consumer base in the markets it is available. The company has had enough success that it has made product and service announcements at the International CES.

Predictably, AT&T plans to use Cricket in the same way Sprint has used Virgin Mobile USA and Boost Mobile: simply an established brand name to separate the prepaid offerings from the core business model. While it is a risky move to spend so much, plus absorb so much debt simply for a brand name, there are examples of success in other industries. For example, Systemax purchased CompUSA and Circuit City in full bankruptcy and have spun those brands into successful TigerDirect stores.

My personal guess is that this move could be successful. The company has had a lot of success in the core business, there has been no real success in prepaid; purchasing relevance is probably the only option.

Boxee Acquired by Samsung for $30 Million

posted Sunday Jul 7, 2013 by Nicholas DiMeo

Boxee Acquired by Samsung for $30 Million

The lesser known of the popular Internet-streaming devices, startup media company Boxee, has been acquired by Samsung for $30 million. If you are unfamiliar, think Roku but with a lot less of a push from media providers to get content on their platform. A quick glance at Boxee's website led us to this statement:

We're pleased to announce that the Boxee team will be joining Samsung.

We started on this journey six years ago, and have been at the forefront of the changing TV and video landscape. We believe that over the next few years the video market will change even more than it has in the past few decades.

Joining Samsung means we will be able to work on products that marry the best hardware and software in the TV space, products that will be used by tens of millions of people and will help to shape the future of TV.

We are excited about the next chapter for our team.

For Boxee users, we're working behind the scenes to ensure there's minimal impact to your devices. However, the beta Cloud DVR functionality we provided to certain Boxee TV users will be discontinued on July 10th. You will not have access to your existing recordings after that date. We realize many of you loved the service, and we're sorry it won't be available moving forward.

We're incredibly proud of what we've built, and we want to thank you for being a part of our journey.

For Samsung, this will help the company boost the software and user interface for their net-connected TVs. At the International Consumer Electronics Show, Boxee has shown off some impressive software but simply never had the backing to get themselves off the ground like Roku has. Samsung acquisition will allow the Boxee staff to really work on something big and provide a great experience across all Samsung devices as a whole.

Initially, Boxee was looking for approximately another $25 million in the round of funding they started up. Then, with the funding not coming in, the company started to shop around looking for a potential buyer for the company. At $30 million from Samsung, I'd say the purchase was successful and beneficial on both sides. At that pricepoint, Samsung will be keeping about 40 Boxee employees, with half of those working from Israel and the other half coming out of the office in New York City.

Where does this all leave Boxee customers? Well, on July 10th Boxee will be discontinuing their Cloud DVR service, and customers will lose all programming they've stored on the cloud. No word yet on the remainder of the transition of the company, as the news just broke over the weekend, however we'll be sure to keep you updates as everything unfolds.

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