The UpStream

Startup MoviePass Acquires Moviefone for Only $1 Million

posted Friday Apr 6, 2018 by Scott Ertz

Startup MoviePass Acquires Moviefone for Only $1 Million

When Verizon purchased AOL and created their nostalgia unit, formally called Oath, the company was looking for content production. It was just one of many examples of "line owners" looking to get into the content production market. AT&T purchased DirecTV, intending to enhance their distribution, and wants Time Warner for the content.

Obviously with the purchase of a company as large and sprawling as AOL comes some unwanted baggage. For example, part of AOL was the long-running Moviefone brand, a company that provides remote movie access. Originally provided through the phone number 777-FILM (famously parodied on Seinfeld), the company shifted to online and mobile movie information and shut down the phone number in 2014.

This week, Verizon was able to unload the brand, which does not serve the Oath purpose of being a content producer, on a startup that many people erroneously have called Moviefone for months: MoviePass. This company allows you to pay a certain amount per month to see "unlimited movies" in theaters (though you are actually limited to a single film per day). Verizon let the brand go for only $1 million, a massive loss for the AOL brand, which purchased the company in 1999 for $388 million.

The Moviefone acquisition makes a lot of sense, and not just for the existing brand confusion. By combining the informational partnerships of Moviefone with the theater viewing experience of MoviePass, subscribers to the service can get a lot more information about the movies they are considering seeing without having to leave the MoviePass environment. They can also leverage the Moviefone userbase to encourage subscriptions to the MoviePass service.

MoviePass CEO Mitch Lowe said of the purchase,

This natural alignment between MoviePass and Moviefone will help us grow our subscriber base significantly and expand our marketing and advertising platform for our studio and brand partners. Moviefone has been a go-to resource for entertainment enthusiasts for years, and we're excited to bolster its presence and bring this iconic platform into the entertainment ecosystem of the future.

Of course, the next important step is to successfully leverage the buyout. MoviePass has had some troubles attracting new customers. Recently, they resorted to a price reduction for a full-year purchase. Obviously they have had some success with it, but they will need to retain growth to be able to stick around at all, let alone validate the purchase of an iconic brand like Moviefone. Hopefully those plans will not include the controversial user tracking feature in the long-term.

Valve has Finally Abandoned the Disastrous Steam Machines

posted Friday Apr 6, 2018 by Scott Ertz

Valve has Finally Abandoned the Disastrous Steam Machines

In 2012, rumors began about a "Steam Box" project. Gabe Newell confirmed the project, claiming that it was intended to compete with consoles while running like a computer. In 2013, the company officially unveiled SteamOS, the Linux-based system that would power Steam Machines, the final name of the product line. While the hardware was supposed to launch in early 2014, by the end of the year, Alienware gave up waiting, installing Windows on the computers and shipping them.

This week, Valve's dream of owning the living room came to an end, as Valve has removed all Steam Machines from their store and redirected the original URL to a list of other hardware. This retirement was inevitable and, for many, one that was believed to have already happened. If it weren't for those of us who watch for these things, most people would have assumed that Steam Machines had been retired in 2015, which was the last time we really heard anything about the platform.

The success of SteamOS and the Steam Machines was doomed even before they were announced. Some issues simply couldn't be overcome no matter what Value tried, while others could only have been dealt with if the platform was already successful.

Reliance on Linux

Sure, we've seen platforms based on Linux succeed in the past, but more often than not, if it relies on Linux as a platform, it has no chance in the market. SteamOS relied on Linux to succeed, and didn't because of it. We talked on F5 Live: Refreshing Technology before and after the release of the platform that less than 10% of Steam games were available on Linux, which meant that the game selection was already limited. As time went on, and more games came to Steam, that percentage lowered, as few new games target Linux.

Having no success in attracting AAA titles to Linux meant that few hardcore gamers were interested in the platform. Those who might be interested in playing the types of games that were available, often games made with platforms like GameMaker or Unity, would not be interested in this hardware.

Unwieldy Hardware

Speaking of hardware that people didn't want, take a look at the original controllers. Most of the games available on Linux at the time of release were designed to be played with a mouse and keyboard, as very few people who use Linux use controllers. However, the console shipped with controller support and a controller that did not work in non-controller games.

Even if the controller had been a good pairing for the types of games on the platform, people still weren't happy to hold them. Absolutely no research was done on ergonomics and what was produced was uncomfortable after only a few minutes. Also, reaching some of the button combinations was nearly impossible if you had small hands.

To add insult to injury, there was not a way to pair third party controllers to the system. That is until January 2016 when Bluetooth pairing was added to the system. That is over a year into the hardware finally being available. In the end, the most popular controller for the Steam Machines were those for the Xbox.

A War With PC Gamers

Game Newell said, when Windows 8 was first released, that it was not a platform for gaming. Instead, he recommended either Windows 7 or Linux, the former sharing a kernel with Windows 8 and the latter having very few games available. It was a strange statement meant to undermine Microsoft's PC gaming community and, hopefully, transition them to SteamOS.

If you know anything about the gaming community, you know that insulting a gamer's platform of choice is like insulting someone's religion. Immediately, the gamer is on the defensive and unwilling to even listen to reason. In this case, it turned PC gamers off to SteamOS rather than endearing them to the platform.

Microsoft Stole Their Thunder

Valve's idea of a PC-based living room gaming console was obviously not a bad one. In fact, it was one that Microsoft had already had. With the release of Windows 8, which Gabe believed was anti-gaming, Microsoft also released a new Xbox Experience to the Xbox 360. That new experience was based entirely on the Windows 8 kernel. With Windows 8.1 came another update to the 360, updating not only the kernel but the interface to work similar to the prime interface.

With the release of the Xbox One came a unified platform, known as the Universal Windows Platform, which meant that an app or game written for Windows could run on Windows Mobile, Xbox One and HoloLens. This move let the last remaining Steam out of the biggest selling point of Steam OS: the Xbox One was a Windows 10 PC.

Distracted Resources

One of Valve's strange ideas is that internal resources can kind of decide what projects they want to work on. Unfortunately, SteamVR came along and partnered with HTC to produce the Vive. As we have discussed on The Piltch Point, the Vive is a runaway VR success. As such, employees want to be part of it, meaning that there were not enough resources available to keep SteamOS alive. Add to that the entry of new competitors, including Microsoft's HoloLens and additional Mixed Reality headsets from every major manufacturer (including HTC's Vive), Valve lost focus on their already dying platform.

The Result

All of this together meant that no one, from hardware manufacturers to gamers and even game studios and publishers, had any interest in the platform. Some hardware partners converted their computers to Windows before release, while others allowed the upgrade later. Game studios and publishers continued with business as usual, publishing nearly nothing of value to the Steam Store for Linux. Gamers universally ignored the consoles, sticking to their existing platforms of choice, either for price, convenience or game choice - or possibly all of these together.

Finally, the gaming world has the ability to say goodbye to the platform that no one cared about.

Apple Hopes to Improve Siri with Hire of Google AI Executive

posted Friday Apr 6, 2018 by Scott Ertz

Apple Hopes to Improve Siri with Hire of Google AI Executive

When Apple bought Siri in 2010, they showed that they were interested in competing with Google on the search front, or at least in the way search looked. Google had recently purchased Aardvark to create their own mobile assistant, after all. The company nearly immediately discontinued the BlackBerry app for Siri and began building the technology directly into iOS. This move began a war for assistant supremacy, which today is hotter than it has ever been.

The problem, for those who use Siri, is that Apple has put very few resources behind the platform since it appeared on the iPhone. Sure, it has been added into macOS and recently released on the HomePod, but Siri's capabilities have languished behind, well... everyone. Google Assistant, Alexa and Cortana all offer more robust music streaming capabilities than Siri, which makes the HomePod a less attractive device than the Google Home, Amazon Echo or Harman Kardon Invoke. Her search results tend to be more link-driven than spoken, making her more like the Google app than a standalone feature.

Apple has recognized this industry-wide criticism and has decided to finally devote resources to competing once again. A recent analysis showed that Apple has about 161 job listings for roles within the Siri engineering team. One of those jobs was filled this week, as Apple has hired John Giannandrea to head up the company's efforts.

Until Monday, Giannandrea was the Senior Vice President of search and artificial intelligence at Google. Previously, he had bneen the Chief Technologist for Netscape and currently sits on the board of trustees for SETI Institute, the Search for Extra-Terrestrial Intelligence. On Tuesday, he joined Apple to head up their machine learning and AI strategy. The company uses AI on a few fronts, but none are as front-and-center as Siri.

In an internal memo, CEO Tim Cook told employees,

Our technology must be infused with the values we all hold dear... John shares our commitment to privacy and our thoughtful approach as we make computers even smarter and more personal.

Apple, as a way of separating itself from the pack, currently claims that its AI approach does not involve tracking personal and user identifiable information. This is going to create a challenge for a former Google executive, a company known for tracking every behavior of its users. If Apple is serious about this approach, then Giannandrea is going to have to completely rethink the way he does things.

The Ups and Downs of Music Streaming for iHeartMedia and Spotify

posted Saturday Mar 17, 2018 by Scott Ertz

There's no doubt that the battle over streaming music is getting heated. As the companies involved get more focused, it is inevitable that the industry will see ups and downs. At the end of 2017, we saw Microsoft exit the market after nearly a decade, shuttering their Groove Music service (previously Zune Music and Xbox Music) and transitioning the customers to the market leader, Spotify.

Bolstered by increased user growth and their newfound partnership with Microsoft, Spotify is riding the wave to an IPO (initial public offering). The company will offer their stock for public purchase on the NYSE, beginning on April 3, 2018. They expect to release around $1 billion worth of stock to the exchange, under the ticker symbol SPOT.

Unlike most IPOs, Spotify is listing directly, rather than having one or more banks involved to underwrite the process. This could mean more money for the company if the IPO is a success, but far less if it is not. The company is hoping that their position in the industry, commanding a full 42% of the market, will drive investors to want to get involved on day one.

On the other hand, we have terrestrial radio turned streaming service, iHeartMedia. This company is the result of a purchase of iHeartRadio by Clear Channel Communications, the owner of many of the country's AM and FM radio stations, as well as billboard company Clear Channel Outdoor. Almost exactly a year ago, the company released guidance that they might not survive 2017. Their timetable was a little off, and a tad more doomsday than reality, but the time has come. This week, iHeartMedia has filed for bankruptcy.

The company currently has about $20 billion in debt, and says that through bankruptcy they have made agreements with existing debt holders to restructure about half of it. They also believe that they have enough cash to survive the Chapter 11 procedures. CEO Bob Pittman said via statement,

The agreement we announced today is a significant accomplishment, as it allows us to definitively address the more than $20 billion in debt that has burdened our capital structure.

The question becomes, what happens if they don't have enough cash to survive the proceedings? Will they start to shed divisions, such as Clear Channel Outdoor, which doesn't quite match their other businesses? Will they sell or shutter radio stations in over-saturated markets? Will they abandon their Spotify competitor, and focus on the terrestrial radio, which is the business they know best?

No matter the outcome, it is likely that the landscape of terrestrial radio will change in some way, either by diversified ownership or possibly a smaller footprint. As more listeners shift their music listening habits away from radio and into streaming services, the need for 2 country stations in Tampa becomes questionable. And, as talk radio continues to shift from broadcast to podcast, the need for as many talk radio stations might be equally questionable.

Google Bans Cryptocurrency Ads, Markets Respond Negatively

posted Saturday Mar 17, 2018 by Scott Ertz

Google Bans Cryptocurrency Ads, Markets Respond Negatively

In the last year, some of the most distressing stories in technology have come from the cryptocurrency industry. From fraudulent ICOs (initial coin offerings) to exchange heists, getting into cryptocurrencies has never been more dangerous. Because of all of the bad blood in the market, a major player has decided to move away from it: Google Ads.

After accidentally running unrelated ads with web-based miners built-in, Google began looking at crypto ads, and deemed them to be part of their "Bad Ads" category. Because of this, the company has decided not to run any more cryptocurrency ads on its platforms. This includes ads for ICOs as well as related financial services. Scott Spencer, Director of Sustainable Ads, said,

We're constantly updating our policies as we see new threats emerge. Last year, we added 28 new advertiser policies and 20 new publisher policies to combat new threats and improve the ads experience online. This year, we updated several policies to address ads in unregulated or speculative financial products like binary options, cryptocurrency, foreign exchange markets and contracts for difference (or CFDs).

While these policies don't officially go into effect until June, their affect on cryptocurrency markets was nearly immediate. At the beginning of the day Google made this announcement, March 14, the price of Bitcoin was at $9,300, but as the day went on, the price fell just below $7,800. That is a steep decline for a 24-hour time period, losing a full 15% of its value. Since then it has recovered some, but not to full value. Etherium made a similar move, moving from about $700 at the beginning of the day to under $600 at the end of the day. This made for a 16% price drop in a 24-hour time period. Etherium has not yet recovered, having reached a low of $470 on Sunday.

EA Admits Defeat, Kills Pay-to-Advance in Star Wars: Battlefront II

posted Saturday Mar 17, 2018 by Scott Ertz

EA Admits Defeat, Kills Pay-to-Advance in Star Wars: Battlefront II

Lately it would seem that no videogame company is farther away from understanding their customers than EA. When the company was preparing to release Star Wars: Battlefront II, they made the decision to include microtransactions in the game. This was far from the first AAA title to do this, but it was certainly the most pervasive. Certain parts of the game required so much in-game currency that it would take over 4,500 hours of gameplay to unlock; that is unless you paid for it. That same currency would cost about $2,100 to achieve.

Needless to say, gamers were not happy about this move. Online petitions were signed, product boycotts were organized and overall outrage was at a new high. Because of the negative sentiment, EA agreed to make changes at launch, including shutting off the transaction system and lowering the progression difficulty, making it far easier to acquire currency by playing.

The company's announcement, however, did leave something to be desired. In this case, what was desired was a commitment that transactions were gone for good. Unfortunately, they left that door wide open for the future. By doing so, they still alienated a lot of players, who were not interested in buying the game only to have the progression system change back to its original, gamer-unfriendly ways.

Luckily, EA seems to have learned its lesson, announcing this week that a completely revamped progression system is coming in a few days that will eliminate the possibility of transactions in the future. In the announcement, the company said,

With this update, progression is now linear. Star Cards, or any other item impacting gameplay, will only be earned through gameplay and will not be available for purchase. Instead, you'll earn experience points for the classes, hero characters, and ships that you choose to play in multiplayer. If you earn enough experience points to gain a level for that unit, you'll receive one Skill Point that can be used to unlock or upgrade the eligible Star Card you'd like to equip.

More importantly, if you already have the game and have earned items that are beyond your level under the new system, you will still keep and be able to use those items. You will also no longer be able to impact your gameplay via crates, as those will only contain Credits and cosmetic items, but will not contain any Star Cards.

EA hopes that these changes will make those who avoided the game more likely to give it a try now. They are also promising future content, including new game modes, in the coming weeks, which should add value to the game as opposed to drive revenue through the game. Whether EA has actually learned its lesson as a whole or not is still to be determined, as future titles may try again.

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