Tech Brew Ride Home - Mon. 10/11 – Pixels To Go Big On Cameras?

Episode Date: October 11, 2021

Is Google aiming to take back the smartphone camera crown with next week’s Pixel event? That Twitch leak reinforces the idea that on platform ecosystems, there very much is a 1%. The Chinese Tesla competitors that are hitting milestones faster than Tesla ever did. When and should Disney give ESPN streaming religion? And would you buy Squid Game merch? Sponsors: Oracle.com/goto/ride OurCrowd.com/ride Links: Google says Pixel 6 camera captures ‘150% more light,’ shows ‘Magic Eraser’ on leaked marketing site (9to5Google) Twitch Streamer Earnings Increase for Top Gamers, Data From Hack Shows (WSJ) EV Sales At BYD, XPeng Soar In Sept., Underscoring Strong China Demand (Forbes) China’s booming electric car industry is much bigger than just Nio and Xpeng (CNBC) Emerson Plans to Merge Industrial-Software Businesses With AspenTech (WSJ) Disney’s shift to streaming puts ESPN in awkward position of clinging to the past (CNBC) Netflix’s ‘Squid Game’ T-Shirts Are Coming to a Walmart Near You (Bloomberg) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Monday, October 11th, 2021. I'm Brian McCullough today. Is Google aiming to take back the smartphone camera crown with next week's pixel event?

That Twitch leak reinforces the idea that on platform ecosystems, there very much is a 1%. The Chinese Tesla competitors that are hitting milestones faster than Tesla ever did, win and should Disney give ESPN streaming religion, and would you buy Squid Game merch? Here's what you miss today in the world of tech. I don't know if I mentioned this, but the Google Pixel fall launch event is scheduled for October 19th, a week from tomorrow. Ahead of that, some alleged Google marketing materials have leaked, suggesting that Google is going to go all out on the cameras in the new expected pixel lineup, quoting 9 to 5 Google.

The page explicitly confirms the pixel includes a 5 megapixel primary sensor on both phones. the Pixel 6 and the Pixel 6 Pro, with Google saying this new sensor can capture 150% more light compared to what was in the Pixel 5. A further image also shows the physical difference in size between the two sensors. As with anything in the camera world, a bigger sensor leads to better shots, both in terms of light capture and in natural boccia or blur. The page goes on to confirm the Pixel 6 Pro will have a 12 megapixel ultra-wide camera and a 48 megapixel 4x telephoto camera as well.

The differences between the Pixel 6 and Pixel 6 Pro are also once again put on display. As previously announced, the Pixel 6 will lack the 4X telephoto camera found on the pro, but these listings also point to the Pixel 6 having an inferior selfie camera. A 94-degree field-of-view selfie camera is also mentioned on the pros listing, but not for the base model. Notably, though, it seems raw quality is required to get the full field of view. Beyond the physical hardware, this page also goes over some key pixel-6 camera features, most notably including Magic Eraser. Quote, Magic Eraser, which leaked last month without any clear details, will apparently be powered by Google Photos and will have the ability to remove stranger and unwanted objects. In a footnote, though, Google mentions that the feature may not work on all image elements.

Similar footnotes can be found on mentions of the D-B blur feature. Google also calls out better handling of skin tones, quote, Magic Eraser makes distractions disappear with a few taps, remove strangers and unwanted objects in Google Photos, so the people in places that you capture remain the true stars, end quote. There are further mentions of Portrait Mode, the previously confirmed face-de-blur, and also motion mode, which appears to add extra depth to a shot by leaving some sense of motion in the shot. In the example given, Google uses a Ferris wheel spinning behind two subjects who are still. Google also directly mentions improved portrait shots that more accurately handle skin tones, end quote.

These numbers should come as no surprise to anyone who's familiar with the economics of platforms, but an analysis of that leaked data from those 4.9 million Twitch accounts shows that the top 1% of Twitch streamers made over half of the money paid out by Twitch to creators in 2021. The vast majority, about three-fourths of Twitch streamers, made under $120 on the platform, quoting the Wall Street Journal. The streaming platform best known for its video game streamers has paid out $889 million so far this year through September up from $517 million over the same period in 2020. Twitch streamers typically earn money on the platform from paid subscriptions to their

channels and through advertising, though only after reaching certain viewer metrics. People who called themselves Twitch streamers posted on social media that many of the leaked payout figures were consistent with what they earned on the platform. The journal cross-referenced pay stubs from one streamer against the same records in the leaked data and found most months' payout totals matched within 25 cents. The Wall Street Journal hasn't been able to independently verify the leaked data. The journal analysis shows the best-paid streamer on Twitch made more than $5 million this year. Last year's highest-earning account, a group of Dungeons and Dragons players, made close to $4 million in 2021.

These figures don't include other possible income sources such as corporate sponsors, tipping services, and video game publishers. The earnings data in the leak go back to July 2019 and reveal the rapid growth of Twitch's business during the pandemic. In just under two years, the amount paid out to streamers has almost tripled to around $100 million a month. These riches aren't evenly distributed, though. Half of all streamers who earn payouts have made less than $28 so far this year, a far cry from the top earn. millions. However, Twitch only offers payouts once a streamer has accrued revenue balances reaching $100. Exceedingly few are getting rich from streaming. Only 0.06% received over the U.S. median household income of $67,521. A quarter of all revenue was earned by the top 1,000

accounts, end quote. If you haven't already guessed, today is a slow newsday here in the U.S. because of the quasi-bank holiday. Banks are closed, but the stock market is open. Schools are closed here in the northeast, but not in a lot of parts of the country, etc. That means that today will allow us to dive into a few things that I've been sitting on that we might not otherwise be able to talk about on busier news days. Like, for example, over the weekend, I was learning a lot about China's homegrown Tesla competitors, companies like XPang and Neo, which recently announced they had reached the 100,000 vehicle production milestone, something that it took Tesla 12 years to do, even though X-Pang is about six years old and Neo is only four years old. Now, of course,

Tesla was the pioneer in all of this, so they struggled and bled so that others like these could follow, but still, quoting Forbes, BYD, the Shen Zhen headquartered vehicle and battery maker, backed by Warren Buffett's Berkshire Hathaway, said on Sunday, sales of new energy vehicles, more than tripled in September to 71,099 compared with 19,881 a year earlier. For the first nine months of the year, it sold 337,579 new energy vehicles an increase of 204.3% from a year earlier. Alibaba backed Ex-Pang, meanwhile, said, shipments rose nearly 200% to 10,412 units. For the first nine months, they gained 301% to 56,404. increasingly popular new energy vehicles accounted for approximately one-fifth of sales of

1.8 million motor vehicles in China in August, claiming even as overall vehicle shipments fell nearly 18% that month. BID's business is more diversified than its rivals. It also makes handset components and photo-vitallics. Among its customers are Dell, Apple, Zhami, and Huawei, end quote. And quoting CNBC, Quichacha found investors poured more than 82 billion yuan or 12.7 billion into 50 electric car-related projects in the first half of this year in China. BYD ranked first by a amount raised, the report showed, but the other top five companies contain names with ties to highly indebted property developers like Ever Grande, and Electric Car Company Faraday Future that has battled with bankruptcy. In the last year, technology companies like Huawei, Baidu, and

Jaume have jumped into the electric car race with business partners and investments. Neo shares surged more than 1,000 percent in 2020 after a capital injection of 7 billion, yuan or $1 billion by a state-led group of investors. X-Peng announced it received 500 million yuan in funding from the investment arm of Guangdong province, where the startup is based, and NEO's U.S.-based listed shares are down 22% so far this year, while XPang's New York listed shares are 10% lower in the same period, end quote. Emerson Electric announced plans to merge two industrial software businesses from its automation unit with Aspen Technology in a roughly $11 billion deal. Now, Emerson Electric is a company I never

expected to talk about on the show, but I actually know it very well. About 20 years ago, as the dot-com bus did a real number on my early retirement account, I shifted a sizable portion of my passive investments to a strategy called dividend growth investing. The idea is you invest in stocks that pay reliable, but crucially, reliably increasing dividends. So companies like like 3M or Procter & Gamble, or even things like McCormick and Company who makes spices or Hormel Foods, maker of spam most famously. The idea is you collect the raising dividends every year as a built-in compounding effect, and if you reinvest the dividends automatically, every quarter you get the actual compounding, the old-fashioned way, and on top of all that,

you get any price appreciation along the way as well. This is, of course, not investing advice. This is just me telling you anecdotally why I have been an investor in Emerson Electric for 20 years or so. They're one of these dividend aristocrats providing industrial machine tooling and engineering. They're a 120-year-old conglomerate doing everything from residential and commercial air conditioning to manufacturing engineering. Anyway, cue my surprise to actually be talking about them this morning, but maybe I shouldn't be because, quoting the Wall Street Journal. Bedford, Massachusetts-based Aspen Tech makes software for companies and industries including chemicals, mining and energy streamline engineering and maintenance processes. It had roughly $700 million of

revenue for its fiscal year, ended in June. And Emerson, a larger industrial conglomerate, is based in St. Louis. It makes products ranging from rigid pipe wrenches to software for power plants and has a market value of around $58 billion following a sharp rise in the stock since earlier this year. The deal involves two small businesses from Emerson's automation unit, which makes software and systems for manufacturers, oil producers, and utilities, and accounted for about two-thirds of the company's revenue last year. The businesses are OSI Incorporated, which Emerson purchased last year for $1.6 billion and geological simulation software. They account for roughly 300 million of the automation segments roughly 12 billion in annual revenue. The combined company's

offerings would be used by clients to do everything from designing industrial systems to running, repairing and analyzing them. Companies ranging from oil drillers to life sciences, startups are pouring billions of dollars into software to increase efficiency, providing Emerson and other established industrial concerns, new avenues for growth, end quote. And that's the point that I wanted to make. That's why I picked this story for today. Not that you need me to make this point or to reinforce it, but when we talk about software eating the world and every industry becoming a tech industry now, this is what we're talking about. Even boring old industries, boring old dividend stocks, technology is coming for you, too, over the next couple of decades. When I talk about ironing out

efficiencies, this is what we're talking about too, and that will either leave some players in the dust, or it will completely transform them. I've said before, when I was living in Detroit 15 years ago, when I would say to my friends in the auto industry, you folks are going to have to completely transform yourself tech-wise, I got laughed at. But look at what happened to the auto industry over the last 15 years. Look at how it is now arguably one of the hottest areas of tech anywhere. There was also a super interesting article I read over the weekend that addressed something I've long wondered about. What does Disney do about ESPN?

It's almost the classic innovators dilemma case study. Despite going all in on streaming with Disney Plus, Disney probably has to keep ESPN tied to traditional cable bundles for a while because that business model remains its biggest revenue driver. Quoting CNBC. Disney makes more money from cable subscribers than any other company, and that's solely because of ESPN. ESPN and Sister Network ESPN2 charge nearly $10 per month combined, according to research firm Kagan, a unit of S&P Global Market Intelligence. That's at least four times more than almost every other national broadcaster cable network, according to Kagan. Disney requires pay TV providers to include ESPN as a part of their most popular cable packages. It's a no-brainer for TV providers who wouldn't dare drop ESPN.

Meanwhile, the non-sports world is cutting the cord. More than 6 million people ditched pay TV in 2020, according to research firm e-marketer, the highest annual total ever. About 25 million Americans have dropped linear TV bundles in the past decade. That creates a struggle within Disney that's poised to escalate. Disney wants people to sign up for its streaming entertainment products, Disney Plus and Hulu. Wall Street wants this too. Streaming video is a growth business, and traditional pay TV is a declining one. It's also a wise financial swap for Disney. While Disney makes more than $10 a month per subscriber for sports, it makes far less for entertainment networks such as Disney Channel and FX, which draw lower audiences and don't command

high advertising rates. If Disney can get a cord cutter to pay $8 per month for Disney Plus and $6 per month for Hulu, it's a huge win for the company. The reverse is true for ESPN. Swapping an ESPN subscriber for an ESPN Plus customer who contributes average revenue of less than $5 per month is a significant loss for Disney. ESPN Plus is a streaming service with limited content thusly. ESPN strategy is to cling to the cable bundle for as long as possible, knowing it can draw potentially billions of dollars from U.S. households that are each paying $120 a year for the network, even if they never watch it. Some analysts have begun to question whether Disney should spin off ESPN, allowing CEO Bob Chapec to focus more clearly on streaming.

ex-Disney executive who recently left the company and asked not to be named, said there's, quote, strategic misalignment between the parent company and ESPN, and the businesses no longer belong together because Wall Street doesn't look kindly undeclining assets. The executive said, having ties to the legacy model will weigh down the company's stock multiple. At $10 per month or $120 per year, multiplied by about 75 million U.S. homes, Disney earns roughly $9 billion annually in domestic carriage fees from ESPN and its associated networks, advertising that comes with broadcasting sports, brings in billions of additional dollars. ESPN's role as cash machine works nicely for the time being, but if 25 million U.S. households ditch cable in the next

four or five years, as some predict, the math will no longer add up, said Lightshed Media Analysts Rich Greenfield. If we're going to 40 to 50 million, the question is, is there any economic model that justifies the level of spending that we're currently at, said Greenfield? ESPN has to figure out how to make up $3 billion in annual law. pay TV subscription revenue that's coming in the next few years as cord-cutting continues, a decline that Disney executives are anticipating, according to people familiar with the matter. Disney's plan is to incrementally raise the price of ESPN Plus as it adds more valuable content while maintaining contractual obligations for exclusive programming to pay TV distributors,

the people said. An early example is Eli and Peyton Manning's alternative broadcast of Monday Night Football, which will air 10 times this season on ESPN 2 with some appearance, is available on ESPN Plus. Should the number of pay TV bundle subscribers drop to a level well under 50 million U.S. households, Disney would likely take ESPN to consumers in a more complete streaming package, said to people with knowledge of the company's plans. At that point, the economics would flip, as most of the people paying for linear TV would be sports fans. Disney could likely make more from a full-service sports streaming service than it would make in a wholesale pay TV distribution model. In the near term, selling ESPN separate from the

the linear bundle isn't feasible. Disney has negotiated digital rights flexibility in almost every major rights renewal in the past few years, but the company is currently restricted by its linear pay TV obligations, which require certain premium programming to stay exclusive to the cable bundle, according to people familiar with the matter, end quote. And finally, if only somewhat relatedly, Netflix and Walmart are partnering to launch a digital storefront on Walmart.com called Netflix hub to sell merch tied to shows like Stranger Things and even Squid Game, quoting the Wall Street Journal. Netflix consumer products from T-shirts to stickers to dolls are already available online from several retailers. The deal with Walmart creates a dedicated area of Walmart.com for Netflix merchandise, the Netflix hub,

the first such online storefront that Netflix has created with a national retailer. Netflix also has its own online store, Netflix.shop. quote, we want to continue to meet fans wherever they are, whether that's through our biggest online marketplace at Walmart or the more boutique and curated Netflix.com, said Josh Simon, Netflix's vice president of consumer products. Mr. Simon said, revenue won't be the only measuring stick of success for the venture, quote, the real value is in reinforcing fan love for the shows and films they see on Netflix, he said. Netflix-themed merchandise includes Squid Game, T-shirts, Nailed It, baking kits, and Stranger Things Bluetooth cassette players.

company doesn't disclose the size of its emerging e-commerce business, end quote. It's like Apple going into services, or anybody wants your hardware or services platform play reaches saturation point. What you do is you look to tertiary but complementary markets for easy growth. Thus, Apple wants to get into movies and video games and Netflix wants to get into video games and merch. Forget the problem of having a dozen different subscriptions for all the things you consume every month. Now imagine a dozen different ecosystems all competing for your subscriptions and your brand loyalty every month. By the way, Squid Game Halloween costumes, I'm already seeing them pop up all over social media, at least this weekend I did, especially because it seems like it's such an easy costume to do.

Just get yourself a green jumper, plaster a number on the front, and boom, you're a player. It's the easiest sort of costume like this I've seen in several years. The sort of costume that would immediately get a, aha, I know who you are at a Halloween party. A bit harder would be to get one of the red guard setups with those circle, square, or triangle masks. But that's still doable, I would think. So anyway, if you can risk doing the costume

that probably everybody's already thinking of doing, there you go. Talk to you tomorrow.