Tuesday, July 26, 2011

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Zynga Partners With Tencent To Launch Localized Chinese Version Of CityVille Top
Zynga is furthering its presence in China with a new partnership with Chinese internet giant Tencent. As part of the deal, Zynga is launching a beta version of Zynga City, a new localized Chinese version of CityVille. The game will launch in the next few days and features brand-new content and game-play inspired by both traditional and pop culture in China. As reported earlier this year, Zynga City beta will be operated by Tencent on its Pengyou platform and will soon launch on the company’s QZone platform. Financial terms of the deal were not disclosed by either company. Zynga City beta will include brand-new decorations and architecture the Chinese audience can identify and connect with, in-game events and competitions linked to Chinese holidays and news, as well as culturally relevant game mechanics such as the chance for players to send street peddlers to their friend's cities. Zynga City beta will also feature quest system, which Zynga says will “quench Chinese players' thirst for rich storytelling within the games they love to play.” Zynga is actually building off of Tencent’s Open Platform, which is an operating system of sorts. Using this platform, Chinese players will be able to play Zynga City in their own language. As I mentioned above, it’s unclear what the terms of the revenue share are from the partnership. The game will first be operated by Tencent in a beta version on its Pengyou platform , which is its social network and game platform, with a wider launch on several Tencent platforms including QZone to follow. This isn’t Zynga’s first localized game in China. The gaming giant actually acquired Chinese game developer XPD Media in May of 2010 and set up a Beijing office. And in August the company launched Zynga’s first internationally localized game, Zynga Texas Poker, in traditional Chinese. So why CityVille as the next localized game and the initial title in the partnership with Tencent? Andy Tian, General Manager of Zynga China, says that because CityVille is Zynga's largest and most popular game, the localized version of Zynga City was the ideal choice. The Zynga China studio is actually leading the development of Zynga City including its new localized content and game features. Lin Songtao, General Manager of Tencent Open Platform, said in a release: Zynga has a lot of experience with game development, services and support. We hope that Zynga City will be a success on Tencent Open Platform. In the future, Tencent Open Platform will keep improving the abilities and value on service and support, with the cooperation of more and more successful social game developing companies. We are expecting that more and more international social game developers will bring their popular games to Tencent Open Platform for Chinese Internet users and this will support the rapid growth of the social game market in China, which is good news for all social game developers. For Zynga, a deal with Tencent is alluring for a number of reasons. First, Tencent has a massive reach in China, with the potential to reach hundreds of millions users . In fact, the Chinese company has just under 400 million active users. Second, the deal spreads Zynga’s dependence off of Facebook as a major platform. Of course, Zynga has major ambitions when it comes to international growth. In the past few game releases, Zynga has launched international versions of its titles, hoping to appeal to broader audiences, especially on mobile platforms. If this partnership works out, this will be a huge gateway for Zynga into China. For Tencent, Zynga China is a strategic partnership that could help the Chinese internet giant expand to North America and Europe. Last year, Tencent bought 10% of Digital Sky Technology, which in turn owns significant portions of of Zynga and Facebook. And as my colleague Sarah Lacy wrote recently , Tencent has been trying to enter the U.S. market quietly, acquiring Riot Games in February and dozens of smaller, unreported acquisitions over the last year or so. As Zynga prepares for a public offering later this year, the company could stand to learn a lot from Tencent, which is one of the largest publicly traded Internet companies on earth. Crunchbase ZYNGA Company: ZYNGA Website: http://www.zynga.com Launch Date: 7/2007 Zynga was founded in July 2007 by Mark Pincus and is named for his late American Bulldog, Zinga. Loyal and spirited, Zinga's name is a nod to a legendary... Learn more
 
Google On The Nortel Loss, Patents As Government-Granted Monopolies, And Plates Of Spaghetti Top
Back in early April,  Kent Walker , Google’s Senior Vice President & General Counsel, wrote a post on the Google blog titled “ Patents and innovation “. The reason behind the post was clear: Google was feeling the pressure in the patent space after multiple attacks against them and their partners. And now they were going to do something about it. In his post, Walker noted that Google had laid down the initial “stalking-horse” bid for over 6,000 patents that were up for sale due to the Nortel bankruptcy. “If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community—which is integrally involved in projects like Android and Chrome—continue to innovate,” Walker wrote. The only problem was that Google wasn’t successful in the bidding . In fact, you could argue that the worst-case scenario happened to them. Instead of Google winning the patents, most of their chief rivals did, including Apple, Microsoft, RIM, and others. Ouch. The following day, Walker issued a formal statement on the matter, calling the outcome “ disappointing “. It obviously was, but as I noted in my post on the matter, I would have liked to hear more on the matter from Google. They wanted the press to know they were upset, but they didn’t want to speak on-the-record about it. Well, now they are. I spoke with Walker earlier today about the Nortel case, as well as the patent situation in general. Walker kicked things off by noting how vital it was that sites like ours cover the patent issues, because startups, entrepreneurs, and venture capitals all stand to lose if things don’t change. “We have the resources to fight,” Walker says of Google, but says that innovation itself is in danger. “It looks like plates of spaghetti,” Walker says of the current patent situation, noting the everyone is suing everyone else. “This is new in the Valley. This has happened in the past 15 years or so. Now it’s a mess,” he says. “A patent isn’t innovation. It’s the right to block someone else from innovating,” he continues. This is something Walker brings up again and again in our talk. Clearly, he thinks that patents, at least the way they’re being enforced right now, are a bit of a joke. Speaking of jokes, I asked Walker about the reports that Google had bid mathematical constants (like “Pi”, for example) during some of the earlier rounds of the Nortel bidding. This led some, including myself , to wonder if Google was actually taking the auction seriously? “No one bids that kind of money without taking things seriously,” Walker says. “We think of this situation as a very serious one. There have been questions about our bidding strategy. We did have one,” he continues. “That said, the numbers being talked about were dwarfed by the amount finally bid. It’s all kind of moot,” he says. “Of all the prior Nortel auctions [there were a few before the patents Google bid on], never had any of those gone for more than twice the stalking-horse bid. This went for five times as much ,” Walker says. “It was the biggest patents sale in the history of the world.” Along those lines, I asked if Google made a strategic blunder when they put down the initial $900 million bid, since many assumed the entire portfolio wouldn’t garner more than $800 million when all was said and done?Perhaps this big bid emboldened Google’s rivals? “No, I don’t think so,” Walker responds, noting that the rivals likely had their strategies set as well. While he wouldn’t give specific numbers, he said Google had a number in their head for how high they were willing to go to get these patents. This is something that Google CEO Larry Page implied during their earnings call a couple weeks ago as well. “We buy companies all the time — for both people and interesting technologies. This would have been north of $4 billion for none of those things. We were bidding on the right to stop people from innovating,” Walker says. “You have to have the discipline not to overbid,” Walker continues. “Are there other opportunities out there? Of course,” he says, noting that Google is looking at all of them, but refusing to name specific opportunities. Rumors have pegged InterDigital as the next Google/Apple patent fight. Or perhaps even Motorola patents will be on the table, as other reports have suggested . Following the massive Nortel result, unsurprisingly, a lot of opportunities are being put on the market now, Walker notes. When I ask about the reports that Apple teamed up with Rockstar Bidco in the Nortel auction, effectively staking them, and leading to the win, Walker declines to talk about specifics of the auction itself, citing the NDA all parties had to sign. But at a high level, he says that Google knew there would be opportunities and risks for partnerships as a part of this auction (it has also been reported that Google teamed up with Intel for the final run). I then ask Walker about the court situation. After the loss, Google seemed to imply that the courts may get involved to change the outcome by adding terms to it. Instead, the deal was approved by the Canadian and a joint U.S./Canadian court in just 10 days. Walker says that there’s an important difference between court approvals and something like the Department of Justice getting involved. The court approvals essentially just said that the terms were beneficial for Nortel — and at $4 billion+, how could they not rule that, Walker jokes. (The Canadian courts also did more generally approve the deal, saying that it wouldn’t stifle competition.) “The separate question is whether regulators from an antitrust perspective will engage,” Walker says. He declined to go any further than that, but it seems like a fair assumption that this is still very much a possibility. The deal is not fully closed yet. “The great news is that there’s lots of interesting options out there. Lots of people with lots of patents out there,” Walker says, moving the conversation beyond the Nortel situation, to the broader issue. Walker says that several times in history, even in the tech space, we’ve seen patent issues flare up and then settle down. In the microprocessor industry and the OEM industry, for example. “They settle into mutual assured destruction,” he says. “These fights are an arduous and expensive way to do it,” he says, implying that eventually, they’ll get there too. “Patents are government-granted monopolies,” Walker then says quite matter-of-factly. “We have them to reward innovation, but that’s not happening here,” he says. When I ask about Microsoft’s pressuring of Android OEM partners to sign licensing agreements, and the notion that Android really isn’t free, you have to pay Microsoft to use their patents, Walker declines to talk about Microsoft specifically. But generally, he says that “it’s one thing to claim to have patents, it’s another for them to actually be valid patents.” “We have a number of partners. Samsung has 30,000 patents, I believe. Motorola has thousands more,” Walker notes, implying that they can fend for themselves even without Google having a ton of patents to help them. We then turn to Intellectual Ventures, which has been in the news a lot in recent days as perhaps the best example of patent “trolling”.  Again, Walker doesn’t want to talk about them specifically, but says that generally, “it’s a sign of the challenges with the patent system.” “When you see a lot of VC money flowing into the acquisition and holding of patents, it’s a problem. These are not companies doing new things, they’re buying them. You see hundreds of millions and billions of dollars flowing in to exploit others,” he says. “An average patent examiner gets 15 to 20 hours per patent to see if it’s valid. It can take years to go back and correct mistakes,” Walker says more broadly. “It has become a kind of lottery.” All of the above situations show the problem with the entire system, in Walker’s view. At the highest level, “patents are not encouraging innovation,” he says. Still, Walker still realizes this is the battle Google must fight right now. So the hunt continues for some nuclear warheads to build towards mutual assured destruction, and eventually détente. [image: flickr/ sikachu ] Crunchbase GOOGLE Company: GOOGLE Website: http://google.com Launch Date: 7/9/1998 Google provides search and advertising services, which together aim to organize and monetize the world’s information. In addition to its dominant search engine, it offers a plethora of... Learn more
 
Netflix: 75 Percent Of New Customers Signing Up For Streaming-Only Plan Top
In its first quarterly earnings since it announced plans to hike prices for DVD subscribers who also stream videos, Netflix tried to put the best face on its new decision. In a shareholder letter ( PDF ) accompanying earnings, CEO Reed Hastings and CFO David Wells report that during “the quarter, the streaming only plan continued to gain in popularity, with nearly 75% of our new subscribers signing up for it.” Nevertheless, net domestic subscribers increased by only 1.8 million versus 3.8 million new subscribers last quarter. (Netflix now has a total of 24.6 million subscribers in the U.S. and about another 1 million abroad). The big impact of the price change, of course, will come next quarter, when the company expects total subscribers to stay at around 25 million, with 22 million getting streaming video in some fashion, 15 million still getting DVDs, and a overlap of about 12 million getting both. Many customers are up in arms about the price change, but Netflix’s attitude seems to be love it or leave it. Again, from the letter: It is expected and unfortunate that our DVD subscribers who also use streaming don't like our price change, which can be as much as a 60% increase for them from $9.99 to $15.98, when it goes into effect for each subscriber upon their renewal date in September . . . We hate making our subscribers upset with us, but we feel like we provide a fantastic service and we're working hard to further improve the quality and range of our streaming content in Q4 and beyond. Netflix acknowledges that it still needs to improve the quality of its streaming selection, but it would rather encourage customers to abandon its DVD business and take those savings in shipping and other costs to pour into better streaming content. This transition will obviously take more than a couple of quarters, but Netflix’s policies seem to be designed to speed it along. In the letter, Reed and Wells also make a point to turn up their noses at Hulu, which they don’t want to buy: Hulu Plus added about 325,000 subs in Q2; we added close to 2 million. We invest much more than Hulu Plus in content, in marketing, and in R&D. Since Hulu is likely to be sold in the near term, it is unknown who will run it and how much they will invest in the subscription part of the Hulu service. We aren't planning to bid on Hulu because most of its revenue is from providing free ad-supported streaming of current season TV shows, which is not our focus. Netflix ended the quarter with $788.6 million in revenue, up 52 percent. Net income was up 55 percent to $68.2 million. EPS came in at $1.26 (versus consensus estimates of $1.11, but Wall Street still isn’t happy with the slowdown in store for the third quarter). Total subscribers were up 70 percent from the year before. Full details in the letter and P&L below. View this document on Scribd Crunchbase NETFLIX Company: NETFLIX Website: http://www.netflix.com/ Launch Date: 1997 With more than 23.3 million members in the United States and Canada, Netflix, Inc. is the world's leading Internet subscription service for enjoying movies and TV shows. For $7.99... Learn more
 
With Monetization And The Mainstream In Mind, Twitter Adds To Senior Management Team Top
While Twitter was busy last week making some quick, but big cuts in an attempt by Jack Dorsey to streamline the product side of things, this week they’re doing the opposite — at least on the sales and marketing side of things. Twitter has just announced that they’ve made two additions to their senior management team.  Joel Lunenfeld is joining Twitter as director of Global Brand Strategy. And  Pam Kramer will be the company’s first vice president of Consumer Marketing. In the quote sent by Twitter PR, Twitter CEO Dick Costolo says he’s “thrilled” by the new hires, and the effort to bolster Twitter’s senior management team. Kramer comes to Twitter from GreenRoad, a startup focused on “greener” driving. Before that, she worked at MarketTools and Lending Club. She was also a longtime executive at E-Trade. Over 9 years there, she served at Chief Product Officer and Chief Marketing Officer, in charge of the Super Bowl ads, among other things. That last role will be key for her new role at Twitter. Lunenfeld comes from Moxie Interactive, where he was CEO. Twitter touts his 12 years of experience as a digital ad man who has plenty of experience working with major clients. “Joel will guide our efforts to develop custom ad and partnership programs for Twitter's most valuable advertisers,” Twitter notes. Clearly, both of these positions are being added to help Twitter in two areas of weakness right now: mainstream audience retention and monetization. While Twitter has been able to sign up north of 200 million users, it has been a bit tricky getting all of them to stick around and continue to use the service. Likewise, while they have a massive reach, convincing brands to advertise (and continue to advertise) with Twitter hasn’t been a walk in the park, by most accounts. Crunchbase TWITTER Company: TWITTER Website: http://twitter.com Launch Date: 21/3/2006 Twitter, founded by Jack Dorsey, Biz Stone, and Evan Williams in March 2006 (launched publicly in July 2006), is a social networking and micro-blogging service that allows users to... Learn more
 
Give A Secret Password, Pay $10 And Bevvy Will Get You 50% Off Your Bar Tab Top
Los Angeles-based deals site Bevvy launches its permanent deals reservation system today, providing discounts for hardcore club types and casual happy hour attendees alike. With the new system Bevvy basically gives users 50% off their tabs at selected bars and clubs, taking a $10 reservation fee for a $100 tab and a $50 reservation fee for a $500 bottle service. Bevvy eliminates the coupons associated with other deals sites by giving users a unique “speakeasy”-type password with which to inform servers of their participation (staff gets an updated password list via email daily). Related: I really like the idea of going up to a server and whispering something like “Rumpelstiltskin” to get a discount on booze. Bevvy deals aren’t “daily,” and can be used year round in order to maximize yield management and spread out business for club owners. The deals for nightlife space is heating up, as competitor Poggld (a “Groupon for nightlife”) just expanded to New York and LA. Bevvy’s site has Twitter and Facebook integration so users can give their friends a heads up about where the discounted party will be at. Users are also encouraged to invite friends via social media for a $10 credit toward more Bevvys. With Bevvy, co-founder Niall Donnelly draws upon his experience as an owner of various nightclubs and bars including Anam Cocktail Lounge and Rolling Stone LA. You can tell: Bevvy monetizes through reservation fees, so businesses get 100% of the customers’ spend. Customers are also encouraged to tip bar staff on the full amount of the bill for obvious good karma reasons. With 100k in seed funding, the company plans on expanding to other cities in the next few months and has a mobile app in the works. Dubbed “the Gilt for nightlife,” it’s no surprise that Bevvy has also partnered up with Gilt City to offer deals via its website shortly. Crunchbase BEVVY Company: BEVVY Website: http://www.bevvy.com Launch Date: 8/1/2011 Bevvy is a nightlife reservation site that offers insider access and ongoing, preferred pricing at the best bars and clubs. Learn more
 
Video: Summer NAMM Conference Gadget Recap Top
I descended upon Nashville’s Summer NAMM conference/trade show with high hopes of finding a plethora of musically oriented gadgets to ease and augment the playing experience for ostensible and pro musicians alike. How did it turn out? Well, let me first say for the record that we do cover music gadgets here; gizmos, tools and instruments with technology at their heart or portability in their design fit in with the mission of TechCrunch Gadgets. To be sure, there is a lot of innovation in the space of music gadgetry…I guess I just didn’t see a large focus on it at the smaller, summer gathering of this giant trade show organization. There was more of a concentration on standard musical instrument retailer offerings. We’ll see if I can get to the extravaganza that is Winter NAMM early next year to search some more because I have heard rumors there will be an entire mobile app/software section to explore. However, I don’t want to sound like Debbie Downer, because I did find a couple of interesting and compelling devices, gadgets and instruments at Summer NAMM. Items by   JamHub , Pick-Smith , The Juliet Collective , and  Cupit Guitars all made the cut this trip. The recap video below shows a couple of them in action with some Lanikai Banjo-lele interludes for your musical enjoyment. While JamHub is an older device, it’s worth noting that they are still pushing their idea. In many ways I think their concept makes even more sense now in 2011 than it did when they launched it in 2009 with portable recording tools really hitting stride in the market, but that’s just me. The other gadget to consider is the Jam Kat, by Pick-Smith. I can’t decide if this little doo-dad is a stroke of genius or just another piece of plastic to add to the entropy pile. At first glance it seems like a total gimmick—a guitar pick on a spring-loaded ring (see video for demo)—yet I have to admit that after further contemplation, the concept grows on me. I am still not sure if I would ever use an item like this myself but after watching a few demos, I can see the potential. Nifty. The final questions that remain in my mind two days out are: Did I miss a massive U2 tribute show (see the impersonators above) Why did I develop a southern accent while speaking with Jerry Cupit?
 

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