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IPOs, crypto funds and other things I missed this week
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
What a week it’s been. I’m exhausted. Not only are we another cycle deeper into the COVID-19 quarantine, but there seems to be more news than ever to sift through. I’ve fallen behind. So, today, this little column is taking look back at things that it missed but wanted to cover. (There may come a day when we run out of stuff to talk about, but it’s not coming any time soon.)
So let’s talk about a16z’s new crypto fund, recent economic data, the Ebang F-1, Lime’s layoffs, Procore’s IPO delay and fresh valuation, stocks, Luckin, and, if we have time, Twitter’s changing jobs data. Let’s get this all out of our heads and into the world.
Odds, ends
To annoy my editors, we’re using bullet points this morning. Bullet points are great way to convey a bloc of information in a neat format. Let the haters hate, we have a lot of ground to cover:
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AWS hits $10B for the quarter putting it on a $40B run rate
AWS, the cloud arm of Amazon, would be a pretty successful business on its own. Today, the company announced it has passed $10 billion for the quarter, putting the cloud business on an impressive run rate of more than $40 billion.
It was a bright spot for the company in an earnings report that saw it report net income of $2.5 billion, down $1 billion from a year ago.
Still, most companies would take that for the entire business, but AWS, which started off as kind of a side hustle for Amazon back in 2006, has grown into a powerful business all on its own. With a growth rate of 33%, it’s still growing briskly, even if it’s slowing down a bit as the law of large numbers begins to work against it.
Even though Microsoft has grown more quickly — in yesterday’s report Microsoft reported that Azure was growing at a 59% clip — AWS had such a big head start and controls a big chunk of the market share.
To give you a sense of how quickly this business has grown, Bloomberg’s Jon Erlichman tweeted the Q1 numbers for AWS since 2014, and it’s pretty amazing growth:
Amazon’s cloud revenue in Q1:
(Amazon Web Services)
Q1 2020: $10.2 billion
Q1 2019: $7.7 billion
Q1 2018: $5.4 billion
Q1 2017: $3.7 billion
Q1 2016: $2.6 billion
Q1 2015: $1.6 billion
Q1 2014: $1.1 billion— Jon Erlichman (@JonErlichman) April 30, 2020
In 2014, it was a $4 billion a year business. Today it is 9.1x that and still going strong. The good news for everyone involved is that this is a huge market, and while nobody could ever characterize the pandemic and it’s economic fall-out as good news for anyone, the fact is that it is forcing companies to move to the cloud faster than they might have wanted to go.
That should bode well for all the cloud infrastructures vendors, even as the economy shrinks, the kinds of services these vendors offer should be in more demand than ever, and that means these numbers could just keep growing for some time.
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If we let the US Postal Service die, we’ll be killing small businesses with it
Laura Behrens Wu is the co-founder and CEO of Shippo, which is building a shipping platform for 21st century e-commerce.
Since moving to the United States, I’ve come to appreciate and admire the United States Postal Service as a symbol of American ingenuity and resilience.
Like electricity, telephones and the freeway system, it’s part of our greater story and what binds the United States together. But it’s also something that’s easy to take for granted. USPS delivers 181.9 million pieces of First Class mail each day without charging an arm and a leg to do so. If you have an address, you are being served by the USPS — and no one’s asking you for cash up front.
As CEO of Shippo, an e-commerce technology platform that helps businesses optimize their shipping, I have a unique vantage point into the USPS and its impact on e-commerce. The USPS has been a key partner since the early days of Shippo in making shipping more accessible for growing businesses. As a result of our work with the USPS, along with several other emerging technologies (like site builders, e-commerce platforms and payment processing), e-commerce is more accessible than ever for small businesses.
And while my opinion on the importance of the USPS is not based on my company’s business relationship with the Postal Service, I want to be upfront about the fact that Shippo generates part of its revenue from the purchase of shipping labels through our platform from the USPS along with several other carriers. If the USPS were to stop operations, it would have an impact on Shippo’s revenue. That said, the negative impact would be far greater for many thousands of small businesses.
I know this because at Shippo, we see firsthand how over 35,000 online businesses operate and how they reach their customers. We see and support everything from what options merchants show their customers at checkout through how they handle returns — and everything in between. And while each and every business is unique with different products, customers operations and strategies, they all need to ship.
In the United States, the majority of this shipping is facilitated by the USPS, especially for small and medium businesses. For context, the USPS handles almost half of the world’s total mail and delivers more than the top private carriers do in aggregate, annually, in just 16 days. And, it does all of this without tax dollars, while offering healthcare and pension benefits to its employees.
As has been the case for many organizations, COVID-19 has significantly impacted the USPS. While e-commerce package shipments continue to rise (+30% since early March based on Shippo data), it has not been enough to overcome the drastic drop in letter mail. With this, I’ve heard opinions of supposed “inefficiency,” calls for privatization, pushes for significant pricing and structural changes, and even indifference to the possibility of the USPS shutting down.
Amid this crisis, we all need the USPS and its vital services now more than ever. In a world with a diminished or dismantled USPS, it won’t be Amazon, other major enterprises, or even Shippo that suffer. If we let the USPS die, we’ll be killing small businesses along with it.
Quite often, opinions on the efficiency (or lack thereof) of the USPS are very narrow in scope. Yes, the USPS could pivot to improve its balance sheet and turn operating losses into profits by axing cumbersome routes, increasing prices and being more selective in who they serve.
However, this omits the bigger picture and the true value of the USPS. What some have dubbed inefficient operations are actually key catalysts to small business growth in the United States. The USPS gives businesses across the country, regardless of size, location or financial resources, the ability to reach their customers.
We shouldn’t evaluate the USPS strictly on balance sheet efficiency, or even as a “public good” in the abstract. We should look at how many thousands of small businesses have been able to get started thanks to the USPS, how hundreds of billions of dollars of commerce is made possible by the USPS annually and how many millions of customers, who otherwise may not have access to goods, have been served by the USPS.
In the U.S., e-commerce accounts for over half a trillion dollars in sales annually, and is growing at double-digit rates each year. When I hear people talk about the growth of e-commerce, Amazon is often the first thing that comes up. What doesn’t shine through as often is the massive growth of small business — which is essential to the health of commerce in general (no one needs a monopoly!). In fact, the SMB segment has been growing steadily alongside Amazon. And with the challenges that traditional businesses face with COVID-19, more small businesses than ever are moving online.
USPS Priority Mail gets packages almost anywhere in the U.S. in two to three days (average transit time is 2.5 days based on Shippo data) and starts at around $7 per shipment, with full service: tracking, insurance, free pickups and even free packaging that they will bring to you.
In a time when we as consumers have become accustomed to free and fast shipping on all of our online purchases, the USPS is essential for small businesses to keep up. As consumers we rarely see behind the curtain, so to speak, when we interact with e-commerce businesses. We don’t see the small business owner fulfilling orders out of their home or out of a small storefront, we just see an e-commerce website. Without the USPS’ support, it would be even harder, in some cases near impossible, for small business owners to live up to these sky-high expectations. For context, 89% of U.S.-based SMBs (under $10,000 in monthly volume) on the Shippo platform rely on the USPS.
I’ve seen a lot of talk about the USPS’s partnership with Amazon, how it is to blame for the current situation, and how under a private model, things would improve. While we have our own strong opinions on Amazon and its impact on the e-commerce market, Amazon is not the driver of USPS’s challenges. In fact, Amazon is a major contributor in the continued growth of the USPS’s most profitable revenue stream: package delivery.
While I don’t know the exact economics of the deal between the USPS and Amazon, significant discounting for volume and efficiency is common in e-commerce shipping. Part of Amazon’s pricing is a result of it actually being cheaper and easier for the USPS to fulfill Amazon orders, compared to the average shipper. For this process, Amazon delivers shipments to USPS distribution centers in bulk, which significantly cuts costs and logistical challenges for the USPS.
Without the USPS, Amazon would be able to negotiate similar processes and efficiencies with private carriers — small businesses would not. Given the drastic differences in daily operations and infrastructure between the USPS and private carriers, small businesses would see shipping costs increase significantly, in some cases by more than double. On top of this, small businesses would see a new operational burden when it comes to getting their packages into the carriers’ systems in the absence of daily routes by the USPS.
Overall, I would expect to see the level of entrepreneurship in e-commerce slow in the United States without the USPS or with a private version of the USPS that operates with a profit-first mindset. The barriers to entry would be higher, with greater costs and larger infrastructure investments required up-front for new businesses. For Shippo, I’d expect to see a much greater diversity of carriers used by our customers. Our technology that allows businesses to optimize across several carriers would become even more critical for businesses. Though, even with optimization, small businesses would still be the group that suffers the most.
Today, most SMB e-commerce brands, based on Shippo data, spend between 10-15% of their revenue on shipping, which is already a large expense. This could rise well north of 20%, especially when you take into account surcharges and pick-up fees, creating an additional burden for businesses in an already challenging space.
I urge our lawmakers and leaders to see the full picture: that the USPS is a critical service that enables small businesses to survive and thrive in tough times, and gives citizens access to essential services, no matter where they reside.
This also means providing government support — both financially and in spirit — as we all navigate the COVID-19 crisis. This will allow the USPS to continue to serve both small businesses and citizens while protecting and keeping their employees safe — which includes ensuring that they are equipped to handle their front-line duties with proper safety and protective gear.
In the end, if we continue to view the USPS as simply a balance sheet and optimize for profitability in a vacuum, we ultimately stand to lose far more than we gain.
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AWS launches Amazon AppFlow, its new SaaS integration service
AWS today launched Amazon AppFlow, a new integration service that makes it easier for developers to transfer data between AWS and SaaS applications like Google Analytics, Marketo, Salesforce, ServiceNow, Slack, Snowflake and Zendesk. Like similar services, including Microsoft Azure’s Power Automate, for example, developers can trigger these flows based on specific events, at pre-set times or on-demand.
Unlike some of its competitors, though, AWS is positioning this service more as a data transfer service than a way to automate workflows, and, while the data flow can be bi-directional, AWS’s announcement focuses mostly on moving data from SaaS applications to other AWS services for further analysis. For this, AppFlow also includes a number of tools for transforming the data as it moves through the service.
“Developers spend huge amounts of time writing custom integrations so they can pass data between SaaS applications and AWS services so that it can be analysed; these can be expensive and can often take months to complete,” said AWS principal advocate Martin Beeby in today’s announcement. “If data requirements change, then costly and complicated modifications have to be made to the integrations. Companies that don’t have the luxury of engineering resources might find themselves manually importing and exporting data from applications, which is time-consuming, risks data leakage, and has the potential to introduce human error.”
Every flow (which AWS defines as a call to a source application to transfer data to a destination) costs $0.001 per run, though, in typical AWS fashion, there’s also cost associated with data processing (starting at 0.02 per GB).
“Our customers tell us that they love having the ability to store, process, and analyze their data in AWS. They also use a variety of third-party SaaS applications, and they tell us that it can be difficult to manage the flow of data between AWS and these applications,” said Kurt Kufeld, vice president, AWS. “Amazon AppFlow provides an intuitive and easy way for customers to combine data from AWS and SaaS applications without moving it across the public internet. With Amazon AppFlow, our customers bring together and manage petabytes, even exabytes, of data spread across all of their applications — all without having to develop custom connectors or manage underlying API and network connectivity.”
At this point, the number of supported services remains comparatively low, with only 14 possible sources and four destinations (Amazon Redshift and S3, as well as Salesforce and Snowflake). Sometimes, depending on the source you select, the only possible destination is Amazon’s S3 storage service.
Over time, the number of integrations will surely increase, but for now, it feels like there’s still quite a bit more work to do for the AppFlow team to expand the list of supported services.
AWS has long left this market to competitors, even though it has tools like AWS Step Functions for building serverless workflows across AWS services and EventBridge for connections applications. Interestingly, EventBridge currently supports a far wider range of third-party sources, but as the name implies, its focus is more on triggering events in AWS than moving data between applications.
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Sonos launches Sonos Radio, a free streaming radio service including artist and genre stations
Sonos has launched its first in-house music streaming offering: Sonos Radio, a digital streaming radio service that includes both existing radio stations from TuneIn and iHeartRadio, as well as its own original programming through three new products including two ad-free offerings and one ad-supported option.
The original streaming options from Sonos include Sonos Sound System; an ad-free single station hosted by Sonos itself, that will play “new and well-known” music, along with snippets of stories from artists about their music, as well as hours guest-hosted by select artists themselves. Sonos says this is all about mixing crowd-pleasers with the occasional song you might’ve missed, in a bid to create a single stream that will have broad appeal.
There’s also Artist Stations, which also don’t have any ads, and which are hand-curated by artists and feature a selection of songs they love or that have inspired them. The first such station, debuting with the Sonos Radio launch, is Thom Yorke’s ‘In the Absence Thereof…’, and there are more to follow in the “coming weeks,” including stations from Brittany Howard of Alabama Shakes, David Byrne and more.
The final component of the original Sonos streaming content is Sonos Stations, which include over 30 dedicated genre stations. These are also free, but are ad-supported, so you’ll hear the occasional promotional message throughout the stream, kind of like you get with Spotify’s free tier.
To date, Sonos has acted strictly as an integrator for the services of others, operating the platform layer to provide in-house, multi-room streaming via its Sonos speaker and audio equipment products. This marks its first foray into doing something on the services side, so it’s a big change. I asked about whether this signals further moves into streaming, including through a potential paid premium offering with on-demand content, which would more directly compete with some of its biggest partners including Apple, Google and Spotify, and Sonos Product Marketing Director Ryan Richards didn’t shut the door on that possibility.
“This is about lean-back listening, it’s about discovery,” he said. “There are a lot of options for active listening out there, too, and so what we’re really focused on is first and foremost making the best possible radio service for our customers. In the future, we’ll see how that changes, but that’s what we’re focused on now.”
At launch, the global radio option backed by iHeartRadio and TuneIn will be available globally, but Sonos Radio’s original products will only be available in the U.S., Canada, the U.K., Ireland and Australia, with the company planning to expand availability in future. Its in-house offerings are powered by a deal with Napster to use their streaming catalog, and Richards told me that that arrangement also bounds the availability of the services. Sonos is working on signing up additional streaming licensing partners for an expanded geographic footprint and catalogue size, however.
The new Sonos Radio features won’t be compatible with voice control via either Google Assistant or Amazon’s Alexa on Sonos hardware that supports that at launch, though Richards says the company is looking at adding that as a future feature update. Sonos also acquired a startup that built its own smart voice assistant last November, so that could potentially still result in another in-house offering to lessen its reliance on partners at some point in the future.
To get access, anyone with a Sonos system should see the new offering in their Sonos app via a software update available today.
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DoD Inspector General report finds everything was basically hunky-dory with JEDI cloud contract bid
While controversy has dogged the $10 billion, decade-long JEDI contract since its earliest days, a report by the DoD’s Inspector General’s Office concluded today that, while there were some funky bits and potential conflicts, overall the contract procurement process was fair and legal and the president did not unduly influence the process in spite of public comments.
There were a number of issues along the way about whether the single contractor award was fair or reasonable, about whether there were was White House influence on the decision, and whether the president wanted to prevent Amazon founder Jeff Bezos, who also owns the Washington Post, from getting the contract.
There were questions about whether certain personnel, who had been or were about to be Amazon employees, had undue influence on the contents of the RFP or if former Secretary of Defense showed favor to Amazon, which ultimately did not even win the contract, and that one of Mattis’ under secretaries, in fact, owned stock in Microsoft .
It’s worth noting that the report states clearly that it is not looking at the merits of this contract award or whether the correct company won on technical acumen. It was looking at all of these controversial parts that came up throughout the process. As the report stated:
“In this report, we do not draw a conclusion regarding whether the DoD appropriately awarded the JEDI Cloud contract to Microsoft rather than Amazon Web Services. We did not assess the merits of the contractors’ proposals or DoD’s technical or price evaluations; rather we reviewed the source selection process and determined that it was in compliance with applicable statutes, policies, and the evaluation process described in the Request for Proposals.”
Although the report indicates that the White House would not cooperate with the investigation into potential bias, the investigators claim they had enough discussions with parties involved with the decision to conclude that there was no undue influence on the White House’s part:
“However, we believe the evidence we received showed that the DoD personnel who evaluated the contract proposals and awarded Microsoft the JEDI Cloud contract were not pressured regarding their decision on the award of the contract by any DoD leaders more senior to them, who may have communicated with the White House,” the report stated.
The report chose to blame the media instead, at least for partly giving the impression that the White House had influenced the process, stating:
“Yet, these media reports, and the reports of President Trump’s statements about Amazon, ongoing bid protests and “lobbying” by JEDI Cloud competitors, as well as inaccurate media reports about the JEDI Cloud procurement process, may have created the appearance or perception that the contract award process was not fair or unbiased.”
It’s worth noting that we reported that AWS president Andy Jassy made it clear in a press conference at AWS re:Invent in December that the company believed the president’s words had influenced the process.
“I think that we ended up with a situation where there was political interference. When you have a sitting president, who has shared openly his disdain for a company, and the leader of that company, it makes it really difficult for government agencies, including the DoD, to make objective decisions without fear of reprisal.”
As for other points of controversy, such as those previously referenced biases, all were found lacking by the Inspector General. While the earliest complaints from Oracle and others were that Deap Ubhi and Victor Gavin, two individuals involved in drafting the RFP, failed to disclose they were offered jobs by Amazon during that time.
The report concluded that while Ubhi violated ethics rules, his involvement wasn’t substantial enough to influence the RFP (which again, Amazon didn’t win). “However, we concluded that Mr. Ubhi’s brief early involvement in the JEDI Cloud Initiative was not substantial and did not provide any advantage to his prospective employer, Amazon…,” the report stated.
The report found Gavin did not violate any ethics rules in spite of taking a job with Amazon because he had disqualified himself from the process, nor did the report find that former Secretary Mattis had any ethical violations in its investigation.
One final note: Stacy Cummings, Principal Deputy Assistant Secretary of Defense for Acquisition and Deputy Assistant Secretary of Defense for Acquisition Enablers, who worked for Mattis, owned some stock in Microsoft and did not disclose this. While the report found that was a violation of ethics guidelines, it ultimately concluded this did not unduly influence the award to Microsoft.
While the report is a substantial, 313 pages, it basically concludes that as far as the purview of the Inspector General is concerned, the process was basically conducted in a fair way. The court case, however involving Amazon’s protest of the award to Microsoft continues. And the project remains on hold until that is concluded.
Note: Microsoft and Amazon did not respond to requests from TechCrunch for comments before we published this article. If that changes, we will update accordingly.
Report on the Joint Enterprise Defense Infrastructure (Jedi) Cloud Procurement Dodig-2020-079 by TechCrunch on Scribd
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With $8 million to consolidate Amazon’s top marketplace sellers, Perch makes its first deals
After raising $8 million in November to roll up top Amazon marketplace companies, the new Boston-based startup Perch has begun putting that money to work in its first few deals.
The brainchild of Chris Bell, formerly Wayfair’s head of logistics and a Bain & Co. principal, Perch is well-positioned to serve as unifier of a bevy of disparate products in one nest.
The company’s recent acquisitions include brands selling a sand anchor for beach umbrellas (Beachr), a waterproof apron for cooking, a hip sciatica brace (Bodymate) and other similar products that wouldn’t be out of place in a late-night infomercial or on the Home Shopping Network.
“We believe that the future of product R&D is entrepreneurs that are closest to the problems,” says Bell in an interview. “We look for products that are top three in their niche… [Their founders] want some liquidity and we can bring that onto our platform and add price optimization, ad-spend optimization and cross-geography marketing.”
In a way, Perch is tapping into a similar urge to give America’s huge population of tinkerers and inventors better access to market and a chance to monetize their ideas à la Quirky, the failed attempt by GE to turn gadget ideas into new product lines for GE.
By contrast, Perch waits for the businesses to gain traction, then offers to buy the products from their owners and give them up to two years of participation in any upside that the product generates at certain milestones that Perch sets for the participating entrepreneurs.
“Three years ago I would not have started this business,” says Bell. “Amazon has made this a much more defensible place.”
The Amazon marketplace remains somewhat of the Wild West, where intellectual property rights are often ignored and successful products are copied at lightning speed by vendors with access to the same commoditized supply chains. It’s really marketing muscle and an ability to get better margins through scale that creates winners, it seems, and Perch is using its technical know-how to get to the top.
Acquisitions can range from $750,000 to $2 million upfront with the upside on the back end still to come, according to Bell. Financing this operation is a $4.5 million equity round and $3.5 million in debt financing by some of the nation’s leading venture firms. Perch won’t buy any company that’s doing less than $250,000 in revenue.
Spark Capital led the deal for Perch, with general partner Alex Finkelstein taking a seat on the company’s board of directors. Tectonic Ventures also participated. Finkelstein, who led Spark’s investment in Wayfair, was introduced to Bell through Wayfair’s chief operating officer. He immediately saw the potential in Perch’s pitch.
“If you look at it from a macro standpoint. Amazon is growing very quickly and the third-party marketplace is growing very quickly. Within the next year we’re going to have a large portfolio and it’ll do well in any environment,” Finkelstein said.
Amazon’s third-party sellers are a $200 billion market and the largest single vendor is a $500 million seller, Bell noted, and that is an opportunity that a well-capitalized company can exploit.
“We’re going to be managing hundreds of micro-brands and the only way to do that is through a technology platform,” Bell said. “They’re generally niche products that are not big enough that Amazon Basics would come into that category. We’re competing in smaller categories, but even some of these niche categories are tens of millions to hundreds of millions in revenue.”
While Perch has seen some impacts from the economic shutdown caused by the government response to the COVID-19 epidemic, the company expects the shift in consumer behavior to be the wind beneath its wings, rather than against its branches.
“Medium-term it’s pushing more people to buy online,” says Bell. And Perch isn’t slowing its pace of acquisitions. “We made two acquisitions in March and we’re likely going to close another two in the next two weeks.”
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Want to survive the downturn? Better build a platform
When you look at the most successful companies in the world, they are almost never just one simple service. Instead, they offer a platform with a range of services and an ability to connect to it to allow external partners and developers to extend the base functionality that the company provides.
Aspiring to be a platform and actually succeeding at building one are not the same. While every startup probably sees themselves as becoming a platform play eventually, the fact is it’s hard to build one. But if you can succeed and your set of services become an integral part of a given business workflow, your company could become bigger and more successful than even the most optimistic founder ever imagined.
Look at the biggest tech companies in the world, from Microsoft to Oracle to Facebook to Google and Amazon. All of them offer a rich complex platform of services. All of them provide a way for third parties to plug in and take advantage of them in some way, even if it’s by using the company’s sheer popularity to advertise.
Michael A. Cusumano, David B. Yoffie and Annabelle Gawer, who wrote the book The Business of Platforms, wrote an article recently in MIT Sloan Review on The Future of Platforms, saying that simply becoming a platform doesn’t guarantee success for a startup.
“Because, like all companies, platforms must ultimately perform better than their competitors. In addition, to survive long-term, platforms must also be politically and socially viable, or they risk being crushed by government regulation or social opposition, as well as potentially massive debt obligations,” they wrote.
In other words, it’s not cheap or easy to build a successful platform, but the rewards are vast. As Cusumano, Yoffie and Gawer point out their studies have found, “…Platform companies achieved their sales with half the number of employees [of successful non-platform companies]. Moreover, platform companies were twice as profitable, were growing twice as fast, and were more than twice as valuable as their conventional counterparts.”
From an enterprise perspective, look at a company like Salesforce . The company learned long ago that it couldn’t possibly build every permutation of customer requirements with a relatively small team of engineers (especially early on), so it started to build hooks into the platform it had built to allow customers and consultants to customize it to meet the needs of individual organizations.
Eventually Salesforce built APIs, then it built a whole set of development tools, and built a marketplace to share these add-ons. Some startups like FinancialForce, Vlocity and Veeva have built whole companies on top of Salesforce.
Rory O’Driscoll, a partner at Scale Venture Partners, speaking at a venture capitalist panel at BoxWorks in 2014, said that many startups aspire to be platforms, but it’s harder than it looks. “You don’t make a platform. Third-party developers only engage when you achieve a critical mass of users. You have to do something else and then become a platform. You don’t come fully formed as a platform,” he said at the time.
If you’re thinking, how you could possibly start a company like that in the middle of a massive economic crisis, consider that Microsoft launched in 1975 in the middle of recession. Google and Salesforce both launched in the late 1990s, just ahead of the dot-com crash, and Facebook launched in 2004, four years before the massive downturn in 2008. All went on to become tremendously successful companies
That success often requires massive spending and sales and marketing burn, but when it works, the rewards are enormous. Just don’t expect that it’s an easy path to success.
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Disney debuts its streaming service in India for $20 a year
Disney+ has arrived in the land of Bollywood. The company on Friday (local time) rolled out its eponymous streaming service in India through Hotstar, a popular on-demand video streamer it picked up as part of the Fox deal.
To court users in India, the largest open entertainment market in Asia, Disney is charging users 1,499 Indian rupees (about $19.5) for a year, the most affordable plan in any of the more than a dozen markets where Disney+ is currently available.
Subscribers of the revamped streaming service, now called Disney+ Hotstar, will get access to Disney Originals in English as well as several local languages, live sporting events, dozens of TV channels, and thousands of movies and shows, including some sourced from HBO, Showtime, ABC and Fox that maintain syndication partnerships with the Indian streaming service. It also maintains partnership with Hooq — at least for now.
Unlike Disney+’s offering in the U.S. and other markets, in India, the service does not support 4K and streams content at nearly a tenth of their bitrate.
Disney+ Hotstar is also offering a cheaper yearly premium tier, priced at Rs 399 (about $5.3), that will offer subscribers access to movies, shows (but not those sourced from aforementioned U.S. networks and studios) and live sporting events; it won’t include Disney Originals.
Access to streaming of sporting events, especially of cricket matches, has helped five-year-old Hotstar become the most popular on-demand video streaming in India. During the cricket tournament Indian Premier League (IPL) last year, the service amassed more than 300 million monthly active users and more than 100 million daily active users.
It also holds the global record for most simultaneous views on a live stream, about 25 million — more than thrice its nearest competitor.
Prior to today’s launch, Hotstar offered its premium plans at 999 Indian rupees, and 365 Indian rupees. Existing subscribers won’t be affected by the price revision for the duration of their current subscription.
The service, run by Indian conglomerate Star India, offers access to about 80% of its catalog at no cost to users. The company monetizes these viewers through ads.
But in recent years, the company has begun to explore ways to turn its users into subscribers. Two years ago, Hotstar stopped offering cricket match streaming to non-paying users.
People familiar with the matter told TechCrunch that Hotstar has about 1.5 million paying subscribers, lower than what most industry firms estimate. But that figure is still higher than most of its competitors.
And there are many.
India’s on-demand video market
Disney+ will compete with more than three dozen international and local players in India, including Netflix, Amazon Prime Video, Times Internet’s MX Player (which has over 175 million monthly active users), Zee5, Apple TV+ and Alt Balaji, which has amassed over 27 million subscribers.
“The arrival of Disney+ in India is another case study in the globalization of entertainment in the digital era. For decades, the biggest companies in the world have expanded their reach into different markets. But it’s new, and actually quite profound, that everyone on earth receives the very same version of such a specific cultural product,” Matthew Ball, former head of strategic planning for Amazon Studios, told TechCrunch.
As in some other markets, including the U.S., streaming services have inked deals with telecom networks, TV vendors, cable TV operators and satellite TV players to extend their reach in India.
Most of these streaming services monetize their viewers by selling ads, and those who do charge have kept their premium plans below $3.
Why that figure? That’s the number most industry executives think — by spending years in the Indian market — that people in the country are willing to pay for viewing content. The average of how much an individual pays for cable TV, for instance, in India is also about $3.
“I think everyone is still trying to sort out the right pricing. It’s true the average Indian consumer is used to far lower prices and can’t afford more. However, we need to focus on the consumers likely to buy this, who have the requisite broadband access and income, etc,” said Ball.
Commuters drive along a road past a billboard in Mumbai advertising the Amazon Prime Video online series “The Forgotten Army”. (Photo by INDRANIL MUKHERJEE / AFP via Getty Images)
At stake is India’s booming on-demand video streaming market that, according to Boston Consulting Group, is estimated to grow to $5 billion from half a billion two years ago.
Hotstar’s hold on India could make it easier for Disney+, which has launched in more than a dozen markets and has amassed over 28 million subscribers.
As the country spends about two more weeks in lockdown that New Delhi ordered last month to curtail the spread of coronavirus, this could also compel many to give Disney+ a try.
On the flip side, if the lockdown is extended, the current season of IPL, which has been postponed until mid-April, might be further delayed or cancelled altogether. Either of those scenarios could hurt the reach of Hotstar, which sees a massive drop in its user base after the conclusion of each cricket tournament.
Disney initially planned to launch its streaming service in India on March 28, the day IPL was supposed to commence. But the company later postponed the launch by six days.
Industry executives told TechCrunch that if IPL is cancelled, it could severely hurt the financials of Hotstar, which clocks more than 50% of its revenue during the 50-odd days of the cricket season.
Some said Disney+’s premier catalog might not be relevant for most of Hotstar’s user base, who seem to care about this streaming service only during the cricket season or to catch up on Indian soap operas.
Hotstar has also received criticism for censoring more content on its platform than any other streaming service in India. Last month, Hotstar blocked from streaming on its platform an episode of “Last Week Tonight with John Oliver” that was critical of Indian Prime Minister Narendra Modi. YouTube made that segment available without any edits.
John Oliver slammed Hotstar for censoring the episode and noted that the streaming service had additionally edited out parts from his older episodes where he made fun of Disney. In 2017, Hotstar also edited out a segment from Oliver’s show in which he mocked Samsung for the Galaxy Note 7 fiasco. Hotstar and Samsung had a commercial partnership.
Hotstar did not respond to multiple requests for comment in 2017. Hotstar did not respond to multiple requests for comment on the recent controversy.
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Estimote launches wearables for workplace-level contact tracing for COVID-19
Bluetooth location beacon startup Estimote has adapted its technological expertise to develop a new product designed specifically for curbing the spread of COVID-19. The company created a new range of wearable devices that co-founder Steve Cheney believes can enhance workplace safety for those who have to be co-located at a physical workplace even while social distancing and physical isolation measures are in place.
The devices, called simply the “Proof of Health” wearables, aim to provide contact tracing — in other words, monitoring the potential spread of the coronavirus from person-to-person — at the level of a local workplace facility. The intention is to give employers a way to hopefully maintain a pulse on any possible transmission among their workforces and provide them with the ability to hopefully curtail any local spread before it becomes an outsized risk.
The hardware includes passive GPS location tracking, as well as proximity sensors powered by Bluetooth and ultra-wide-band radio connectivity, a rechargeable battery and built-in LTE. It also includes a manual control to change a wearer’s health status, recording states like certified health, symptomatic and verified infected. When a user updates their state to indicate possible or verified infection, that updates others they’ve been in contact with based on proximity and location-data history. This information is also stored in a health dashboard that provides detailed logs of possible contacts for centralized management. That’s designed for internal use within an organization for now, but Cheney tells me he’s working now to see if there might be a way to collaborate with WHO or other external health organizations to potentially leverage the information for tracing across enterprises and populations, too.
These are intended to come in a number of different form factors: the pebble-like version that exists today, which can be clipped to a lanyard for wearing and displaying around a person’s neck; a wrist-worn version with an integrated adjustable strap; and a card format that’s more compact for carrying and could work alongside traditional security badges often used for facility access control. The pebble-like design is already in production and 2,000 will be deployed now, with a plan to ramp production for as many as 10,000 more in the near future using the company’s Poland-based manufacturing resources.
Estimote has been building programmable sensor tech for enterprises for nearly a decade and has worked with large global companies, including Apple and Amazon . Cheney tells me that he quickly recognized the need for the application of this technology to the unique problems presented by the pandemic, but Estimote was already 18 months into developing it for other uses, including in hospitality industries for employee safety/panic button deployment.
“This stack has been in full production for 18 months,” he said via message. “We can program all wearables remotely (they’re LTE connected). Say a factory deploys this — we write an app to the wearable remotely. This is programmable IoT.
“Who knew the virus would require proof of health vis-a-vis location diagnostics tech,” he added.
Many have proposed technology-based solutions for contact tracing, including leveraging existing data gathered by smartphones and consumer applications to chart transmission. But those efforts also have considerable privacy implications, and require use of a smartphone — something Cheney says isn’t really viable for accurate workplace tracking in high-traffic environments. By creating a dedicated wearable, Cheney says that Estimote can help employers avoid doing something “invasive” with their workforce, since it’s instead tied to a fit-for-purpose device with data shared only with their employers, and it’s in a form factor they can remove and have some control over. Mobile devices also can’t do nearly as fine-grained tracking with indoor environments as dedicated hardware can manage, he says.
And contact tracing at this hyperlocal level won’t necessarily just provide employers with early warning signs for curbing the spread earlier and more thoroughly than they would otherwise. In fact, larger-scale contact tracing fed by sensor data could inform new and improved strategies for COVID-19 response.
“Typically, contact tracing relies on the memory of individuals, or some high-level assumptions (for example, the shift someone worked),” said Brianna Vechhio-Pagán of John Hopkins University’s Applied Physics Lab via a statement. “New technologies can now track interactions within a transmissible, or ~6-foot range, thus reducing the error introduced by other methods. By combining very dense contact tracing data from Bluetooth and UWB signals with information about infection status and symptoms, we may discover new and improved ways to keep patients and staff safe.”
With the ultimate duration of measures like physical distancing essentially up-in-the-air, and some predictions indicating they’ll continue for many months, even if they vary in terms of severity, solutions like Estimote’s could become essential to keeping essential services and businesses operating while also doing the utmost to protect the health and safety of the workers incurring those risks. More far-reaching measures might be needed, too, including general-public-connected, contact-tracing programs, and efforts like this one should help inform the design and development of those.
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