Tech Brew Ride Home - Tue. 01/31 – Weird Gaming News

Episode Date: January 31, 2023

Today, some weird headlines from the world of gaming. Is VR gaming a big nothingburger for gamers themselves? Is E3 dead as a gaming industry event? Stripe is apparently raising a pretty significant down round. And the first Level 3 autonomous driving platform to receive regulatory approval belongs to Mercedes-Benz. Sponsors: Radial.llc/ride (Listener Ad!) Links: Sony Slashes PlayStation VR2 Headset Output After Pre-Orders Disappoint (Bloomberg) Exclusive: Xbox, Nintendo, and Sony Won't Be Part of E3 2023 (IGN) Showtime to Be Rebranded ‘Paramount+ with Showtime,’ Added to Paramount+ Premium Tier (The Streamable) Thrive Capital Said to Lead Potential Investment in Stripe (NYTimes) Twitter Makes First Interest Payment on Musk Buyout Debt (Bloomberg) Mercedes-Benz is the first to bring Level 3 automated driving to the US (The Verge) 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 TechMeme right home for Tuesday, January 31st, 2021, 2023. I'm Brian McCullough today. Some weird headlines from the world of gaming.

Is VR gaming a big nothing burger for gamers themselves? Is E3 dead as a gaming industry event? Stripe is apparently raising a pretty significant downround. And the first Level 3 autonomous driving platform to receive regulatory approval belongs to Mercedes-Benz. Here's what you miss today in the world of tech. As I said, weird headlines from gaming here. First things first, because I wonder what this means for this year, supposedly being the big year for AR and VR. Sources are telling Bloomberg that Sony has cut its Q1 PlayStation VR2 shipment forecasts in half to around 1 million units after disappointing early pre-orders.

The headset, you'll remember, launches on February 22nd. Remember, I was operating under the assumption that if anyone was going to take the lead in the gaming portion of this space, it would be Sony. But what if nobody cares? Quote, Sony had previously aimed to have two million headsets ready for the launch quarter and leverage its second-generation headset to drive user growth and adoption for VR. The Tokyo-based electronics giant has told a supply partner to expect reduced display panel orders, according to the people who asked not to be named as the information is not public. The company now plans to ship around 1.5 million units between this April and March next year,

they added, though that figure may be adjusted further in response to demand. Consumers globally have taken to VR less rapidly than initially hoped, held back in part by a lack of titles that can showcase the technology. After diving in 2022, worldwide shipments of augmented and virtual reality headsets are expected to grow 32 percent to 12.8 million units this year, according to IDC estimates. The market is currently dominated by meta-platform's Quest range with nearly an 85 percent market share. Sony does not rank among the top five providers, and its first generation PSVR has failed to secure even a 1% share. Sony began accepting PSVR2 pre-orders on an invitation basis in November, but it soon relaxed conditions so that anyone wishing to buy the gadget could order one.

The PSVR2 will work only with Sony's PlayStation 5 console, which starts at $399 at retail. The headset is priced at $549, with less than a month. to go until the PSVR2's release. Most stores are still taking pre-orders without a wait list, whereas hotly anticipated gaming gadgets are usually limited in supply at launch. Sony had expected launch game titles such as Horizon Call of the Mountain would entice strong demand, a person familiar with its thinking said, but the new hardware's pricing may have blunted consumer appetite, end quote. I actually did put a pre-order in for the PSVR2 specifically because I wanted to see how much that Horizon game would wow me, since I

I like that Horizon game, the one on the regular PlayStation right now. But now I'm wondering if I should even have bothered. And sources are telling IGN that Microsoft, Nintendo, and Sony do not plan to attend E3-20203, which was being held in person from June 13th to June 16th this year. E322 was canceled due to the pandemic, but now, I mean, the question would be, is the biggest industry event in all of gaming dead? Quote, E3's first physical event in four years was supposed to be a triumphant return for the trade show, an opportunity to recapture some of the excitement of past conventions,

which historically have been major showcase events for the games industry. However, it appears that when E3-20203 hits the Los Angeles Convention Center in June, it will be without three of its most important draws. IGN has heard from multiple knowledgeable sources that Xbox, Sony, and NNNNNNN, Nintendo won't be part of E3-2020 or have a presence on the Los Angeles Convention Center show floor. This information comes on the heels of Xbox's announcement last week that it would be returning to Los Angeles for its annual summer showcase while declining to confirm whether it would be part of the show itself. Speaking with IGN last week, Xbox CEO Phil Spencer said

the platform holder is timing its showcase with E3 at a moment, quote, convenient for press and even consumers at the event, meaning it's likely to roughly align. with the event itself. Spencer also stressed Xbox's support for E3 and the Entertainment Software Association itself. However, IGN understands that Xbox won't have a booth on the show floor. Xbox's decision not to have a formal presence on E3's show floor comes as a surprise, given its support for the event in the past. Out of the so-called Big Three, it appears the most likely to be at E3, not the least because it has several major releases to promote in 2023, including Starfield. Nintendo has also traditionally maintained a booth on E3's show floor, even after pioneering

the direct format. However, IGN has heard from sources around the industry that neither Nintendo nor Sony will be at E3-2020 with PlayStation originally dropping out in 2019 over reported disagreements with the Entertainment Software Association. It's currently unclear whether Nintendo and Sony intend to time a showcase with the event, end quote. We knew that it was a game of musical chairs, but this doesn't look good for anyone. Paramount Global says it plans to merge its Showtime streaming service with Paramount Plus's ad-free tier later in 2023 and call the new offering Paramount Plus with Showtime, quoting the streamable. This newly unified offering is intended to bring all of the company's

most popular shows and movies under the same umbrella in order to highlight the breadth and depth of their libraries. As a result, a Paramount spokesperson has confirmed to the streamable that while there will be no changes to the linear distribution of Showtime programming, the existing Showtime streaming platform will be sunset later this year. Since rebranding as Paramount Global earlier last year, the company has prided itself on being a multi-platform global content company, and this will further allow it to prove that. While housing all of the company's most popular IP and a single streaming experience will help customers, it also has a benefit for the company as well.

This move will more closely align Paramount's domestic streaming operation with how the company operates internationally, where Showtime programming is often already a part of the larger Paramount Plus platform. Also, by unifying some of the operations of the two disparate streaming services, Paramount will be able to achieve a number of administrative and technological cost savings, making the business side of content creation more profitable, end quote. But here's the thing. There have been layoffs recently all across the streaming platforms. Layoffs all across Hollywood, actually, entire shows, entire movies, canceled. Why? Well, all. all the streaming services are cutting back because they're losing money. Remember a long time ago,

we had Peter Kafka on the podcast for a bonus episode, and I asked him, are we sure streaming can be profitable or at least as profitable as the old movie theater into windowed release on rental and then onto streaming? And he said, no. He said we were not sure the numbers mathed out, not sure at all. And I'm hearing from folks in Hollywood recently that there's a huge amount of fear that this whole thing is a potential disaster of Titanic-like proportions. And I mean the ship, not the movie. What if in the end, Hollywood itself is the ultimate casualty of the streaming wars? So maybe they're not going to go public this year after all, because sources say Stripe is aiming to raise around $2.5 billion at a $55 to $60 billion valuation.

The investment is being led by Thrive Capital, which has committed around a billion dollars. Stripe was last valued at around $95 billion back in March of 2021, so this is a downround, a big one. The biggest startup unicorn of this era is voluntarily lowering its valuation by around 40%. Quoting the New York Times. If completed, the funding could give Stripe breathing room amid a tough market for public listings. The money is expected to be used to pay the startup's tax liabilities and to allow its employees to sell their company shares. Many privately held tech companies use stock options. to help recruit employees, but a faltering market for public offerings has made it difficult for

employees to cash out of those shares. Some Stripe employees have stock grants that will start expiring next year if the company does not go public or raise new funding, a person familiar with the situation said. Stripe's moves are being scrutinized because it was once the most highly valued private company in the United States. How it responds to an inhospitable market for public offerings could be a harbinger for how others manage it, end quote. Yeah, there is a whole bunch of T-leaf reading on this one. Dar Obasanjo tweeted what was my first thought originally, quote, less interested in Stripe doing a downround from $95 to $60 billion and more interested in why 12 years in, Stripe still needs to be raising money. Are they not profitable? If they weren't during the COVID

e-commerce highs, when will they be? End quote. But again, maybe this is just to provide liquidity to employees. But the interesting thing would be if they've decided to go this route, then that means that they figured that going public would be some form of a disaster. This is basically their only choice. Because remember, they were planning to do a direct listing, again, just to cash out insiders. In a direct listing, the company itself doesn't raise any money. But if they thought they were going to hit the public markets and the public markets were going to spit them back out, then that wouldn't help them at all, right? So I guess go in this direction. Also, again, Stripe is the biggest unicorn of this era. So this is an interesting marker for the valuation of

everybody, all private companies, especially fintech and SaaS ones. Quoting Elliot Brown, FinTech comps are down 60% plus from peak. Strike, which missed investor targets last year, raising $3 billion at a 40% discount to peak round, end quote. And quoting Ellie Morrill on Twitter, repricing of most late stage startups waiting for the IPO window to open will happen in private, so this is a rare, valuable public benchmark slash placeholder for what to expect, end quote. Noting this, just so we're up to date on a story that, thankfully, has gone a bit quiet lately. Sources have told Bloomberg that Twitter made its first interest payments under Elon Musk to a group of seven banks who provided debt financing for Elon's takeover of Twitter. The payment was due around January 27th and was estimated to be in the neighborhood of $300 million.

Quote, a lot is writing on these interest payments. Questions remain about Musk's ability to turn around the social media giant, though the fact that he's made good on the first. first chunk of interest expenses stands to bolster confidence in his ability to avert a bankruptcy in the near term. Since his purchase, Twitter has failed to pay millions of dollars in rent for its San Francisco headquarters and London offices and has been sued by multiple contractors over unpaid services and has auctioned off everything from bird statues to espresso machines to raise money. He's also openly floated the idea of bankruptcy, citing a, quote, massive drop in revenue as some advertisers fled from the platform and slash staff since closing his $44 billion leverage buyout at the end of October.

Yet Musk has also said Twitter's finances are improving. He said in a late December Twitter spaces conversation that the company has about a billion dollars in cash on its balance sheet and is now on track to, quote, roughly, hit cash flow break-even following all the cuts, end quote. I didn't talk about it, but yesterday the Financial Times also had a story reporting on various regulatory licenses the company has filed for in order to, begin facilitating payments on the app. Remember, Elon wants to turn Twitter into a super app. Back in November, apparently Twitter registered with U.S. Treasury as a payments processor and is now doing so with the various state licensing organizations that would be needed as well.

All of this is being overseen by Esther Crawford, who, as many have been noting, has quickly become Elon Musk's apparently most trusted lieutenant at the company. And finally, today, an interesting benchmark. Mercedes-Benz has become the first automaker approved for level three self-driving in the U.S., as the state of Nevada has allowed drive pilot, which still requires the driver's face to stay visible, but is the first level three platform to make it to U.S. roads, quoting the verge. The company said it had self-certified in Nevada for use of its drive-pilot feature in which the car does all the driving, but the driver needs to stand by to take control at a moment's notice. Mercedes certified that its technology

meets Nevada's minimal risk condition requirement that requires level three or higher fully autonomous vehicles to be able to stop if there is a malfunction in the system. Nevada law allows all automation levels to operate on public streets. A spokesperson for the state's DMV said in an email, Nevada does not issue any permit or license based on an autonomous vehicle's level of automation, end quote. Mercedes-Benz's drive pilot is similar to hands-free highway driving systems like GM's Supercruise, Ford's Blue Cruise, and Tesla's autopilot. insofar as it allows drivers to take their hands off the steering wheel and feet off the pedals under certain conditions. But unlike level two systems in which drivers are required to keep their eyes on the road,

Mercedes's level three system has a little more allowances. According to the drive, which got to test out the system on a closed course in Germany last year, the driver must keep their face visible to the vehicles in-car cameras at all times, but can also turn their head to talk to a passenger or play a game on the vehicle's infotainment screen. A Mercedes engineer suggested playing Tetris, for example. But when the drive reporter brought a camera up to his face to take a picture, the system disengaged. In other words, the system doesn't allow drivers to take a nap or ride in the vehicle in the back seat. In the past, people have abused the lax driver monitoring controls and

Tesla's autopilot to do both, which has unnerved regulators and spurred safety advocates to call for more robust monitoring. Other than that, drive pilot acts similarly to many of the level two systems that are available in the U.S. It accelerates and decelerates depending on the traffic ahead. It can stay centered in the lane and perform automated lane changes and blind spot detection. Interestingly, Mercedes says that drive pilot will only operate at speeds up to 40 miles per hour on, quote, suitable freeway sections and where there is high traffic density, end quote, which seems to suggest it will only be available in heavy stop-and-go traffic. In addition to cameras and radar, the system relies on data from a LiD sensor to construct a 3D model of its surrounding environment, as well as microphones to detect approaching emergency vehicles.

To be sure, level 3 systems are not without their risks. Most autonomous vehicle operators, including Waymo and crews, have said that they think level 3 is too dangerous, preferring to work exclusively on level 4 technology. The reason is the need for drivers to stay attentive despite the vehicle performing most of the driving tasks. end quote. So I keep hearing from developers, especially younger ones. I even heard this at the meetup over the weekend a couple of times that once devs try these new generative AI tools for writing code, they never want to go back. So anyone out there, can you tell me what is the main platform people are using generative AI to write code on right now? Is it GitHub copilot? Is it chat GPT itself. What I'm interested in is finding out if there's a default coding platform

already that folks are utilizing this new AI stuff to write code with, because if there's not one, and it's not one of the two I just mentioned, if it's a completely new player, a new startup, I'd love to hear about them, because Ride Home Fund would love to invest in them. Get in touch if you've got any ideas on Twitter or Brian at Ridehomefund.com via email. Talk to you tomorrow.