Tech Brew Ride Home - Thu. 07/15 – Oh Yeah. It Definitely Looks Like Netflix Is Getting Into Gaming.

Episode Date: July 15, 2021

Netflix hires a big name gaming executive. Twitter retires Fleets. Facebook wants to make it rain for creators. TSMC says the chip shortage is starting to ease. Amazon launches serialized storytelling. And one of the biggest unicorns in the world, just 6x’d in less than a year. Sponsors: WealthFront.com/techmeme Canva.me/techmeme Links: Netflix Plans to Offer Video Games in Push Beyond Films, TV (Bloomberg) Twitter is shutting down Fleets, its expiring tweets feature (The Verge) Facebook plans to pay creators $1 billion to use its products. (NYTimes) TSMC Expects Auto-Chip Shortage to Abate This Quarter (WSJ) Amazon launches its mobile-first Kindle Vella serialized story platform (Engadget) Revolut confirms a fresh $800M in funding at a $33B valuation (TechCrunch) 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 Thursday, July 15th, 2021. I'm Brian McCullough today. Netflix hires a big name gaming executive. Netflix retires fleets. Facebook wants to make it rain for creators. TSM says the chip shortage is starting to ease. Amazon launches serialized storytelling and one of the

biggest unicorns in the world, just six-xed in less than a year. Here's what you missed today in the world of tech. It's a Mark German scoop Thursday, but this time the scoop is not a about Apple, and this time he has the assistance of his Bloomberg colleague Lucas Shaw. The boys are reporting that Netflix has hired ex-Facebook and EA executive Mike Verdu as VP of game development at Netflix. This is in aid of, according to sources, Netflix's plans to offer gaming within the next year, quote, The games will appear alongside current fair as a new programming genre similar to what Netflix did with documentaries or stand-up specials. The company doesn't currently plan to charge extra for the content the people said, who asked not to be identified because the deliberations

are private. Netflix has been seeking ways to keep growing, especially in more saturated markets such as the U.S. That's included building out its kids programming, opening an online shop to sell merchandise, and tapping Steven Spielberg to bring more prestigious movies to its lineup. The company remains well ahead of streaming rivals such as Disney Plus or HBO Max, but, it added fewer subscribers than expected in its most recent reported quarter. Pushing into games would be one of Netflix's boldest moves yet. In Verdue, the company has an executive who worked on popular mobile games at Electronic Arts, including titles in The Sims, Plants v. Zombies, and Star Wars franchises. He also served as chief creative officer for Zinga between 2009 and 2012.

Netflix will be building out its gaming team in the coming months, according to the person familiar with the matter. the company has already started advertising for game development-related positions on its website. This feels like a significant event with broad ramifications across the video games landscape. City analyst Jason Bazanette wrote in a note on Thursday. He said Netflix's move creates, quote, obvious risks for larger game developers and publishers. Video games give Netflix another way to lure new customers and also offer something none of its direct competitors currently provide. Disney, AT&T's WarnerMedia, and Amazon all have access to live-stores. sports, but they don't have gaming within their main video services. Ultimately, the move may make

it easier for Netflix to justify price increases in coming years. Games also serve the purpose of helping market existing shows, end quote. One more note about this Verdue fellow, his last two years at Facebook. He was the vice president of augmented and virtual reality content, i.e., he was the guy that got VR game titles onto the Oculus platform. So there's that. wrinkled to this too, the VR-A-R-R-Rinkle. We actually spoke to Lucas Shaw, who got that scoop with Mark German, on our spacecast last night, which you'll be able to hear shortly. I have to do a little bit of editing before I can release it, but Lucas was sitting on this story the whole time he was talking to us. We spoke to him about the whole Black Widow story from earlier this week,

which he was probably talking to us about while putting the finishing touches on that scoop in the background. But I'm not mad at him. That's how scoops work. You publish them on your own platform first. Anyway, we talked to Lucas about streaming, streaming wars. We talked a lot also about this. Twitter announced yesterday, it is retiring fleets. It's stories like service on August 3rd. The reason? Well, low adoption. But also, fleets were only like eight months old, right? So insert your joke about fleets being designed to be fleeting in the first place, quoting Alex Heath in the Verge. Starting on August 3rd, users will instead just see active spaces. Twitter's live audio chat rooms at the top of their timelines.

And the composer for traditional tweets will be updated with more camera editing features from fleets, like text formatting and gift stickers over photos. Twitter's decision to axe fleets is not just an admission that the feature didn't work, but that the company still hasn't figured out how to get people tweeting more. For years, Twitter has struggled to get new users to post regularly and not just consume other people's tweets. Fleets was its shot at using stories, the popular social media format invented by Snapchat, and further popularized by Instagram to lower the pressure around tweeting. We hoped Fleets would help more people feel comfortable joining the conversation on Twitter.

Ilya Brown, Twitter's vice president of product said in a statement, but in the time since we introduced fleets to everyone, we haven't seen an increase in the number of new people joining the conversation with fleets like we hoped, end quote. Killing the feature now is especially sudden since Twitter just rolled it out to everyone in November and started testing ads between fleets last month. At the time, the company called the ads an experiment with a handful of advertisers. It's unclear if those full-screen ads will show up in other parts of the app in the future, end quote. So again, that scoop was from Alex Heath, who also spoke to us on the Twitter space last night. We got deep into this story to the degree of,

is this bullish for Twitter, i.e., they're moving fast, they're throwing a bunch of stuff against the wall, so being quick to kill failures makes more room for things that are working, like we assume Twitter spaces. The bearish take, of course, is that this was their first big swing, and it missed bigly. Anyway, head over to Spacecast to check out that conversation when I get it published later today. We also spoke last night about this. Mark Zuckerberg said yesterday that Facebook will pay $1 billion to creators by the end of 2022, and that creators can earn money using Instagram or Facebook tools or just by hitting certain usage milestones. So making it rain for creators just like everyone else, but, you know, a billion dollars is a big round number, quoting the New York Times. Under Facebook's new program, which is invitation only for now, eligible creators will see alerts encouraging them. to join the effort when they open the app. Facebook said it planned to create a dedicated place for creators to track their bonuses on Instagram and Facebook by the end of the year. This is not the

first time that Facebook has given money to creators in exchange for using its products. The company previously paid TikTok influencers and YouTubers to use features of Instagram such as IGTV, a long-form video feature similar to YouTube, and Reels, a feature that functions similarly to TikTok. In December, Facebook pledged to invest $10 million over the next two years in the black gaming community, offering some creators guaranteed monthly payments for using Facebook gaming, a streaming platform similar to Twitch. Direct payments are becoming an increasingly common way to try to pry creators away from TikTok. In November, Snapchat began giving away a million dollars a day to content creators who posted to the app's spotlight feature, which functions similarly to TikTok.

Those payments have recently dried up making Facebook's bonus program, potentially enticing, end quote. Follow up to something that we and basically everyone else in the global economy has been tracking for about a year, TSM said this morning that it expects the shortage of chips used in cars to start easing in the next few months, but broader semiconductor shortages could still persist until 2022, quoting the journal. The company is on track to increase output of microcontrollers used in cars by about 60% this year compared with last, Chief Executive CC Way said in an earnings call on Thursday. However,

he said the broader semiconductor shortage could persist until 2022. The dearth of semiconductors used in products including home appliances and smartphones has stymied manufacturing activity notably in the auto industry. That shortfall should be greatly reduced for TSM customers in the current quarter, Mr. Way said. Global automakers from the U.S. and Europe have put pressure on TSM to give priority to their orders, forcing the chipmaker to negotiate with other clients to free up manufacturing capacity for auto chips. Second quarter revenue from the auto chips increased by 12%, but accounted for just 4% of overall sales. Meanwhile, revenue from smartphone chips fell by 3%, accounting for 42% of overall sales.

Mr. Way said he expects chip demand from the auto sector to increase as more cars become electric and automated. The company is further increasing production of semiconductors used in cars and other products that require less advanced technology by expanding capacity at plants such as in the Chinese city of Nanjing. Executive said Thursday that the company is also in talks to build a new facility in Japan. TSM has pledged to spend $100 billion on increasing production over the next few years to meet surging demand for semiconductors, end quote. Well, this could also be helping matters considerably. According to the South China Morning Post, China's output of semiconductors reached an all-time single month high of 30.8 billion units in June, up 43.9% year over year. China's chip production for

the first half of the year is up 48.1% year over year. Yes, China is largely producing for its internal market, but hey, increased supply means, in theory, making additional capacity available generally. Amazon has launched its Kindle Vela serialized story service on iOS and the web. This service lets you unlock episodic, self-published stories via an app purchases, quoting and gadget. The new platform is a way for readers to discover new fiction and a new way for authors to generate revenue from the Kindle Direct Publishing Service. While the name might suggest otherwise, Kindlevela isn't available on Amazon's Kindle E-readers. Rather, you'll only find it on Amazon.com or the Kindle iOS app, no Android for now. To start with, the service will be limited to

U.S.-based authors who publish stories in English. The serialized stories will run from 600 to to 5,000 words per episode, with the first three offered for free. To see subsequent episodes, you'll need to pay for tokens, with prices ranging from $2 for $200 tokens, up to $15 for $1,700 tokens. The latter will give you about 34 episodes, though prices per episode depend on the word count. The more words, the more you'll have to spend. Authors, meanwhile, will receive 50% of the revenue, along with bonuses based on engagement with the app's social media-style features. To that end, readers can follow stories to be notified of new episodes, leave a thumbs-up for episodes they like, apply a fave for their favorite story of the week, provided they purchase

tokens, and share on Twitter, Facebook, and other social media. To boost engagement, authors can speak directly to readers at the end of episodes to share story insights, and behind-the-scenes content, Amazon wrote. Since Amazon opened Vela to authors three months ago, thousands of authors, according to Amazon, have published, quote, tens of thousands of Kindovalla episodes across dozens of genres and microgenres, Amazon said, end quote. Finally, today, we've got a weekend, interesting raise episode coming for you ride home plus subscribers this weekend, but this just dropped this morning, and it's so eyebrow raising in size that I figured we'd mention it here and now.

Revolut is one of those European neobank slash super apps that lets you do everything, banking, investing, currency transfer, and more all in one app. Revolut has raised an $800 million series A from SoftBank's Vision Fund 2 and Tiger Global at a valuation of $33 billion. So it's eyebrow raising to see the Vision Fund and Tiger Global jointly leading around in anything instead of competing for but it's also eyebrow-raising because Revolut was last valued at only $5.5 billion, and that was only a year ago, quoting TechCrunch. This makes Revolut the most valuable fintech out of the UK, as well as one of the biggest of the privately backed scaled-up startups, not just in Europe, but the world. It's also following in the footsteps of Clarna, the buy-now, pay-later startup out of Sweden. That is also diversifying into a wider range of other services for consumers

and the businesses that integrate it. Klarna last month raised $639 million valued at just under $46 billion. Stripe in the U.S. earlier this year raised at a $95 billion valuation. This latest Series E is being co-led by SoftBank Vision Fund 2 and Tiger Global, who appear to be the only backers in this round. It comes on the heels of rumors earlier this month. Revolut was raising big. Revolut last raised about a year ago when it closed out a Series D at

$580 million, but what is stunning is how much its valuation has changed since then, growing 6x. It was valued at $5.5 billion last year. SoftBank and Tiger Global's investments are an endorsement of our mission to create a global financial super app that enables customers to manage all their financial needs through a single platform, said Nikolai Stronsky, Revolut's founder and CEO in a statement. As a further point of reference, when Revolute reported financial figures for 2020 last month. It noted that it made $361 million in revenue in the fiscal year, a 57% increase versus 2019 revenue of $229 million. Gross profit in the period was $170 million last year, although it still operates at a net loss with Q1 2020 racking up an adjusted operating loss of $76 million,

with $277 million in operating losses for the whole of the year. In other words, the big money being placed down now, and this big valuation are long-term bets. Revolut now has over 16 million customers and sees over 150 million transactions per month, and the plan will be to bring on a wider range of services and promotions both to grow that base and to get its users putting more money and time into the app. That will also include exploring newer areas like insurance and a deeper dive into investing and trading, and likely a significant increase in credit services, which have been a big growth engine for other neobanks and financial tech companies.

Revolut will also be doing more to build out its user bases in the U.S. and India, it said, end quote. Has anyone else had the wrist sensor on your Apple watch just crap out on you? It kept locking itself even on my wrist starting last week, so I had to turn the wrist sensor off, which sucks, because now I have to enter a passcode to do things like Apple pay every time, And the worst thing is notifications get pushed through to my phone. So I've had to put my phone on vibrate all the time. Yes, I've tried all the fixes.

I think the sensor just conked out. And what this has made me realize is that 90% of the value proposition for an Apple Watch, for me at least, is basically just notification triage. Like, I've realized how much my phone would be beeping and vibrating and blowing up all day now if I had never had an Apple Watch. And it's crazy to me that it is, like, legitimately worth several hundred dollars just to put a gadget barrier between those notifications and me. But I have discovered that that's true. It's entirely worth it. Most of the value of

an Apple Watch to me is like intercepting the notifications and setting timers. And that's basically it. Oh, and run tracking. I'm not kidding about that. I really am trying that couch to 5K thing. But even there, you kind of still need your phone with you. Anyway, it's sort of disheartening to realize that you're paying all this money for just what is seemingly a little thing until you realize it's not really that little a thing. But whatever. First world problems, right? Talk to you tomorrow.