Tech Brew Ride Home - Tue. 10/02 - Choose Your Own Adventure, But For Netflix

Episode Date: October 2, 2018

Amazon raises its minimum wage, Tesla’s hitting its Model 3 marks, another new California law could change the face of Tech Boards of Directors and Netflix wants us to choose our own adventure. Links: Amazon raises minimum wage to $15 for all US employees (CNBC) The Story of Henry Ford's $5 a Day Wages: It's Not What You Think (Forbes) Tesla delivered over 55,000 Model 3s in Q3 (Road Show/CNET) Three US universities now let students use iPhone and Apple Watch as their campus ID card (9to5Mac) THESE TECH COMPANIES WILL NEED MORE WOMEN ON THEIR BOARDS (Wired) Google's Project Stream lets you play Assassin's Creed Odyssey in Chrome (CNET) Netflix Is Planning a Choose-Your-Own-Adventure ‘Black Mirror’ (Bloomberg) Amazon's IMDb will announce this week a new free video service to compete for TV ad dollars (CNBC) The anti-Netflix: Free, ad-supported video streaming services are growing (Digiday) 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, October 2, 2018. I'm Brian McCullough today. Amazon raises its minimum wage.

Tesla's hitting its Model 3 marks. Another new California law could change the face of tech boards of directors. And why ad-supported streaming services are the new hotness. Here's what you missed today in the world of tech. Amazon announced today that it will be raising the minimum wage. It pays all 350,000 of its U.S. workers. including part-time, temporary, and seasonal employees to $15 an hour beginning next month. If you weren't aware, late last month, Senator Bernie Sanders introduced legislation that he pointedly named the Bezos Act,

which would tax corporations for every dollar in government health benefits or food stamps their employees received because those corporations were not paying their workers enough to keep them above the poverty level. Amazon itself has faced criticism not only for working conditions at some of its warehouses and fulfillment centers, but for the fact that a large number of those employees were paid so little they qualified for government assistance programs like food stamps. Today I want to give credit where credit is due, Senator Sanders said in response to the announcement. What Mr. Bezos has done today is not only enormously important for Amazon's hundreds of thousands of employees, it could well be, and I think it will be a shot heard around the world, end quote. We listened to our critics, thought hard about what we wanted to do, and decided we wanted to lead, Jeff Bezos said in a statement,

we're excited about this change and encourage our competitors and other large employers to join us, end quote. According to CNBC, Amazon's starting pay currently varies by location, for example, $10 an hour at a warehouse in Austin, Texas, and $13.50 an hour in Robbinsville, New Jersey. For 2017, the median Amazon employee earned just under $28,500, according to company filings. Jeff Bezos earned $1.7 million last year, end quote. As you might imagine, the commentary on this has been spicy. As Daniel Gross pointed out, this has some interestingly logical timing. The crucial holiday season is coming up, and in recent years, Amazon has struggled to staff up to handle the deluge. Quote, unemployment is really low.

There are 6.6 million jobs open in the U.S. already. And you need to hire 50,000, 80,000, 100,000 people for temporary work for the holiday season or else your year is shot. Offering $10 an hour or $12 an hour or gift cards or other perks won't do the trick. We have a huge shortage of people who are able and willing to work these kinds of jobs, so you have to offer substantially higher wages than they can get at other work. The marginal price for temporary work for the holidays may indeed be $15 an hour. But you can't offer the temporary people slightly more than the wages being paid to existing employees. They leave, end quote.

So it seems the need to staff up for Christmas might be having the knock-on effect of raising wages generally, which by the by is something that should happen in a tight job market, right? This is Econ 101 stuff. So it'll be interesting to see if there is indeed a knock-on effect to other retailers like Walmart and Target. And that, by the way, might very well be a good street. strategic reason to do this in the first place. What if Jeff Bezos sees he could pressure his competitors to raise their wages? Target said it would be raising seasonal work pay to $15 an hour, but only by 2020. Walmart earlier this year said it was raising its minimum wage for workers to $11 an hour.

And Amazon, of course, has other high-margin businesses to take care of the hit to retail margins that the other competitors don't. Something, something, your margins are Jeff Bezos's opportunities, right? Matt Novak tweeted, quote, Yes, it's great that Amazon is paying people more, but with unemployment below 4%, wages are supposed to be going up anyway. Again, it's great, but it's not without self-interest. Amazon needs to pay more if they want to retain people. This isn't charity, end quote. Indeed, it usually isn't. Remember that famous story from history about Henry Ford paying $5 a day to workers in his factories? The legend has it that he wanted his workers to be able to buy the cars they

were manufacturing, but the truth is a little less heroic and a little more pragmatic. Quote, at the time, workers could count on about $2.25 per day, for which they worked nine-hour shifts. It was pretty good money in those days, but the toll was too much for many to bear. Ford's turnover rate was high. In 1913, Ford hired more than 52,000 men to keep a workforce of only 14,000. New workers required a costly break-in period, making matters worse for the company. Also, some men simply walked away from the line to quit and look for a job elsewhere. Then the line stopped and production of cars halted. The increased cost and delayed production kept Ford from selling his cars at the low price he wanted. Dramatic measures were necessary if he

wanted to keep up this production, end quote. Speaking of auto production, if you can somehow look past all the SEC news, all the pot smoke, and all the headlines, the one thing that really matters on a fundamental level to the Tesla story these days is production of its Model 3 car. As we've discussed on the bonus episode, it's possible that if the Model 3 does hit scale, it can make a lot of Tesla's other problems fade into the background. Well, this morning, Tesla announced that in Q3 of this year, it produced 53,239 Model 3 sedans. In Q2 of this year, Tesla only produced 53,000 vehicles of any model full stop, and only 28,000 of of those 53,000 last quarter were Model 3s. So Tesla produced in quarter three as many Model 3 as it did

all cars last quarter. Quoting from CNET's Roadshow, an impressive jump over the quarter before, yes, but it averages out to just over 4,100 Model 3 sedans produced per week. That's well below the 5,0 and 31 cars the company managed to produce in the final week of Q2 and a far cry. From the 10,000 weekly the company hoped to hit at some point this year. Tesla did, however, manage 5,300 Model 3s in the final week of Q3. From the Department of I Wish we had this back in the day, if you are currently matriculating at Duke University, the University of Alabama, or the University of Oklahoma, you can now use your iPhone and Apple Watch as your campus ID card. Quote, by using contactless NFC readers, students can use their digital ID card to access dorms,

dining halls, libraries, and the gym. You can also use it to pay for bookstore supplies, laundry usage, and restaurant meals, end quote. I'm so old that when I got to college in the fall of 1996, not only were we the second or third class of students to all be assigned email addresses automatically, we were the very first class that was able to sign up for classes online, as opposed to literally queuing up physically out in the real world in long lines and signing up for classes by writing our names on a piece of paper. Yesterday we talked about how California is single-handedly trying to force the return of net neutrality through legislation, but there's another California bill just signed by Governor Jerry Brown called SB 826,

which could have an interesting impact on tech companies. Under the law, all public companies domiciled in California, California, companies that would include, of course, Apple, alphabet, and Facebook, must have at least one woman on their board of directors by 2019 and two by 2021. If a company has a board with more than six members, there must be at least three women on the board. Quoting from Wired, Apple, Alphabet, and Facebook each have two women on their boards, as do chipmakers, Intel, and Nvidia. Among the biggest Silicon Valley companies, Cisco, Oracle, and Netflix meet the 2021 requirement with three or more. women on their boards. Beyond big tech, the impact of the law could be even greater. Annalisa Barrett of Board Governance Research says only 62 of the 439 California companies in the Russell

3,000 stock index comply with the 2021 requirement. The others will have to add 684 women to their boards by July 2021 in order to comply, including 66 companies that now have no women directors. In a study last year, Barrett found that women accounted for 15.5% of directors on California-based companies compared with 16.2% of directors on all Russell 3,000 companies. We've sort of known because there have been a lot of rumors and whatever that Google was working on a streaming gaming service, but in a surprise announcement yesterday, Google officially announced Project Stream, A partnership with GameMaker Ubisoft to test gaming streaming, get this, in the browser. On the same day, the new Assassin's Creed Odyssey game comes out on PlayStation 4, Xbox 1, and PC,

a limited number of players will be able to test playing that game right in their Chrome browsers, which is, wow. Quoting from CNET, you can watch a 1080-60-frames-per-second video of Assassin's Creed Odyssey, captured from ProjectStream below and sign up for the limited beta at projectstream.gov.com forward slash ACO, forward slash signup. And a word of caution for those wanting to sign up

with slow internet connections, the test is geared towards participants with a home internet connection of at least 25 megabits per second, end quote. And again, the signups are limited, so get on that if you're interested. Quoting Gamer, as a true, on Twitter, quote, wow.

If Google pulls this off, then PlayStation, Xbox, et cetera, are going to have a battle on their hands. Netflix is apparently going all, choose your own adventure on us. The streaming company is apparently developing a slate of specials for next year that will let you choose the storyline in a TV episode or movie, although the first of these experiments

might actually arrive by the end of this year, because among the shows that will reportedly offer this option are Black Mirror, which is slated, to return in December. Netflix apparently already offers a handful of Choose Your Own Adventure Style shows for kids. Once you choose one narrative stream, you can go back and rewatch and choose others.

Netflix already produces a universe of content, so we're already all off in our own little niches watching our own thing. Now imagine a future where there are 90 potential storylines for any one movie or show, so none of us can even be certain. we've even ended up watching the same story. More rumors have been flying over the last several days

that Amazon's IMDB unit will soon announce a new free video streaming service, and it might announce it as soon as this week. The service would be monetized by ads, and this is the possibility that has gotten me all a flutter, of course, that Amazon could target me with ads on TV based on my recent purchasing history on Amazon. Seems pretty powerful to me, Steven Sinovsky.

But I don't want to harp on. that right now I want to take a minute to step back and look at the bigger picture here because free ad-supported streaming services are really coming to the forefront in a major way lately. Roku in particular has had such success with its ad-supported streaming services that it no longer claims to even be a hardware or tech company, but instead it's an advertising company they want you to know. And I don't know if you've checked Wirecutter recently, but there are those TCL Roku 4K TVs out there that Wirecutter says are the best TV's money can buy for a lot of categories. And there's also Pluto TV, Zumo, and a whole bunch more.

So what's going on here? Well, Digidae looks at the phenomenon and says not only is ad-supported streaming working out, it has a strong appeal to both viewers and TV manufacturers. Subscription services might dominate the over-the-top video market today, but free ad-supported platforms are beginning to find their way to viewers on internet-connected TVs. This growth is proving to be an opportunity for video programmers searching for distribution on the biggest screen in the house. Beyond Roku, other free video streaming services are also managing to build an audience on connected TV screens. Pluto TV now has roughly 10 million monthly active users. Zumo has 3.5 million monthly active users at the end of July,

with viewership growing by 325% over the past year, the company said, end quote. And then there's, of course, Amazon here looking to jump into this field. What is fueling this growth, according to industry analysts, is subscription fatigue. I mean, if you're doing Netflix and, say, Hulu, you're already $30 deep into your pocket every month, then add on ESPN and Disney and this one and that one. And for specific apps, the article mentions companies like Cheddar, Newsie, and even ABC News. These new ad-supported platforms offer more eyeballs. again on the biggest screen in the house that they can monetize.

But the third angle here is that these ad-supported streamers are appealing to the TV manufacturers who are used to fighting tooth and nail for minuscule profit margins. Quoting again from Digidae, according to Colin Petri Norris, CEO of Zumo, these services are appealing to TV manufacturers because they receive recurring revenue in the form of an ad revenue share. You're not making 50% margins when selling TVs, he said. So a revenue share, which brings with it long-term value as customers watch those services for years, is an attractive model for them. And there are no upfront costs for them either, end quote.

Wouldn't it be ironic if streaming video, which seemingly disrupted traditional TV by allowing people to flee ads, were somehow undercut from below by free streaming channels that were ad-supported? I feel like every time we analyze this streaming video space, we keep coming back to this idea that maybe we're just blowing up the traditional TV model just to reconstitute the same state of affairs just now over TCPIP. So by the time you listen to this, the Microsoft Hardware event will have happened, but as it occurred at 4 p.m. Eastern time, and the show drops at 5 p.m. Eastern Time, of course,

we'll have to get to all of that tomorrow. Only two more big tech fall unveilings after this one. A week from today is that made by Google event where there'll be new phones. And then there's whatever Apple's going to do this month, whenever they end up doing it. Then we've got a breather on product announcements until the madness of CES.

So a bit of a breather. Talk to you all tomorrow.