Weekly Digest from the West

-Inside HBO’s Plan to Win the Streaming Wars: HBO has reigned over television for a quarter- century now; no other institution is more central to our concept of prestige TV. Its archives contain classics that defined the new golden age of television: The Sopranos, Six Feet Under, The Wire, Sex and the City, Deadwood, Girls, Veep. Over and over, HBO has stretched TV’s formulaic limits and played a key role in television’s usurpation of film’s privileged prominence in the American psyche. More than any other network, HBO elevated TV to its current status as the American storytelling medium of the young century. So it makes sense that almost as soon as the ink was dry on AT&T’s acquisition of Time Warner—which it promptly renamed Warner Media—the telecom giant began to position HBO as the centerpiece of its plans for a direct-to-consumer streaming subscription business: Phase One of a war to ward off deep-pocketed TV upstarts like Netflix, Amazon, and Apple. Although it remains the most profitable and influential boutique network in America, HBO faces a surprisingly unsettled future in 2019. In addition to the Silicon Valley set, established elders like Disney will soon be launching their own streaming services. HBO needs to keep attracting top TV talent in a market that has seen A-list show-runners land nine-figure deals while also preserving its reputation for excellence—all in the year its international mega-hit Game of Thrones comes to an end. an HBO’s artisanal approach to developing shows mesh with the quick-results, high-turnover culture of the telecom industry? That’s the idea. “I want more hours of engagement,” Stankey told Plepler at an employee town hall last spring. The discussion—a recording of which was leaked to The New York Times—stoked fears both inside the company and among TV fans that the new owners planned to turn HBO into a content factory, jeopardizing the very things that make the network so alluring to creators and performers. (Game of Thrones was nurtured for four years.) As one television executive told me worriedly at the time, “You can’t turn HBO into a superstore overnight!” All charm and ease as he darted through the room ego-burnishing the brightest and the best in HBO’s firmament, Plepler surely felt the tension of this high-stakes moment. He is faced with the responsibility of keeping the suits and the shareholders sated, while maintaining HBO’s creative edge as a swarm of rivals take the model it invented and threaten to beat the originators at their own game. The network, which had 54 million cable subscribers at the close of 2017, already dipped a toe into the direct-to-consumer game with the four-year-old HBO Now. The app had more than seven million U.S. subscribers at the end of 2018. (Netflix had 58.4 million U.S. subscribers in the third quarter of 2018.) As viewers increasingly ditch their cable boxes, what was once a sideline is becoming the main event. To keep up, HBO will need to accelerate its output, which is why Stankey’s demand for “more hours of engagement” garnered so much alarm. His somewhat more reassuring comment that “you’re going to have to have the latitude, the freedom, and the resources to be able to go about doing what you all do very well” was less widely circulated. Of course, what HBO does well runs the gamut, from the TV equivalent of art projects to documentaries to blockbuster dramas, not all of which have the same level of payoff.

https://www.vanityfair.com/hollywood/2019/01/hbo-plan-to-win-the-streaming-wars

-Apple Plans Gaming Subscription Service: Apple is planning a subscription service for games, according to five people familiar with the matter. The service would function like Netflix for games, allowing users who pay a subscription fee to access a bundled list of titles. Apple ($AAPL) began privately discussing a subscription service with game developers in the second half of 2018, said the people, all of whom requested anonymity to discuss unannounced plans. It’s unclear how much the subscription will cost or what kind of games Apple will offer. The service is still in the early stages of development, and Apple could ultimately decide to abandon it. The company has also discussed partnering with developers as a publisher, according to two people familiar with the talks, which could signal Apple’s ambition to assume distribution, marketing, and other related costs for select games. An Apple spokesperson declined to comment for this story. The move to create a gaming subscription service comes as Apple faces pressure to grow its services business while hardware sales plateau. The iPhone-maker is developing a slew of original shows for a video streaming service to rival Netflix, partnering with carriers to boost the subscriber base for Apple Music, and is also planning to release a news subscription service this year. While it’s unclear what kinds of games would be included, a subscription service for App Store games could provide a boost to Apple’s recurring revenue at a time when iPhone sales are slowing and gaming and esports are booming. Mobile gaming is expected to become a $100 billion industry by 2021, according to the gaming and esports intelligence firm Newzoo.

https://cheddar.com/videos/apple-plans-gaming-subscription-service-sources

-TiVo could split its business in two: Shares of TiVo Inc. TIVO, -1.89% are up 1% in midday trading Monday after a report from communications-industry publication Light Reading suggested that TiVo is "leaning toward" separating its intellectual-property and licensing business from its product and services business. The report cites several unnamed sources. "If TiVo opts to take that route, it's not clear if those units would become separate, publicly traded companies, go private, or if TiVo would spin off its products and service unit and ultimately seek a buyer for it," Light Reading said. TiVo said in a statement to Light Reading that it expected to complete its strategic review by its year-end earnings call. That call will likely take place in February. TiVo shares have lost 21% over the past 12 months, as the S&P 500 SPX, +0.09% has gained 8.3%.

https://www.marketwatch.com/story/tivo-could-split-its-business-in-two-report-2019-01-28

-Dropbox snares HelloSign for $230M, gets workflow and e-signature: Dropbox announced today that it intends to purchase HelloSign, a company that provides lightweight document workflow and e-signature services. The company paid a hefty $230 million for the privilege. Dropbox’s SVP of engineering, Quentin Clark, sees this as more than simply bolting on electronic signature functionality to the Dropbox solution. For him, the workflow capabilities that HelloSign added in 2017 were really key to the purchase. “What is unique about HelloSign is that the investment they’ve made in APIs and the workflow products is really so aligned with our long-term direction,” Clark told TechCrunch. “It’s not just a thing to do one more activity with Dropbox, it’s really going to help us pursue that broader vision,” he added. That vision involves extending the storage capabilities that is at the core of the Dropbox solution. This can also been seen in the context of the Extension capability that Dropbox added last year. HelloSign was actually one of the companies involved at launch. While Clark says the company will continue to encourage companies to extend the Dropbox solution, today’s acquisition gives it a capability of its own that doesn’t require a partnership and already is connected to Dropbox via Extensions.

https://techcrunch.com/2019/01/28/dropbox-snares-hellosign-for-230m-gets-workflow-and-esignature

-Facebook Watch Isn’t Living Up to Its Name: Three long years ago, when the world knew little about Cambridge Analytica and laughed off the specter of fake news, Mark Zuckerberg had a very different kind of problem. Facebook wasn't adding many more users in key ad markets, so it needed to figure out how to wring more money from its existing audience. Although the company accounted for an impressive 45 minutes of its average user’s day, that wasn’t in chunks big enough to send them the ever-growing number of ads at the heart of the company’s business model. The average Facebook session lasted less than 90 seconds, according to people familiar with the matter—while you were waiting in a checkout line, trying to avoid eye contact between subway stops, or sitting on the toilet. Zuckerberg and other executives decided to try to boost that number by pushing their way into a much older kind of advertising model: TV. Like a lot of things at Facebook these days, it’s not going great.

You’re probably not watching much Facebook Watch. The company committed about $1 billion last year to buying shows for its streaming video tab, reasoning that even a single hit could leach a significant piece of the average two hours Americans spend in front of the TV, or the Facebook-level amount of time they spend on Google’s YouTube. It hasn’t produced a hit like the Netflixes, Amazon Primes, and Hulus of the world. So far, some of its biggest names have been network castoffs (MTV’s Loosely Exactly Nicole) and refugees from other streaming services (Comcast Watchable’s I Want My Phone Back). When Facebook reports its quarterly earnings on Jan. 30, investors and analysts will mostly be listening for news about ad sales for its messaging apps and the stories feature it copied from Snapchat. (Bloomberg Media also produces a show, funded by Facebook, for the Watch platform.)

https://www.bloomberg.com/news/articles/2019-01-28/facebook-watch-struggles-to-deliver-hits-or-advertisers

-Fantastic video-streaming services that are not named Netflix, Amazon, or Hulu: Netflix has become a verb (“let’s netflix tonight”), everyone knows about Amazon, and Hulu is a force to be reckoned with. You could even refer to them as the new Big Three, given their growing influence over the industry. As these behemoths flex their muscles by repeatedly raising prices, consumers looking for alternative sources for online movies, TV shows, and other forms of video entertainment would be wise to sample some of these alternative services. Most of them target niche audiences, but they’re all inexpensive—indeed, some don’t charge any fees at all. Incidentally, there are a few sites operating in the darker corners of the web that we don’t recommend visiting. We’re talking about the ones that offer Hollywood movies that are still playing in theaters. All the services listed here—in alphabetical order—are completely above board.

https://www.techhive.com/article/3336193/streaming-services/alternative-video-streaming-services-to-netflix-amazon-hulu.html

-Inside Disney’s Daring Dive Into the Streaming World: Bob Iger has repeatedly called it the “highest priority” of the Walt Disney Co. The launch of Disney Plus has become the talk of the entertainment industry — for creatives, for tech mavens and for Wall Street — as production and development of original series and movies accelerate for the streaming service, slated to debut in the U.S. by year’s end. Disney, under the leadership of chairman-CEO Iger, has re-engineered its operating segments and reshuffled its management ranks to prepare for its streaming future. The Burbank media giant has made big investments in technical infrastructure. And Iger rocked the Hollywood establishment in 2017 with his dogged pursuit of Rupert Murdoch’s 21st Century Fox entertainment empire. He was hunting for the kind of IP that can help drive Disney Plus and future platform offerings, and lend itself to exploitation through Disney’s well-oiled franchise machine. Now that the Fox acquisition is near the finish line, with a projected close by March, industry sources say pressure is mounting inside Disney’s film and TV units to grapple with the force of a number of headwinds at once. They’re tasked with stepping up their overall output — significantly in the case of its movie units — at a time when they’re also bracing for what will surely be a massive process of integrating the contingent of Fox executives who will make the transition. More details about Disney’s investment to date in its Direct-to-Consumer operations will be forthcoming on Feb. 5, when the conglom reports its fiscal first quarter earnings. For the first time, the company will break out financials for the Direct-to-Consumer and International division. Disney earlier this month disclosed that the unit recorded a loss for the first nine months of 2018 of $738 million in operating income on revenue of $3.4 billion, most of which came from Disney’s international channels. Disney is up to the huge challenges ahead, in the view of RBC Capital Markets senior media analyst Steven Cahall. He estimates the company will devote about $500 million to original programming for Disney Plus in 2019. “Disney spends more on content than anyone else globally. It has decades of experience in making excellent content, it has a huge balance sheet with low leverage and it’s a brand that’s known the world over,” Cahall wrote in December. RBC research pegs Disney as the biggest spender among media giants on content, with a projected $23.8 billion for 2019, or $16.4 billion excluding sports-related properties. Disney’s total spending to fill its pipeline amounts to 22% of the estimated $107 billion in global content spending among the largest media companies. AT&T and Netflix are next on the list with $14.3 billion and $14 billion, respectively, per RBC. Original movies are slated to be a big part of the Disney Plus lineup. At first, industry sources say the message from the Disney Plus team last year was that it was looking for modestly budgeted movie concepts. Then came word that it is open to projects with a wider budget range of $20 million to $60 million. Sean Bailey, president of motion picture production for Disney Studios, is playing a major role in liaising with the imprints and helping to steer the movies strategy. Other projects are coming from the seasoned team at Disney Channels Worldwide, which has long produced telepics. Strategy adjustments and dealmaking hiccups are hardly unexpected for such an expansive start-up effort. Sources close to the situation point to the hiring earlier this month of Fox alum Joe Earley as exec VP of marketing and operations for Disney Plus as recognition that more heft was needed to prepare for the launch. Earley had a 21-year run at Fox Broadcasting, rising to chief operating officer for Fox Television Group. He spent the past three years as president of Gail Berman’s Jackal Group shepherding TV, film and legit productions. Earley will soon be joined under the larger Disney corporate umbrella by a host of former TV and film colleagues from 20th Century Fox.

https://variety.com/2019/biz/features/disney-plus-streaming-plans-bob-iger-1203120734/

-Apple’s streaming video service is reportedly launching this spring: Little is known about Apple’s standalone streaming service, aside from the mountain of original content that’s coming. But according to a new report from The Information, it could launch this spring. The Information is reporting that Apple has told various studios and networks “whose offerings will be available through the service to be ready for launch by mid-April,” according to three sources. Some of those studios may include independent film powerhouse A24 and the Oprah Winfrey Network, which Apple has signed multiyear and picture deals with, according to previous reports. The streaming service is expected to launch “within several weeks of that date,” according to The Information. There’s still no information on how much Apple’s streaming service will cost subscribers. If correct, April will be a busy month for streaming services. Disney is expected to show investors its standalone streaming service, Disney+, on April 11th, according to a report released ahead of the company’s Q4 investors call. Disney’s streaming platform won’t launch until later in the year, according to CEO Bob Iger, but the company is gearing up to tease what subscribers should expect. If both Apple and Disney launch their streaming platforms by the end of 2019, that means consumers will have access to a number of top-tier streaming platforms from major corporations, including streaming giants like Hulu, Amazon Prime, and Netflix. The big question is what the content on Apple’s streaming service will look like. The company has inked deals with a number of studios and networks, and it appears to be betting on exclusive, prestige content. That’s similar to Disney’s plan, which will offer subscribers access to the company’s humongous library of films and television series, alongside new shows from some of its biggest franchises like the Marvel Cinematic Universe and Star Wars.

https://www.theverge.com/2019/1/29/18202178/apple-streaming-service-launch-spring-2019-apple-disney-netflix-hulu

-Apple Music customers can stream music for free over Wi-Fi on American Airlines soon: Apple announced today that it’s partnering with American Airlines to provide Apple Music subscribers access to the streaming app on flights, without having to pay for in-flight Wi-Fi. Apple Music customers can access their music on any American Airline domestic flight that’s equipped with Viasat satellite Wi-Fi starting on February 1st. It’s the first time Apple Music has partnered with an airline. Subscribers will be able to stream on any device with which they use Apple Music, including PCs, iPhones, iPads, Android devices, and Macs. Although it’s a convenient perk for Apple Music customers, the bigger picture is that it’s a zero-rating service that undermines competition and net neutrality principles. Offering free data for specific apps (like Apple Music) is the same controversial strategy that several states like California have banned in the past, and it’s no different from carriers offering sponsored data to third-party providers. Onboard Wi-Fi is still a developing technology, and Apple offering zero-rated services gives it an early edge over competitors like Spotify and Tidal.

https://www.theverge.com/2019/1/30/18203589/apple-music-stream-free-wifi-american-airlines

-Ultraviolet Cloud Movie Locker to Shut Down (EXCLUSIVE): Ultraviolet, a cloud movie locker once hailed as Hollywood’s best bet to get consumers hooked on digital movies, is shuttering. The Digital Entertainment Content Ecosystem (DECE), the industry consortium that has been tasked with running Ultraviolet, will shut down the service on July 31. DECE will start to inform its users of the wind-down this Thursday, and is advising users to not delete their Ultraviolet movie libraries. Users should instead make sure that their libraries are connected to the service of at least one retailer, which they can then use to access their movies and TV shows going forward, according to an FAQ document that is slated to be published on Ultraviolet’s website on Thursday morning. DECE president Wendy Aylsworth told Variety in an exclusive interview this week that the decision to discontinue Ultraviolet was a response to the evolution of the market for online entertainment. “The marketplace for collecting entertainment content was very small when Ultraviolet started,” she said. “It was siloed into walled gardens at the time.”

https://variety.com/2019/digital/news/ultraviolet-shutting-down-1203123898/

-Looking ahead: The trends LA tech companies are watching in 2019: The first few weeks of 2019 have given way to a flood of think pieces about the future of tech. Blockchain. IoT. Machine learning. Augmented reality. Most forecasts include the same set of characters changing things up in virtually every industry under the sun: e-commerce, biotech, cybersecurity, adtech, foodtech, fintech — the list goes on. To understand how these trends are forecasted to affect the tech ecosystem in LA, we turned to the experts. Here’s what CIE Digital Labs, a startup accelerator and innovation lab for Fortune 500s, and foodtech game-changer sweetgreen told us about where tech is trending in 2019.  

https://www.builtinla.com/2019/01/31/los-angeles-2019-tech-trends

-Video piracy’s unexpected comeback? Since 2011, Netflix has become one of the most powerful companies in the world, boasting a worldwide user base of nearly 150 million. Between 2011 and 2015, Netflix and other streaming services penetrated the global market so effectively that piracy plummeted roughly 50%. However, for the first time in years, that trend line is changing. In 2018, global piracy went up. Global piracy rate is a useful indicator for the health of the streaming market because it highlights a key value of streaming providers: convenience. Netflix proved that even in a world where piracy is accessible and relatively low-risk, users are willing to pay for convenience. No one wants to search dodgy corners of the internet to stream The Office if they don’t have to. The migration of users from streaming services back to piracy indicates that streaming services are no longer offering the same level of convenience they used to. There are two major reasons for this. The first is market segmentation. If you want to watch Westworld, Atlanta, and The Marvelous Mrs. Maisel, you'll need to subscribe to some combination of HBO, Hulu, and Amazon Prime. As major streaming services invest in exclusive content (Netflix  budgeted $13 billion for original content in 2018), users are forced to sign up for multiple services or miss out. As producers like Disney launch their own exclusive streaming services, the problem only grows. The second is international licensing. International licensing for media is a nightmare, and for streaming services, it presents a massive bottleneck. While Netflix users in the U.S. enjoy thousands of streamable movies, users in Portugal get by with a couple hundred. In countries with strict censorship laws like Saudi Arabia, numbers become even smaller.

https://tinyurl.com/y8xh452t

-The state of AI in 2019: It’s a common psychological phenomenon: repeat any word enough times, and it eventually loses all meaning, disintegrating like soggy tissue into phonetic nothingness. For many of us, the phrase “artificial intelligence” fell apart in this way a long time ago. AI is everywhere in tech right now, said to be powering everything from your TV to your toothbrush, but never have the words themselves meant less. It shouldn’t be this way. While the phrase “artificial intelligence” is unquestionably, undoubtedly misused, the technology is doing more than ever — for both good and bad. It’s being deployed in health care and warfare; it’s helping people make music and books; it’s scrutinizing your resume, judging your creditworthiness, and tweaking the photos you take on your phone. In short, it’s making decisions that affect your life whether you like it or not. It can be difficult to square with the hype and bluster with which AI is discussed by tech companies and advertisers. Take, for example, Oral-B’s Genius X toothbrush, one of the many devices unveiled at CES this year that touted supposed “AI” abilities. But dig past the top line of the press release, and all this means is that it gives pretty simple feedback about whether you’re brushing your teeth for the right amount of time and in the right places. There are some clever sensors involved to work out where in your mouth the brush is, but calling it artificial intelligence is gibberish, nothing more. When there’s not hype involved, there’s misunderstanding. Press coverage can exaggerate research, sticking a picture of a Terminator on any vaguely AI story. Often this comes down to confusion about what artificial intelligence even is. It can be a tricky subject for non-experts, and people often mistakenly conflate contemporary AI with the version they’re most familiar with: a sci-vision of a conscious computer many times smarter than a human. Experts refer to this specific instance of AI as artificial general intelligence, and if we do ever create something like this, it’ll likely to be a long way in the future. Until then, no one is helped by exaggerating the intelligence or capabilities of AI systems. It’s better, then, to talk about “machine learning” rather than AI. This is a subfield of artificial intelligence, and one that encompasses pretty much all the methods having the biggest impact on the world right now (including what’s called deep learning). As a phrase, it doesn’t have the mystique of “AI,” but it’s more helpful in explaining what the technology does. How does machine learning work? Over the past few years, I’ve read and watched dozens of explanations, and the distinction I’ve found most useful is right there in the name: machine learning is all about enabling computers to learn on their own. But what that means is a much bigger question.

https://www.theverge.com/2019/1/28/18197520/ai-artificial-intelligence-machine-learning-computational-science