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Apple TV+ makes Facebook Watch look like a joke

Apple flexed its wallet today in a way Facebook has scared to do. Tech giants make money by the billions, not the millions, which should give them an easy way to break into premium video distribution: buy some must-see content. That’s the strategy I’ve been advocating for Facebook but that Apple actually took to heart. Tim Cook wrote lines of zeros on some checks, and suddenly Steven Spielberg, JJ Abrams, Reese Witherspoon, Jennifer Aniston, and Oprah became the well-known faces of Apple TV+.

Facebook Watch has…MTV’s The Real World? The other Olsen sister? Re-runs of Buffy The Vampire Slayer? Actually, Facebook Watch is dominated by the kind of low-quality viral video memes the social network announced it would kick out of its News Feed for wasting people’s time.

And so while Apple TV+ at least has a solid base camp from which to make the uphill climb to compete with Netflix, Facebook Watch feels like it’s tripping over its own feet.

Today, Apple gave a preview of its new video subscription service that will launch in fall offering unlimited access to old favorites and new exclusives for a monthly fee. Yet even without any screenshots or pricing info, Apple still got people excited by dangling its big-name content.

Spielberg is making short films out of the Amazing Stories anthology that inspired him as a child. Abrams is spinning a tale of a musician’s rise called Little Voice Witherspoon and Aniston star in The Morning Show about anchoring a news program. And Oprah is bringing documentaries about workplace harassment and mental health.

This tentpole tactic will see Apple try to draw users into a free trial of Apple TV+ with this must-see content and then convince them to stay. And a compelling, exclusive reason to watch is exactly what’s been missing from…Facebook Watch. Instead, it chose to fund a wide array of often unscripted reality and documentary shorts that never felt special or any better than what else was openly available on the Internet, let alone what you could get from a subscription. It now claims to have 75 million people Watching at least one minute per day, but it’s failed to spawn a zeitgeist moment. Even as Facebook has scrambled to add syndicated TV cult favorites like Firefly or soccer matches to free, ad-supported video service, it’s failed to sign on anything truly newsworthy.

That’s just not going to fly anymore. Tech has evolved past the days when media products could win just based on their design, theoretical virality, or the massive audiences they’re cross-promoted to. We’re anything but starved for things to watch or listen to. And if you want us to frequent one more app or sign up for one more subscription, you’ll need A-List talent that makes us take notice. Netflix has Stranger Things. HBO has Game Of Thrones. Amazon has the Marvelous Mrs. Maisel. Disney+ has…Marvel, Star Wars, and the princesses. And now Apple has the world’s top directors and actresses.

Video has become a battle of the rich. Apple didn’t pull any punches. Facebook will need to buy some new fighters if Watch is ever going to deserve a place in the ring.

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Gjirafa raises a $6.7M Series B from Rockaway Capital to digitise the Balkans

There’s nothing like a niche language to create a sort of lock-in for a startup, and that’s exactly what’s happened with Gjirafa. Focusing exclusively on Albanian-speaking countries, co-founder and CEO Mergim Cahani started out developing an Albanian language search engine and then literally digitizing the country’s information, from bus timetables to a database of local businesses and venues, and beyond.

Investors were attracted to this “emerging-market approach” and put in a $2 million Series A three years ago to “grow the Balkans’ internet economy” by digitizing and indexing information in Albania and Kosovo, thus making Gjirafa the regional leader in search, e-commerce and online advertising.

Today it claims 3 million monthly unique users across its services and has now raised a Series B round of $6.7 million from Rockaway Capital, which has been backing the company since 2016. The new funding is intended for scaling the current products regionally.

The Series B will allow the company to double their current team (currently at 70 full-time, and about 100 in total with part-time), scale with the existing products regionally and deliver other digital services that aren’t available in the region.

Dušan Zábrodský, investment partner at Rockaway, says: “Mergim Cahani and his team validated our trust and truly succeeded in building a centrepiece of innovation for the whole region. Thanks to this very positive experience we are committed to build up a digital economy in the region and we actively explore new investment opportunities where we can use our knowledge to digitalize traditional industries.”

He says Rockaway group’s investment is long-term and strategic because they think Gjirafa could become an entire platform/network of additional services that will be used throughout the region.

Using the same strategy, Rockaway previously found success in the DACH region, where it built up an online travel group under the Invia Group brand, and in the field of e-commerce through Mall Group, which operates on seven markets in the CEE region. These groups have contributed significantly to Rockaway’s revenues, which crossed the threshold of €2 billion in 2018.

Gjirafa has become the largest e-commerce player in the region, having a leading OTT product: GjirafaVideo and GjirafaStudio, equivalent to Hulu and Netflix; producing its own content it currently has about 1 million minutes of video consumed a day (and growing double-digits on monthly basis) and more than 80 live channels online.

Gjirafa, Inc., is the fastest-growing company in the region, and the growth is impressive at 314 percent CAGR. To put it in perspective: when GDP indicators are normalized for the Balkans region versus the U.S., it has an equivalent revenue growth as Google had between 2001-2004 and continuing on the same path.

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Podcasting startup WaitWhat raises $4.3M as interest in audio content explodes

WaitWhat, the digital content production engine behind LinkedIn co-founder Reid Hoffman’s Masters of Scale podcast, has secured a $4.3 million Series A investment led by Cue Ball Capital and Burda Principal Investments.

Launched in January 2017, WaitWhat will use the cash to create additional media properties across a variety of mediums, including podcasts.

Investors are gravitating toward podcast startups as consumer interest in original audio content skyrockets. Podcasting, though an infantile industry that hit just $314 million in revenue in 2017, is maturing, raking in venture capital rounds large and small and recording its first notable M&A transaction with Spotify’s acquisition of Gimlet and Anchor earlier this month. The music streaming giant shelled out a total of $340 million for the podcast production platform and the provider of a suite of podcast creation, distribution and monetization tools, respectively. It plans to spend an additional $500 million on audio storytelling platforms as part of a larger plan to become the Netflix of audio.

WaitWhat, for its part, dubs itself the “media invention company.” Founded by June Cohen and Deron Triff, a pair of former TED executives responsible for expanding the nonprofit’s digital media business, WaitWhat is today launching Should This Exist, a new podcast hosted by Flickr founder and tech investor Caterina Fake.  Fake will interview entrepreneurs about the human side and the impact of technology in the show created in partnership with Quartz.

“People don’t just transact with content; they want to feel connected to it through a sense of wonder, awe, curiosity, and mastery,” Cohen said in a statement. “These are contagious emotions, and research shows they stimulate sharing. Where many media companies aim for volume — putting out lots of content with a short shelf life — we’re building a completely distinctive portfolio of premium properties that are continually increasing in value, inspiring deep audience engagement, and creating opportunities for format expansion.”

Other investors in the round include Reid Hoffman, MIT Media Lab director Joi Ito and Liminal Ventures. WaitWhat previously raised a $1.5 million round from Victress Capital, Human Ventures and Able Partners, all of which have joined the A round.

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Netflix launches ‘smart downloads’ feature on iOS to automate offline viewing

Netflix today is launching a new feature on iOS devices that will help make it easier to watch its shows when you’re offline. The “smart downloads” feature, as it’s called, will automatically delete a downloaded episode after you’ve finished watching, then download the next one — but only when you’re connected to Wi-Fi.

The idea is that users will no longer have to go through the tedious work of managing their downloads — deleting those they’ve watched or downloading new titles, for example. Instead, the app can manage the downloads for you, so people can spend more time watching Netflix shows.

Smart downloads make sense for those who plan for intermittent connectivity — like commuters who take underground trains, for instance, or those who travel through dead spots where wireless coverage drops. It also makes sense for those on limited data plans, who are careful about not using streaming video apps unless they’re on Wi-Fi.

Offline features like this are key to attracting and retaining users in emerging markets where connectivity concerns are the norm. That’s likely why Netflix prioritized Android over iOS, for the initial launch of smart downloads.

The feature had first arrived on Android last summer. It’s now offered across platforms, including iOS and in the Windows 10 Netflix app, the company says.

Offline access is only one area where Netflix is focusing on the needs of those in developing markets. The company late last year also began testing a more affordable, mobile-only subscription.

Non-U.S. users accounted for 7.31 million of the 8.8 million new subscribers Netflix added in the last quarter, as the U.S. market has become more saturated.

To use smart downloads on iOS, you can toggle the option in the Netflix app settings. It then turns itself on when you’re connected to Wi-Fi, to ensure your data plan won’t be used and your device storage won’t fill up as you watch offline. The feature will alert you when the episode in question has been downloaded.

“The faster our members can get to the next episode of their favorite stories, the better. Now, fans on the Netflix iOS app can get in on the fun and convenience of Smart Downloads, spending less time managing their downloads and more time watching,” said a Netflix spokesperson in a statement about the launch. “The feature is one more way we’re making it easier for Netflix fans to take the stories they love wherever they go,” they added.

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Video game revenue tops $43 billion in 2018, an 18% jump from 2017

Video game revenue in 2018 reached a new peak of $43.8 billion, up 18 percent from the previous years, surpassing the projected total global box office for the film industry, according to new data released by the Entertainment Software Association and The NPD Group.

Preliminary indicators for global box office revenues published at the end of last year indicated that revenue from ticket sales at box offices around the world would hit $41.7 billion, according to comScore data reported by Deadline Hollywood.

The $43.8 billion tally also surpasses numbers for streaming services, which are estimated to rake in somewhere around $28.8 billion for the year, according to a report in Multichannel News.

Video games and related content have become the new source of entertainment for a generation — and it’s something that has new media moguls like Netflix chief executive Reed Hastings concerned. In the company’s most recent shareholder letter, Netflix said that Fortnite was more of a threat to its business than TimeWarner’s HBO.

“We compete with (and lose to) Fortnite more than HBO,” the company’s shareholder letter stated. “When YouTube went down globally for a few minutes in October, our viewing and signups spiked for that time…There are thousands of competitors in this highly fragmented market vying to entertain consumers and low barriers to entry for those with great experiences.”

“The impressive economic growth of the industry announced today parallels the growth of the industry in mainstream American culture,” said acting ESA president and CEO Stanley Pierre-Louis, in a statement. “Across the nation, we count people of all backgrounds and stages of life among our most passionate video game players and fans. Interactive entertainment stands today as the most influential form of entertainment in America.”

Gains came from across the spectrum of the gaming industry. Console and personal computing, mobile gaming, all saw significant growth, according to Mat Piscatella, a video games industry analyst for The NPD Group.

According to the report, hardware and peripherals and software revenue increased from physical and digital sales, in-game purchases and subscriptions.

U.S. Video Game Industry Revenue 2018 2017 Growth Percentage
Hardware, including peripherals $7.5 billion $6.5 billion 15%
Software, including in-game purchases and subscriptions  

$35.8 billion

 

$30.4 billion

18%
Total: $43.3 billion $36.9 billion 18%

Source: The NPD Group, Sensor Tower

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Netflix thinks ‘Fortnite’ is a bigger threat than HBO

Netflix thinks “Fortnite” is a bigger threat to its business than HBO. The company in its latest quarterly earnings report released on Thursday said that while its streaming service now accounts for around 10 percent of TV screen time in the U.S., it no longer views its competition only as those services also providing TV content and streaming video.

“We compete with (and lose to) Fortnite more than HBO,” the company’s shareholder letter stated. “When YouTube went down globally for a few minutes in October, our viewing and signups spiked for that time…There are thousands of competitors in this highly fragmented market vying to entertain consumers and low barriers to entry for those with great experiences.”

In other words, Netflix today sees its competition as anyone in the business of entertaining their customers, and eating up their hours of free time in the process. That includes breakout gaming hits like “Fortnite.”

Netflix’s statement comes at a time when the internet, mobile and gaming have been shifting consumer’s focus and attention away from watching TV.

In fact, all the way back in 2012, mobile industry experts were warning that time spent in mobile apps was beginning to challenge television. And a few years ago, apps finally came out on top. For the first time ever, time spent inside apps exceeded that of TV.

Fortnite, in particular, has capitalized on this change in consumer behavior and has now grown to more than 200 million players. (Netflix just reached 139 million, for comparison’s sake.)

In 2018, Fortnite — along with other multiplayer games like PUBG — pushed forward a trend toward cross-platform gaming that’s capable of reaching consumers wherever they are, similar to streaming apps like Netflix. According to a recent report from App Annie, this is just the tip of the iceberg, too. Cross-platform gaming, including not only Fortnite and PUBG, but also whatever comes next, is poised to grow even further in 2019.

Notably, Fortnite, too, has become a place where you don’t just go to play — but rather “hang out.” For kids and young adults, the game has replaced the mall or other parts of the city where kids and teens just go to be around friends and socialize, wrote tech writer Owen Williams on his blog Charged.

“Not only is Fortnite the new hangout spot, replacing the mall, Starbucks or just loitering in the city, it’s become the coveted ‘third place’ for millions of people around the world,” he said.

Roblox, with it over 70 million players, serves a similar purpose.

That means it’s also a real threat to Netflix’s time. If gamers are hanging around a virtual space with friends, they have less time to stream TV. (And perhaps — given that many of the youngest Netflix never got cable to begin with — less desire to watch TV to begin with.)

“I think about it really is as winning time away, entertainment time from other activities,” said Netflix CEO Reed Hastings on Thursday, discussing the threat from those competing for users’ time. “So, instead of doing Xbox or Fortnite or YouTube or HBO or a long list, we want to win and provide a better experience. No advertising on demand. Incredible content,” he said.

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5 unicorns that will probably go public in 2019 (besides Uber and Lyft)

There’s been plenty of fanfare surrounding Uber and Lyft’s initial public offerings — slated for early 2019 — since the two companies filed confidential IPO paperwork with the U.S. Securities and Exchange Commission in early December. On top of that, public and private investors have had plenty to say about Slack and Pinterest’s rumored 2019 IPOs but those aren’t the only “unicorn” exits we should expect to witness in the year ahead.

Using its proprietary company rating algorithm, data provider CB Insights ranked five billion dollar companies most likely to perform IPOs next year in its latest tech IPO report. The algorithm analyzes non-traditional public signals, including hiring activity, web traffic and mobile app data to make its predictions. These are the startups that topped their list.

 

Peloton

Peloton Co-Founder and CEO John Foley speaks onstage during TechCrunch Disrupt SF 2018 on September 6, 2018 in San Francisco, California. (Photo by Kimberly White/Getty Images for TechCrunch).

Peloton, dubbed the “Netflix of fitness,” has raised nearly $1 billion in venture capital funding in the six years since it was founded by John Foley, most recently raising $550 million at a $4 billion valuation. The manufacturer of tech-enabled exercise equipment is more than doubling in size every year and is “weirdly profitable,” an unusual characteristic for a venture-backed business of its age. Headquartered in New York, Peloton doesn’t have any public IPO plans, though Foley recently told The Wall Street Journal that 2019 “makes a lot of sense” for its stock market debut.

Select investors: L Catterton, True Ventures, Tiger Global

Cloudflare

Cloudflare co-founder and CEO Matthew Prince appears on stage at the 2014 TechCrunch Disrupt Europe/London. (Photo by Anthony Harvey/Getty Images for TechCrunch)

Cybersecurity unicorn Cloudflare is likely to transition to the public markets in the first half of 2019 in what is poised to be a strong year for IPOs in the security industry. The web performance and security platform is said to be preparing for an IPO at a potential valuation of more than $3.5 billion after last raising capital in 2015 at a $1.8 billion valuation. Since it was founded in 2009, the San Francisco-based company has raised just north of $250 million in VC funding. CrowdStrike, another security unicorn, is also on track to go public next year and it wouldn’t be surprising to see Illumio and Lookout make the jump to the public markets as well.

Select investors: Pelion Venture Partners, NEA, Venrock

Zoom

San Jose-based Zoom Video Communications has reportedly tapped Morgan Stanley to lead its upcoming IPO.

Zoom, a provider of video conferencing services, online meeting and group messaging tools that’s raised $160 million in VC cash to date, is eyeing a multi-billion IPO in 2019 and has reportedly hired Morgan Stanley to lead the offering. Founded in 2011, the company most recently brought in a $100 million Series D financing, entirely funded by Sequoia, at a $1 billion valuation in early 2017. Based in San Jose, Zoom is hoping to garner a valuation significantly larger than $1 billion when it IPOs, according to Reuters.

Select investors: Sequoia, Emergence Capital Partners, Horizons Ventures

Rubrik

Data management company Rubrik co-founder and CEO Bipul Sinha.

Data management company Rubrik has quietly made moves indicative of an impending IPO. The startup, which provides data backup and recovery services for businesses across cloud and on-premises environments, hired former Atlassian chief financial officer Murray Demo as its CFO earlier this year, as well as its first chief legal officer, Peter McGoff. Palo Alto-based Rubrik was valued at over of $1 billion with a $180 million funding round in 2017. The company has raised nearly $300 million to date.

Select investors: Lightspeed Venture Partners, Greylock, Khosla Ventures

Medallia

Medallia, a customer experience management platform that’s nearly two decades old, may finally become a public company in 2019. The San Mateo-based company, which has been rumored to be planning an IPO for several years, hired a new CEO this year and reported $250 million in GAAP revenue for the year ending Jan. 31, 2018, according to Forbes. Medallia hasn’t raised capital since 2015, when it secured a $150 million funding deal at a $1.2 billion valuation. It has raised a total of just over $250 million.

Select investor: Sequoia

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With trust destroyed, Facebook is haunted by old data deals

As Facebook colonized the rest of the web with its functionality in hopes of fueling user growth, it built aggressive integrations with partners that are coming under newfound scrutiny through a deeply reported New York Times investigationSome of what Facebook did was sloppy or unsettling, including forgetting to shut down APIs when it cancelled its Instant Personalization feature for other sites in 2014, and how it used contact syncing to power friend recommendations.

But other moves aren’t as bad as they sound. Facebook did provide Spotify and Netflix the ability to access users messages, but only so people could send friends songs or movies via Facebook messages without leaving those apps. And Facebook did let Yahoo and Blackberry access people’s News Feeds, but to let users browse those feeds within social hub features inside those apps. These partners could only access data when users logged in and connected their Facebook accounts, and were only approved to use this data to provide Facebook-related functionality. That means Spotify at least wasn’t supposed to be rifling through everyone’s messages to find out what bands they talk about so it could build better curation algorithms, and there’s no evidence yet that it did.

Thankfully Facebook has ditched most of these integrations, as the dominance of iOS and Android have allowed it to build fewer, more standardized, and better safeguarded access points to its data. And it’s battened down the hatches in some ways, forcing users to shortcut from Spotify into the real Facebook Messenger rather than giving third-parties any special access to offer Facebook Messaging themselves.

The most glaring allegation Facebook hasn’t adequately responded to yet is that it used data from Amazon, Yahoo, and Huawei to improve friend suggestions through People You May Know — perhaps its creepiest feature. The company needs to accept the loss of growth hacking trade secrets and become much more transparent about how it makes so uncannily accurate recommendations of who to friend request — as Gizmodo’s Kashmir Hill has documented.

In some cases, Facebook has admitted to missteps, with its Director of Developer Platforms and Programs Konstantinos Papamiltiadis writing “we shouldn’t have left the APIs in place after we shut down instant personalization.”

In others, we’ll have decide where to draw the line between what was actually dangerous and what gives us the chills at first glance. You don’t ask permission from friends to read an email from them on a certain browser or device, so should you worry if they saw your Facebook status update on a Blackberry social hub feature instead of the traditional Facebook app? Well that depends on how the access is monitored and meted out.

The underlying question is whether we trust that Facebook and these other big tech companies actually abided by rules to oversee and not to overuse data. Facebook has done plenty wrong, and after repeatedly failing to be transparent or live up to its apologies, it doesn’t deserve the benefit of the doubt. For that reason, I don’t want it giving any developer — even ones I normally trust like Spotify — access to sensitive data protected merely by their promise of good behavior despite financial incentives for misuse.

Facebook’s former chief security officer Alex Stamos tweeted that “allowing for 3rd party clients is the kind of pro-competition move we want to see from dominant platforms. For ex, making Gmail only accessible to Android and the Gmail app would be horrible. For the NY Times to try to scandalize this kind of integration is wrong.” But countered that by noting that “integrations that are sneaky or send secret data to servers controlled by others really is wrong.”

Even if Spotify and Netflix didn’t abuse the access Facebook provided, there’s always eventually a Cambridge Analytica. Tech companies have proven their word can’t necessarily be trusted. The best way to protect users is to properly lock down the platforms with ample vetting, limits, and oversight so there won’t be gray areas that require us to put our faith in the kindness of businesses.

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Moonbug nabs $145M to buy up kids’ digital media brands

Moonbug, a kid-focused media business founded by a pair of entertainment executives, has brought in a $145 million Series A investment led by The Raine Group, a merchant bank that supports technology, media and telecom efforts.

Venture capital firms Felix Capital and Fertitta Capital also participated in the financing.

Moonbug, headquartered in London, acquires and distributes media content made for kids. Recently, the company completed its first IP acquisition of Little Baby Bum, a children’s sing-along show popular on YouTube, Amazon and Netflix. According to a Los Angeles Times report, one of the show’s videos is the 20th most popular video in YouTube history, boasting 2.1 billion views. In total, Moonbug says Little Baby Bum has clocked in 23 billion views across multiple platforms.

With its Series A investment, Moonbug will amp up its M&A activity to expand its portfolio of content that “helps children build essential life skills.” Moonbug chief executive officer René Rechtman, who spent the last three years as the head of digital studios at The Walt Disney Co., says they plan to acquire eight media businesses.

Rechtman and John Robson, a former senior vice president of digital distribution at Paramount Pictures and vice president of global content at HTC, launched Moonbug earlier this year.

“I see an independent creator and I put them in very simple brackets: one is high viewership and engagement and one is quality of IP,” Rechtman told TechCrunch. “If they have both of those, I am very interested.”

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Netflix just had a record-breaking November on mobile

Netflix just broke new records on consumer spending in its mobile apps, according to new data app intelligence firm Sensor Tower has shared with TechCrunch. In November, Netflix pulled in an estimated $86.6 million in worldwide consumer spending across its iOS and Android apps combined — a figure that’s 77 percent higher than the $49 million it generated last November. That’s a new record.

Before, the biggest month Netflix had to date was July 2018, when it grossed an estimated $84.7 million. At the time, that was the most it had made on mobile since it began monetizing on mobile in September 2015.

To date, Netflix has grossed more than $1.58 billion on mobile.

The firm didn’t speculate as to what, specifically, drove Netflix to break records again in November, but there are probably a few factors at play, including the trend toward cord cutting and shift toward streaming services for traditional “TV” viewing.

But most notably is the increasing revenue coming to Netflix from its international markets.

Sensor Tower did point out that Netflix’s U.S. app revenue grew 76 percent year-over-year in November, but other countries contributing more than $1 million in gross revenue were higher. For example, Germany grew 90 percent, Brazil was 94 percent, South Korea was 107 percent and Japan was 175 percent.

However, the U.S. still accounts for the majority of Netflix’s in-app subscription revenue, at 57 percent in November, or $49.4 million. But with Netflix’s international expansion, its share is declining. When Netflix first began offering subscriptions in fall 2015, the U.S. then accounted for 71 percent of its revenue.

Netflix in recent weeks has been doubling down on mobile. The company is now testing a mobile-only subscription aimed at making its service more affordable in Asia and other emerging markets.

In Q3, the company gained nearly 7 million new subscribers, with 5.87 million of those coming from international markets.

Image credit: Sensor Tower 

Note: Post updated with corrected percentages after publication due to a Sensor Tower calculation error. 

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