Column

Voodoo Games thrives by upending conventional product design

Posted by | Apps, Column, Gaming, Startups, Voodoo Games | No Comments
Will Robbins
Contributor

Will Robbins is an early-stage investor at Contrary.
More posts by this contributor

Voodoo Games is one of the most interesting startups alive today. In mid-2018, it had 150 million MAUs and raised $200 million from Goldman Sachs, yet I’ve never heard anyone mention the company. That might be normal for an obscure enterprise SaaS play, but Voodoo is consumer-facing through and through.

Quantitative success aside, Voodoo upends much of the conventional thinking about product design and gaming. If it can do it, how can similar strategies apply to other products?

But first, some background: What is Voodoo Games?

Voodoo is best described as a product conglomerate. Take a look at its App Store page. It has dozens of generic-looking apps. The basic playbook is:

  • Quickly build a relatively low-quality, single-purpose game.
  • Make sure one mechanic is really fun. It doesn’t matter if users churn 20 minutes after downloading it.

Powered by WPeMatico

Russia’s push back against big tech has major consequences for Apple

Posted by | Android, Apple, Column, Developer, donald trump, Google, hardware, huawei, LinkedIn, Messenger, Moscow, Pavel Durov, Policy, pornhub, privacy, russia, smart device, Tim Cook, Turkey, Twitter | No Comments
Josh Nadeau
Contributor

Josh Nadeau is a Canadian journalist based in St. Petersburg who covers the intersection of Russia, technology and culture. He has written for The Economist, Atlas Obscura and The Outline.

Last month, Donald Trump took to Twitter to criticize Apple for not unlocking two iPhones belonging to the Pensacola shooter, another volley in the struggle between big tech and the world’s governing bodies. But even the White House’s censure pales in comparison to the Kremlin’s ongoing plans. Apple, as the timing would have it, also happens to be in Vladimir Putin’s sights.

The company’s long-running policy of not preloading third-party software onto its devices is coming up against a new piece of Russian legislation requiring every smart device to be sold with certain applications already installed, many of which are produced by the government. Inside the country, the policy has even been called the zakon protiv Apple, or the “law against Apple,” for how it disproportionately affects the tech giant. While the law was passed last November, the Russian Federal Antimonopoly Service released the full list of apps only last week.

These regulations form the latest move in what’s turning out to be one of the largest national campaigns for digital control outside of Asia. These laws have been steadily accumulating since 2014 and are described as a way of consolidating sovereignty over the digital space — threatening to push companies out of the country if they fail to comply. Apple, for instance, will have to choose by July 1 whether maintaining access to the Russian market is worth making a revolutionary change in their policy. The same choice is given to any company wishing to do business in the country.

Powered by WPeMatico

Adding India to your business

Posted by | Amazon, Android, Asia, Brainly, Column, duolingo, FlixBus, india, LinkedIn, Netflix, Paytm, Snap, Snapchat, Spotify, Tinder, Truecaller, Twitter, Vyng, wattpad | No Comments
Kumar Shah
Contributor

Kumar Shah is the founder of Transit Capital, a cross-border VC firm that partners with growth-stage entrepreneurs building global champions.

At the start of recruiting season in business school, a top-tier consulting firm sent an invite to the entire class: “over your career, you will either be sitting with us or across from us. We would like to get to know you.”

If you’re building a large-scale technology startup, sooner or later, you should be having a conversation about the Indian market. India’s growth is often compared to China’s, but the big difference between these two markets is that India has an open internet infrastructure, where the best product wins.

In the last decade, Indian consumers have enjoyed the trifecta of cheap smartphones (courtesy of Android), some of the lowest data rates on the planet (courtesy of Mukesh Ambani’s telecom firm Jio) and rising disposable income. Most consumer startups from the U.S., Europe and China have already seen a large number of users organically adopt their product as hundreds of millions of Indians have come online.

Some examples:

  • for most of 2018 and 2019, Tinder was the highest grossing app in India
  • Quora and Pinterest are consistently in the top 30 most visited websites
  • India is the largest or second-largest user base for Facebook, WhatsApp, YouTube, Linkedin, Twitter, Snapchat and many other platforms

Snapchat, in particular, has seen tremendous growth in the Indian market. In March 2019, Snap launched eight new languages — five of which are spoken in India. Consequently, the company reported in Q3 2019 that 6 million out of the 7 million new Daily Active Users added were from outside the U.S. Snapchat’s stock is up almost 3x in the last year, well ahead of Nasdaq’s performance in the same period.

As a cross-border investment firm investing in U.S. and European companies to help them grow in India, we thought it would be useful to share our conversations with growth-stage entrepreneurs about the Indian market. In this article, we will focus on consumer-facing (B2C and B2B2C) companies.

What segment of India do you want to target first? 

While everyone thinks of India as a singular 1.3 billion-consumer market, there are, in fact, multiple sub-segments that have their own characteristics and are acquired differently. The India 1 segment, arguably the most lucrative, constitutes the 25+ million Indians who have credit cards, form the 10 million iPhone install base and were Netflix’s first 500,000 users in the country. The India 2 segment requires products that work in languages other than English and potentially different product features (such as voice input). Snapchat is now focused on acquiring India 2 users with its new language strategy.

What are the best ways to acquire users in this segment?

The short answer is — it depends. If you are in a category (such as gaming) that appeals to a broad demographic and geography, strategic partnerships with mobile OEMs or unicorns building super apps (Paytm and PhonePe for example) will give you a high-volume distribution channel. If you are a wellness app that is focused on India 1 users only, then it makes sense to prioritize channels or partnerships, such as hospital chains in Tier 1 cities, to acquire that segment of users. If you already have organic traction in the country, look at your analytics (for example, cities where your users are based, price range of phone models being used and so on) to understand your initial set of power users.

What is your monetization and pricing strategy? 

The monetization strategy that worked in your existing market(s) may not work in the Indian market. From both an addressable base of paying customers (see the install base of credit cards above) to the ARPU, Asian markets have significantly lagged their western counterparts.

The good news is that with the strong adoption of Unified Payments Interface (UPI), a first-of-its-kind payments protocol that can be implemented by third-party applications, there is almost no friction (or costs) to receive payment amounts as small as two cents. When in India, you should be using UPI.

While Tinder found success with subscription billing at U.S. prices, Netflix entered India with a ~$7/month billing plan in line with their global rates but realized that growth would only come through innovations such as mobile-only plans at $2.80/month. Apple and Spotify have been clear that they want to target the mass market and launched with plans that are close to $1.50/month, a significant discount to their U.S. and European plans.

While these companies have found success with subscription billing, more likely monetization models are advertising led (YouTube) or freemium. Are there features in your product that you can charge a premium for while still offering a subset of the product for free (and cover your direct costs through advertising)? Are there partnerships (such as the ones that Netflix and Amazon Video have signed with Indian telcos) where you can get paid indirectly for your core product?

Build your costs in line with your target segment and pricing

Now that you have a better idea of your target market size and expected pricing, you should build a cost structure that is in line with expected revenues. Most of the companies we track have acquired their first five million customers (or more) in India with an initial team of one to three people on the ground. From both a team build out as well as customer acquisition cost point of view, most companies have been disappointed that they have invested in resources well ahead of understanding the size of their target market and expected revenues.

Find a local partner

If you aren’t setting up a local team in the near term, we recommend having a local partner/shareholder that is aligned with your business and plans. From regular follow-ups on strategic conversations to keeping tabs on changes in regulations, having someone local who understands your business is critical to your entry and expansion plans. Similar to the scrutiny that internet companies face in other countries, India is also drafting regulations for localized data storage and mandating a local point of contact for companies that have more than 5 million users.

For entrepreneurs building global champions, having an India strategy is essential and can form the beachhead to expand into Southeast Asia and the Middle East. As Mary Meeker has repeatedly noted in her annual report, India and Indonesia will be the first and third-largest open internet markets in the world.

What excites our team is that India is already home to significant user bases for early and growth-stage private companies such as Truecaller (100 million daily users), Quora (second largest market), Duolingo (10 million users), Brainly (20 million users), Wattpad (3 million users) and Vyng (14 million installs), while others such as FlixBus are actively setting up operations.

We hope you found the above information helpful. And if you are building a global technology company, we would like to get to know you.

Powered by WPeMatico

US regulators need to catch up with Europe on fintech innovation 

Posted by | Adyen, Amazon, Android, Apple, Chime, Column, Consumer Financial Protection Bureau, eqt ventures, Facebook, Finance, Google, Kabbage, Libra, monzo, Open Banking, Policy, Revolut, TC, Uber, Venmo, visa | No Comments
Alastair Mitchell
Contributor

Alastair Mitchell is a partner at multi-stage VC fund EQT Ventures and the fund’s B2B sales, marketing and SaaS expert. Ali also focuses on helping US companies scale into Europe and vice versa.
More posts by this contributor

Fintech companies are fundamentally changing how the financial services ecosystem operates, giving consumers powerful tools to help with savings, budgeting, investing, insurance, electronic payments and many other offerings. This industry is growing rapidly, filling gaps where traditional banks and financial institutions have failed to meet customer needs.

Yet progress has been uneven. Notably, consumer fintech adoption in the United States lags well behind much of Europe, where forward-thinking regulation has sparked an outpouring of innovation in digital banking services — as well as the backend infrastructure onto which products are built and operated.

That might seem counterintuitive, as regulation is often blamed for stifling innovation. Instead, European regulators have focused on reducing barriers to fintech growth rather than protecting the status quo. For example, the U.K.’s Open Banking regulation requires the country’s nine big high-street banks to share customer data with authorized fintech providers.

The EU’s PSD2 (Payment Services Directive 2) obliges banks to create application programming interfaces (APIs) and related tools that let customers share data with third parties. This creates standards that level the playing field and nurture fintech innovation. And the U.K.’s Financial Conduct Authority supports new fintech entrants by running a “sandbox” for software testing that helps speed new products into service.

Regulations, if implemented effectively as demonstrated by those in Europe, will lead to a net positive to consumers. While it is inevitable that regulations will come, if fintech entrepreneurs take the action to engage early and often with regulators, it will ensure that the regulations put in place support innovation and ultimately benefit the consumer.

Powered by WPeMatico

Mobile gaming is a $68.5 billion global business, and investors are buying in

Posted by | apple music, applovin, Blackstone, Column, communications apps, computing, Electronic Arts, epic games, France, Gaming, Germany, Glu Mobile, ketchapp, KKR, Mobile, mobile devices, mobile game, niantic, pokemon, Riot Games, RSS, Seismic, Seismic Games, social media, Spotify, supercell, Sweden, TC, Tencent, ubisoft, United Kingdom, United States, voodoo, washington DC, White House, Zynga | No Comments
Omer Kaplan
Contributor

Omer Kaplan is CMO and co-founder at ironSource.
More posts by this contributor

By the end of 2019, the global gaming market is estimated to be worth $152 billion, with 45% of that, $68.5 billion, coming directly from mobile games. With this tremendous growth (10.2% YoY to be precise) has come a flurry of investments and acquisitions, everyone wanting a cut of the pie. In fact, over the last 18 months, the global gaming industry has seen $9.6 billion in investments and if investments continue at this current pace, the amount of investment generated in 2018-19 will be higher than the eight previous years combined.

What’s interesting is why everyone is talking about games, and who in the market is responding to this — and how.

The gaming phenomenon

Today, mobile games account for 33% of all app downloads, 74% of consumer spend and 10% of all time spent in-app. It’s predicted that in 2019, 2.4 billion people will play mobile games around the world — that’s almost one-third of the global population. In fact, 50% of mobile app users play games, making this app category as popular as music apps like Spotify and Apple Music, and second only to social media and communications apps in terms of time spent.

In the U.S., time spent on mobile devices has also officially outpaced that of television — with users spending eight more minutes per day on their mobile devices. By 2021, this number is predicted to increase to more than 30 minutes. Apps are the new prime time, and games have grabbed the lion’s share.

Accessibility is the highest it’s ever been as barriers to entry are virtually non-existent. From casual games to the recent rise of the wildly popular hyper-casual genre of games that are quick to download, easy to play and lend themselves to being played in short sessions throughout the day, games are played by almost every demographic stratum of society. Today, the average age of a mobile gamer is 36.3 (compared with 27.7 in 2014), the gender split is 51% female, 49% male, and one-third of all gamers are between the ages of 36-50 — a far cry from the traditional stereotype of a “gamer.”

With these demographic, geographic and consumption sea-changes in the mobile ecosystem and entertainment landscape, it’s no surprise that the game space is getting increased attention and investment, not just from within the industry, but more recently from traditional financial markets and even governments. Let’s look at how the markets have responded to the rise of gaming.

Image courtesy of David Maung/Bloomberg via Getty Images

Games on games

The first substantial investments in mobile gaming came from those who already had a stake in the industry. Tencent invested $90 million in Pocket Gems and$126 million in Glu Mobile (for a 14.6% stake), gaming powerhouse Supercell invested $5 million in mobile game studio Redemption Games, Boom Fantasy raised $2M million from ESPN and the MLB and Gamelynx raised $1.2 million from several investors — one of which was Riot Games. Most recently, Ubisoft acquired a 70% stake in Green Panda Games to bolster its foot in the hyper-casual gaming market.

Additionally, bigger gaming studios began to acquire smaller ones. Zynga bought Gram Games, Ubisoft acquired Ketchapp, Niantic purchased Seismic Games and Tencent bought Supercell (as well as a 40% stake in Epic Games). And the list goes on.

Wall Street wakes up

Beyond the flurry of investments and acquisitions from within the game industry, games are also generating huge amounts of revenue. Since launch, Pokémon GO has generated $2.3 billion in revenue and Fortnite has amassed some 250 million players. This is catching the attention of more traditional financial institutions, like private equity firms and VCs, which are now looking at a variety of investment options in gaming — not just of gaming studios, but all those who have a stake in or support the industry.

In May 2018, hyper-casual mobile gaming studio Voodoo announced a $200 million investment from Goldman Sachs’ private equity investment arm. For the first time ever, a mobile gaming studio attracted the attention of a venerable old financial institution. The explosion of the hyper-casual genre and the scale its titles are capable of achieving, together with the intensely iterative, data-driven business model afforded by the low production costs of games like this, were catching the attention of investors outside of the gaming world, looking for the next big growth opportunity.

The trend continued. In July 2018, private equity firm KKR bought a $400 million minority stake in AppLovin and now, exactly one year later, Blackstone announced their plan to acquire mobile ad-network Vungle for a reported $750 million. Not only is money going into gaming studios, but investments are being made into companies whose technology supports the mobile gaming space. Traditional investors are finally taking notice of the mobile gaming ecosystem as a whole and the explosive growth it has produced in recent years. This year alone mobile games are expected to generate $55 billion in revenue, so this new wave of investment interest should really come as no surprise.

A woman holds up her cell phone as she plays the Pokemon GO game in Lafayette Park in front of the White House in Washington, DC, July 12, 2016. (Photo: JIM WATSON/AFP/Getty Images)

Government intervention

Most recently, governments are realizing the potential and reach of the gaming industry and making their own investment moves. We’re seeing governments establish funds that support local gaming businesses — providing incentives for gaming studios to develop and retain their creatives, technology and employees locally — as well as programs that aim to attract foreign talent.

As uncertainty looms in England surrounding Brexit, France has jumped on the opportunity with “Join the Game.” They’re painting France as an international hub that is already home to many successful gaming studios, and they’re offering tax breaks and plenty of funding options — for everything from R&D to the production of community events. Their website even has an entire page dedicated to “getting settled in France,” in English, with a step-by-step guide on how game developers should prepare for their arrival.

The U.K. Department for International Trade used this year’s Game Developers Conference as a backdrop for the promotion of their games fund — calling the U.K. “one of the most flourishing game developing ecosystems in the world.” The U.K. Games Fund allows for both local and foreign-owned gaming companies with a presence in the U.K. to apply for tax breaks. And ever since France announced their fund, more and more people have begun encouraging the British government to expand their program, saying that the U.K. gaming ecosystem should be “retained and enhanced.” But, not only does the government take gaming seriously, the Queen does as well. In 2008, David Darling, the CEO of hyper-casual game studio Kwalee, was made a Commander of the Order of the British Empire (CBE) for his services to the games industry. CBE is the third-highest honor the Queen can bestow on a British citizen.

Over in Germany, and the government has allocated €50 million of its 2019 budget for the creation of a games fund. In Sweden, the Sweden Game Arena is a public-private partnership that helps students develop games using government-funded offices and equipment. It also links students and startups with established companies and investors. While these numbers dwarf the investment of more commercial or financial players, the sudden uptick in interest governments are paying to the game space indicate just how exciting and lucrative gaming has become.

Support is coming from all levels

The evolution of investment in the gaming space is indicative of the stratospheric growth, massive revenue, strong user engagement and extensive demographic and geographic reach of mobile gaming. With the global games industry projected to be worth a quarter of a trillion dollars by 2023, it comes as no surprise that the diverse players globally have finally realized its true potential and have embraced the gaming ecosystem as a whole.

Powered by WPeMatico

Is your product’s AI annoying people?

Posted by | Android, artificial intelligence, brand management, cars, Column, customer experience, Emerging-Technologies, Google, Google Duplex, personal assistant, Tesla, Tesla Autopilot, Tesla Model S | No Comments
James Glasnapp
Contributor

James Glasnapp is a senior UX researcher at PARC.

Artificial intelligence is allowing us all to consider surprising new ways to simplify the lives of our customers. As a product developer, your central focus is always on the customer. But new problems can arise when the specific solution under development helps one customer while alienating others.

We tend to think of AI as an incredible dream assistant to our lives and business operations, when that’s not always the case. Designers of new AI services should consider in what ways and for whom might these services be annoying, burdensome or problematic, and whether it involves the direct customer or others who are intertwined with the customer. When we apply AI services to make tasks easier for our customers that end up making things more difficult for others, that outcome can ultimately cause real harm to our brand perception.

Let’s consider one personal example taken from my own use of Amy.ai, a service (from x.ai) that provides AI assistants named Amy and Andrew Ingram. Amy and Andrew are AI assistants that help schedule meetings for up to four people. This service solves the very relatable problem of scheduling meetings over email, at least for the person who is trying to do the scheduling.

After all, who doesn’t want a personal assistant to whom you can simply say, “Amy, please find the time next week to meet with Tom, Mary, Anushya and Shiveesh.” In this way, you don’t have to arrange a meeting room, send the email, and go back and forth managing everyone’s replies. My own experience showed that while it was easier for me to use Amy to find a good time to meet with my four colleagues, it soon became a headache for those other four people. They resented me for it after being bombarded by countless emails trying to find some mutually agreeable time and place for everyone involved.

Automotive designers are another group that’s incorporating all kinds of new AI systems to enhance the driving experience. For instance, Tesla recently updated its autopilot software to allow a car to change lanes automatically when it sees fit, presumably when the system interprets that the next lane’s traffic is going faster.

In concept, this idea seems advantageous to the driver who can make a safe entrance into faster traffic, while relieving any cognitive burden of having to change lanes manually. Furthermore, by allowing the Tesla system to change lanes, it takes away the desire to play Speed Racer or edge toward competitiveness that one may feel on the highway.

However, for the drivers in other lanes who are forced to react to the Tesla autopilot, they may be annoyed if the Tesla jerks, slows down or behaves outside the normal realm of what people expect on the freeway. Moreover, if they are driving very fast and the autopilot did not recognize they were operating at a high rate of speed when the car decided to make the lane change, then that other driver can get annoyed. We can all relate to driving 75 mph in the fast lane, only to have someone suddenly pull in front of us at 70 as if they were clueless that the lane was moving at 75.

For two-lane traffic highways that are not busy, the Tesla software might work reasonably well. However, in my experience of driving around the congested freeways of the Bay Area, the system performed horribly whenever I changed crowded lanes, and I knew that it was angering other drivers most of the time. Even without knowing those irate drivers personally, I care enough about driving etiquette to politely change lanes without getting the finger from them for doing so.

Post Intelligence robot

Another example from the internet world involves Google Duplex, a clever feature for Android phone users that allows AI to make restaurant reservations. From the consumer point of view, having an automated system to make a dinner reservation on one’s behalf sounds excellent. It is advantageous to the person making the reservation because, theoretically, it will save the burden of calling when the restaurant is open and the hassle of dealing with busy signals and callbacks.

However, this tool is also potentially problematic for the restaurant worker who answers the phone. Even though the system may introduce itself as artificial, the burden shifts to the restaurant employee to adapt and master a new and more limited interaction to achieve the same goal — making a simple reservation.

On the one hand, Duplex is bringing customers to the restaurant, but on the other hand, the system is narrowing the scope of interaction between the restaurant and its customer. The restaurant may have other tables on different days, or it may be able to squeeze you in if you leave early, but the system might not handle exceptions like this. Even the idea of an AI bot bothering the host who answers the phone doesn’t seem quite right.

As you think about making the lives of your customers easier, consider how the assistance you are dreaming about might be more of a nightmare for everyone else associated with your primary customer. If there is a question regarding the negative experience of anyone related to your AI product, explore that experience further to determine if there is another better way to still delight them without angering their neighbors.

From a user-experience perspective, developing a customer journey map can be a helpful way to explore the actions, thoughts and emotional experiences of your primary customer or “buyer persona.” Identify the touchpoints in which your system interacts with innocent bystanders who are not your direct customers. For those people unaware of your product, explore their interaction with your buyer persona, specifically their emotional experience.

An aspirational goal should be to delight this adjacent group of people enough that they would move toward being prospects and, eventually, becoming your customers as well. Also, you can use participant ethnography to analyze the innocent bystander in relation to your product. This is a research method that combines the observations of people as they interact with processes and the product.

A guiding design inspiration for this research could be, “How can our AI system behave in such a way that everyone who might come into contact with our product is enchanted and wants to know more?”

That’s just human intelligence, and it’s not artificial.

Powered by WPeMatico

Reality Check: The marvel of computer vision technology in today’s camera-based AR systems

Posted by | animation, AR, ar/vr, artificial intelligence, augmented reality, Column, Computer Vision, computing, Developer, digital media, Gaming, gif, Global Positioning System, gps, mobile phones, neural network, starbucks, TC, Virtual reality, VR | No Comments
Alex Chuang
Contributor

Alex Chuang is the Managing Partner of Shape Immersive, a boutique studio that helps enterprise and brands transform their businesses by incorporating VR/AR solutions into their strategies.

British science fiction writer, Sir Arther C. Clark, once said, “Any sufficiently advanced technology is indistinguishable from magic.”

Augmented reality has the potential to instill awe and wonder in us just as magic would. For the very first time in the history of computing, we now have the ability to blur the line between the physical world and the virtual world. AR promises to bring forth the dawn of a new creative economy, where digital media can be brought to life and given the ability to interact with the real world.

AR experiences can seem magical but what exactly is happening behind the curtain? To answer this, we must look at the three basic foundations of a camera-based AR system like our smartphone.

  1. How do computers know where it is in the world? (Localization + Mapping)
  2. How do computers understand what the world looks like? (Geometry)
  3. How do computers understand the world as we do? (Semantics)

Part 1: How do computers know where it is in the world? (Localization)

Mars Rover Curiosity taking a selfie on Mars. Source: https://www.nasa.gov/jpl/msl/pia19808/looking-up-at-mars-rover-curiosity-in-buckskin-selfie/

When NASA scientists put the rover onto Mars, they needed a way for the robot to navigate itself on a different planet without the use of a global positioning system (GPS). They came up with a technique called Visual Inertial Odometry (VIO) to track the rover’s movement over time without GPS. This is the same technique that our smartphones use to track their spatial position and orientation.

A VIO system is made out of two parts.

Powered by WPeMatico

Fortnite, copyright and the legal precedent that could still mean trouble for Epic Games

Posted by | Column, copyright law, Gaming | No Comments
Anne Friedman
Contributor

Anne Friedman is of counsel at DLA Piper where she focuses her practice on structuring and negotiating large scale sourcing and technology transactions.

Andrew Deutsch
Contributor

Andrew Deutsch is a partner at DLA Piper concentrating on intellectual property litigation and advice, including copyright, trademark, defamation and other First Amendment concerns, trade secret, unfair competition and misappropriation, advertising law, and law of the Internet, social media and electronic databases.

Ric Flaggert
Contributor

Ric Flaggert is a partner at DLA Piper where he focuses his global practice on entertainment, media, and communications matters.

A new U.S. Supreme Court decision is pitting entertainers and video game developers against one another in a high-stakes battle royale.

The decision in Fourth Estate Public Benefit Corp. v. Wall-Street.com LLC raises interesting questions about several lawsuits brought against Epic Games, the publisher of popular multiplayer game Fortnite.

In Fortnite, players may make in-game purchases, allowing player avatars to perform popular dance moves (called emotes), such as the Carlton, the Floss, and the Milly Rock.

Five performers, all represented by the same law firm, recently filed separate lawsuits against Epic Games in the Central District of California, each alleging: (i) the performer created a dance; (ii) the dance is uniquely identified with the performer; (iii) an Epic emote is a copy of the dance; and (iv) Epic’s use of the dance infringes the plaintiff’s copyright in the dance move and the dancer’s right to publicity under California statutory and common law.

In short, the dance creators argue that Epic Games used their copyrightable dance moves in violation of existing law.

The building battle

What do these Fortnite lawsuits in California have to do with the US Supreme Court?  US copyright law says that a copyright owner can’t sue for copyright infringement until “registration of the copyright claim has been made” with the US Copyright Office.  Prior to the recent Supreme Court decision in Fourth Estate, lower federal courts split over what this language means.

Some (including the federal courts in California) concluded that a copyright claimant could sue an alleged infringer upon delivering a completed copyright application to the Copyright Office.  Other lower federal courts held that the suit could not be brought until the Copyright Office issued a registration, meaning that the Office viewed the work to be copyrightable.

Because the Copyright Office now takes over seven months to process a copyright application and issue a registration, claimants often chose to sue in California federal courts, which had adopted the quicker “application approach.”  This was the route chosen by the plaintiffs in all five Fortnite cases.

Down (but not out)

On March 4, 2019, in Fourth Estate, the Supreme Court ruled that California federal courts and others following the application approach were wrong, and that a plaintiff cannot sue for copyright infringement unless the Copyright Office has issued a copyright registration.

This had an immediate impact on the Fortnite lawsuits because the Copyright Office had not yet registered any of the dances and, indeed, had found two of the plaintiffs’ dances uncopyrightable.  Recognizing their vulnerability, plaintiffs preemptively withdrew these lawsuits, announcing they would refile the complaints once the Copyright Office issued registrations.

Epic question #1: are the emote dances copyrightable?

The central question is whether the dances used in Fortnite emotes are copyrightable material  protected under US law. If not, then Epic Games’ use of the dances is not copyright infringement, and in-game sales of the particular dances may continue unfettered.

Dance moves fall into a gray area in copyright law.  Copyright law does protect “choreographic works,” but the Copyright Office says that “social dance steps and simple routines” are not protected. What’s the difference between the two? The Copyright Office says that choreography commonly involves “the composition and arrangement of a related series of dance movements and patterns organized into a coherent whole” and “a story, theme, or abstract composition conveyed through movement.”  Dances that don’t meet this standard can’t be copyrighted, even if they are “novel and distinctive.”

So are the Fortnite plaintiffs’ dances “choreographic works” in the eyes of the Copyright Office?  Herein lies a clash of cultures. The performer-plaintiffs undoubtedly feel they have created something not just unique, but a work entitled to protection for which they are owed damages.  But the buttoned-down Copyright Office may not agree.

The Copyright Office has already denied Alfonso Ribeiro a copyright registration for the Carlton, a widely recognized dance popularized by Ribeiro during his days as Carlton Banks on the show Fresh Prince of Bel Air.  The Office stated that the Carlton was “a simple routine made up of three dance steps” and “is not registrable as a choreographic work.”

The plaintiffs’ lawyer in the Epic Games cases has disclosed that 2 Milly’s application for copyright in the Milly Rock was also rejected, but that a long “variant” of Backpack Kid’s Floss dance was accepted for registration.  The Copyright Office’s view on the other two plaintiffs’ dances has not yet been reported.

If a registration is denied

Denial of a copyright registration is not necessarily a dead end for these lawsuits.  The Copyright Act allows a plaintiff who has been refused a copyright registration by the Copyright Office to still sue a potentially offending party for copyright infringement.  However, the Copyright Office can then join the lawsuit by asserting that the plaintiff’s work is not entitled to copyright protection.

Historically, the federal courts have usually followed the Copyright Office’s view that a work is uncopyrightable.  If the other Fortnite plaintiffs are denied registration, as Ribeiro and 2 Milly were, they will all face an uphill fight on their copyright claims.

Other issues to overcome

Even if the plaintiffs’ copyright claims survive, they face other problems, including originality, which is a requirement of copyright.  If their dances are composed of moves contained in dances previously created by others, the plaintiffs may fail to convince the court that their dances are sufficiently original to warrant their own copyright.  For example, Ribeiro has stated in interviews that moves by Eddie Murphy, Courtney Cox and Bruce Springsteen inspired him when he created the Carlton.

Ownership of the dance can also be at issue if the dance was created in the course of employment (such as while working as an actor on a television show), as the law may hold that the employer owns the copyright.

Epic question #2: the right to publicity

The plaintiffs’ right to publicity arguments could go further than their copyright infringement claims. The right to publicity claims were based on the assertion that plaintiffs’ dances are uniquely associated with them and that Epic Games digitally copied the plaintiffs performing the dances, then created a code that allows avatars to identically perform the dances.  Some side-by-side comparisons of the original dance performances and the Epic emote versions (speed adjusted) look strikingly similar for the few seconds the emote lasts. According to plaintiffs, this use misappropriated their “identity.”

Their assertion is not as far-fetched as it may seem, given the broad reading courts in California have given to the state’s common law and statutory publicity law.  For example, the Ninth Circuit has previously ruled that an ad featuring a robot with a wig that turned letters on a board wrongfully took Vanna White’s identity, and that animatronic robots sitting at airport bars vaguely resembling “Norm” and “Cliff,” characters from the popular TV show Cheers, misappropriated the identities of the actors who played the roles, George Wendt and John Ratzenberger.

There remains an open question on whether the courts will be willing to take another step and find that a game avatar having no physical resemblance to a performer misappropriates the performer’s publicity rights just because the avatar does a dance popularly associated with the performer.

Once the Copyright Office announces its decisions on the outstanding copyright applications, the Fortnite plaintiffs may choose to re-file their cases; and this question could eventually be decided.

Powered by WPeMatico

Despite short-term questions, games software/hardware to top $200 billion by 2023

Posted by | Column, Gaming | No Comments

There has been some negative sentiment surrounding the games industry recently, with stock prices of public games companies in question in both the U.S. and China. While being contrarian to market sentiment is always risky, it’s also possible that folks might be taking a long-term solution to a short-term problem. Games industry software/hardware combined revenue could drive well over $200 billion of revenue by 2023, and there was a record $5.7 billion investment in games companies in 2018. So what’s going on?

The games industry isn’t one monolithic sector. Depending on how you slice it, the market is made up of 15 sectors, eight platform types (e.g. mobile, PC, console) and even more proprietary hardware/software platforms (e.g. iOS, Android, Xbox One, Sony PS4, Nintendo Switch).

Games software/hardware sector revenue share versus growth (2018-2023)

(Note: See selected data below. Free charts do not include all the numbers, axes and data from Digi-Capital’s Games Report, with underlying data sourced directly from companies and reliable secondary sources.)

Mobile games rule

We first forecast mobile’s dominance of the games market way back in 2011. At that time, many traditional games companies didn’t believe mobile/online games could become the driving force for games. Some of those companies no longer exist, so what’s happening today is nothing new.

Total global mobile app store revenues (gross across games and non-games apps, including app store revenue sharetopped $100 billion for the first time in 2018. Mobile games delivered around three quarters of that number, as they have consistently for years. So where mobile games drove more than $70 billion gross revenue globally last year, they could top $100 billion revenue (again gross, including app store revenue share) in their own right in the next five years. But like all games sectors, mobile games are hit-driven. And this could be the source of some of the mismatch between the market’s understanding of short-term trends and long-term potential.

For example, Supercell’s Clash of Clans and Clash Royale have delivered over $10 billion revenue to date. However, Supercell also saw revenues and profits decline in 2018 for the second year in a row as its franchises matured. Yet Supercell’s newest franchise, Brawl Stars, delivered $100 million revenue within its first two months. Swings and roundabouts.

Epic Games had the biggest breakout mobile games hit of 2018, with Fortnite contributing significantly to a reported $3 billion profit in 2018. It also anchored part of the interest behind a record $1.25 billion fundraising round last year. Yet the company removed once-dominant mobile franchise Infinity Blade from the App Store, and redirected internal development resources to focus on Fortnite by closing Paragon and stopping further development on Unreal Tournament. We will come back to Fortnite in the context of mobile games becoming platforms in their own right.

Perhaps the biggest concern for mobile games after last year is China, in which the regulator ceased approving new games for most of 2018. This weighed particularly heavily on market heavyweights Tencent and NetEase, although the regulator returned to approving their games this year. However, the regulator again stopped accepting games in February, only to approve more games in March. This regulatory risk has resulted in our downgrading Chinese games revenue growth rates until a clearer long-term pattern emerges.

Niantic’s mobile AR smash Pokémon GO took just over 1 percent of mobile games revenue globally last year, and has been reported to drive some astonishingly big numbers: 800 million downloads, more than $2.5 billion lifetime revenue, 147 million MAU, 5 million DAU, 78 percent of users aged 18 to 34, 144 billion steps taken by users, 500 million visits to sponsored locations and Niantic’s valuation of nearly $4 billion (Note: Not all of these figures have been confirmed by Niantic.) Off the back of this, Niantic is exploring Pokémon GO’s potential to become a platform, with GO Snapshot challenging Snapchat, and the Niantic Real World Platform as a serious AR Cloud player. We’ll come back to these.

PC games hardware/software is big, too

PC games hardware/software is made up of four individual sectors, including PC games hardware (gaming computers, upgrades and peripherals), PC games, online (DLC, IAP and subscriptions), PC games (digital sales) and PC games (physical sales). While each subsector has different characteristics, scales and growth rates, together they make up the only part of the market close to mobile games long-term. Google’s new Stadia cloud gaming platform and competitors could also fundamentally impact high-end gaming across all platforms (not just PC). Mobile games software and PC games hardware/software combined could deliver three quarters of total games industry revenues by 2023.

Selected multiplayer PC games (ex-China)

While PC games hardware is massive, users are buying that hardware mainly to play MMO/MOBA games. This part of the market is consolidated around franchises from major public games publishers such as Tencent and Activision Blizzard, as well as independents like Wargaming and Bluehole.

The console abides

Console games were the market leader for games hardware/software for decades, and remain huge despite no longer being an engine of growth. The highest growth here could come from console games (digital sales) and console games (online), with console games hardware and console games (physical sales) both ex-growth long-term. Despite flattish platform growth for console games hardware/software, they could still deliver multiple tens of billions of dollars revenue by 2023.

High-growth from a low base

Of the remaining market sectors, a handful are small today but have high-growth potential long-term. These include VR games, VR hardware, AR games and esports. Yet taken individually, each sector is likely to deliver in the 1 percent to 2 percent range of total games market revenue in five years’ time. So great for indie developers, but more challenging commercially for the big guns in terms of scale.

United nations of games

Geographical games market discussions tend to focus on China and the U.S., but there are more than 50 country markets driving growth at a global level. Scales and growth rates vary dramatically from giant, stable growth countries such as China (even with its current uncertainty), the U.S. and Japan to higher growth markets like India and Russia. In aggregate, Asia could take around half of global games market revenue by 2023 (despite short-term concerns about China). Europe might deliver around a quarter of global revenue, followed by North America at around one fifth in the same time frame. Countries in MEA and Latin America make up the balance at a much lower level.

Concentration versus growth

The law of big numbers caught up with the games industry years ago, with the 10 largest publicly listed games companies taking three quarters of public games company revenues globally (Note: This ratio does not include private games company revenues, which are substantial). When you already produce billions to tens of billions of dollars in revenue, high growth rates aren’t easy to come by as new hits counterbalance maturing franchises.

Public games company revenue share

(Note: Heat map displays relative revenue scale of publicly listed games companies. Private games company revenues not shown on this chart.)

Top grossing mobile games of recent years (outside China) often came from independents. Standouts include Supercell, King, Epic Games, Niantic, Machine Zone and others. Perhaps in response to this dynamic, there was more than $75 billion of games M&A over the last five years. Major games companies have been buying both growth and cash flow.

Mobile games as platforms?

The beauty of what Steve Jobs created with the App Store is that it democratized distribution of apps at scale beyond the early social games market. It also enabled indie games developers to build some of the rocket ships we’ve seen over the last decade. Yet despite massive growth, even the biggest mobile games couldn’t really be described as platforms in the traditional sense. Not yet.

Where Tencent’s WeChat messaging platform looks like a domestic app store rival with its “mini-programs,” some mobile games pureplays are taking very different routes to becoming platforms in their own right.

For Epic Games, the recent Marshmello concert in Fortnite held out the tantalizing prospect of the beginnings of the “Metaverse” on ubiquitous, affordable mobile devices. With 10.7 million concurrent attendees, this represents a significant milestone in the evolution of games as platforms. Given Fortnite’s previous records for streaming on Twitch and concurrent esports tournament viewers, the savvy Tim Sweeney is beginning to leverage all that scale in a totally new way. Together with building its own app store and the quality of its Unreal Engine, the lessons learned from Fortnite and partial owner Tencent are leading to new horizons.

Where Epic Games is building a metaverse that is a little like Ready Player One without the headsets, Niantic has taken a different approach. Leveraging the real-world, big data stream coming from Pokémon GO, Niantic is building the core of an AR cloud ecosystem to challenge Google, Apple and Facebook. It could also move the company far beyond its entertainment origins for real-world navigation, social, e-commerce, advertising and more.

Epic Games and Niantic could become two of the most valuable platform companies in the world, with long-term potential even they might not fully understand yet.

To infinity and beyond

All this potential doesn’t mean that short-term concerns aren’t valid, or that some games companies (even those currently at scale) might not fall from grace. Some of the volatility of recent times could turn out to be right on the money. When we talked to Epic Games’ CEO Tim Sweeney about all of this, he said “I think that we’re just in the final days of a long transition away from the old retail-centric game release model. Good times ahead.”

With the long-term prospects for games still looking positive, the brave, bold and lucky could have a bright future.

Powered by WPeMatico

Law enforcement needs to protect citizens and their data

Posted by | Android, Australia, Column, computer security, crypto wars, cryptography, encryption, european union, Facebook, Federal Bureau of Investigation, General Data Protection Regulation, human rights, law, law enforcement, national security, privacy, Security, United Kingdom | No Comments
Robert Anderson
Contributor

Robert Anderson served for 21 years in the FBI, retiring as executive assistant director of the Criminal, Cyber, Response and Services Branch. He is currently an advisor at The Chertoff Group and the chief executive of Cyber Defense Labs.

Over the past several years, the law enforcement community has grown increasingly concerned about the conduct of digital investigations as technology providers enhance the security protections of their offerings—what some of my former colleagues refer to as “going dark.”

Data once readily accessible to law enforcement is now encrypted, protecting consumers’ data from hackers and criminals. However, these efforts have also had what Android’s security chief called the “unintended side effect” of also making this data inaccessible to law enforcement. Consequently, many in the law enforcement community want the ability to compel providers to allow them to bypass these protections, often citing physical and national security concerns.

I know first-hand the challenges facing law enforcement, but these concerns must be addressed in a broader security context, one that takes into consideration the privacy and security needs of industry and our citizens in addition to those raised by law enforcement.

Perhaps the best example of the law enforcement community’s preferred solution is Australia’s recently passed Assistance and Access Bill, an overly-broad law that allows Australian authorities to compel service providers, such as Google and Facebook, to re-engineer their products and bypass encryption protections to allow law enforcement to access customer data.

While the bill includes limited restrictions on law enforcement requests, the vague definitions and concentrated authorities give the Australian government sweeping powers that ultimately undermine the security and privacy of the very citizens they aim to protect. Major tech companies, such as Apple and Facebook, agree and have been working to resist the Australian legislation and a similar bill in the UK.

Image: Bryce Durbin/TechCrunch

Newly created encryption backdoors and work-arounds will become the target of criminals, hackers, and hostile nation states, offering new opportunities for data compromise and attack through the newly created tools and the flawed code that inevitably accompanies some of them. These vulnerabilities undermine providers’ efforts to secure their customers’ data, creating new and powerful vulnerabilities even as companies struggle to address existing ones.

And these vulnerabilities would not only impact private citizens, but governments as well, including services and devices used by the law enforcement and national security communities. This comes amidst government efforts to significantly increase corporate responsibility for the security of customer data through laws such as the EU’s General Data Protection Regulation. Who will consumers, or the government, blame when a government-mandated backdoor is used by hackers to compromise user data? Who will be responsible for the damage?

Companies have a fiduciary responsibility to protect their customers’ data, which not only includes personally identifiable information (PII), but their intellectual property, financial data, and national security secrets.

Worse, the vulnerabilities created under laws such as the Assistance and Access Bill would be subject almost exclusively to the decisions of law enforcement authorities, leaving companies unable to make their own decisions about the security of their products. How can we expect a company to protect customer data when their most fundamental security decisions are out of their hands?

phone encryption

Image: Bryce Durbin/TechCrunch

Thus far law enforcement has chosen to downplay, if not ignore, these concerns—focusing singularly on getting the information they need. This is understandable—a law enforcement officer should use every power available to them to solve a case, just as I did when I served as a State Trooper and as a FBI Special Agent, including when I served as Executive Assistant Director (EAD) overseeing the San Bernardino terror attack case during my final months in 2015.

Decisions regarding these types of sweeping powers should not and cannot be left solely to law enforcement. It is up to the private sector, and our government, to weigh competing security and privacy interests. Our government cannot sacrifice the ability of companies and citizens to properly secure their data and systems’ security in the name of often vague physical and national security concerns, especially when there are other ways to remedy the concerns of law enforcement.

That said, these security responsibilities cut both ways. Recent data breaches demonstrate that many companies have a long way to go to adequately protect their customers’ data. Companies cannot reasonably cry foul over the negative security impacts of proposed law enforcement data access while continuing to neglect and undermine the security of their own users’ data.

Providers and the law enforcement community should be held to robust security standards that ensure the security of our citizens and their data—we need legal restrictions on how government accesses private data and on how private companies collect and use the same data.

There may not be an easy answer to the “going dark” issue, but it is time for all of us, in government and the private sector, to understand that enhanced data security through properly implemented encryption and data use policies is in everyone’s best interest.

The “extra ordinary” access sought by law enforcement cannot exist in a vacuum—it will have far reaching and significant impacts well beyond the narrow confines of a single investigation. It is time for a serious conversation between law enforcement and the private sector to recognize that their security interests are two sides of the same coin.

Powered by WPeMatico