02 February, 2012



Here’s how new CEO Kaz Hirai wants to save Sony

Posted: 02 Feb 2012 09:00 AM PST

Kazuo-HiraiSony this morning reported a massive net loss of $2 billion, but Kazuo Hirai, who yesterday was officially appointed to replace Howard Stringer as CEO, has big plans in mind to get the company back in shape.

In a meeting with investors this morning, Hirai detailed a four-point plan that calls for Sony to focus on its core business, further streamline its TV business, cut costs, and move forward with innovation.

Sure, those seem like common sense fixes for the struggling company, but it’s still nice to see that Hirai is coming on-board with an achievable game plan in mind.

“I thought turning around the PlayStation business was going to be the toughest challenge of my career, but I guess not,” Hirai told the Wall Street Journal in an interview today. “It’s one issue after another. I feel like ‘Holy s—, now what?’”

Here’s the full skinny on Hirai’s plans:

Focusing on core business: Acknowledging that gaming and digital imaging are among Sony’s strong suits, Hirai said that he would leverage its expertise in those fields to give it an edge in mobile. He’s also interested in taking on the medical imaging market, with the hopes of it becoming a future core business.

Streamlining Sony’s TV business: Hirai wants Sony to utilize its Crystal LED and OLED technology for compelling next-generation TVs, but he also points out that the company needs to continue being lean with its TV business, especially when it comes to LCD TVs. (Sony recently split up its LCD venture with Samsung.)

Cut costs by transforming Sony’s business portfolio: Hirai says the company has its fingers in a wide variety of businesses, which can sometimes be a good thing, but Sony also needs to take a closer look at its products that aren’t adding much value. The company will then need to either drop those products, or figure out ways to reduce costs through collaboration.

Speeding up innovation: Coming back to medical imaging, Hirai pointed out the company is well situated to become a dominant force in that field. The underlying message is that Sony isn’t afraid to step into new markets, especially if they gel with the company’s existing business. Hirai also said that he’s leading a movement to make Sony’s R&D and business groups work better together.

Via The Verge

Filed under: media, mobile, VentureBeat

This posting includes an audio/video/photo media file: Download Now

Apple hires former Xbox Live marketing head

Posted: 02 Feb 2012 08:04 AM PST

AppstoreThe latest top executive to land at Apple is former head of Xbox Live marketing Robin Burrowes, who joined the company earlier this month.

Burrowes is Apple’s new head of App Store Marketing for iTunes Europe. Prior to that, he worked at Microsoft for seven years where he led product, business and marketing management of Xbox Live across the Europe, Middle East and Africa. And as MVC notes, Burrowes was one of the main people promoting Microsoft's recent Xbox dashboard update, which brought more social integration and premium content to the Xbox platform.

Burrowes isn’t the only top gaming executive that Apple has poached in the past year. The company also hired former Nintendo PR boss Robert Saunders to head up promotion on iOS apps. Additionally, Apple lured Nick Grange, who previously worked for Activision, EA, and Microsoft, to focus on promoting the company’s hardware business.

Clearly Apple realizes the value in stacking their executive team with people who have an intimate knowledge of the gaming industry. Over the past few years, Apple has slowly gained popularity in the mobile gaming space. With the new hires, it seems likely that Apple will continue growing its gaming presence going forward.


Filed under: media, mobile, VentureBeat

This posting includes an audio/video/photo media file: Download Now

The DeanBeat: billionaire Mark Pincus breaks out of quiet period (exclusive interview)

Posted: 02 Feb 2012 08:00 AM PST

Mark Pincus is the newest billionaire in Silicon Valley, thanks to the December initial public offering of Zynga, the social game giant he founded in 2007.

For much of last year, Zynga was in a quiet period leading up to its IPO and Pincus had to wear a muzzle. During that time, Zynga haters came out of the woodwork in poorly disguised attempts to derail the IPO.

But the company managed to go public at an $8.9 billion valuation and raise $1 billion for its acquisition war chest. And now the muzzle is off. Pincus is now free to respond to allegations that his company is an untalented copycat — an issue that won’t go away — and that its business is overly dependent on Facebook.

Here’s an edited transcript of our interview with Pincus. And if you want more, check out our 25,000-word history of Zynga.

Gamesbeat: So I guess you were a millionaire last time I talked to you. Now you have a “B” in front of it.

Mark Pincus: Well … I think that the rest of the world has more fun and intrigue with all of it than I do, or any of us.

GB: Do you think you get too much attention for (being a billionaire)?

MP: I don’t think that this has been about that. I’ve been interviewed by someone on NBC who said, “Isn’t that what all you Silicon Valley people are about? Just trying to have more money or whatever?” And I said, “No, that’s really not what we’re about here. We’re way more ambitious than that. We want to change the world, make history.”

GB: How do you get them to come to understand that part?

MP: I just saw the movie “Moneyball” yesterday, and I realized, everyone doesn’t have to understand you, or believe in what you’re doing, while you’re doing it. Sometimes it’s later, when people see the outcomes of what you’re doing, that they maybe change their beliefs.

GB: It was quite a while that you were in this quiet period. Do you have a lot to get off your chest now that you’re able to talk more? What are some things that you’re itching to address?

MP: If you go back to before the quiet period and look at what I was publicly talking about, that’s the thread we’ve still been on. We’re not just trying to build a company, we’re not just trying to build an industry, we’re trying to build a movement around play. We want people to put play in their day. We want to remind people to play with people and connect with people in their lives, and people are doing that. And I think we as an industry — and it’s now a broader industry — our industry goes all the way from fairly hardcore gaming developers to social developers.

If you go back to what I said when I keynoted the Social Gaming Summit industry conference at UCSF, I talked about how we need to work as an industry to build an awesome experience that convinces people that this can be the next great free medium since TV. I think we’re in the middle of this massive secular movement to free-to-play gaming. That’s been going on for a while, but I think it’s really accelerated. With mobile and social, it’s started to really penetrate the mass market.

What we’re excited about is seeing how huge numbers of people are changing their behaviors, like hearing last year that social games had replaced soap operas. We’re seeing it cut across the culture, seeing Words With Friends now become a cultural meme. And not just for the success of that one game, but for the success of our industry. Because on the back of Words With Friends rides an entire industry.

GB: This idea of changing play goes back pretty far in Zynga’s history. I don’t know if it was there at the very beginning, or how early you adopted it. It is interesting to me that none of the traditional game companies thought in such an ambitious way about getting everyone to play. Why do you think that was?

MP: When I first walked into EA — it was the meeting where I met Bing [Gordon, now a member of Zynga's board] — I said to the room full of EA people I thought social gaming was the best thing that had ever happened to them. I said that I thought it would create a whole new generation of online digital gamers, and I thought that whether or not companies like EA chose to play in that part of the market, these people would graduate to more hardcore, more sophisticated [games]. That TV might get you into video, and then you might want to go to movies. I don’t believe that TV cannibalized movies, and I don’t believe social gaming was going to cannibalize the video game industry. I think it was a renewed chance for growth.

GB: And it was about the same time that the Wii was starting to really take off?

MP: Yeah! I thought the Wii was a real shot across the bow. It was orthogonal. All of a sudden it, it wasn’t that it had the fastest processor and could do the coolest new graphics. It was an innovation in accessibility, which led to more social. So why didn’t the traditional industry go after this opportunity?

First of all, they did. I’ll remind you that the EAs of the world had games on Facebook almost when we did. If you remember, the whole Scrabulous thing was EA, (in a legal fight over) the Scrabble rights. They did focus on and pursue it. I think what was different was that we came from a place that was more organic to the medium, and we believed that this was the whole thing.

I think that initially, for the traditional industry, this was seen as a channel to take existing intelletcual property to market. Which it could be, and is, and will be. But our approach was that you couldn’t have play, you couldn’t have social gaming, without social. And that it had to exist in places that people wanted to hang out and congregate, and not be a destination that required that much intent and pre-planned interest. We thought it had to be free. Similar to, I think, when Amazon innovated to get us to do e-commerce, they had to take down the barriers to commerce. They had to compete with offline commerce, they had to show you that it was fewer minutes and hopefully fewer dollars to shop online. To create a whole movement, a behavioral change, where people saw online as a convenience and not a hassle.

Similarly, we thought that we had to remove tons and tons of barriers that were stopping the mass market from playing. So free was one, but even beyond free it was the download, the complexity. And the areas that we’ve innovated sometimes are too small; they don’t come in big, explosive graphics packages. The innovations that we focus on are things like the FTUE, which stands for First Time User Experience. We counted how many clicks it took, how many seconds before you could understand what the game was and why you’d want to play it. We had to simplify what a game was to make it more accessible.

GB: There was an interesting reaction, where you guys did do a great favor for the game industry, and the industry reacted so negatively.

MP: Yeah. That’s why it was so interesting watching “Moneyball” yesterday. You have to see it, and the book is even better. The whole story of this guy, Billy Beane, what he did with the Oakland A’s; he challenged the whole way that baseball had been managed. He said he was just going to focus on metrics and outcomes. He was scorned, laughed at, almost fired, and it didn’t work out at first. Everyone said he was an idiot, until it totally did work out, they had a 20-game winning streak that broke all records in baseball. It changed the industry forever.

Filed under: games, social

This posting includes an audio/video/photo media file: Download Now

Elite game group recruits board members from the new guard at Nexon and Zynga

Posted: 02 Feb 2012 08:00 AM PST

The Academy of Interactive Arts and Sciences is an elite professional game group that puts on the annual Dice Summit gaming event Las Vegas and selects the winners for the equivalent of the game industry’s Oscar winners. So it is interesting that the academy is adding two new board members from Nexon and Zynga.

Min Kim (pictured below), vice president of Live Games at Nexon, and Brian Reynolds (pictured right), chief game designer at Zynga, have joined the board of the AIAS. The appointments signal that the game industry has changed and the AIAS is changing with it. And it means that the makers of social and online games, once considered the second-class citizens of gaming, now have a seat at the board table.

It’s no accident that both of these companies raised more than $1 billion in initial public offerings and are considered to be the pioneers of the new game business. The board, after all, has to consist of the movers and shakers of the game industry. Reynolds is one of the veterans of the traditional game industry who made the leap to Zynga, which has more than 235 million monthly active users who play free-to-play games on Facebook. He created FrontierVille for Zynga and gave a talk at a past Dice Summit where he talked about metrics-based game design.

Kim is one of the executives at Nexon who helped create the free-to-play business model. Aiming to deal with piracy for games in Korea, Kim pushed more than a decade ago to create free-to-play games where users play for free and pay real money for virtual goods. Kim co-founded Nexon America, bringing the model to the U.S., and launched the global edition of Nexon’s flagship game MapleStory. He helped get retailers to adopt prepaid game cards in stores and helps the industry deal with the risks of cyber attacks. And as you can see from above, Kim will do anything to promote a game.

These appointments are a big deal because the AIAS, which has 22,000 members and has a board of 16 industry leaders, considers its task to be the advancement of artistic values of the game community.

"As one of the earliest advocates of free-to-play online games, Min has been instrumental in bringing this business model to gamers worldwide," said Martin Rae, president, Academy of Interactive Arts & Sciences.  "Their introduction of free-to-play, giving players free access to games in favor of generating revenue from microtransactions, has quite literally been a game changer. Nexon has been quite involved already with Academy activities and we're really excited to have Min's input at the board level."

Reynolds is a 21-year industry veteran who has created games such as FrontierVille, which hit a peak of 35 million users, and Rise of Nations. He played a key role in founding the game studios Firaxis, Big Huge Games, and Zynga East. His games ranging from Civilization II to Alpha Centauri have sold more than 6 million copies.

"Zynga has been leading the charge for delivering quality social gaming to an ever expanding demographic," said Rae. "And they have been at the forefront of one of the major shifts in our industry. Brian's work at Zynga has helped redefine how people enjoy and interact with the medium of gaming, and we are proud to have his experience and deep insight on the board as gaming further becomes a part of everyone's everyday life."

Since Zynga has been under attack lately for copying other games, Reynolds’ appointment is to one of the industry’s highest artistic bodies will help Zynga fend off charges that it isn’t innovative.


Filed under: games, social

This posting includes an audio/video/photo media file: Download Now

IDC: Apple now the world’s third-largest phone manufacturer

Posted: 02 Feb 2012 07:49 AM PST

apple store grand central

Apple has moved up two spots in the world phone manufacturer rankings, with LG and ZTE dropping down a rank and Nokia and Samsung taking the top two slots, according to new IDC research.

IDC’s latest report on the state of the worldwide phone market says it grew by 6.1 percent year-over-year in the fourth quarter of 2011. But that growth is actually quite weaker than the 9.3 percent year-over-year gain for Q3, indicating that feature phones are falling out of favor fast.

“The mobile phone market exhibited unusually low growth last quarter, which shows it is not immune to weaker macroeconomic conditions worldwide,” said Kevin Restivo, senior research analyst with IDC, in a statement. “The introduction of high-growth products such as the iPhone 4S, which shipped in the fourth quarter, bolstered smartphone growth. Yet overall market growth fell to its lowest point since Q3 2009 when the global economic recession was in full bloom.”

The most interesting movement to happen this quarter was Apple blowing past LG and ZTE in shipments thanks to huge demand for the iPhone 4S, which is available in more than 90 countries. Apple now has the third place slot with a record-breaking 37 million iPhones moved in the fourth quarter. Apple is also now the largest smartphone maker in the world.

First place in total phone shipments is still Nokia, which has retained that position for some time by selling massive amounts of “dumb” feature phones. Nokia recently introduced several new Windows Phone smartphones like the Lumia 900, showing off a new direction for the company and hoping it can become a major smartphone player again. Nokia shipped 113.5 million phones total.

Second place went to Samsung, which offers a blend of powerful Android phones and cheap feature phones. Samsung was notable for breaking the 90 million phone mark for the first time in a single quarter and breaking the 300 million mark for the first time in a single year for 2011. The company shipped 97.6 million phones in the fourth quarter.

Rounding out the top five are LG and ZTE in fourth and fifth place, both dropping a slot because of Apple’s surge. LG’s phone shipments dropped a staggering amount, going from shipping 30.6 million phones in Q4 2010 to shipping 17.7 million in Q4 2011, a 42 percent decline. Chinese manufacturer ZTE boosted shipments 8.9 percent year-over-year in the fourth quarter with the shipping of 17.1 million phones.

You can view a full chart of IDC’s top mobile vendor list below:


Chart image: IDC

Apple Store photo: Sean Ludwig/VentureBeat

Filed under: mobile

This posting includes an audio/video/photo media file: Download Now

One day after appointing new CEO, Sony announces big losses of $2.09B

Posted: 02 Feb 2012 06:17 AM PST

A slumping TV business and a surging yen combined to send Sony into the red. The company reported a net loss of $2.09 billion for the final quarter of 2011, a far cry from the nearly billion in profit they managed to end 2010.

This makes nine straight years of losses for Sony’s TV business. Sensibly the first moves of the new CEO, Kazuo Hirai,  were to scale back the television division and look to replicate some of the success he had with video games at Sony. As Dean Takahashi wrote yesterday, Hirai was largely responsible for the success of Playstation in North America. He was also the one who took the stage to bow and apologize when the Playstation network was hacked last year.

Some of Sony’s losses this year came from moves it made to streamline the business. It sold its stake in a joint venture with Samsung to produce flat panel screens and bought out Ericsson to consolidate its smartphone business. The earthquake and tsunami which struck Japan last March shut down ten Sony plants and hampered supply chains.

But the new CEO made it clear that Sony had no excuses, and would try to find a way to regain its footing in the consumer electronics market. "I hold a very severe sense of crisis," Mr. Hirai told reporters at a conference on Thursday, 24 hours after he replaced former CEO Howard Stringer, who will become chairman. "Without a faster sense of speed, Sony cannot win."

Filed under: VentureBeat

This posting includes an audio/video/photo media file: Download Now

Beware the king: Zuckerberg’s voting power a risk to shareholders

Posted: 02 Feb 2012 04:33 AM PST

As VentureBeat’s Jolie O’Dell pointed out yesterday, Mark Zuckerberg managed to strike a deal with some key investors and friends that gives him 57 percent of the shareholder voting power. For a public company, it’s an almost unheard of concentration of authority, a troubling sign for those who focus on shareholder rights.

“The public has no say in the control of the board, which in my view is terribly harmful to any notion of accountability,” Charles Elson, a University of Delaware corporate-governance professor, told Bloomberg.  ”It's very troubling to investors, and it's a bad bet for them.”

Is this just a bunch or worry warts? Not exactly. Facebook included Zuckerberg’s total control of the company as one of the risk factors its listed on its S-1. ”So long as the outstanding shares of our class B common stock represent a majority of the combined voting power of our common stock, Mr. Zuckerberg will be able to effectively control all matters submitted to our stockholders for a vote, as well as the overall management and direction of our company.”

Early investors and close friends like Dustin Moscovitz and Sean Parker gave Zuckerberg  "irrevocable proxy", meaning where the big boss goes, their votes will follow.

Starting in 2013 Zuckerberg’s salary will drop to just $1. Meanwhile, as Bill Gurley notes, Facebook is unique among big tech companies in paying a full 40 percent on its taxes. “Warren Buffet's secretary would be happy. Facebook's tax rate is already north of 40%. Other multi-national companies typically have found a way to reduce this. Facebook is paying full-boat.”

Zuckerberg isn’t alone among Silicon Valley founders in his need to concentrate power. As VentureBeat’s Dean Takahashi noted, Zynga’s Mark Pincus put together a complex system which left him with 70 times the voting power of ordinary shareholders.

Flashback to 2004 and the public offering for Google,  the biggest tech IPO until Facebook arrived. Again the founders chose to grab a controlling stake of the voting shares. At the time CNET noted that this gave Larry Page and Sergey Brin “rare control over the company.”

When it comes to domineering founders of high growth tech startups, history shows this kind of arrangement isn’t as rare as the press likes to think.

Filed under: VentureBeat

This posting includes an audio/video/photo media file: Download Now

Flaregames raises $7.9M from Accel for free-to-play mobile games (exclusive)

Posted: 01 Feb 2012 11:02 PM PST

Flaregames has raised 6 million euros, or $7.9 million, in a funding round led by Accel Partners. The money will help beef up the company founded by Klaas Kersting, the founder of Germany’s Gameforge.

Kersting’s Karlsruhe, Germany-based Flaregames is focused on free-to-play mobile games where users play for free and pay real money for virtual goods. Previously, the company was focused on mobile reality games that blended virtual and real worlds, but the company decided that free-to-play mobile games had more potential.

Kersting plans to launch five games by the end of the second quarter. As the founder of Gameforge, Kersting created a downloadable online games company that grew to more than 400 employees, $150 million in revenue, and 200 million registered users.

"Our first focus is on getting fun, high-quality games to market, and
reaching the mass-market as well as mid-core gamers with our line-up this year," said Kersting. "Our investors see the opportunity for mobile game companies to grow fast and the team's extensive knowledge of the free-to-play gaming market is an asset that will enable us to create new mobile games that are both fun and commercially successful."

Kersting started the company in April 2011 along with Andreas Suika, former lead game designer for Ubisoft Blue Byte. Flaregames now has 30 employees.

"The mobile games business will likely be larger than the social games
business," said Harry Nelis, partner at Accel Partners. "We're backing
Flaregames because we believe in the team, technology, business model and
most of all know that Klaas will drive the company to its full potential as
it strives to become a major mobile games company."

Accel has backed more than 300 successful companies, from Admob to Facebook. In gaming, it has invested in Rovio, maker of Angry Birds, and Playfish, which was acquired by Electronic Arts.

Filed under: games, mobile

This posting includes an audio/video/photo media file: Download Now

HootSuite adds support for Digg, Trendspottr, and InboxQ

Posted: 01 Feb 2012 04:58 PM PST

Popular social networking management service HootSuite announced Wednesday it has added support for more social apps and opened its Engagement API.

Digg, Trendspottr, and InboxQ have joined the HootSuite App Directory; a collection of apps and social media sites that you can manage with HootSuite. Each app has a unique set of features that can be accessed with HootSuite’s dashboard.

For those who use Digg, a community that shares new stories and videos from all over the web, you can use Hootsuite to view current top stories, “Digg” stories, and share content.

Trendspottr tracks topics, hashtags, and phrases that are trending on social networks and news sites. Now Trendspottr users can keep on top of trending topics, search for popular content, and share videos and stories in the Hootsuite dashboard.

Lastly, InboxQ tracks questions that are asked on Twitter about businesses or general topics. With Hootsuite, those who use InboxQ can find questions asked on Twitter about their business and respond to questions directly.

The company also announced integration with click.to, an extension used to share information on social networks rapidly and efficiently. Now, you can share content directly to HootSuite from click.to, no copy and paste required.

The final announcement HootSuite made Wednesday was that its Engagement API is now open. Developers can use the API to connect more services to Hootsuite (Google+ anyone?). More details on how to access the API will be released in the coming days.

Filed under: media

This posting includes an audio/video/photo media file: Download Now

Power play: How Zuckerberg wrested control of Facebook from his shareholders

Posted: 01 Feb 2012 04:22 PM PST

Mark Zuckerberg controls a majority of Facebook’s voting rights, and will continue to enjoy that control after it goes public, according to an unusual arrangement he struck with some key investors and colleagues among Facebook’s shareholders.

A string of voting arrangements outlined in Facebook’s SEC filing show that some of the company’s most powerful shareholders have ceded their voting rights to Zuckerberg, the company’s chief executive. While Zuckerberg only owns 28.2 percent of the Facebook’s shares, the additional “shares subject to voting proxy” gives him an additional 30.6 percent of the voting power, leaving him with a total of 56.9 percent of the shareholder voting power. That gives Zuckerberg full control of the company’s decisionmaking.

Under the arrangement, Dustin Moscovitz, Sean Parker, and a host of other Silicon Valley bigwigs have given Zuckerberg “irrevocable proxy” to control their votes. That means that their shares will swing with his shares.

Zuckerberg also has irrevocable control over shares held by DST, Greylock, Accel Partners, and other major firms and investors — and the voting rights that go along with those shares — in most circumstances.

“This is not common at all,” said Menlo Ventures partner Mark Siegel, who has monitored quite a few IPOs in his time in Silicon Valley and spoke to VentureBeat by phone today.

“He negotiated a very unique deal,” said Siegel of Zuckerberg’s coup. While no one knows exactly why Moscovitz, Parker, and a slew of high-powered VC firms would have given up their votes, Siegel speculated, “I’m sure there’s a point where shares were offered with that as a contingency.”

In other words, this may have been a qui-pro-quo trade of money (shares) for power (votes).

And maintaining power is something that Zuckerberg has focused on since Facebook’s inception.

“To give Mark and Sheryl their due, it looks brilliant having turned down those earlier offers,” said Siegel, referring to a past multi-billion dollar acquisition offer from Yahoo. “I think they understood before a lot of us did what the potential of the company was… Staying independent and private was a pretty smart move.”

Now, Zuckerberg will continue to exert his control over the publicly traded company; with his block of votes, he will have more sway in important decisions such as changes to the board, mergers, or splitting up parts of the company.

“Every company puts in place things like a poison pill, things that make it possible for dissenting shareholders to prevent a hostile takeover,” said Siegel. “Presumably [the voting arragement] puts more of that control in one individual’s hands… it concentrates a lot of traditional protections.”

Separately, a special “Class B” of shares has let Zuckerberg and a small group of executives and employees at Facebook exert more control than they otherwise would by giving them ten times the number of votes per share than “Class A” shares. Class A shares are the ones public investors will get.

This will also give Zuckerberg the ability to maintain control of Facebook even if some of his proxy friends decide to sell their shares. That’s because, under the rules of Facebook stock, those “Class B” shares, if sold, automatically get converted to Class A. Thus, people buying from the special proxy share owners will only get “Class A” shares with only one vote per share. Zuckerberg is thus left a greater majority of the powerful “Class B” shares, and thus will be more able to maintain control overall.

So except for unforeseen edge cases, Zuckerberg will maintain control of a huge block of Facebook shares (and votes) until he dies or divests. But as far as Facebook is concerned, Moscovitz, Parker, DST, et al. don’t constitute a group because they’re not voting together — Zuckerberg is voting for them.

For those of you fond of complicated legalese, here are the relevant paragraphs from the filing:

Our CEO has entered into voting agreements with certain of our stockholders, which voting agreements will remain in effect after the completion of this offering. These voting agreements cover approximately 42,245,203 shares of Class A common stock and 485,199,231 shares of Class B common stock, which will represent approximately _____% of the outstanding voting power of our capital stock after our initial public offering.

Under one type of voting agreement, stockholders agreed to vote all of their shares as directed by, and granted an irrevocable proxy to, Mr. Zuckerberg at his discretion on all matters to be voted upon by stockholders. The following individuals and entities hold shares of our capital stock that are subject to this type of voting agreement: ARPI 2, LLC; Matt Cohler and certain affiliated entities; Gregory Druckman; Michael Druckman; Richard Druckman; Steven Druckman; The Founders Fund, LP; Glynn Partners; Hommels Holding GmbH; Adam Moskovitz; Dustin Moskovitz and certain affiliated entities; Nancy and Richard Moskovitz and certain affiliated entities; Sean Parker and certain affiliated entities; Cara & Robert Scudder; Silicon Valley Community Foundation; certain entities affiliated with Technology Crossover Ventures; Valiant Capital Opportunities, LLC; and VHPI 2, LLC.

Under a second type of voting agreement, Mr. Zuckerberg has the authority (and irrevocable proxy) to vote these investors' shares at his discretion on all matters to be voted upon by stockholders, except for issuances of capital stock by us in excess of 20% of our then outstanding stock and matters which would disproportionately, materially and adversely affect such stockholder. This type of voting agreement also provides that the investor shall not: (1) acquire any ownership of any of our assets or business, (2) make any solicitation of proxies with respect to the voting of any of our securities, (3) form any "group" within the meaning of Section 13(d) of the Exchange Act, (4) nominate any person as director who is not nominated by the then incumbent directors, propose any matter to be voted upon by our stockholders or initiate or vote in favor of or call for a special meeting of the stockholders, or (5) publicly announce an intention to do any of the above. Following the completion of our initial public offering, a transferee of the shares currently subject to this type of voting agreement shall no longer be subject to the terms of the voting agreement if we have a two-class capital stock structure and a party to the agreement is transferring Class B common stock that, upon completion of the transfer, becomes Class A common stock or is transferring Class A common stock. DST Global Limited and certain affiliated entities and Mail.ru Group Limited hold shares of our capital stock that are subject to this type of voting agreement.

The third type of voting agreement contains the same substantive provisions as the second type of agreement. For some of the parties to this type of voting agreement, the provisions of the agreement do not apply to shares held by the investors prior to their secondary purchases. The following entities hold shares of our capital stock that are subject to this type of voting agreement: certain entities affiliated with Accel Partners and James W. Breyer, a member of our board of directors; certain entities affiliated with Elevation Partners; Felarmon Group Limited; certain entities affiliated with Greylock Partners; Li Ka Shing (Canada) Foundation; certain entities affiliated with Meritech Capital Partners; certain entities affiliated with Anand Rajaraman; Tiger Global FB Holdings, LLC; and certain entities affiliated with Venkatesh Harinarayan.

With the exception of up to 232,542,558 shares of Class B common stock, which will remain subject to the provisions of a voting agreement until Mr. Zuckerberg's death, if an investor sells, transfers, assigns, pledges or otherwise disposes of or encumbers the shares subject to these voting agreements after the completion of our initial public offering, the shares would no longer be subject to the provisions of the voting agreement. Voting agreements covering 42,245,203 shares our Class A common stock and 215,919,085 shares of our Class B common stock will terminate if Mr. Zuckerberg is no longer actively engaged in the management of the company.

We do not believe that the parties to these voting agreements constitute a "group" under Section 13 of the Exchange Act, as Mr. Zuckerberg exercises voting control over the shares held by these stockholders.

Image courtesy of Jolie O’Dell.

[This story originally published at 3:04pm]

Filed under: deals

This posting includes an audio/video/photo media file: Download Now

Facebook COO Sheryl Sandberg made $30.9M in 2011

Posted: 01 Feb 2012 04:21 PM PST

Facebook’s second in command COO Sheryl Sandberg was compensated millions more than any other Facebooker in 2011 — founder and CEO Mark Zuckerberg included.

The social network’s leading lady took home $295,833 in base salary, $86,133 in bonus money, and $30.49 million in stock awards (an estimated value) for a grand total of almost $30.9 million in 2011.

The juicy tidbit was unearthed in the executive compensation section of Facebook’s S-1 document, filed Wednesday.

Zuckerberg, by comparison, took home a paltry $1.49 million for the year. The figure includes his base salary of $483,333, bonuses totaling $220,500, and $783,529 in other compensation (fun footnote alert: Zuck’s other 2011 compensation included $692,679 for personal aircraft charter costs and $90,850 for estate and financial planning). On the ownership front, however, Zuckberg has a 28.2 percent stake in the company, while Sandberg owns less than one percent of Facebook. So with a rumored valuation of $100 billion, Zuckerberg could worth more than $28 billion.

Also good to know: Facebook maintains a compensation committee that periodically reviews compensation data of public companies in a “Peer Group” that includes Google, Amazon, Apple, AOL, eBay, Microsoft, and Yahoo. The intention, according to the S-1, is to “ensure that our executive officer compensation is competitive and sufficient to recruit and retain our executive officers.”

And no surprise here, Facebook compensates its executives, Sandberg especially, remarkably well when compared against other technology companies, but only if you include equity. “Overall, based on our Peer Group analysis, total cash compensation for our executive officers was below the 25th percentile of the Radford Survey and Peer Group data,” the filing disclosed. “When equity compensation was factored in … total compensation for our named executive officers significantly exceeded the 90th percentile of the market.”

Facebook filed to become a public company Wednesday and is expected to make $5 billion in its initial offering. The social network’s S-1 document revealed that it made $1 billion on $3.7 billion in revenue in 2011, and has a total of 845 million monthly active users.

Photo credit: Hubert Burda Media/Flickr

Filed under: VentureBeat

This posting includes an audio/video/photo media file: Download Now

EA releases new stats on Star Wars: The Old Republic online game: 20B enemies slain

Posted: 01 Feb 2012 03:56 PM PST

Electronic Arts issued new data about the launch of the six-week-old massively multiplayer online game, Star Wars: The Old Republic.

As previously noted, EA said that it has sold more than 2 million copies since Dec. 20 and has more than 1.7 million active subscribers. If each active player paid $60 and has signed up for at least one month of subscription service for a fee of $15 a month, then the game has probably generated about $127 million in revenues to date. (EA did not disclose the actual number). EA said the majority of the 1.7 million active users are paying.

Compare that to the estimated cost (which EA also didn’t comment on today) of $200 million to develop the game over the past six years, not counting marketing costs. EA is thus well on the way toward making money on the Star Wars game, as it can continue to both sell the game to new first-time users and will continue to collect the monthly subscription fees.

EA said that servers have been up for 99.5 percent of the time, and the company has already added new content with the launch of Rise of the Rakghouls. Another update is scheduled for the spring.

"We're truly honored and humbled by the incredibly strong support from our players who are enjoying Star Wars: The Old Republic," said Ray Muzyka (pictured middle),  co-founder of BioWare and general manager of EA's BioWare Label, which made the game. "Our entire team worked very hard over the holidays to deliver a smooth experience at launch, and the resulting response to the game from our fans and critics has been exceptionally gratifying."

Added Greg Zeschuk (pictured left), co-founder of BioWare and general manager of the BioWare MMO Business Unit: "But we're not resting! We're actively listening to our community for ongoing feedback to help us ensure the game and service continue to improve, and we're working to deliver spectacular new high quality content on a regular cadence going forward."

EA said that engagement in The Old Republic has not slowed since the launch. Players have logged more than 239 million in-game hours, or 332,000 months and 27,000 years of in-game time. More than 20 billion non-player characters have been killed, and 148 billion credits have been spent.

EA plans to launch Star Wars in Australia and New Zealand in early March. It will add more locations in Asia too, said Peter Moore, chief operating officer at EA, speaking on EA’s conference call with analysts today. John Riccitiello, chief executive, said that EA has to be careful as it adds new areas, as it is not acceptable to launch with poor service.

Moore said that much of the marketing spend for The Old Republic will happen as Lucasfilm releases a stereoscopic 3D version of Star Wars Episode I The Phantom Menace film on Feb. 10.

Filed under: games

This posting includes an audio/video/photo media file: Download Now

Facebook says “mobile” is big risk — starting with Android and iOS

Posted: 01 Feb 2012 03:47 PM PST

Facebook Mobile riskFacebook said its users are increasingly using mobile devices, and that this is risky because the social network still hasn’t figured out how it can make money from mobile ads.

A majority of Facebook users still access the site on their personal computers, where Facebook makes a lot of money from ads served on its web pages. However, increasingly, more users are going mobile (indeed, 425 million of them and counting), partly because of Facebook’s own encouragement. And there, Facebook makes no money.

The statement came in Facebook’s paperwork filed with the Securities and Exchange Commission today, which signaled the company’s intent to start selling its shares to the public. It came in a portion of the filing called “risk factors,” which is where a company warns investors of the risks entailed in buying its shares. A lot of these warnings are boilerplate stuff, and aren’t supposed to be taken as red flags, per se. But it’s noteworthy that Facebook lists mobile so highly on the list. It’s on the third of about 20 pages of risks, coming just under the obvious big generic risks about advertising revenue trends, and whether Facebook will be able to retain users amid competition.

Facebook has not started serving display advertisements in its mobile offering, in part because ads are considered by Facebook to be disruptive to the user experience. At the same time, Facebook has actively encouraged users to go mobile with Facebook, and has pumped resources into perfecting their mobile apps — presumably because it its wants to keep users as engaged as possible, wherever they go.

Facebook said its mobile effectiveness will depend on other players, such as Google and Apple, who control the most popular mobile operating systems. As a result, some popular phones may not feature Facebook prominently, Facebook warned.

Facebook referred to other areas, such as “systems, networks and standards,” where competitors may wield control over how Facebook is used. More broadly, Facebook said, it competes heavily with Google+, and also with other, largely regional, social networks that have strong positions in particular countries, including Cyworld in Korea, Mixi in Japan, Orkut (owned by Google) in Brazil and India, and vKontakte in Russia. While Facebook refers to these as competitors not just in the mobile arena, its true that these players could exercise control over mobile products too, if they strike the right deals with manufacturers and carriers.

Below is the actual text Facebook uses in its IPO filing:

Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results.

We had more than 425 million MAUs who used Facebook mobile products in December 2011. We anticipate that the rate of growth in mobile users will continue to exceed the growth rate of our overall MAUs for the foreseeable future, in part due to our focus on developing mobile products to encourage mobile usage of Facebook. Although the substantial majority of our mobile users also access and engage with Facebook on personal computers where we display advertising, our users could decide to increasingly access our products primarily through mobile devices. We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven. Accordingly, if users continue to increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, our revenue and financial results may be negatively affected.

Facebook user growth and engagement on mobile devices depend upon effective operation with mobile operating systems, networks, and standards that we do not control.

There is no guarantee that popular mobile devices will continue to feature Facebook, or that mobile device users will continue to use Facebook rather than competing products. We are dependent on the interoperability of Facebook with popular mobile operating systems that we do not control, such as Android and iOS, and any changes in such systems that degrade our products' functionality or give preferential treatment to competitive products could adversely affect Facebook usage on mobile devices. Additionally, in order to deliver high quality mobile products, it is important that our products work well with a range of mobile technologies, systems, networks, and standards that we do not control. We may not be successful in developing relationships with key participants in the mobile industry or in developing products that operate effectively with these technologies, systems, networks, or standards. In the event that it is more difficult for our users to access and use Facebook on their mobile devices, or if our users choose not to access or use Facebook on their mobile devices or use mobile products that do not offer access to Facebook, our user growth and user engagement could be harmed.

[Image credit: Flickr, Veer66]

Filed under: media, social

This posting includes an audio/video/photo media file: Download Now

How “The Hacker Way” helped propel Facebook to market dominance

Posted: 01 Feb 2012 03:38 PM PST

The graffiti-covered wall at Facebook HQ

Facebook’s core values include a powerful, results-oriented, anti-theoretical philosophy called “The Hacker Way,” according to founder Mark Zuckerberg.

“The Hacker Way is an approach to building that involves continuous improvement and iteration,” Zuckerberg writes. “Hackers believe that something can always be better, and that nothing is ever complete. They just have to go fix it — often in the face of people who say it's impossible or are content with the status quo.”

The remarkable “letter” from Zuckerberg appears in Facebook’s S-1 form announcing its intention to go public, which the SEC released to the public today. No starting price has yet been named, but Facebook said in the filing it expects to raise $5 billion in the IPO. The transaction may leave the company valued between between $75 and $100 billion.

The Hacker Way, Zuckerberg writes, is embedded deeply into the company’s culture. It prioritizes code-based solutions over theoretical arguments, practicality over perfection, risk-taking, and iteration (creating things quickly, testing, then refining).

It’s a remarkable codification of principles that many programmers and Silicon Valley entrepreneurs have understood for a long time. The 37signals founders Jason Fried and David Heinemeyer Hansen elaborated a similar philosophy in their book Rework, and Eric Ries touts an entrepreneurial version of the code in his book and blog, The Lean Startup.

Reading a business book is one thing; seeing the principle outlined in the SEC documents filed by a company planning to go perfect is another. It’s a sign of how deeply the hacker ethos has transformed the way the tech industry works.

Among other things, the philosophy appears in sayings that Facebook employees frequently repeat.

  • "Done is better than perfect."
  • "Code wins arguments."
  • "Move fast and break things."
  • "The riskiest thing is to take no risks."

Leaving nothing to chance, the company also ensures that all employees are steeped in this worldview by putting them through a Facebook “Bootcamp.”

“To make sure all our engineers share this approach, we require all new engineers — even managers whose primary job will not be to write code — to go through a program called Bootcamp where they learn our codebase, our tools and our approach,” Zuckerberg writes. “There are a lot of folks in the industry who manage engineers and don't want to code themselves, but the type of hands-on people we're looking for are willing and able to go through Bootcamp.”

Another prominent part of the company’s culture: Frequent hackathons, all-out coding marathons that produce code everyone gets to see and comment on. Some of Facebook’s most popular features emerged from hackathons, including the new Timeline, chat, video, the company’s mobile development framework, and even some infrastructure elements.

Zuckerberg’s letter also shows a sharp awareness of the shift in human interconnectedness brought about by the internet and mobile technologies. The company was “built to accomplish a social mission — to make the world more open and connected,” Zuckerberg writes. Facebook does that, he says, by helping people connect to one another, starting with the most fundamental relationship: That of two people to each other.

Here’s the full text of Zuckerberg’s letter.

Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.

We think it's important that everyone who invests in Facebook understands what this mission means to us, how we make decisions and why we do the things we do. I will try to outline our approach in this letter.

At Facebook, we're inspired by technologies that have revolutionized how people spread and consume information. We often talk about inventions like the printing press and the television — by simply making communication more efficient, they led to a complete transformation of many important parts of society. They gave more people a voice. They encouraged progress. They changed the way society was organized. They brought us closer together.

Today, our society has reached another tipping point. We live at a moment when the majority of people in the world have access to the internet or mobile phones — the raw tools necessary to start sharing what they're thinking, feeling and doing with whomever they want. Facebook aspires to build the services that give people the power to share and help them once again transform many of our core institutions and industries.

There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future. The scale of the technology and infrastructure that must be built is unprecedented, and we believe this is the most important problem we can focus on.

We hope to strengthen how people relate to each other.

Even if our mission sounds big, it starts small — with the relationship between two people.

Personal relationships are the fundamental unit of our society. Relationships are how we discover new ideas, understand our world and ultimately derive long-term happiness.

At Facebook, we build tools to help people connect with the people they want and share what they want, and by doing this we are extending people's capacity to build and maintain relationships.

People sharing more — even if just with their close friends or families — creates a more open culture and leads to a better understanding of the lives and perspectives of others. We believe that this creates a greater number of stronger relationships between people, and that it helps people get exposed to a greater number of diverse perspectives.

By helping people form these connections, we hope to rewire the way people spread and consume information. We think the world's information infrastructure should resemble the social graph — a network built from the bottom up or peer-to-peer, rather than the monolithic, top-down structure that has existed to date. We also believe that giving people control over what they share is a fundamental principle of this rewiring.

We have already helped more than 800 million people map out more than 100 billion connections so far, and our goal is to help this rewiring accelerate.

We hope to improve how people connect to businesses and the economy.

We think a more open and connected world will help create a stronger economy with more authentic businesses that build better products and services.

As people share more, they have access to more opinions from the people they trust about the products and services they use. This makes it easier to discover the best products and improve the quality and efficiency of their lives.

One result of making it easier to find better products is that businesses will be rewarded for building better products — ones that are personalized and designed around people. We have found that products that are "social by design" tend to be more engaging than their traditional counterparts, and we look forward to seeing more of the world's products move in this direction.

Our developer platform has already enabled hundreds of thousands of businesses to build higher-quality and more social products. We have seen disruptive new approaches in industries like games, music and news, and we expect to see similar disruption in more industries by new approaches that are social by design.

In addition to building better products, a more open world will also encourage businesses to engage with their customers directly and authentically. More than four million businesses have Pages on Facebook that they use to have a dialogue with their customers. We expect this trend to grow as well.

We hope to change how people relate to their governments and social institutions.

We believe building tools to help people share can bring a more honest and transparent dialogue around government that could lead to more direct empowerment of people, more accountability for officials and better solutions to some of the biggest problems of our time.

By giving people the power to share, we are starting to see people make their voices heard on a different scale from what has historically been possible. These voices will increase in number and volume. They cannot be ignored. Over time, we expect governments will become more responsive to issues and concerns raised directly by all their people rather than through intermediaries controlled by a select few.

Through this process, we believe that leaders will emerge across all countries who are pro-internet and fight for the rights of their people, including the right to share what they want and the right to access all information that people want to share with them.

Finally, as more of the economy moves towards higher-quality products that are personalized, we also expect to see the emergence of new services that are social by design to address the large worldwide problems we face in job creation, education and health care. We look forward to doing what we can to help this progress.

Our Mission and Our Business

As I said above, Facebook was not originally founded to be a company. We've always cared primarily about our social mission, the services we're building and the people who use them. This is a different approach for a public company to take, so I want to explain why I think it works.

I started off by writing the first version of Facebook myself because it was something I wanted to exist. Since then, most of the ideas and code that have gone into Facebook have come from the great people we've attracted to our team.

Most great people care primarily about building and being a part of great things, but they also want to make money. Through the process of building a team — and also building a developer community, advertising market and investor base — I've developed a deep appreciation for how building a strong company with a strong economic engine and strong growth can be the best way to align many people to solve important problems.

Simply put: we don't build services to make money; we make money to build better services.

And we think this is a good way to build something. These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits.

By focusing on our mission and building great services, we believe we will create the most value for our shareholders and partners over the long term — and this in turn will enable us to keep attracting the best people and building more great services. We don't wake up in the morning with the primary goal of making money, but we understand that the best way to achieve our mission is to build a strong and valuable company.

This is how we think about our IPO as well. We're going public for our employees and our investors. We made a commitment to them when we gave them equity that we'd work hard to make it worth a lot and make it liquid, and this IPO is fulfilling our commitment. As we become a public company, we're making a similar commitment to our new investors and we will work just as hard to fulfill it.

The Hacker Way

As part of building a strong company, we work hard at making Facebook the best place for great people to have a big impact on the world and learn from other great people. We have cultivated a unique culture and management approach that we call the Hacker Way.

The word "hacker" has an unfairly negative connotation from being portrayed in the media as people who break into computers. In reality, hacking just means building something quickly or testing the boundaries of what can be done. Like most things, it can be used for good or bad, but the vast majority of hackers I've met tend to be idealistic people who want to have a positive impact on the world.

The Hacker Way is an approach to building that involves continuous improvement and iteration. Hackers believe that something can always be better, and that nothing is ever complete. They just have to go fix it — often in the face of people who say it's impossible or are content with the status quo.

Hackers try to build the best services over the long term by quickly releasing and learning from smaller iterations rather than trying to get everything right all at once. To support this, we have built a testing framework that at any given time can try out thousands of versions of Facebook. We have the words "Done is better than perfect" painted on our walls to remind ourselves to always keep shipping.

Hacking is also an inherently hands-on and active discipline. Instead of debating for days whether a new idea is possible or what the best way to build something is, hackers would rather just prototype something and see what works. There's a hacker mantra that you'll hear a lot around Facebook offices: "Code wins arguments."

Hacker culture is also extremely open and meritocratic. Hackers believe that the best idea and implementation should always win — not the person who is best at lobbying for an idea or the person who manages the most people.

To encourage this approach, every few months we have a hackathon, where everyone builds prototypes for new ideas they have. At the end, the whole team gets together and looks at everything that has been built. Many of our most successful products came out of hackathons, including Timeline, chat, video, our mobile development framework and some of our most important infrastructure like the HipHop compiler.

To make sure all our engineers share this approach, we require all new engineers — even managers whose primary job will not be to write code — to go through a program called Bootcamp where they learn our codebase, our tools and our approach. There are a lot of folks in the industry who manage engineers and don't want to code themselves, but the type of hands-on people we're looking for are willing and able to go through Bootcamp.

The examples above all relate to engineering, but we have distilled these principles into five core values for how we run Facebook:

Focus on Impact

If we want to have the biggest impact, the best way to do this is to make sure we always focus on solving the most important problems. It sounds simple, but we think most companies do this poorly and waste a lot of time. We expect everyone at Facebook to be good at finding the biggest problems to work on.

Move Fast

Moving fast enables us to build more things and learn faster. However, as most companies grow, they slow down too much because they're more afraid of making mistakes than they are of losing opportunities by moving too slowly. We have a saying: "Move fast and break things." The idea is that if you never break anything, you're probably not moving fast enough.

Be Bold

Building great things means taking risks. This can be scary and prevents most companies from doing the bold things they should. However, in a world that's changing so quickly, you're guaranteed to fail if you don't take any risks. We have another saying: "The riskiest thing is to take no risks." We encourage everyone to make bold decisions, even if that means being wrong some of the time.

Be Open

We believe that a more open world is a better world because people with more information can make better decisions and have a greater impact. That goes for running our company as well. We work hard to make sure everyone at Facebook has access to as much information as possible about every part of the company so they can make the best decisions and have the greatest impact.

Build Social Value

Once again, Facebook exists to make the world more open and connected, and not just to build a company. We expect everyone at Facebook to focus every day on how to build real value for the world in everything they do.

Thanks for taking the time to read this letter. We believe that we have an opportunity to have an important impact on the world and build a lasting company in the process. I look forward to building something great together.

Facebook wall photo: M.POLLO Menswear/Flickr

Filed under: Entrepreneur Corner, VentureBeat

This posting includes an audio/video/photo media file: Download Now

Facebook’s monster mobile numbers: Over 425M users across Android, iOS, other platforms

Posted: 01 Feb 2012 03:34 PM PST

Facebook appWith Facebook’s just-released S-1 filing, we’re getting a better picture of how the company is competing in the mobile sphere. We already knew the company had more than 800 million registered members, and now we know it had more than 425 million monthly active mobile users in December 2011, a stunning accomplishment.

“Mobile is really coming into its own right now, and Facebook is going to play heavily in this space,” Altimeter Group analyst Rebecca Lieb told VentureBeat.

Facebook’s users have access to the service through mobile sites, feature phone products, and smartphone apps on Android, iOS, and Windows Mobile. In the S-1, it claims that the Facebook application is the “most frequently downloaded app across all major smartphone platforms in the United States,” according to a third-party report. The company believes usage across mobile will continue to grow, especially with young users. Facebook states:

“We also believe that younger users have higher levels of engagement with the web and mobile devices in general and with Facebook specifically. We anticipate that demographic trends over the long term may contribute to growth in engagement as a greater number of users will come from demographic groups that have grown up with the web and mobile devices and who spend more time online every day.”

The company does not currently feature advertisements inside its Facebook mobile apps, but it does indicate that “the global mobile advertising market was $1.5 billion in 2010 and is expected to grow at a 64% compound annual rate to $17.6 billion in 2015.” With those sort of numbers in mind, the company realizes it’s missing out, stating that “we believe that we may have potential future monetization opportunities such as the inclusion of sponsored stories in users' mobile News Feeds.”

“The company faces different challenges across each platform,” Lieb told VentureBeat. “For example, there’s more room for an ad on an iPad than there is on an iPhone. But the company will develop new advertising and marketing products to meet these challenges. And as it develops ad products for mobile, it will begin to be a significant competitor to Google and Apple in this space.”

Filed under: mobile

This posting includes an audio/video/photo media file: Download Now

BREAKING: Facebook files its S-1; let the IPO hoopla begin

Posted: 01 Feb 2012 03:15 PM PST

Facebook has filed its S-1 form with the SEC, announcing its intention to go public.

The SEC filing is included at the end of this post for your convenience, since this news has understandably had a negative impact on the SEC’s site.

The stock ticker symbol will be FB. No starting price has yet been named, but Facebook did say in the filing it expects to raise $5 billion in the IPO. The transaction may leave the company valued between between $75 and $100 billion.

“Facebook was not originally created to be a company,” wrote CEO Mark Zuckerberg in a letter within the S-1.

“It was built to accomplish a social mission — to make the world more open and connected… There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future. The scale of the technology and infrastructure that must be built is unprecedented, and we believe this is the most important problem we can focus on.”

Facebook currently claims 845 million active monthly users, with a fairly even breakdown between markets in North America, Asia, Europe, and South America/Africa (with the latter two regions considered as a whole). The site claims 483 million daily active users, and the S-1 says Facebook also has 425 million mobile monthly active users.

BREAKOUT POST: Facebook made $1B profit on $3.7B revenue last year

Financial firms Morgan Stanley, J.P. Morgan, Goldman Sachs, Merrill Lynch, Barclays, and Allen & Company are named on the S-1 as underwriters for the deal, with Ernst & Young acting as an auditing and accounting expert for the deal.

As for which market the stock will debut on, the company states in the S-1, “We intend to apply to list our common stock on the NASDAQ Global Select Market or the New York Stock Exchange.”

Zuckerberg still holds the majority of the company’s voting power; in other words, he is the single largest shareholder. “Mr. Zuckerberg will be able to effectively control all matters submitted to our stockholders for a vote, as well as the overall management and direction of our company,” reads the form.

And other high-profile shareholders have arranged to vote as directed by the CEO. We read: “Under one type of voting agreement, stockholders agreed to vote all of their shares as directed by, and granted an irrevocable proxy to, Mr. Zuckerberg at his discretion on all matters.” These parties include but are not limited to Founders Fund, co-founder Dustin Moskovitz, early employee Sean Parker, and a handful of others.

Altogether, Facebook now has more than 3,200 employees — a 50 percent increase year-over-year — the form says. Facebook employees and other shareholders are prohibited from selling stock for a period of three months — half the usual six-month lockup period. Zuckerberg is being held back from selling for a six-month period.

BREAKOUT POST: Mark Zuckerberg owns 28.2% of Facebook

In the form, we learn that Zuckerberg’s salary sits at $500,000 annually; it will go down to $1 beginning January 2013, a common move by CEOs for tax purposes (Steve Jobs also received a $1 annual salary). Other prominent Facebook executives, including Sheryl Sandberg, make between $275,000 and $300,000 in base salary.

The company has taken nearly $2.5 billion in institutional funding since its founding in 2004. Its revenue last year totaled $3.711 billion, according to the filing — around $500 million less than the $4 billion-plus figures anticipated by many analysts. Net earnings for 2011 stood at an even $1 billion.

No date for the public sale of Facebook stock has yet been set, but the IPO has been anticipated since last year, when the company’s number of shareholders hit an SEC-imposed limit, triggering the beginnings of IPO proceedings.

“We hope to improve how people connect to businesses and the economy,” Zuckerberg’s letter concludes.

“We think a more open and connected world will help create a stronger economy with more authentic businesses that build better products and services.”

Filed under: deals, social, VentureBeat

This posting includes an audio/video/photo media file: Download Now

Facebook user data: 845M monthly users, 2.7B daily likes & comments

Posted: 01 Feb 2012 02:51 PM PST

Facebook User Data-1

Facebook filed for an initial public offering today, and included an updated report on the giant social network’s user and usage data.

The company’s total number of active monthly users, which it defines as registered Facebook users who have logged in and visited the site via web browser/mobile device (including interactions from third-party sites), was 845 million as of December 31, 2011. That’s up by about 45 million since the company’s last update at September’s F8 developers conference, and a 39 percent increase compared to the same period of last year.

The company stated that future active monthly user growth “depends on our ability to retain our current users, re-engage with inactive users, and add new users, including by extending our reach across mobile platforms.”

Of those 845 million, 161 million came from the U.S., while 46 million from India and 37 million from Brazil — two areas that are key source of growth, according to Facebook. The company further broke out its user penetration by country:

  • 80 percent of all Internet users in Chile, Turkey, and Venezuela are on Facebook
  • 60 percent of all Internet users in the U.S. and U.K. are on Facebook
  • 20-30 percent of all Internet users in Brazil, Germany, and India are on Facebook.
  • 15 percent of all Internet users in Japan, Russia, and South Korea are on Facebook.
  • Unsurprisingly, zero percent penetration in countries that restrict Facebook (like China).

When it comes to active users per day, the numbers are also quite impressive. As of December 31, 2011, an average of 483 million people log on to use Facebook everyday — up from 327 million or 48 percent compared to the same period in 2010.

“I looks like the overall monthly users growth is slowing, which I don’t think was much of a surprise to anyone. But one interesting tidbit about growth is if you compare the daily active users to the monthly active users (year-over-year) the ratio went up. That’s a very good sign,” Forrester analyst Nate Elliott said in an interview with VentureBeat. “This is a company that’s worked really hard to innovate user experience in terms of the features offered, information presented to users and pull in the best of what’s social in other sites.”

“What you’re seeing with (the daily active user data) growth is all that hard work paying off,” Elliott said, adding that the company has plenty potential for daily active growth in India and Brazil going forward.

Some other impressive metrics regarding user engagement reported by Facebook include:

  • 250 million photos uploaded per day
  • 2.7 billion likes and comments per day
  • 2 billion total registered users
  • 100 billion friendships

For more information, check out these charts on usage data and user growth from Facebook’s S-1 filing:

Filed under: deals, social, VentureBeat

This posting includes an audio/video/photo media file: Download Now

Zynga accounted for $445M, or 12 percent of Facebook’s revenue, in 2011

Posted: 01 Feb 2012 02:39 PM PST

Zynga, the largest app publisher on Facebook, accounted for 12 percent of the social network’s total revenue in 2011, according to Facebook’s inital public offering filing with the Securities and Exchange Commission. That means that Zynga accounted for $445 million of Facebook’s revenue in 2011.

The numbers show that Facebook and Zynga have intertwined fates, with both depending on the other for revenues. Zynga, however, is more dependent, as about 90-percent-plus of its revenues are generated on the Facebook platform.

Zynga has more than 235 million monthly active users on Facebook. Those players play social games such as FarmVille and CityVille for free, but they can purchase virtual goods with real money. About 30 percent of those revenues goes to Facebook, which charges a transaction fee for the use of its Facebook Credits virtual currency.

Zynga also generates revenue for Facebook by purchasing ads on the network to promote its social games. Zynga, along with Electronic Arts and Disney, purchase “performance-based ads” on Facebook to capture new players.

Facebook has said in the past that if the use of Zynga games on its platform declines, if Zynga launches games on other platforms, or if Facebook fails to maintain good relations with Zynga, then Facebook’s revenues may get hurt.

The companies have had their differences in the past. In May of last year, Facebook began requiring Zynga to pay the 30-percent transaction fee for Facebook Credits. That hurt Zynga’s profits, and it started diversifying beyond Facebook after that. But the two companies have since patched things up, and Zynga is still heavily focused on Facebook, which has 800 million users.

While Facebook gets revenue from a variety of sources, it has said, “Games from Zynga have generated the majority of our payments and other fees revenue.” Social games account for just about all of the payments revenue. Zynga declined comment.

Filed under: games, social

This posting includes an audio/video/photo media file: Download Now

Facebook made $1B on $3.7B in revenue last year

Posted: 01 Feb 2012 02:31 PM PST

Facebook money imageFacebook has been on a rocket ride to social network dominance. Now we know that it’s making some money from that ride.

The social-networking company made $3.7 billion in revenue in 2011, according to the S-1 documents it filed with the SEC today. Facebook filed the documents as the first step in going public. No starting price has yet been named, but Facebook said it expects to raise $5 billion in the IPO. The transaction may leave the company valued between between $75 and $100 billion, of which founder Mark Zuckerberg will own 28.2 percent.

After expenses, the company had $1 billion in earnings, for an earnings per share of $0.46 on a diluted basis.

The S-1 doesn’t break out earnings before interest, taxes, deductions and adjustments (EBITDA, a common business metric) per se, but earnings before accounting for “other expenses” and taxes are $1.76B, and net earnings before taxes are $1.7B.

“We generate substantially all of our revenue from advertising and from fees associated with our Payments infrastructure that enables users to purchase virtual and digital goods from our Platform developers,” according to the document.

$3.1 billion of Facebook’s 2011 revenue came from advertising, while just $557 million came from payments and related fees. The total is an increase of 88 percent from 2010, when the company make $1.97 billion in revenue ($1.87 billion of it from advertising, and $106 million from payments).

While payments is generating a relatively small fraction of Facebook’s income, it is growing rapidly, from $13 million in 2009 to $557 million in 2011. Even accounting for just the last year’s growth, payments are up fivefold.

The growth in payments revenue is attributable to the adoption of Facebook Payments, which began generating significant revenue in the fourth quarter of 2010 and became mandatory for all game developers who want to accept customer payments starting in July, 2011.

In addition, Facebook has almost $4 billion in working capital on hand. While that’s nowhere near Apple’s cash reserves of $100 billion, it’s an impressive number for a seven-year-old company that describes itself as being in the “early days of pursuing our mission to make the world more open and connected.”

Interestingly, 12 percent of the company’s revenue comes from its partnership with games company Zynga, which is the dominant provider of games on the Facebook platform.

The documentation also lists what Facebook has been spending its money on:

  • $860 million on cost of revenue, including data centers, bandwidth, and associated salaries
  • $427 million on marketing and sales
  • $388 million on research and development
  • $280 million on general and administrative costs
  • $695 million on income taxes

Filed under: VentureBeat

This posting includes an audio/video/photo media file: Download Now

With a solid launch of Star Wars online game, EA investors can breathe a sigh of relief

Posted: 01 Feb 2012 02:25 PM PST

Electronic Arts saw better-than-expected sales of Star Wars: The Old Republic and Battlefield 3 in the third fiscal quarter ended Dec. 31, according to the company’s comments in its analyst conference call today.

After initially driving the stock down, EA’s performance has now driven the stock up 4 percent to $19.20 a share in after-hours trading.

“I think the stock goes up tomorrow,” said Michael Pachter, an analyst at Wedbush Securities.

The Old Republic sold 2 million units and 1.7 million are active. The difference is some have either not started playing yet or have quit. The gamers are playing 4 hours a day, on average, and logins are averaging 1 million a day. The Old Republic has had stable servers and EA had doubled the efficiency of the servers after the launch, resulting in less congestion for players. EA plans to deliver an update to the content in March. EA investors should greet those comments with some relief. Battlefield 3 sold more than 10 million units. Many investors were holding their breath, particularly on the performance of Star Wars.

But EA chief executive John Riccitiello guided analysts to a lower financial performance in the fourth fiscal quarter ending March 31 because of several factors.

Riccitiello said the fourth fiscal quarter would be hurt by the delay of a big social game, the shipment of more Star Wars The Old Republic games in December, shifting more titles that were expected to sell in January to December, and a weaker European retail partner. The retail partner, which EA did not identify but is likely GAME Group, could result in bad debt and losses for EA. The Star Wars title essentially did so well that sales were shifted forward by a quarter.

Those factors will reduce earnings per share by 15 cents in the fourth fiscal quarter. Riccitiello didn’t say which social game was delayed, but EA is rumored to be working on a social version of Sim City. Pachter said EA’s explanation made sense.

Eric Brown, chief financial officer, said stronger performance of Battlefield 3 and FIFA 12 offset weaker sales of Need for Speed: The Run. The Sims Social and PopCap helped digital revenues grow to $1 billion for the 2011 calendar year. Revenue from smartphones was up 70 percent, and mobile games as a whole were $59 million, up 25 percent from a year ago.

“It was another good quarter overall,” Brown said. “For calendar year 2011, EA was the No. 1 publisher in the Western world.”

In fiscal 2013, EA expects to launch about 20 titles in the packaged goods market. Frank Gibeau, head of EA’s labels, said that Battlefield 3 showed that making fewer and better games is a good strategy, with more than 11 million units sold. He said more content would becoming in 2012. He said the FIFA 12 title sold $39 million in micro transactions related to online play and trading.

EA said that its server infrastructure stood up well during the launch. Servers have been up and running 99.5 percent of the time, much better than other MMO launches.

“In summary, we nailed the launch,” regarding Star Wars, said Frank Gibeau, head of labels at EA. He said the reported lack of congestion is not due to a lack of players, as some analysts reported, but a tribute to good engineering.

In the coming quarter, EA has big launches with Kingdoms of Amalur: Reckoning on Feb. 7 and Mass Effect 3 on March 6. Riccitiello said that the company is now a very different company from what it was a year ago, with more emphasis on digital distribution and making more revenue from fewer titles. EA also has

“We’re a much better company than we were at the start of the fiscal year,” Riccitiello said.

Peter Moore, chief operating officer, said that EA will publish five major branded Facebook games in the coming year using EA’s popular brands.

Filed under: games

This posting includes an audio/video/photo media file: Download Now

Mark Zuckerberg owns 28.2% of Facebook, Peter Thiel has 2.5%

Posted: 01 Feb 2012 02:09 PM PST


Facebook CEO Mark Zuckerberg owns 28.2 percent of the company, according to Facebook’s just-released IPO S-1 filing with the Securities and Exchange Commission.

Facebook’s initial public offering is one of the most hyped technology events of the year, and the company is expected to debut on the stock market in May. Its stock ticker symbol will be “FB.” The company has not yet named a starting price has yet been named, but Facebook said in the filing that it expects to raise at least $5 billion in the IPO.

Since the Facebook story began, we’d wondered how much ownership and control 27-year-old Zuckerberg had of the company he started while attending Harvard. Now we know he has 28.2 percent of the company’s shares, according to the S-1 — and controls a majority of Facebook shareholder votes.

Also interesting is who else has a serious stake in the company. The filing states that James Breyer of Accel Partners has 11.4 percent of company shares, and superstar investor Peter Thiel owns 2.5 percent of company shares. Facebook co-founder Dustin Moskovitz owns 7.6 percent of shares, while current Facebook COO Sheryl Sandberg has less than .1 percent of company stock.

Also eye-popping is that Zuckerberg actually has control of a majority of Facebook’s voting stock. Check out this language from the filing that indicates just how much power and control Zuck has over Facebook:

Mr. Zuckerberg has the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets. In addition, Mr. Zuckerberg has the ability to control the management and affairs of our company as a result of his position as our CEO and his ability to control the election of our directors. Additionally, in the event that Mr. Zuckerberg controls our company at the time of his death, control may be transferred to a person or entity that he designates as his successor. As a board member and officer, Mr. Zuckerberg owes a fiduciary duty to our stockholders and must act in good faith in a manner he reasonably believes to be in the best interests of our stockholders. As a stockholder, even a controlling stockholder, Mr. Zuckerberg is entitled to vote his shares, and shares over which he has voting control as a result of voting agreements, in his own interests, which may not always be in the interests of our stockholders generally.

Altimeter Group analyst Rebecca Lieb told VentureBeat that she anticipated that Zuckerberg would retain an immense level of control, but no one knew he would have complete say over nearly all decisions.

“Facebook is his baby and he has been judicious with his decision making,” Lieb said. “By all accounts, this was an expected move.”

Although Facebook is planning to raise at least $5 billion with the IPO, the company could raise a lot more. With a rumored valuation of $100 billion, Zuckerberg’s shares would make him worth more than $28 billion. By extension, Breyer’s shares are worth more than $11 billion, Moskovitz’s are worth more than $7 billion, and Thiel’s are worth more than $2 billion.

You can see the full ownership chart below (click for a larger image):


Image credit: Jolie O’Dell/VentureBeat

Filed under: VentureBeat

This posting includes an audio/video/photo media file: Download Now

Redbox says no to 56-day delays on new Warner Bros. DVDs

Posted: 01 Feb 2012 01:58 PM PST


Video-rental kiosk company Redbox is refusing a Warner Brothers request to make customers wait roughly two months before being able to rent a newly released WB movie on DVD, the company announced in a statement yesterday.

The statement is in direct response to contract agreement between the two companies that ended in February. In an effort to boost lagging DVD sales, film studio Warner Brothers decided earlier this month to delay all new releases from becoming available through many popular movie rental services, like Netflix, Blockbuster, and Redbox. This means the rental services must wait 56 days after a new Warner Brothers DVD hits retail store shelves before they are able to begin renting it out to customers.

The video rental companies can get around the 56-day delay stipulation, but it requires them to purchase all new DVD releases at full retail price rather than a discounted, wholesale rate. In doing so, however, it would raise a rental company’s operating costs and ultimately dip into its profits.

Yet, that’s exactly what Redbox intends to do.

“Redbox will continue to provide our consumers with affordable access to new release movies from all major studios including Warner Brothers at our more than 28,000 locations nationwide. We will work to provide Warner Brothers' movies through alternative means,” wrote Redbox SVP of marketing and customer experience Gary Cohen in the statement. “Redbox maintains direct working relationships with every other major studio."

While this may seem like a declaration of war from Redbox to Warner Brothers, it’s more or less just a smart business decision. The company realized that delaying these new releases for an extended amount of time would have an adverse effect on its ability to generate revenue. It could be as simple as Redbox not wanting to disappoint its loyal repeat customers. Or, it could be as calculated as determining that the potential financial loss from losing rental sales was greater than the cost of spending more on the actual DVDs.

Speaking of business decisions, Warner Brothers is making a bad one by imposing a delay to rental companies. In fact, since the move has the potential to raise those rental companies’ costs, it will push them closer to extinction –  and eventually eliminate a healthy source of revenue to movie companies like Warner Brothers.

Filed under: media, VentureBeat

This posting includes an audio/video/photo media file: Download Now

As Google falters in public favor over privacy, Microsoft seeks to step in

Posted: 01 Feb 2012 01:23 PM PST

Some would look at Google’s recent PR flub over privacy policies and settings as a bit of a fiasco.

Microsoft, of course, sees it as an opportunity.

This week, the company is placing a series of ads in newspapers across the U.S. to remind consumers that it still offers popular and secure web services for search, email, document management, and more.

In short, the company is making a bid for disgruntled Google users. For those among us who won’t like the idea of having a unified Google identity and privacy policy — a big part of the company’s Google+ strategy — Microsoft has Bing, Hotmail, Office 365 just waiting in the wings.

“When we read the coverage last week, it was clear people were honestly wrestling with the choices that had been made for them and were looking for options or alternatives,” wrote Microsoft communications VP Frank Shaw on the company’s official blog.

In some sense, we have to call BS on the whole dialog. It’s the clash of the PR titans. Neither company is really changing much of anything, including its actual practices when it comes to handling user data.

Unfortunately, average users have a hazy understanding of the changes Google is making; most of what they know is that change has the potential to disrupt their online lives, and they don’t want that.

Microsoft, which has been cloaked in (somewhat undeserved) big-bad-corporation vibes since the 1990s, is making “come to papa” gestures toward these users, even though nothing has changed in that company’s online products. There’s no new launch to announce, just a new angle to pitch — and the angle is “We’re not Google.”

Google, on the other hand, has to feed its users a similarly ambiguous line: “We’re changing, but nothing’s changing. Don’t worry; we’re all going to be fine.”

When it comes to your privacy, both companies are saying exactly the same thing, making highly subjective statements with no qualifying data.

Both claim to keep your data safe, to not share it around without your permission, to give you “choices” and operate with “transparency” when it comes to how data is used. But PR pitches aside, both companies are handling a complex issue — users storing massive amounts of data in online accounts — in roughly the same way.

So on which side is the grass truly greener? Whose privacy policies actually allow for more privacy?

The answer is… well, there is no answer. Both corporations are making company-friendly choices to improve their services and enhance their bottom lines, but not at the risk of scaring off the users they rely on to fund their operations. It’s a fine line, and both Microsoft and Google are toeing it carefully. Both will likely make some mistakes along the way; it’s inevitable.

As we don our trusty tin foil hats, we recommend that those truly obsessed with personal privacy shouldn’t be working “in the cloud” or putting most of their lives and work online. But if you have to live in an web-connected reality, as do we, decentralizing your activities will make for more privacy, because it will disperse small aspects of your information, habits, and behaviors among a range of companies rather than siloing your entire online life in just one mega-corporation. Between that and an app like 1Password, you should be just fine.

Filed under: VentureBeat

This posting includes an audio/video/photo media file: Download Now

Electronic Arts beats quarterly estimates but offers pessimistic guidance

Posted: 01 Feb 2012 01:21 PM PST

Electronic Arts reported today that its sales and earnings beat analysts’ estimates for the third fiscal quarter ended Dec. 31, but the company offered surprisingly pessimistic guidance for the fourth fiscal quarter ending March 31.

Redwood City, Calif.-based EA is one of the biggest independent video game publishers, with business that range from hardcore shooter games like Battlefield 3 to casual titles like The Sims Social on Facebook. Its results are a bellwether for the video game business. EA is balancing digital and retail sales of games and is shifting more and more of its business to digital distribution.

EA reported non-GAAP revenues of $1.65 billion and earnings of 99 cents a share. Analysts were expecting non-GAAP revenues of $1.62 billion and earnings of 93 cents a share, compared with revenue of $1.4 billion and net income of 59 cents a share a year earlier. EA’s own guidance was for $1.55 billion to $1.65 billion in revenues and 85 cents to 95 cents a share in net income. In after-hours trading, EA’s stock has fallen 14 cents to $18.44 a share.

But EA said that adjusted earnings for the fourth fiscal quarter will be 10 cents to 20 cents a share, compared to expectations of 29 cents. EA said sales will be $925 million to $975 million on a non-GAAP basis for the fourth fiscal quarter, compared with estimates of $983 million.

EA chief executive John Riccitiello will talk about the results in detail at 2 pm Pacific time.

"We are pleased to report a strong holiday quarter driven by Battlefield 3, FIFA12 and a strong showing by our digital games and services," said Riccitiello in a statement. “Star Wars: The Old Republic is developing a committed community of players with more than 1.7 million active subscribers and growing."

EA has a diverse portfolio of games, but the big title that everyone is watching closely is Star Wars: The Old Republic, which launched Dec. 20 after six years of development and an estimated $200 million in expenses. EA is selling the game for $60 and asking for subscriptions of $13 to $15 a month. The key is whether the gamers who tried it out on a free basis will stick with it and pay for the game. Star Wars sold through 2 million units in just a month.

The Old Republic, which has been in the making for more than five years, was a major reason why the publisher purchased development studio BioWare (and the now defunct Pandemic) for $860 million in 2007. The success or failure of the game will speak volumes about the tenure of Riccitiello. The Old Republic could get a boost since a 3D version of the film Star Wars: Episode I — The Phantom Menace will debut at the box office on Feb. 10.

Previously, Riccitiello  stated that the game would be on a path to profits with half a million subscribers, a modest number in light of World of Warcraft's 10.3 million players. He said that the game needed 1 million subscribers to be nicely profitable. If Electronic Arts gets 1.5 million to 2 million subscribers, it will be enough to "make it look like a great investment and justify the purchase of BioWare Pandemic,” Riccitiello said. The high-end numbers may seem overly ambitious, but in the past year, World of Warcraft has lost around 1.7 million paying subscribers, leaving plenty of former Warcraft fans ripe for the picking. With 1.7 million users already, EA is at the high end of the hopes for the game.

Battlefield 3 and FIFA 12 both sold through more than 10 million units, while Madden NFL 12 has sold through almost 5 million units to date. EA said it was the No. 1 publisher in market share for North America and Europe. Its share in 2011 of Europe grew 3 percentage points to 20 percent, while it grew 1 percentage point to 17 percent share in North America.

PopCap, acquired for $750 million-plus in August, has grown revenue by 30 percent of the past 12 months. EA said it was the No.1 game publisher in the Apple App Store in December, with the free-to-play mobile game The Sims: FreePlay hitting NO. 1. EA’s Nucleus registration system now has a database of more than 168 million players. And EA’s Origin digital distribution service has more than 9.3 million consumers and generated $100 million in non-GAAP revenue since its launch. EA Origin now has publishing deals with 11 new companies, including Warner Bros., THQ, CapCom, Trion Worlds and Robot Entertainment.

In the fourth fiscal quarter, EA has some big titles coming. This wek, EA is launching Kingdoms of Amalur: Reckoning, the title developed by Curt Schilling’s 38 Studios. EA will also launch Mass Effect 3, a big sci-fi title on March 6.

"We recorded our highest operating cash flow in 31 quarters and grew segment share in both Europe and North America," said Eric Brown, chief financial officer. "Third quarter non-GAAP digital revenue grew 79 percent year-over year, and we achieved our goal of generating over $1 billion in non-GAAP digital revenue on a trailing-twelve-month basis."

For the past 12 months, EA said non-GAAP revenue was $4.2 billion, up from $3.7 billion a year earlier. Non-GAAP net income for the year was $311 million, or 92 cents a share, compared with $173 million, or 52 cents a share a year earlier.

GAAP revenues were $1.06 billion, up from $1.05 billion a year ago for the quarter. GAAP net loss was $205 million, compared with a net loss of $322 million a year ago. EA closed the quarter with $1.2 billion in cash and 7,742 employees, down 17 percent from a year ago.

Filed under: games

This posting includes an audio/video/photo media file: Download Now

Twitter a truly global tool with 72% of accounts outside of the U.S.

Posted: 01 Feb 2012 01:19 PM PST

Geography of Twitter @replies

Twitter is growing in popularity across the world, with U.S. accounts now representing just slightly more than one quarter (28.1 percent) of the total Twitter population, according to new data.

With 33.3 million accounts, Brazil now outranks Japan (29.9 million accounts) as the second most Twittering country, but Japanese remains the second most used language on Twitter after English, according to Paris-based social media research company Semiocast.

Semiocast said it analyzed the explicit and implicit location data, along with the activity levels, of 383 million Twitter profiles created before January 1, 2012.

The U.S. still has a commanding lead as the country with the most accounts (107.7 million accounts in total), but its global share is shrinking as users around the world sign on to the service.

Folks in the Netherlands, meanwhile, bested their Japanese and American peers in terms of activity, and are the most active people on the information network, Semiocast found. Thirty three percent of accounts located in the Netherlands tweeted at least one public update between September 1 and November 30, 2011 — that’s six percent higher than the global average.

As the nearly six-year-old Twitter continues its international expansion, it will face a variety of challenges, including legal discrepancies around freedom of speech. Twitter recently added the capability to withhold tweets from users in a particular country, while leaving them accessible to users elsewhere, should it need to comply with tweet takedown orders.

Twitter did not immediately respond to a request for comment on Semiocast’s data.

Photo credit: Eric Fischer/Flickr

Filed under: social, VentureBeat

This posting includes an audio/video/photo media file: Download Now

Report: THQ cutting 170+ staff, including VP of technology

Posted: 01 Feb 2012 12:41 PM PST

[Update: THQ confirmed in a filing that it is cutting 240 jobs.]

Game publisher and developer THQ is set to announce their financials on Thursday. However, reports surfaced today of layoffs at the company, in addition to previously announced cutbacks.

The publisher appears ready to lay off more than 170 employees as well as THQ’s VP of technology, Mark DeLoura. The original report comes from Kevin Dent, who posted the following message on Twitter:

This is probably going to break in the morning, I have sat on it for a week or so. The culling at THQ was 170+ souls including @markdeloura

Dent then wrote “A smart journalist would send THQ’s VP of Tech Mark DeLoura an email and see what the auto-reply says,” to which DeLoura replied, “Hey, that’s cheating.”

VentureBeat contacted THQ and they declined to comment on the layoffs and gave no information other than a reminder that an earnings call is set for tomorrow.

Despite concern, some analysts believe that THQ may be okay in the longterm as they have cancelled projects and cut costs. Wedbush Securities analyst Michael Pachter recently told VentureBeat that the publisher is likely to run out of cash by June or earlier, unless they take the necessary steps.

THQ is also facing a possible Nasdaq delisting if they can’t bring their share prices above $1 for ten consecutive days. THQ’s stock is currently at .70 per share as of the time of this writing.

[Via Eurogamer]

Filed under: games

This posting includes an audio/video/photo media file: Download Now

Pinterest wins Best New Startup of 2011 Crunchie, now driving more referrals than Reddit

Posted: 01 Feb 2012 12:12 PM PST

pinterest-ben-crunchies Hot-as-heck social networking service Pinterest won the award for Best New Startup of 2011 at the Crunchies Awards last night, beating out other strong contenders like Turntable.fm, Fab, and Codeacademy.

Pinterest lets people spotlight products and pictures they like and was launched in private beta in March 2010. It was nominated in the 2011 category because it saw incredible growth in traffic last year. The site attracted nearly 11 million unique visitors in mid-December and is now one of the top 10 social networking sites on the web.

On top of that, a study by Shareaholic came out yesterday that indicates Pinterest is driving massive amounts of referral traffic to other sites as well. According to the study’s findings, which are based on data from more than 200,000 publishers, Pinterest now drives more referral traffic than Reddit, Google+, LinkedIn and YouTube. Pretty compelling stuff, if you ask us.

Asked why Pinterest remained under-the-radar for so long, co-founder Ben Silbermann (pictured) told TechCrunch: “The whole team really just wanted to build a product that we really loved and that we hoped other people would really love. That’s pretty much what we do.”

Silbermann also elaborated on what elements could be driving so much growth to his site: “Pinterest is a visual site, and a lot of people are visual by nature,” Silbermann said. "But at its core, Pinterest is a site that connects people who are passionate about the same things. In the same way that people who use Facebook are excited to connect with people they care about, people on Pinterest are excited to be inspired by people with similar tastes."

As expected, Silbermann would not disclose how many members or “pins” the site had accumulated thus far.

You can view a screen grab from Pinterest’s home page today below:


Crunchies photo: Heather Kelly/VentureBeat

Image credit: Pinterest screenshot

Filed under: social

This posting includes an audio/video/photo media file: Download Now

Apple loses to Samsung in Germany, Galaxy Tab sales will continue

Posted: 01 Feb 2012 11:54 AM PST

Poor Apple. Those guys just can’t win. Especially in a certain German court, where they tried to sue Samsung over the design of the Galaxy Tab 10.1N tablet and Galaxy Nexus phone.

Last August, the iPad maker was granted a preliminary injunction to halt sales of the Galaxy Tab 10.1, a decision that one analyst called “an unmitigated disaster.”

However, today’s decision (in the case LG Muenchen 21 O 26022/11) applies to a revised version of the same tablet. The Tab 10.1N was created and marketed in Germany to circumvent the ban.

Where the 10.1N is concered, the Munich Regional Court turned down Apple’s request for a ban on grounds of patent infringement. The patent in question covers a seemingly minuscule piece of technology: a UI element to show a user when he or she has reached the end of a scrolling page.

"Samsung has shown that it is more likely than not that the patent will be revoked because of a technology that was already on the market before the intellectual property had been filed for protection," said judge Andreas Mueller in his ruling today.

The fight is far from over, however; Apple is also going after Samsung over the Galaxy S Plus and the S II, also attempting to ban sales in Germany.

Last year, Apple also won a temporary ban on the Tab 10.1 in Australia, and Samsung itself took a few patent-related shots at Apple in a French court in the fall of 2011.

The patent lawsuits between these two contenders began back in April 2011 — that’s when Apple first started making patent claims about the Samsung Galaxy lineup. The first suit in the ongoing barrage was filed in the U.S. District Court in Northern California, Apple’s home turf.

It never gets old, folks. Just kidding; it really, really does. Here’s hoping the lawsuits stop soon and the gadgets flow freely across the EU and everywhere else.

Filed under: mobile

This posting includes an audio/video/photo media file: Download Now

LivingSocial lost $558M in 2011

Posted: 01 Feb 2012 11:29 AM PST

Amazon spent $175 million for a 31 percent stake in number two daily deals site LivingSocial, and in so doing bought us all the best look yet at the privately-held Groupon competitor’s financials.

Buried in Amazon’s annual 10-K filing, made public following the company’s disappointing fourth quarter earnings report, we get to take a gander at its investee’s financial well-being.

LivingSocial, according to the financial information it shared with Amazon, made just $245 million in revenue in 2011 and closed out the year with a $558 million net loss. We also learn that the book value of Amazon’s investment, or the total value of its stake, is now $208 million.

LivingSocial, like Groupon, is clearly operating in the red, and the revenue figure appears more than extremely low (so low that we question how LivingSocial is accounting for revenue), especially if you consider a leaked report from April of last year that suggested LivingSocial was on track to make north of $1 billion in 2011. But the financials, if you believe one source, may be more like abstract art than they are writing on the wall.

(click to enlarge)

“The revenue would have been significantly higher had it included the company's full international results for the year, which were boosted in part by a series of overseas acquisitions,” a person familiar with LivingSocial told GeekWire. “In addition, the bottom line was impacted by heavy marketing expenses, as the company sought to grab market share, and those expenses were concentrated heavily at the beginning of last year.”

In addition to Amazon’s original $175 million investment in LivingSocial in December 2010, it recently participated in a substantial follow-on round to help the young (and obviously still unprofitable) company put off a public offering. In furtherance of its investment, Amazon also offered a $20 voucher for $10 on LivingSocial last year. The deal was too good to pass up, and LivingSocial ended up selling 1.3 million Amazon vouchers.

AOL co-founder and LivingSocial investor Steve Case recently defended the deals company, in an interview with The Deal, as still being in the early stages of social commerce. The video is embedded below.

Photo credit: travisseitler/Flickr

Filed under: deals, VentureBeat

This posting includes an audio/video/photo media file: Download Now

How crowdfunding done right can light America’s entrepreneurial fire

Posted: 01 Feb 2012 10:00 AM PST

This sponsored post is produced by MicroVentures.

Investing in a start-up is no longer a game of having the right connections. Just a short ten years ago, you had to have an "in" with a lawyer, an accountant, or a friend of a friend who'd give you a referral to a promising tech start-up looking to raise money. Or they would invite you to be part of a select few to invest with them.

Participating in the most exciting part of entrepreneurial efforts had a second barrier to entry: You needed a lot of money, in many cases at least $50,000. And many start-ups coming your way were based far away and hard to get a good handle on. That traditional scenario left a lot of interested angel investors sitting on the sidelines.

Fast forward to early 2012, and we're looking at a different world. Even Washington is taking note how crowdfunding can light much-needed entrepreneurial fire under the lukewarm U.S. economy. The Entrepreneur Access to Capital Act, recently approved by the House of Representatives, for the first time recognizes microlending to start-ups as an integral part of future growth.

The debate over the measure's merits and risks may be ongoing, but microfunding done right is anything but uncharted territory where investors have to worry about placing risky bets on opaque start-ups. Quite the opposite is true, as investment sites like MicroVentures demonstrate.

Thanks to such pioneering crowdfunding sites, it has become a lot easier to be an angel investor with anywhere from $1,000 to $20,000 at their disposal. MicroVentures vets all companies with a thorough and complete due diligence process. It then provides additional documents so investors can conduct their own due diligence to make the final decision.

That way, even small investors are able to focus on high-growth companies, particularly those in the high-tech space, that offer a large upside, rather than the mom-and-pop stores that have traditionally been associated with micro-lending.

MicroVentures founder Bill Clark argues that crowdfunding for entrepreneurs and their ideas for hot new technologies can be done right — if one focuses on three key pieces:

1) Access to good deal flow to identify potential winners.
2) The ability to invest in multiple deals to gain experience.
3) The tools and skills to filter out those companies and founders who will succeed.

Clark faced all three hurdles as an investor himself and turned adversity into an advantage when he founded MicroVentures. Like many others interested in angel investments, Clark wanted to invest smaller sums in more companies, allowing him to spread out his risk and increase his chances of picking a winner. What's more, he wanted access to high-growth candidates beyond his hometown of Austin, Texas.

The quick uptake of his venture seems to prove him right. Since launching MicroVentures a year ago, more than 2,000 investors have joined. "MicroVentures helps investors learn about companies they may never have heard of, and to invest smaller sums in them, " he says. "It's a long overdue break with investment traditions where the small guys get access — and can prime the pumps of innovation for the whole country."

When you sign up to be an investor be sure to put "VentureBeat" in the referral code and MicroVentures will send you a $100 gift card after you make your first investment.

Sponsored posts are content that has been produced by a company, which is either paying for the post or has a business relationship with VentureBeat, and they’re always clearly marked. The content of news stories produced by our editorial team is never influenced by advertisers or sponsors in any way. For more information, contact garrett@venturebeat.com.

Filed under: Entrepreneur Corner, VentureBeat

This posting includes an audio/video/photo media file: Download Now