augmented reality
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Twitter CEO’s weak argument why investors shouldn’t fire him
Twitter CEO Jack Dorsey might not spend six months a year in Africa, claims the real product development is under the hood and gives an excuse for deleting Vine before it could become TikTok. Today he tweeted, via Twitter’s investor relations account, a multi-pronged defense of his leadership and the company’s progress.
The proclamations come as notorious activist investor Elliott Management prepares to pressure Twitter into a slew of reforms, potentially including replacing Dorsey with a new CEO, Bloomberg reported last week. Sources confirmed to TechCrunch that Elliott has taken a 4% to 5% stake in Twitter. Elliott has previously bullied eBay, AT&T and other major corporations into making changes and triggered CEO departures.
…Focusing on one job and increasing accountability has made a huge difference for us. One of our core jobs is to keep people informed. We want to be a service that people turn to… to see what’s happening, to be a credible source that people learn from.
— Twitter Investor Relations (@TwitterIR) March 5, 2020
Specifically, Elliott is seeking change because of Twitter’s weak market performance, which as of last month had fallen 6.2% since July 2015, while Facebook had grown 121%. The corporate raider reportedly takes issue with Dorsey also running fintech giant Square, and having planned to spend up to six months a year in Africa. Dorsey tweeted that “Africa will define the future (especially the bitcoin one!),” despite cryptocurrency having little to do with Twitter.
Rapid executive turnover is another sore spot. Finally, Twitter is seen as moving glacially slow on product development, with little about its core service changing in the past five years beyond a move from 140 to 280 characters per tweet. Competing social apps like Facebook and Snapchat have made landmark acquisitions and launched significant new products like Marketplace, Stories and Discover.
Dorsey spoke today at the Morgan Stanley investor conference, though apparently didn’t field questions about Elliott’s incursion. The CEO did take to his platform to lay out an argument for why Twitter is doing better than it looks, though without mentioning the activist investor directly. That type of response, without mentioning to whom it’s directed, is popularly known as a subtweet. Here’s what he outlined:
On democracy: Twitter has prioritized healthy conversation and now “the #1 initiative is the integrity of the conversation around the elections” around the world, which it’s learning from. It’s now using humans and machine learning to weed out misinformation, yet Twitter still hasn’t rolled out labels on false news despite Facebook launching them in late 2016.
On revenue: Twitter expects to complete a rebuild of its core ad server in the first half of 2020, and it’s improving the experience of mobile app install ads so it can court more performance ad dollars. This comes seven years late to Facebook’s big push around app install ads.
On shutting down products: Dorsey claims that “5 years ago we had to do a really hard reset and that takes time to build from… we had been a company that was trying to do too many things…” But was it? Other than Moments, which largely flopped, and the move to the algorithmic feed ranking, Twitter sure didn’t seem to be doing too much and was already being criticized for slow product evolution as it tried to avoid disturbing its most hardcore users.
On stagnation: “Some people talk about the slow pace of development at Twitter. The expectation is to see surface level changes, but the most impactful changes are happening below the surface,” Dorsey claims, citing using machine learning to improve feed and notification relevance.
Yet it seems telling that Twitter suddenly announced yesterday that it was testing Instagram Stories-esque feature Fleets in Brazil. No launch event. No U.S. beta. No indication of when it might roll out elsewhere. It seems like hasty and suspiciously convenient timing for a reveal that might convince investors it is actually building new things.
On talent: Twitter is apparently hiring top engineers “that maybe we couldn’t get 3 years ago.” 2017 was also Twitter’s share price low point of $14 compared to $34 today, so it’s not much of an accomplishment that hiring is easier now. Dorsey claims that “Engineering is my main focus. Everything else follows from that.” Yet it’s been years since fail whales were prevalent, and the core concern now is that there’s not enough to do on Twitter, rather than what it does offer doesn’t function well.
On Jack himself: Dorsey says he should have added more context “about my intention to spend a few months in Africa this year,” including its growing population that’s still getting online. Yet the “Huge opportunity especially for young people to join Twitter” seemed far from his mind as he focused on how crypto trading was driving adoption of Square’s Cash App.
“I need to reevaluate” the plan to work from Africa “in light of COVID-19 and everything else going on.” That makes coronavirus a nice scapegoat for the decision while the phrase “everything else” is doing some very heavy lifting in the face of Elliott’s activist investing.
Photographer: Cole Burston/Bloomberg via Getty Images
On fighting harassment: Nothing. The fact that Twitter’s most severe ongoing problem doesn’t even get a mention should clue you in to how many troubles have stacked up in front of Dorsey.
Running Twitter is a big job. So big it’s seen a slew of leaders ranging from founders like Ev Williams to hired guns like Dick Costolo peel off after mediocre performance. If Dorsey wants to stay CEO, that should be his full-time, work-from-headquarters gig.
This isn’t just another business. Twitter is a crucial communications utility for the world. Its absence of innovation, failure to defend vulnerable users and an inability to deliver financially has massive repercussions for society. It means Twitter hasn’t had the products or kept the users to earn the profits to be able to invest in solving its problems. Making Twitter live up to its potential is no side hustle.
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The companies that will shape the upcoming multiverse era of social media
Throughout this series on the rise of multiverse virtual worlds, I have outlined the collision of gaming and social media into a new multiverse era of social media within virtual worlds due to technological and cultural changes. The result will be a healthier ecosystem of social media than what currently exists and the economic development of these virtual worlds such that many people turn to them as sources of income.
The critical question that remains in this final part of the series: Who will be the dominant companies of this multiverse era who build the most popular virtual worlds? Will one virtual world achieve a monopoly or will there be many worlds we hop between on a daily basis? Will the most influential company be the developer of a certain world or an infrastructure layer underpinning many worlds?
(This is the final column in a seven-part series about “multiverse” virtual worlds.)
There are three categories of competitors in position for this new stage: gaming incumbents, social media incumbents and new virtual world startups.
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Making money from games: the future of virtual economies
Fictional portrayals of virtual worlds such as “Ready Player One” and “The Matrix” typically portray the physical and virtual worlds as distinct realms siloed from each other. Characters escape a dystopian, impoverished physical realm and enter a separate, utopian virtual realm in which they are wealthy and important.
Our non-fictional future won’t have that dichotomy. One main reason is money. Any virtual world has a virtual economy, and when that virtual economy gets really big, it integrates with our real-world economy. That is in equal parts due to market forces and government intervention.
This is part six of a seven-part series about “multiverse” virtual worlds. We will explore the dynamics of games’ virtual economies, the exchange of virtual assets for real money, challenges with money laundering and underage gambling, the compliance infrastructure needed for virtual economies, and the challenges in balancing a virtual economy’s monetary supply.
What separates virtual from “real” is the ability to make money
To many people, the idea of spending time in virtual worlds amassing in-game currency and trading goods still sounds like the geeky science fiction hobby of someone who needs to “get a real job.”
Our society gauges the worthiness of pursuits based on their social and economic productivity, and most people don’t view virtual worlds as productive places. As more people find enjoyment in virtual worlds and respect people with accomplishments in them, however, vying for accomplishment with those worlds will increasingly be viewed as socially productive. As more people start earning an income through work in virtual worlds, perception of economic productivity will quickly change, too.
Virtual worlds will be viewed as digital extensions of “the real world” and working a full-time job in a multiverse virtual world will become as normal as someone working in a social media marketing role today.
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Multiverse virtual worlds will be healthier for society than our current social networks
The basis of the classic James Bond film “Tomorrow Never Dies” is an evil media mogul who instigates war between the U.K. and China because it will be great for TV ratings. There’s been a wake-up call recently that our most popular social networks have been indirectly designed to divide populations into enemy camps and reward sensational content, but without the personal responsibility of Bond’s nemesis because they’re algorithmically driven.
(This is part five of a seven-part series about virtual worlds.)
The rise of “multiverse” virtual words as the next social frontier offers hope to one of the biggest crises facing democratic societies right now. Because the dominant social media platforms (in Western countries at least) monetize through advertising, these platforms reward sensational content that results in the most clicks and shares. Oversimplified, exaggerated claims intended to shock users scrolling past are best practices for individuals, media brands and marketing departments alike, and social platforms intentionally steer users toward more extreme content in order to captivate them for longer.
Our impending cultural shift to socializing equally as often through virtual worlds could help rescue us from this constant conflict of interest between what we recognize as healthy interactions with others and how these social apps incentivize us to behave.
Virtual worlds can have advertisements within them, but the dominant monetization strategies in MMOs are upfront purchase of games and in-game transactions. Any virtual world that gains enough adoption to compete as a social hub for mainstream society will need to be free-to-play and will earn more money through in-world transactions than from ads.
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What virtual worlds in the coming multiverse era will look like
Gaming and social media are on a collision course, the result of which will be mainstream popularity of virtual worlds primarily driven by user-generated content (UGC) and anchored in small groups and one-to-one interactions.
Games targeting core gamers will remain a thriving market, and social apps centered on broadcasting content will remain popular for photo sharing and news tracking. However, a lot of our daily online social interaction will shift to multiverse virtual worlds where avatars mark our presence, we own digital goods, earn money from our contributions to the world and gain a deeper sense of community than other types of online interactions.
(This is part three of a seven-part series about virtual worlds.)
Most people will participate in multiple virtual worlds depending on their mood, personality and social circle. A half dozen worlds will be particularly popular but there will be many niche ones. Some may require that you use your real identity (or at least the name on your Facebook account) but most will not.
These worlds don’t have to remain tied to the norms of our physical world — they can be imaginative realms with different physics. Some worlds may strive to look photorealistic while others will go for artistic distinction. Rules, cultural norms, economic models, and user controls will vary. Some worlds will be oriented around war and conflict, others will be oriented around peaceful commerce and participation in a tranquil society, and still others will take an educational focus looking to simulate areas of Earth for closer study.
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Why social networks want even more gaming
Even if you don’t play games, you have spent years of your life in one or more virtual worlds.
Social media platforms like Facebook, Twitter, Instagram and WeChat are lightweight versions of virtual worlds. They don’t offer terrain for avatars to explore, but they are neighborhoods within cyberspace where we store assets, develop relationships and, in some instances, might even choose to hide behind an alias.
The faces we present on these platforms are different from the ones we show our friends in person. While we usually use real names and photos, our presence on Twitter and Instagram is an avatar of sorts. What we do (and do not) post, how we say what we say, how we portray ourselves through selectively chosen (and often edited) photos — it’s an online persona. The aim — conscious and subconscious — is to build social capital within the particular cultural environment of these virtual spaces.
(This is part two of a seven-part series about virtual worlds.)
The social capital gained or lost within a virtual space can connect directly to social capital in the physical world. The worlds are separate but intertwined; what percent of news stories these days revolve around what someone posted on Twitter or Instagram?
Social media apps have virtual economies the same way as games like Fortnite do, they’re just smaller and involve fewer users thus far. There is constant trading of goods and services that exist only within the virtual world of a social app. For example, individuals and companies spend real money on trading Twitter handles, buying Instagram followers, purchasing special image filters and on Twitch memberships that put a badge next to their name to signify their status as a financial supporter of a specific streamer.
On this point, CCP Games CEO Hilmar Veigar Pétursson told me, “there’s not much reality in reality anymore,” given how much of our daily lives in “the real world” are about creating, consuming and interacting online, noting that many social media influencers earn more money in these virtual worlds than factory workers can make building physical items.
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Games already are social networks
Video games are only getting more popular.
Roughly 2.5 billion people around the world played games last year, double the number of players in 2013. Gaming is a $149 billion industry, growing 7% year over year, with the U.S. as its largest market. In America, the average gamer is 33 years old and 46% of gamers are female, according to the Entertainment Software Association.
(This is part one of a seven-part series about virtual worlds.)
Per Quartz reporter Dan Kopf’s summary of U.S. Department of Labor data:
More people now report playing games on a typical day — 11.4% in 2017 compared to 7.8% in 2003 — and, on days they do play games, they spend more time doing so — about 145 minutes in 2017, compared to 125 in 2003.
Young people are the biggest driver of the trend. From 2003 to 2015, 15-24 year olds spent less than 25 minutes playing games on the average day. From 2015 to 2017, those in that age group dedicated almost 40 minutes a day to games.
Mobile games account for a large part of this dramatic growth, but all major game categories are growing. The console gaming market — the oldest segment and most expensive due to hardware cost — expanded more than 7% last year alone.
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A multiverse, not the metaverse
Following web forums, web platforms and mobile apps, we are entering a new stage of social media — the multiverse era — where the virtual worlds of games expand to become mainstream hubs for social interaction and entertainment. In a seven-part Extra Crunch series, we will explore why that is the case and which challenges and opportunities are making it happen.
In 10 years, we will have undergone a paradigm shift in social media and human-computer interaction, moving away from 2D apps centered on posting content toward shared feeds and an era where mixed reality (viewed with lightweight headsets) mixes virtual and physical worlds. But we’re not technologically or culturally ready for that future yet. The “metaverse” of science fiction is not arriving imminently.
Instead, the virtual worlds of multiplayer games — still accessed from phones, tablets, PCs and consoles — are our stepping stones during this next phase.
Understanding this gradual transition helps us reconcile the futuristic visions of many in tech with the reality of how most humans will participate in virtual worlds and how social media impacts society. This transition centers on the merging of gaming and social media and leads to a new model of virtual worlds that are directly connected with our physical world, instead of isolated from it.
Multiverse virtual worlds will come to function almost like new countries in our society, countries that exist in cyberspace rather than physical locations but have complex economic and political systems that interact with the physical world.
Throughout these posts, I make a distinction between the “physical,” “virtual,” and “real” worlds. Our physical world defines tangible existence like in-person interactions and geographic location. The virtual world is that of digital technology and cyberspace: websites, social media, games. The real world is defined by the norms of what we accept as normal and meaningful in society. Laws and finance aren’t physical, but they are universally accepted as concrete aspects of life. I’ll argue here that social media apps are virtual worlds we have accepted as real — unified with normal life rather than separate from it — and that multiverse virtual worlds will make the same crossover.
In fact, because they incentivize small group interactions and accomplishment of collaborative tasks rather than promotion of viral posts, multiverse virtual worlds will bring a healthier era for social media’s societal impact.
The popularity of massive multiplayer online (MMO) gaming is exploding at the same time that the technology to access persistent virtual worlds with high-quality graphics from nearly any device is hitting the market. The rise of Epic Games’ Fortnite since 2017 accelerated interest in MMO games from both consumers who don’t consider themselves gamers and from journalists and investors who hadn’t paid much attention to gaming before.
In the decade ahead, people will come to socialize as much in virtual worlds that evolved from games as they will on platforms like Instagram, Twitter and TikTok. Building things with friends within virtual worlds will become common, and major events within the most popular virtual worlds will become pop culture news stories.
Right now, three-quarters of U.S.-based Facebook users interact with the site on a daily basis; Instagram (63%), Snapchat (61%), YouTube (51%) and Twitter (41%) have similarly penetrated the daily lives of Americans. By comparison, the percentage of people who play a game on any given day increased from just 8% in 2003 to 11% in 2016. Within the next few years, that number will multiply as the virtual worlds within games become more fulfilling social, entertainment and commercial platforms.
As I mentioned in my 2020 media predictions article, Facebook is readying itself for this future and VCs are funding numerous startups that are building toward it, like Klang Games, Darewise Entertainment and Singularity 6. Epic Games joins Roblox and Mojang (the company behind Minecraft) as among the best-positioned large gaming companies to seize this opportunity. Startups are already popping up to provide the middleware for virtual economies as they become larger and more complex, and a more intense wave of such startups will arrive over the next few years to provide that infrastructure as a service.
Over the next few years, there will be a trend: new open-world MMO games that emphasize social functionality that engages users, even if they don’t care much about the mission of the game itself. These new products will target casual gamers wanting to enter the world for merely a few minutes at a time since hardcore gamers are already well-served by game publishers.
Some of these more casual, socializing-oriented MMOs will gain widespread popularity, the economy within and around them will soar and the original gaming scenario that provided a focus on what to do will diminish as content created by users becomes the main attraction.
Let’s explore the forces that underpin this transition. Continue reading through the seven articles in this series (which will be linked below as they are published daily over the next six days):
- Games already are social networks
- Social apps already are lightweight virtual worlds
- What virtual worlds in this transition era look like
- Why didn’t this already happen?
- How virtual worlds could save society
- The rise of virtual economies and their merging with our “real” economy
- Competitive landscape of the multiverse
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Snapchat hits 218M users but big Q4 losses sink share price
Snapchat still isn’t profitable nearly two years after its IPO. In Q4 2019, Snap lost $241 million on $560.8 million in revenue; that’s up 44% year-over-year and an EPS of $0.03. That comes from adding 8 million daily users to reach a total of 218 million up 3.8% this quarter from 210 million and 17% year-over-year.
The big problem was a one-time $100 million legal settlement that pushed it to lose $49 million more in Q4 2019 than Q4 2018. That comes from a shareholder lawsuit claiming Snap didn’t adequately disclose the impact of competition from Facebook on its business. The IPO was soured by weak user growth as people shifted from Snapchat Stories to Instagram Stories.
A rough Q4
Snapchat had a mixed quarter compared to estimates, exceeding the EPS predictions but falling short on revenue. FactSet’s consensus predicted $563 million in revenue and a loss of $0.12 EPS. Estimize’s consensus came in at $568 million in revenue and an EPS gain of $0.02.
Snapchat shares plunged over 11% in after-hours trading following the announcement. Shares had closed up 4.17% at $18.99 today. That’s up from a low of $4.99 in December 2018 when its user count was shrinking under competition from Instagram Stories. It’s now hovering around its $17 IPO price, but it’s still under its post-IPO pop to $27.09.
Snap gave stronger than expected revenue guidance for Q1 2020 of $450 million to $470 million, and 224 million to 225 million users. The company’s CFO Derek Anderson says that “Q4 marked our first quarter of Adjusted EBITDA profitability at $42 million for the quarter, an improvement of $93 million over the prior year.” Still, he predicts an Adjusted EBITDA in Q1 of negative $90 million to negative $70 million. That’s manageable for Snap without raising more money, since it now has $2.1 billion in cash and marketable securities, down $148 million quarter-after-quarter.
Snapchat 2020
“Throughout the course of 2019, we added 31 million daily active users, largely driven by investments in our core product and improvements to our Android application,” said Snapchat CEO Evan Spiegel . “We’ve recently completed our 2020 strategic planning process and have aligned our teams and resources around our goals of supporting real friendships on Snapchat, expanding our service to a broader global community, investing in our AR and content platforms, and scaling revenue while achieving profitability in order to self-fund our investments in the future.”
Some other highlights:
- 1.3 trillion Snaps were created in 2019
- The average Snapchat user engages for 30 minutes per day
- Snapchat reaches 90% of U.S. 13 to 24-year-olds and over 75% of 13 to 34-year-olds
- Total daily time spent by Snapchatters watching Discover increased by 35% year-over-year, and it’s up 60% for users over the age of 25
- Over 50 Snapchat shows reached a monthly audience of 10 million viewers or more
- 75% of users engage with augmented reality per day
- 20% of Snaps sent with an AR lens were made with commununity-developed lenses
- 5X more users open the Lens Explorer now versus a year ago, and 10% of users open it every day
Snapchat’s user growth has been on a tear thanks to international penetration, especially in India, after it re-engineered its Android app for developing markets. It gained users in all markets. Crucially, it raised its average revenue per user 23% from $2.09 in Q4 2018 to $2.58, though only from $1.24 to $1.35 in the Rest of World region, where it’s growing user count the fastest. Snap will need to figure out how to squeeze more cash out of the international market to offset the costs of streaming tons of video to these users.
Q4 saw Snapchat readying several new products that could help boost engagement and therefore ad views. Cameos, first reported by TechCrunch, lets users graft their face onto an actor in an animated GIF like a lightweight deepfake. Bitmoji TV, which won’t run ads initially but could drive attention to Snapchat Discover, offers zany four-minute cartoons that star your Bitmoji avatar. We could see a bump to engagement from these starting in Q1 2020.
To retain its augmented reality filter creators, Snapchat has pledged $750,000 in payouts in 2020. It also expanded the use of product catalog ads, and now lets advertisers buy longer skippable ads.
Outside of the legal settlement, Snapchat is inching closer to profitability, but still has a ways to go. It has managed to develop a strong synergy between its popular chat feature that’s tougher to monetize, and the Stories and Discover content where it can inject ads. The big question is whether Facebook Messenger, Instagram and WhatsApp will get more serious about ephemeral messaging that’s at the core of Snapchat. If it can hold onto the market and maintain its place as where teens talk, it could ride out its costs and build revenue until it’s sustainable for the long-term.
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Google’s Glass dreams live on with the arrival of enterprise hardware
Google Glass was ahead of its time. That’s not to say that the people who wore it out in public didn’t look like giant dorks, of course, but in hindsight it seems safe to say that the world just wasn’t ready for wearable augmented reality. The phenomenon has, however, seen a resurgence among enterprise applications, courtesy of companies like Epson and Microsoft.
Google’s ready to ride that wave. In May, the company announced the arrival of the second version of its Enterprise Edition of Glass. Today, the headset is available for developers as a direct purchase from a handful of resellers. The Android-based device, which graduated from Google X mid last year, looks remarkably like the earliest versions of Glass, albeit with a slightly refined design.
Seven years after the arrival of the original model, the Glass Enterprise 2 isn’t cheap, either. It runs $1,000 from partner sites. There are a few suggestions for potential applications, including card text, imaging samples and QR scanning.
As Lucas noted in his initial write-up, the Glass system is much more limited than the likes of the latest HoloLens, which is focused on a more XR experience. Google, instead, is focused on lightweight usability — which could certainly serve as an advantage in certain settings. Key applications for the product include settings like construction sites, where contextual environmental information can otherwise be difficult to access.
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