19 March, 2012



Neil Young’s path to the multibillion-dollar mobile social game market (interview)

Posted: 19 Mar 2012 08:25 AM PDT

Neil Young sold his San Francisco startup Ngmoco to Japan’s DeNA for $403 million in the fall of 2010. And that was just the beginning of Young and DeNA’s quest to create a multibillion-dollar mobile entertainment group, he told VentureBeat last year. DeNA, with $1.4 billion in revenues in the last year, has already cleared many hurdles on that path. Ngmoco has integrated its NG Core technology with DeNA’s Mobage social mobile gaming network to create a new platform for smartphone entertainment.

Mobage is organizing content around an “interest graph” — that is, grouping people by their interests. DeNA has succeeded in doing this in Japan, but a huge market awaits it if it can do the same in the U.S. and on a global stage. While the U.S. market still isn’t there yet, Young believes it will be, and he believes Ngmoco is still a huge part of that undertaking.

We caught up with Young, the CEO of Ngmoco and an executive officer at DeNA,  at the recent Game Developers Conference in San Francisco. Here’s an edited transcript of our interview with Young.

GamesBeat: How are you doing on the road to the mobile gaming bonanza?

Neil Young: It’s the same. We still believe that there’s a tremendous opportunity to create that future entertainment company. We think that building the leading global, social, mobile game platform company is the vital milestone that we’re going to have to pass through to get entrance to the pantheon of media companies.

At DeNA, we’re focused on doing that. 2011 was really about putting all the pieces of the puzzle in place to be able to do that. We talked about building something that’s cross-platform and cross-border, as two very critical pieces of the strategy. We now have games authored by teams in Japan that are coming to the west, and games authored by teams in the west coming to Japan. Pocket Frogs and Zombie Farm just released on the Japanese market.

We’ve released games on Android for a quite a while now, since the third quarter of last year, and we’ve just released our first iOS games, built on the ngCore framework. Those same games now live on two platforms, and those same games live in multiple regions. So that part of the strategy has now been implemented and done. We’ve got about 45 live titles on Mobage now, on smartphone. Over a thousand across Mobage in all title types.

2012 is about getting some of the first-party titles we’ve had in development out and live, bringing some more developers to the platform, and continuing to iterate on the learning and the knowledge so we can deliver the best platform possible. I think we’re ahead of our competition in terms of being live, having experience, having quality developers and games on the network. I feel pretty good about our prospects.

Gamesbeat: And the results so far, for the games that are up on Mobage?

Young: Pretty good. There was a period of time, I think, where it was easy for our competitors to take potshots at us, as we were really just going through the beta testing on these titles. They would talk about, “Wow, they’re only three-star-rated games,” or “Look, the downloads on the Android market are only 10,000.” We try to ignore that commentary, as annoying as it is, because the only venue you have to test these titles is really with real customers. At the point that we were ready to hit the go button on some of those titles, we did. I don’t think you can find a Mobage game that has a rating of less than 4 or 4.2 on any scale.

You take Tiny Tower, which is a game on Mobage, the Android market range is in the one million to five million downloads. Most of the games that we’ve released and promoted have hit the one to five million, or 500,000 to a million download mark. So I think in general, on Android, I think we’ve made pretty good progress. We’re operating a growing and scaling network now. We’re billing, we’re making money on virtual goods. We have great metrics in that regard. I feel pretty good.

We have learned a lot. And I think I try to remind the people inside our company, when sometimes you hit bumps in the road, you learn things. Our competitors have to go through those same learning curves as well. That’s why I feel pretty good about our position.

GamesBeat: Those titles are producing real money. When will that revenue look good compared to what DeNA makes in Japan?

Young: We’re a long way away from that. But that’s always been known. What’s happening in the U.S. now is analogous to what happened in Japan in the mid-2000s. You’ve got the primordial soup to build really big, at-scale media services. That’s what they call it in Japan: the media service industry. If you just look at some of the metrics, in Japan in the mid-2000s you had over 90 percent penetration of mobile into the population base. 3G penetrating over 40 percent. Low cost or flat price billing and devices that — yes, they could make telephone calls and send text messages — but they could also take photos and play games and listen to music and buy goods and services that would directly bill off your carrier bill or your credit card. From a human standpoint, that’s not very dissimilar to what’s happening here, and from a metric standpoint, it’s almost exactly the same as what’s happening here.

In the U.S. last year, we had 93 percent penetration of mobile into the population, 43 percent 3G penetration into that mobile population, and devices that do those same things. We think that those devices, the unique blend of usability and capability, regardless of the underlying technology that they have in them, will fuel the same type of growth. And just on a population basis, Japan is about one-tenth of the population of the developed western world.

You could make the argument that maybe western consumers are not quite as obsessive as Japanese consumers can be. But there’s a really big market to take advantage of this. So it’s a marathon. We’re very focused on winning the marathon.

GamesBeat: When you’re building things now, what takes most of your investment? The network itself…is it built out?

Young: Yeah, the network’s pretty built out. As the network scales there are more capital investments we have to make. We always roll our network over to the cloud, so we sort of operate a private cloud and then roll over to the more public cloud so we can handle peak capacity. If there’s ever a problem we can make sure that the service stays up. As a company, Ngmoco basically operates three business units in the west.

The first would be our first-party studios. We’re creating games that try to take full advantage of what we know about these platforms, what we know about customers, and the learning that we’ve been able to get as part of DeNA. So our own experience, combined with DeNA’s experience, that’s what first-party is about.

We have our third-party teams, which are dedicated to bringing developers to the Mobage platform and offering them the services they need to access audience and maximally monetize.

And then we have the platform itself, which is a blend of hardware and software, infrastructure and technology, that allows people to build titles that target a global audience across multiple platforms. So whether that’s the Mobage stack itself, which you can access through ngCore, or you can now access through a native software development kit (SDK), you can access through Unity, you can access through Unreal, or whether it’s actually using something like ngCore, that allows you to write once and deploy on multiple platforms and automatically get carriage across the network.

And then lastly, traffic management. We are developing the ability to acquire customers effectively, to make sure those customers are high-monetizing customers, and to be able to move them seamlessly around the network. These are all skills that we have and services that we offer to first-party and third-party studios.

Filed under: games, mobile

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42Floors: hacking commercial real estate so you can find a dream office

Posted: 19 Mar 2012 08:20 AM PDT

Zillow, Redfin, Trulia: all familiar names to anyone who's looked for a home lately. But where in this digital landscape would you go to look for office space?

Starting today, 42Floors is finally the answer to that question. It's a web service aimed squarely at helping companies find office space easily—and also those listing leasable space.

But could it really have taken five to seven years for office space search to finally be optimized by the Internet?

Yes, says 42Floors co-founder Jason Freedman, who blames the commercial real estate industry's lack of a consumer focus and reliance on hapless brokers for keeping the opportunity at bay for so long. It's hard to believe, but in an era when software is eating the world, it hasn't yet taken a bite out of this $11 trillion industry, which has a very poor Internet presence.

In classic Silicon Valley—and Y Combinator—fashion, Freedman insists that 42Floors is strictly a technology company saving an industry that's anything but. Industry data providers still rely on thousands of cold-callers to gather information; brokers base their livelihoods on faxes, paper fliers, and hastily assembled spreadsheets. "It's the single most inefficient process you can dream of, and it's going to all be replaced by software," he proudly exclaims.

It all started when Freedman and his team (formerly of Y Combinator-backed startup FlightCaster; acquired in 2010), were looking for office space for their next startup, but became aggravated by the outmoded process that was office space search. Lacking a broker's license to sift through listings, they were at the mercy of other brokers who were operating as if the Internet didn't exist. Craigslist was a letdown as well, with most listings severely out of date and brokers on there engaging in bait-and-switch tactics.

The only companies that had up-to-date online listings were giants left over from the last dot-com boom, namely LoopNet and CoStar. With little incentive to adopt modern web design principles and push for quality photos of all their listings, these companies had become acceptable for brokers, but had stifled the experience for tenants. They're also unreasonably expensive for a startup looking for just one office space, with full access costing as much as $5,000 per month.

This is also why, according to Freedman, the residential search startups took off earlier, since the data in that market was spread out over several competing listing systems that weren't as locked-in and monopolized.

The co-founder became so enamored by the prospect of shattering the old system and conveniently finding his dream office that he took the requisite courses to get himself licensed as a full broker. Within months, he and his team had dissected the industry and built a website that would make finding office space transparent and direct for tenants.

While making the marketplace more efficient may be synonymous with killing the middlemen (in this case brokers), that's not necessarily true. The company has been working with several large brokerages to replace their internal systems so they can feed data into 42Floors much more fluidly. "Brokers don't need to go away, but the data needs to be liberated," says Freedman, who sees the role of brokers evolving to be more of a consultant and negotiator.

To be clear, 42Floors is not serving the market for buying commercial properties. This is strictly about direct-to-tenant office space leases, although it will grow at some point to all types of commercial leases.

42Floors takes many design cues from the more established residential search sites, with a few enhancements. For one, their own professional photographers take all listing photos. Once on the site, the photos are joined by beautifully displayed data. The interface is extremely minimal and uncluttered. This really is one of the better listing sites you've seen. The site relies heavily on the Ken Burns effect, where still-photos are gradually panned and zoomed through a steadily paced slideshow. Freedman insists this is much better than 360-degree views for showcasing office space, and I'd have to agree.

A videography feature will debut later this year, but photography is the more sensible option for a majority of spaces, Freedman says. In fact, 42Floors is currently working on a mobile application (set to debut within the next quarter) that will allow brokers and landlords to take photos with their smartphones and upload them to the service directly. This is an interesting angle for the company and it will be worth observing how the trend plays out.

While all these innovations enhance the browsing and discovery of office space, the company will not be touching the transaction process at all. Once a company finds a space they like, 42Floors will refer a broker and then collect a 20 percent commission if the deal goes through.

In fact, this referral fee will be the primary business model once several quarters of growth have gotten the startup on steady footing. However, it will always be free to both browse and list space. The goal is for 42Floors to generate value by lubricating the market, reducing friction by making it free to list and view beautiful office spaces.

The company also plans to open a marketplace of services to help round out the creation of a dream office, with design and furnishing vendors on the list of eventual offerings.

The service is currently limited to the San Francisco Bay Area, where a panoply of office-hungry startups serve as a great testing ground for beta testing.

This will be the second time this team of entrepreneurs goes through the Y Combinator program, which they say was a "no-brainer," citing loyalty to the program as the main motivator. In addition to all the important business insights gleaned from the startup boot camp, Freedman and co. insist that the real value is in the community, the people and the attitude. They could have raised more money from larger institutional names but were drawn to Paul Graham, the head of Y Combinator, who Freedman likens to a hard-charging college coach that "you just want to perform for." Their own peers from the current batch of startups have voted them #1 in their group.

The company has so far raised $400,000 from Y Combinator, Start Fund, and a follow-on from SV Angel.

My parting thought on 42Floors is that it truly is astonishing how a direct-to-tenant modern web service for finding office space wasn't done yet, and that launching as a startup for startups is a great play here. Just as AngelList has become the go-to social network for startups looking to fundraise, helping entrepreneurs make connections and fall back on the community during that difficult process, 42Floors can be the go-to social hub for startups looking to do the same around the office-space dynamic.

It's also a great content-marketing angle for 42Floors to play: showcase hot startup office spaces, galvanize the community, promote their own service, and build an audience with authentic engagement. It may seem cliché, but we just haven't seen this paradigm around physical startup spaces yet.

Filed under: Top stories, VentureBeat

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NetZero launches super cheap Clearwire-backed 4G wireless service

Posted: 19 Mar 2012 07:47 AM PDT


NetZero surprised the world when it offered up free ad-supported Internet access back in 1998. Now the company will soon try to bring its cost-effective approach to Web access with a low-cost no-contract 4G wireless data service.

"Our service gives customers the freedom to take the Internet anywhere in our coverage area, without being tied to public Wi-Fi service or having to purchase higher-cost, sometimes multi-year plans offered by other mobile broadband providers,” said Mark Goldston, CEO of NetZero-parent United Online, in a statement.

To get access, customers first have to buy a $50 NetZero 4G Stick or a $100 NetZero 4G Hotspot. NetZero then offers up to 200MB of data usage per month for free and then pricing escalates when you need more, as you can see in the pricing structure below:


The pricing on the lower tiers is fairly inexpensive and gives nice flexibility. But once you start getting up to the 4GB usage level, it’s actually more cost-effective to use T-Mobile, Sprint, AT&T, or Verizon Wireless. Each of those offers either 5GB or 6GB of data for about $50 a month whereas NetZero is 4G for $50 a month.

NetZero is backed by the troubled Clearwire company, which is partially owned by Sprint. Clearwire offers WiMAX 4G, but that type of data technology has been pushed aside by more popular LTE. But perhaps with this new arrangement, WiMAX can find a place in the market as a lower-cost alternative to LTE. Clearwire’s WiMAX network covers 82 cities across the U.S. and surrounding areas, so be sure to do your research before buying in.

Girl using computer: Lucky Business/Shutterstock

Filed under: mobile, VentureBeat

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Zayo acquires AboveNet for $2.2B to advance its fiber network

Posted: 19 Mar 2012 07:28 AM PDT

Zayo, a provider of fiber-based bandwidth services, has acquired AboveNet for a whopping $2.2 billion, the company announced today.

AboveNet, which is also in the business of providing bandwidth services, operates a fiber network of about 13,000 in mostly metropolitan areas. This business will then be combined with Zayo’s 45,000-route-mile network that covers 42 states. Both companies primarily provide service to enterprise-level customers, carriers, and governments.

"AboveNet and Zayo's business models are closely aligned with a disciplined focus on high bandwidth fiber-based communications services for enterprises, government and carrier customers," said Zayo President and CEO Dan Caruso in a statement about the deal. "We have admired AboveNet's business model and results and believe the combination will create value for customers, employees and investors."

As part of the deal, Chicago-based private equity firm GTCR will make an equity investment in Zayo. Current investor Charlesbank Capital Partners will also make an additional investment in the company. The acquisition deal contains a 30-day "go-shop" provision — meaning AboveNet has the right  enter discussions with other companies about acquisition offers until April 17, 2012. The transaction, subject to customary approvals, is expected to close in mid 2012, according to Zayo.

Founded in 2006, the Louisville, Colo.-based company has a total of $225 million in funding to date. Zayo reported a $3.6 million loss on revenue of $319.4 million for the year (ending Dec. 31).

Filed under: deals, enterprise, VentureBeat

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Tim Cook says new iPad had a “record weekend” for sales

Posted: 19 Mar 2012 06:24 AM PDT

Updated at 8:30 a.m. PT with AT&T’s statement.

On a call to discuss its first-ever share dividend Monday morning, Apple CEO Tim Cook admitted that the new iPad had a “record weekend” for sales.

Cook did not get specific with sales numbers because the call was focused on the new dividend and share buyback. However, the announcement is a curious one because of the notable lack of sell-outs at many stores around the country this past weekend. Even though Apple Store locations attracted attention with long lines, our own Devindra Hardawar was able to get a new iPad at 11 a.m. on launch day from a Radio Shack location without any fuss.

Perhaps this was because Apple was more-ready-than-ever to meet demand for the iPad. Or maybe a ton of people ordered online so they didn’t have to deal with the lines.

If Apple did indeed achieve huge sales numbers this weekend, we expect the company to trumpet the milestone. When the iPhone 4S sold more than four million units in its first weekend, for example, Apple let the public know with a press release.

AT&T followed Cook by a few hours with its own statement about setting a single-day record for iPad sales this past Friday, saying:

On Friday, March 16, AT&T set a new single-day record for its iPad sales and activations, demonstrating robust demand for the new iPad on the nation’s largest 4G network, covering nearly 250 million people.

iPad photo: Devindra Hardawar/VentureBeat

Filed under: VentureBeat

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Apple’s cash plans: dividend and $10B share buyback, spending $45B in three years

Posted: 19 Mar 2012 05:55 AM PDT

Apple today finally offered up some plans for its nearly $100 billion war chest — and it’ll likely please the company’s shareholders.

The company announced that it will initiate a quarterly dividend of $2.65 per share beginning the fourth fiscal quarter (beginning July 1), as well as a $10 billion share repurchase program starting in Apple’s fiscal 2013, which begins on September 30, 2012. Overall, Apple expects to spend $45 billion over the next three years.

"We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You'll see more of all of these in the future," Tim Cook, Apple's CEO, said in a statement today. "Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program."

Today’s announcements fall in line with what many were expecting. By offering a dividend, Apple is putting cash directly in the hands of its shareholders. But the method has been criticized because it’s relatively inefficient, since shareholders will have to pay taxes on the dividends. Buying back stock is more tax efficient, but could end up being problematic for Apple since its stock is currently at an all-time high.

It’s also notable that Apple is only relying on its domestic cash stockpile for the dividend and share buybacks. If the company tapped into its cash reserves overseas, it would have had to hand over a healthy chunk to the U.S. government in taxes.

“Repatriating the cash from offshore would result in significant tax consequences under current U.S. laws,” Apple CFO Peter Oppenheimer said during a conference call today.

Oppenheimer said that the company is aiming to attract new investors and offset dilution from employee restricted stock. He said that Apple expects its dividend payments to be over $2.5 billion a quarter, adding up to over $10 billion per year.

Apple shares were up over $10 reaching $596.16 in pre-market trading at the time of this post.

Cook also briefly mentioned that the new iPad had a “record weekend” for sales, but he didn’t elaborate further, since that wasn’t the focus of today’s call.

Filed under: VentureBeat

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How scientists can manipulate us with games to gather data

Posted: 18 Mar 2012 06:38 PM PDT

Smartphones have turned us into an army of accidental data collectors, checking in at locations, taking photos, recording audio, even gauging network speeds wherever we go. This rich data can be used for research, but because people are creatures of habit, there are sometimes gaping blind spots.

“Flickr has thousands of photos of the front of the Lincoln Memorial. But who takes a picture of the back? Very few people,” said Fabian Bustamante, associate professor at Northwestern University, in a statement. He proposes “soft controlling” people into gathering information needed for research by using games or social networking apps. The apps would nudge people into completing a task at a specific location, then reward them with points or incentives.

Bustamante and his group at Northwestern University whipped up a location-based, augmented-reality Android game called Ghost Hunter to test the theory with students. In the game, a player wanders around her neighborhood looking for ghosts and other monsters, and when the ghouls are in range, the app switches to a live view with an overlay of cross-hairs. The player shoots the ghost and a photo of the location is uploaded.

Just playing the game was enough of an incentive to get participants to wander off their beaten-track, according to graduate student John P. Rula. Rula was the lead author of a paper on the project.

Full sets of crowdsourced photos can be used to do neat things like create 3D models of landmarks or buildings. Another possible use for this technology is tracking noise pollution. Mobile phones and tablets already have built-in microphones that can be used to measure ambient noise, but what would make you whip out your iPhone and hit a button right as the N train rumbles into the station? How about a reward such as the chance to win $5 at Starbucks, or something less tangible like killing a brains-hungry zombie for points?

There are already plenty of apps that reward you for “checking in” at a location, including Foursquare and Gowalla. Soft control functions could be easily integrated into existing apps with about 25 lines of additional code, according to the paper.

Researchers are quick to point out the idea isn’t to trick people into sharing information; all participants would be notified and their data anonymized when uploaded.

The idea may sound a bit odd at first — who would agree to be “soft controlled”? But many people are actually eager to become citizen scientists, as evidenced by the popularity of the SetiQuest Explorer app, which allows anyone to help monitor radio signals in space to help search for extraterrestrial life.

Filed under: games, mobile, offBeat, VentureBeat

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Apple to announce plan for $98B cash balance Monday morning

Posted: 18 Mar 2012 03:32 PM PDT

Apple is holding a conference call bright and early Monday morning to announce plans for its large cash balance. The company is sitting on around $98 billion in cash, and investors are getting increasingly antsy and clamoring for a dividend or share buyout.

Tim Cook and Apple’s chief financial officer Peter Oppenheimer will be hosting the call, which will take place at 9am Eastern time. They will discuss the cash balance only, nothing else. In addition to the call-in number, a live audio stream of the call will be available on all computers or mobile devices running QuickTime 6 or later.

At the Goldman Sachs Technology and Internet Conference in February, Apple CEO Tim Cook addressed the very expensive elephant in the room, saying "I only ask for a bit of patience so we can do this in a deliberate way and do it in a way that's best for shareholders."

"We're judicious, we're deliberate, we spend our money like it’s our last penny … We're not going to go have a toga party or do something outlandish," he said at the time.

When a company is sitting on a huge pile of cash, as Apple is, it is expected to shell out a dividend to investors, issue a stock buyback, or spend the money on things that will make it even more money. Cook said that, so far, the company has spent billions of dollars on its supply chain, intellectual property, acquisitions, retail, and the Apple infrastructure.

Apple’s share price hit $600 for the first time on March 15 and has since fallen back a bit to $585 a share.

What do you think Apple will do with the cash? What do you think Apple should do with it?

Filed under: VentureBeat

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New Apple TV gets the teardown treatment, has increased RAM

Posted: 18 Mar 2012 02:33 PM PDT

Like little kids on Christmas morning, Apple fans cannot wait to open up their shiny new toys. The new Apple TV is the latest Apple device to be disassembled in the name of curiosity. The teardown reveals the same amount of flash storage as the 2nd generation Apple TV, but an increased amount of RAM — 512MB, up from 256MB.

Intrepid forum commenter Aicjofs on XMBC.org did the dissecting, beating teardown experts iFixIt to the punch. MacRumors first noticed the post.

The big news is the RAM increase, and the poster deduces the 512MB RAM from Hynix is the same as what’s found in the Kindle Fire. The processor is an A5 chip possibly made in February 2012. The naming conventions indicate that this Apple TV processor (PL2498) is similar to what’s found in the standard dual-core A5 (APL0498).

There is 8GB of on-board flash storage by Toshiba, the same amount as on the last Apple TV. And Aicjofs spotted a mystery second antenna inside the third-gen Apple TV that didn’t exist in previous models, which will hopefully be used to boost the Apple TV’s steaming performance.

Photo by aicjofs

Filed under: VentureBeat

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The week in tech drama and hotly anticipated product releases

Posted: 18 Mar 2012 12:06 PM PDT

The past week was packed with big news, thanks in part to the South By Southwest Interactive conference in Austin. Jolie O’Dell was there interviewing movers and shakers, so executive editor Dylan Tweney filled in as host of VBWeekly.

In this recap, we chat about the following stories:

  • Square got a bit of competition in the mobile-payments field from PayPal, which announced its smartphone dongle, Here. It’s a blue triangle, so totally different.

Filed under: VentureBeat

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