Bioware’s high-flying ‘Anthem’ falls flat

Anthem is the first attempt by Bioware (of Mass Effect and Dragon Age fame) to tap into the well of cash supposedly to be found in the “game as platform” trend that has grown over the last few years, with Destiny, Warframe and Fortnite as preeminent exemplars. After a botched demo weekend dampened fan expectations, the final game is here — and while it’s a lot better than the broken mess we saw a few weeks ago, it’s still very hard to recommend.

I delayed my review to evaluate the game’s progress after an enormous day-one patch. While it is always premature to judge a game meant to grow and evolve by how it is immediately after launch, there are serious problems here that anyone thinking of dropping the $60 or more on it should be aware of. Perhaps they’ll all be fixed eventually, but you better believe it’s going to take a while.

I’d estimate this is about half the game it’s clearly intended to be; it seems to me we must soon find out that most of Anthem, supposedly in development for five years or more, was scrapped not long ago and this shell substituted on short notice.

The basic idea of Anthem is that you, a “freelancer” who pilots a mechanized suit called a “javelin,” fly around a big, beautiful world and blast the hell out of anything with a red hostility indicator over its head, which in practice is damn near everything. Once you’re done, you collect your new guns and gadgets and head back to base to improve your javelin, take on new missions and so on.

If it sounds familiar, it’s basically an extremely shiny version of Diablo, which established this gameplay loop more than 20 years ago; its sequels and the innumerable imitators it spawned have refined the concept, bolstering it with MMO-style online integration, “seasons” of gameplay and, of course, the inevitable microtransactions. People play them simply because it’s fun to kill monsters and see your character grow more powerful.

So Anthem is in good company, though of course for every success there are probably two or three failures and mediocre titles. Destiny has thrived in a way only because of its fluid and satisfying gunplay, while a game like Path of Exile leans on bulk, with skill trees and content one may never reach the ends of.

Anthem, on the other hand, lacks the charms of either. It is wildly short on content and its moment-to-moment gameplay, while competent and in some ways unique, rarely has you on the edge of your seat. It’s a very mixed bag of interesting concepts and disappointing execution, coupled with some truly baffling user experience issues.

I’ll cover the good parts first: the basics of flying around and shooting guys are for the most part solid. There’s a good variety of weapons, from hand cannons to shotguns and sniper rifles, with meaningful variations within those groups (though they usually boil down to rate of fire). You feel very cool during engagements, picking off enemies, dodging behind cover, flying to a new vantage point and so on.

Each of the four javelins has a good pile of themed special abilities that significantly affect how you play; for instance, the Storm starts out with (basically) non-damaging ice shards that freeze enemies, setting them up for a damaging combo from its lightning strike — but soon you can swap those out for fiery explosions and a charge-up blast of cold, and so on. The synergies are somewhat limited in that some abilities clearly only work with some others, but there’s fun to be had experimenting. I played with three of the four javelins available (more to come, apparently) and they were all very distinct styles.

Damn.

The graphics really are lovely, from the future-past desert chic of Fort Tarsis to the lush jungle cliffs of the world you’ll be exploring. The light and landscapes are beautiful, and the character models are, too. Firefights look chaotic and splashy, which they are. There are also lots of customization options, in terms of colors and materials anyway — there’s a puzzling lack of cosmetics to buy with in-game or real currency; only two or three are available right now.

Unfortunately, that’s pretty much the extent of what Anthem gets right — and to be clear, it really can be fun when you’re actually in the middle of a firefight, blasting away, doing combos with friends, taking on hordes of bad guys. The rest is pretty much a mess. Here’s the greatest hits of how Anthem fails to operate, to respect the player’s time and, generally speaking, to be a good game.

First and perhaps most egregious, the load screens are frequent and long. I timed it at more than five minutes from launch, and at least three or four different load screens, before I could actually play the game.

Get ready for a lot of this! And incidentally, many fire attacks don’t actually set up combos.

A long load time to bring up a huge world like Anthem’s I can understand. But load times to enter the screen where you change your gear? Load screens when you enter a small cave from the map? A load screen when you stray too far from your teammates and have to be teleported to them? A load screen when you finish a mission, then another before you can return to base — and another before you can equip your new gun? Oh my god!

This is compounded by a sluggish and over-complicated UI that somehow manages to show both too much and not enough, while inconsistent keys and interaction elements keep you guessing as to whether you need to press F or space or escape to go forward, hit or hold escape to go back, use Q or E to go through submenus or if you have to escape out to find what you’re looking for.

Equipment and abilities are mystifyingly under-explained: no terms like “+15% gear speed” or “+/-10% shield time” are explained anywhere in the tutorial, documentation or character screen — because there is no character screen! For a game that depends hugely on stats and getting an overall feel for your build and gear, you have to visit five or six screens to get a sense of what you have equipped, its bonuses (if comprehensible) and whether you have anything better to use. Even core game systems like the “primer” and “detonator” abilities are only cursorily referenced, by cryptic icons or throwaway text. The original Diablo did it better, to say nothing of Anthem’s competition at the AAA level.

Navigating these menus and systems is doubly hard because you must do so not by just hitting a key, but by traveling at walking speed through the beautiful but impractical Fort Tarsis. It took a full 30 seconds for me to walk from my suit (the only place where you can launch missions) to a quest giver. And when you start the game, you start in a basement from which you have to walk 20 seconds to get to your suit! Are you kidding me?

A common sight.

Even when you’re doing what the game does best, zooming around and getting in firefights, there’s a disturbing lack of mission variety. Almost without exception you’ll fly to a little arena — some ruins or a base of some kind — and are immediately alerted of enemies in the area. They warp in at a convenient distance, often while you watch, and attack while you stand near a gadget (to advance a progress bar) or collect pieces to bring back. Some more powerful guys warp in and you shoot them. Fly to the next arena, rinse and repeat.

Sure, you could say “well it’s a shooter, what do you expect?” I expect more than that! Where are the aerial chases the intro leads you to believe exist? Enemies all either stand on the ground or hover just above it. They don’t clamber on the walls, get to the top of towers, shoot down on you from cliffs, climb trees, build gun emplacements. You don’t defend a moving target like the “Striders” (obviously AT-ATs) you supposedly travel in; bridges and buildings don’t crumble or explode; you don’t chase a bad guy into a big cave (or if you do, there’s a loading screen); the “boss-type” enemies are often just regular guys with more life or shields that recharge in the time it takes you to reload. Where are the enemy javelins? The enemy Striders? Ninety percent of what you kill will be ground-bound grunts taken down in a flash. For a game in which movement is emphasized and enjoyable, combat involves very little of it.

The campaign, which is surprisingly well acted but forgettable, seems like it was tacked on in a hurry. Amazingly, a major cutscene details a much more interesting story, in which a major city is overrun and destroyed and only a few survive. It struck me at the time that this might have been the original campaign and starting mission, after which you are logically relegated to the nearby Fort Tarsis and forced to fight for scraps. Instead you have a series of samey missions with voice-overs telling you what’s happening while you stand there and watch progress bars fill up.

At one point you are presented with four ancient tombs to track down, only to find that these amazing tombs aren’t missions but simply checklists of basic game activities like opening 15 treasure chests, killing 50 enemies with melee and so on. At a point, increasing these numbers was literally the only “mission” I had available in the game. And when I tried to join other people’s missions to accomplish these chores, half the time they were broken or already finished. Even trying to quit these missions rarely worked! (Some of these bugs and issues have been mitigated by patches, but not all.)

Spoiler warning! What do you think is in the tombs? A taxing dungeon full of traps, monsters and ancient treasure? Nope! Literally just a tiny, empty room. And yes, there’s a loading screen — both in and out.

Oh, and because many of the missions are difficult or tedious to do solo, you’ll want to team up — except if you’re slow to load, the mission will commence without you and you’ll miss the VO. Whoops! And by the way, if you just want to test out a new gun or power, you’ll have to join a multiplayer “freeplay” session to do it, which is another handful of loading screens. I’m not even going to get into the failings of the multiplayer. Because you can’t communicate it’s basically like playing with bots. By the way, there’s no PvP, so forget about skirmishing with your friends or randoms.

Even the loot you get is frustratingly low-quality and unimaginative. Every gun or component is a standard model almost always with just slightly better damage than the last one you found, and perhaps a stat bonus. But the stat bonuses are boring and often nonsensical: do I really want an assault rifle that gives me 10 percent better damage with heavy pistols?

Where’s the fun? For comparison when I was playing Diablo III recently I found a pair of leg armor early on that produced a powerful poison cloud whenever I was touching three or more enemies. Suddenly I played differently, rushing into crowds of monsters and leaping out, then immobilizing them while their life ticked down. I changed out my weapons, focused on physical defense, poison buffs… all because of a pair of pants!

I’ve encountered nothing like that in 25 hours of Anthem. Every new power and gun is the same as the old one but with a higher number. Where’s the lightning bolt that also sets people on fire, or the plasma blast that always knocks down flying guys? The pistol that does double damage against one class of enemy, the sniper rifle that automatically chambers a new round instantly in one out of five shots?

You do eventually find some “Masterwork” items that have unique qualities, but even these are compromised by the fact that their stats are completely random (such as a bonus to the wrong damage type), necessitating a grind to make or find them over and over until you get one with bonuses that make sense.

So much of Anthem seems like it’s just missing. The campaign is half there; the controls and UI are half there; the loot is half there. The multiplayer is half there. Everything lacks a critical piece that makes it more than basically functional, and considering the game’s highly polished competition, this is inexplicable and inexcusable. I find it hard to believe this was in the works for five years when such elementary aspects like a character screen and working item descriptions aren’t included at launch.

It’s more than possible that with perhaps half a year of work the Bioware team — which seems to be painfully aware of the game’s shortcomings, if their responses to detailed litanies of complaints on the game’s subreddit are any indication — could make this game worth the price of entry. But right now I couldn’t recommend it to anybody in good conscience, and I’m disappointed that a developer that’s created some of my favorite games dropped the ball so badly.

It’s too bad, because I feel the pull of the game, the basic chaotic fun at the heart of any good looter-shooter, because I feel like this can’t really be it. This can’t really be all my abilities, right? This can’t be every weapon? I liked Anthem when it was at its best, but that was so very little of the time I spent in it, and it took so much effort and patience on my part to even make those moments a possibility. I’ll be checking back in with the game in the hopes that it makes a Destiny-esque turnaround, but for now I have to say Anthem suffers from a failure to launch.


Source: Tech Crunch

LG’s latest flagship uses your hand veins to unlock

We’ve already known about the G8 ThinQ for some months now. And a few weeks back, LG made the whole camera rig official, announcing that the handset would be getting a ToF image sensor on its front-facing camera, bring, among other things, advanced face unlock technology.

The company did manage to save a few tricks for the product announcement, including a strange little biometric addition. LG says the phone’s Hand ID tech is the first to use “advanced palm vein authentication” — which could well be accurate. Certainly it’s not a mainstream feature yet.

And I’ll give it to LG, Hand ID is a much catchier name than “palm vein unlock,” which is one of the creepier sounding smartphone features in recent memories. Still, the underlying technology is actually pretty cool here, once you’re down shuddering from how weird the whole thing is on the face of it.

From the company’s press materials, “LG’s Hand ID identifies owners by recognizing the shape, thickness and other individual characteristics of the veins in the palms of their hands.” It turns out, like faces and fingerprints, everyone’s got a unique set of hand veins, so once registered, you can just however your hot blue blood tubes over the handset to quickly unlock in a few seconds.

The Z camera also does depth-sensing face unlock that’s a lot harder to spoof than the kind found on other Android handsets. LG’s also put the tech to use for a set of Air Motion gestures, which allow for hands-free interaction with various apps like the camera (selfies) and music (volume control).

I played around with the feature, and if I’m being totally honest, it takes some getting used to. You’ve got to train yourself to get things just right, which could well dissuade most users from any sort of long-term adoption of features that can pretty quickly with accomplished with a tap.

Other notable features for the new flagship include a 6.1 QHD+ OLED display and a new video portrait mode, which lets users adjust bokeh on the fly.

The handset will hit the States “in the coming weeks.” Pricing is still TBD, but I anticipate that it will cost around the same a previous LG flagships.


Source: Tech Crunch

LG gets a 5G flagship, making the world’s longest phone name even longer

For a company with a two letter name, LG loves nothing so much as an unwieldy title. A form of overcompensation, perhaps? Whatever the case, the lengthening of LG phone names is one of this world’s few constants, and as such, it ought to be no surprise that the company’s first 5G handset happily continues the trend as the LG V50 ThinQ 5G.

The phone will be available for Verizon and Sprint customers “this summer”. As for price, I’d put that somewhere in the admittedly vague ballpark of “more expensive that a regular LG phone.”

The device looks to be pretty premium, sporting a 6.4 inch OLED display, Snapdragon 855 and a beefy 4,000-mAh battery. The company isn’t revealing how 5G will impact battery drain, but it’s pretty safe to say it will take a hit. On the upside, anyone who picks up a 5G phone in 2019 will almost certainly be spending a lot of their time still riding the LTE rails.

The phone could eventually be available to additional U.S. carriers.


Source: Tech Crunch

Microsoft promises an open HoloLens ecosystem

At its MWC keynote in Barcelona today, Microsoft promised to keep the HoloLens ecosystem open. That means third-party app stores and browsers, for example, with Mozilla already announcing its Firefox browser for HoloLens today.

“Developers will have the freedom to create their own stares as first-class citizens,” Microsoft’s HoloLens chief Alex Kipman said today and stressed that developers will also have the freedom to create great web browsers.

All of this should be obvious, but there have, of course, been times in Microsoft’s history where an open ecosystem was not exactly what the company focused on. And browser competition was surely not on the top of the company’s list during the browser wars. That cost the company dearly, both financially and in terms of developer goodwill. Maybe that’s why it is now making this announcement, too.

“We believe in an open API surface area and driver model,” Kipman said. “We will continue to participate in guiding open standards like OpenXR so anyone can innovate with our headset from the sensors that are being used to the differentiated experiences that are being created.”


Source: Tech Crunch

Unreal Engine 4 support is coming to HoloLens 2

Microsoft closed out today’s big HoloLens 2 debut with a surprise appearance by Epic Games CEO, Tim Sweeney. The gaming exec was clearly impressed by the technology’s future for both developement and consumer augmented reality.

“I believe that AR is going to be the primary platform of the future for both work and entertainment,” he told the crowd at the event.

The Fortnite creator is kicking things off on the development side, announcing that Unreal Engine 4 support will be coming to the headset. The move is part of a larger strategy for Microsoft to open the system up, as it looks to grow its key foray into the world of mixed reality.

For Epic, meanwhile, it’s part of a larger embrace of both Microsoft’s solution and all things AR. Sweeney noted that the company is not ready to announce any kind of consumer-facing AR offering, that they’re certainly on the way, and the company “will support HoloLens in all of our endeavors.”


Source: Tech Crunch

Microsoft and Trimble made a hardhat with HoloLens built-in

Microsoft is really hoping to get down to business with the next version of the Hololens. In fact, the software giant announced a new customization program for the HoloLens 2.

How, precisely such customized versions of the XR headset will look remains to be seen, but the company’s first partner, construction hardware company Trimble, is offering a pretty interesting glimpse. The company joined Microsoft on-stage to debut a new collaboration.

The XR10 is a customized hardhat with a swiveling HoloLens 2 built-in, so construction works can get a heads-up display on site. This first partnership is a clear sign of where Microsoft hopes to go with this second generation of its headset, bringing the technology beyond the confines of the office and into real world site. 

Pricing is still TBD, but the headset will be available at the same time as the regular Hololens 2.


Source: Tech Crunch

ICANN warns of “ongoing and significant” attacks against internet’s DNS infrastructure

The internet’s address book keeper has warned of an “ongoing and significant risk” to key parts of the domain name system infrastructure, following months of increased attacks.

The Internet Corporation for Assigned Names and Numbers, or ICANN, issued the notice late Friday, saying DNS, which converts numerical internet addresses to domain names, has been the victim of “multifaceted attacks utilizing different methodologies.”

It follows similar warnings from security companies and the federal government in the wake of attacks believe to be orchestrated by nation state hackers.

In January, security company FireEye revealed that hackers likely associated with Iran were hijacking DNS records on a massive scale, by rerouting users from a legitimate web address to a malicious server to steal passwords. This so-called “DNSpionage” campaign, dubbed by Cisco’s Talos intelligence team, was targeting governments in Lebanon and the United Arab Emirates. Homeland Security’s newly founded Cybersecurity Infrastructure Security Agency later warned that U.S. agencies were also under attack. In its first emergency order amid a government shutdown, the agency ordered federal agencies to take action against DNS tampering.

ICANN’s chief technology officer David Conrad told the AFP news agency that the hackers are “going after the Internet infrastructure itself.”

The internet organization’s solution is calling on domain owners to deploy DNSSEC, a more secure version of DNS that’s more difficult to manipulate. DNSSEC cryptographically signs data to make it more difficult — though not impossible — to spoof.

But adoption has been glacial. Only three percent of the Fortune 1,000 are using DNSSEC, according to statistics by Cloudflare released in September. Internet companies like Cloudflare and Google have pushed for greater adoption by rolling out one-click enabling of DNSSEC to domain name owners.

DNSSEC adoption is currently at about 20 percent.


Source: Tech Crunch

Patreon’s future and potential exits

Through the Extra Crunch EC-1 on Patreon, I dove into Patreon’s founding story, product roadmap, business model and metrics, underlying thesis, and competitive threats. The six-year-old company last valued around $450 million and likely to soon hit $1 billion is the leading platform for artists to run membership businesses for their superfans.

As a conclusion to my report, I have three core takeaways and some predictions on the possibility of an IPO or acquisition in the company’s future.

The future is bright for creators

First, the future is promising for independent content creators who are building engaged, passionate fanbases.

There is a surge of interest from the biggest social media platforms in creating more features to help them directly monetize their fans — with each trying to one-up the others. There are also a growing number of independent solutions for creators to use as well (Patreon and Memberful, Substack, Pico, etc.).

We live in an economy where a soaring number of people are self-employed, and the rise of more monetization tools for creators to earn a stable income will open the door to more people turning their creative talents into a part-time or full-time business pursuit.

Membership is a niche market and it’s unclear how big the opportunity is

Patreon’s play is to own a niche category of SMB who it recognizes has particular needs and provide them with the comprehensive suite of tools and services they need to manage their businesses. A large portion of creators’ incomes will need to go to Patreon for it to someday earn billions of dollars in annual revenue.

The market for content creators to build membership businesses appears to be growing, however, membership will be only one piece of the fan-to-creator monetization wave. The number of creators who are a fit for the membership business model and could generate $1,000-500,000 per month through Patreon (its target customer profile) is likely measured in the tens of thousands or low hundreds of thousands right now, rather than in the millions.

To get a sense of the revenue math here, Patreon will generate about $35 million this year from the 5,000-6,000 creators who fit its target customer profile; if you believe this market is expanding at a fast clip, capturing 10% of the revenue (Patreon’s current commission) from 20,000 such creators could bring in $140 million. And that’s without factoring in the potential success of Patreon implementing premium pricing options, which is a high priority. If Patreon can increase its commission from 10% to 15%, it would need around 47,500 creators in the $1,000-$500,000/month range (9.5x its current number) to reach $500 million in revenue from them.

There is a compelling opportunity for a company to provide the dominant business hub for creators, with tools to manage their fan (i.e. customer) relationships across platforms and to manage back-office logistics. At a certain point it taps out though.

That’s one of the reasons why Patreon’s vision includes extending into areas like business loans and healthcare. For companies targeting small and medium businesses like Shopify, Salesforce and Dropbox, there is so much more growth tied to their core products that there is no need for them to consider such unrelated offerings as business loans. Patreon has to both expand its market share and also expand the services it offers to those customers if it wants to reach massive scale.

Patreon faces serious competition but is evolving in the right direction

Patreon is the leading contender in this market, and there’s a role for an independent player even if Facebook, YouTube, and other distribution platforms push directly competing functionality. Patreon will need to make three important changes to compete effectively: more aggressively segment its customers, make the consumer-facing side of its platform more customizable by creators, and build out more lightweight talent management services.

What’s next for Patreon?

Having raised over $100 million in funding over the last six years, what is the path to a liquidity event for investors and employees? 

In a worst case scenario, it is unlikely the company would go out of business even if it fell into disarray because it would be strategic for several large companies to takeover at a discount. Patreon may be on the path to IPO (as CEO Jack Conte hopes), but I find it more likely that the company gets acquired sometime in the next couple years.

Path to IPO?

If a public offering is in Patreon’s future, it’s several years out. It now defines itself as a SaaS company and has a plan to earn a higher blended commission on the sales of its customers through premium pricing options. It is a frequently misunderstood company, however, and needs to prove that a big market exists for mid-tail creators building membership businesses. 

According to a summary by Spark Capital’s Alex Clayton, SaaS companies who went public in 2018 typically:

    • had $100-200 million in revenue over the prior twelve months,
    • were 14 years old,
    • had an average year-over-year revenue growth rate of ~40%,
    • earned 90% of revenue from subscriptions,
    • had a median gross margin of 73%,
    • ranged from roughly 500 to 2500 employees,
    • had a raised a median of $300 million in VC funding,
    • and IPO’d with a median market cap of $2 billion

Public market companies to benchmark it against will be Shopify (as SaaS infrastructure for small businesses selling to, and managing payments from, consumers) and Zuora (Patreon can be viewed as a media-specific SMB alternative to Zuora’s “Subscription Relationship Management” system). Compared to Shopify, whose market of SMB e-commerce businesses globally is easily understood to be enormous, Patreon would face more skepticism from public investors about the market size of mid-tail content creators.

Patreon’s gross margins can’t be much more than 50% given that almost half of revenue is going toward payment processing. Patreon mirrors Shopify’s topline revenue growth in the run up to its 2015 IPO: Shopify reported $23.7 million for 2012, $50.3 million for 2013, $105 million for 2014 and I estimate Patreon brought in $15 million for 2017, $30 million for 2018, and will hit $55 million for 2019. Most of Shopify’s revenue came from subscriptions, however, with only 37% coming from the “merchant solutions” services where Shopify had to pay out payment processing fees. Patreon’s revenue net of payment processing fees is closer to $7.5 million for 2017, $15 million for 2018, and $27 million (predicted) for 2019.

There’s a lot of capital chasing late-stage startups right now. How long that remains the case is unknown, but Patreon can likely raise the funding to operate unprofitably a few more years — getting topline revenue closer to $150-200 million, proving creators will adopt premium pricing, and showcasing its ability to compete with Facebook and YouTube in a growing market. In that case, it could become a strong IPO candidate.

The acquisition route

The other scenario, of course, is that a larger company buys Patreon. In particular, one of the large social media platforms building directly competitive features may decide it is easier to buy their expansion into membership than build it from scratch. Patreon is the dominant platform without any noteworthy direct competitor among independent companies, so acquiring it would immediately put the parent company in a market-leading position. Competing social platforms wouldn’t have another large Patreon-like startup to acquire in response.

There are three companies that jump out as both the most likely acquirers. Each of these M&A scenarios would be mutually beneficial: advancing Patreon’s mission and providing strategic value to the parent. The first two companies are probably obvious, but the last one may be less known to TechCrunch readers.

Facebook

I highlighted Facebook as the top competitive threat to Patreon. This is also why it’s a natural acquirer. Patreon would bring fan relationship management to the Facebook ecosystem and particularly the company’s Creator App with CRM and analytics specifically fit for creators’ needs. It would also bring a stable of 130,000 creators of all types to make Facebook the primary infrastructure through which they engage their core fans.

Facebook is prioritizing human relationships more and clickbait content less. A natural replacement for the flood of news articles and viral videos is deeper engagement with the creators that Facebook users care the most about.

Since the annual churn rate of Patreon creators who earn $500 per month or more is under 1%, the ~9,200 creators who fit that category would likely stick around as Patreon’s infrastructure integrates with Facebook’s; the vast majority probably already have Facebook pages and possibly use the Creator App.

Facebook’s data on who fans are, what they like, and who their friends are is unrivalled. The insights Facebook could provide Patreon’s creators on their fans could help them substantially grow their number of patrons and build stronger relationships with them.

Like all major social media platforms, Facebook has partnership teams vying to get major celebrities to use its products. Patreon could lock the mid-tail of smaller (but still established) creators into its ecosystem, which means more consumer engagement, more time well spent, and more revenue through both ads and fan-to-creator transactions. Owning and integrating Patreon could have a much bigger financial benefit than solely revenue from the core Patreon product.

As a Facebook subsidiary, Patreon would stick more closely to being a software solution; it wouldn’t develop as robust of a creator support staff and the vision that it may expand to offer business loans and health insurance to creators would almost surely be cut. Facebook would also probably discontinue supporting the roughly 23% of Patreon creators who make not-safe-for-work (NSFW) content.

Given Patreon’s mission to help creators get paid, it may make a bigger impact as part of Facebook nonetheless. Facebook’s ecosystem of apps is where creators and their fans already are. Tens of thousands of creators could start using Patreon’s CRM infrastructure overnight and activating fan memberships to earn stable income.

A Facebook-Patreon deal could happen at any point. I think a deal could just as likely happen in a few months as in a few years. The key will be Facebook’s business strategy: does it want to build serious infrastructure for creators? And does it believe paywalled access to some content and groups fits the future of Facebook? The company is experimenting with both of those right now, but doesn’t appear to be committed as of yet.

YouTube

The other most likely acquirer is Google-owned YouTube. Patreon was birthed by a YouTuber to support himself and fellow creators after their AdSense income dropped substantially. YouTube is becoming a direct competitor through YouTube Memberships and merchandise integrations.

If Patreon shows initial success in getting creators to adopt premium pricing tiers and YouTube sees a strong response to the membership functionality it has rolled out, it’s hard to imagine YouTube not making a play to acquire Patreon and make membership a priority in product development. This would create a whole new market for it to dominate, making money by selling business features to creators and encouraging fan-to-creator payments to happen through its platform.

In the meantime, it seems that YouTube is still searching for an answer to whether membership fits within its scope. It previously removed the ability for creators to paywall some videos and it could view fan-to-creator monetization efforts as a distraction from its dominance as an advertising platform and its growing strength in streaming TV online (through the popular $40/month YouTube TV subscription).

YouTube is also a less compelling acquirer than Facebook because the majority of Patreon’s creators don’t have a place on YouTube since they don’t produce video content (as least as their primary content type). Unless YouTube expands its platform to support podcasts and still images as well, it would be paying a premium to acquire the subset of Patreon creators that it wants. Moreover, as much as a quarter of those may be creators of NSFW content that YouTube prohibits.

YouTube is the potential Patreon acquirer people immediately point to, but it’s not as tight of a fit as Facebook would be…or as Endeavor would be.

Endeavor

The third scenario is that a major company in the entertainment and talent representation sphere sees acquiring Patreon as a strategic play to expand into a whole new category of talent representation with a technology-first approach.  There is only one contender here: Endeavor, the $6.3 billion holding company led by Ari Emanuel and Patrick Whitesell that is backed by Silver Lake, Softbank, Fidelity, and Singapore’s GIC and has been on an acquisition spree.

This pairing shows promise. Facebook and YouTube are the most likely companies to acquire Patreon, but Endeavor may be the company best fit to acquire it.

Endeavor is an ecosystem of companies — with the world’s top talent agency WME-IMG at the center — that can each integrate with each other in different ways to collectively become a driving force in global entertainment, sports and fashion. Among the 25+ companies it has bought are sports leagues like the UFC (for $4 billion) and the video streaming infrastructure startup NeuLion (for $250 million). In September, it launched a division, Endeavor Audio, to develop, finance and market podcasts.

Endeavor wants to leverage its talent and evolve its revenue model toward scalable businesses. In 2015, Emanuel said revenue was 60% from representation and 40% from “the ownership of assets” but quickly shifting; last year Variety noted the revenue split as 50/50.

In alignment with Patreon, Endeavor is a big company centered on guiding the business activities of all types of artists and helping them build out (and maximize) new revenue streams. When you hear Emanuel and Whitesell, they reiterate the same talking points that Patreon CEO Jack Conte does: artists are now multifaceted, and not stuck to one activity. They are building their own businesses and don’t want to be beholden to distribution platforms. Patreon could thrive under Endeavor given their alignment of values and mission. Endeavor would want Patreon to grow in line with Conte’s vision, without fearing that it would cannibalize ad revenue (a concern Facebook and YouTube would both have).

In a June interview, Whitesell noted that Endeavor’s M&A is targeted at companies that either expand their existing businesses or ones where they can uniquely leverage their existing businesses to grow much faster than they otherwise could. Patreon fits both conditions.

Patreon would be the scalable asset that plugs the mid-tail of creators into the Endeavor ecosystem. Whereas WME-IMG is high-touch relationship management with a little bit of tech, Patreon is a tech company with a layer of talent relationship management. Patreon can serve tens of thousands of money-making creators at scale. Endeavor can bring its talent expertise to help Patreon provide better service to creators; Patreon would bring technology expertise to help Endeavor’s traditional talent representation businesses better analyze clients’ fanbases and build direct fan-to-creator revenue streams for clients.

If there’s opportunity to eventually expand the membership business model among the top tiers of creators using Patreon.com or Memberful (which Conte hinted at in our interviews), Endeavor could facilitate the initial experiments with major VIPs. If memberships are shown to make more money for top artists, that means more money in the pockets of their agents at WME-IMG and for Endeavor overall, so incentives are aligned.

Endeavor would also rid Patreon of the “starving artist” brand that still accompanies it and could open a lot of doors in for Patreon creators whose careers are gaining momentum. Perhaps other Endeavor companies could access Patreon data to identify specific creators fit for other opportunities.

An Endeavor-Patreon deal would need to occur before Patreon’s valuation gets too high. Endeavor doesn’t have tens of billions in cash sitting on its balance sheet like Google and Facebook do. Endeavor can’t use much debt to buy Patreon either: its leverage ratio is already high, resulting in Moody’s putting its credit rating under review for downgrade in December. Endeavor has repeatedly raised more equity funding though and is likely to do so again; it canceled a $400M investment from the Saudi government at the last minute in October due to political concerns but is likely pitching other investors to take its place.

Patreon has strong revenue growth and the opportunity to retain dominant market share in providing business infrastructure for creators — a market that seems to be growing. Whether it stays independent and can thrive in the public markets sometime or whether it will find more success under the umbrella of a strategic acquirer remains to be seen. Right now the latter path is the more compelling one.


Source: Tech Crunch

Airbnb, Automattic and Pinterest top rank of most acquisitive unicorns

It takes a lot more than a good idea and the right timing to build a billion-dollar company. Talent, focus, operational effectiveness and a healthy dose of luck are all components of a successful tech startup. Many of the most successful (or, at least, highest-valued) tech unicorns today didn’t get there alone.

Mergers and acquisitions (M&A) can be a major growth vector for rapidly scaling, highly valued technology companies. It’s a topic that we’ve covered off and on since the very first post on Crunchbase News in March 2017. Nearly two years later, we wanted to revisit that first post because things move quickly, and there is a new crop of companies in the unicorn spotlight these days. Which ones are the most active in the M&A market these days?

The most acquisitive U.S. unicorns today

Before displaying the U.S. unicorns with the most acquisitions to date, we first have to answer the question, “What is a unicorn?” The term is generally applied to venture-backed technology companies that have earned a valuation of $1 billion or more. Crunchbase tracks these companies in its Unicorns hub. The original definition of the term, first applied in a VC setting by Aileen Lee of Cowboy Ventures back in late 2011, specifies that unicorns were founded in or after 2003, following the first tech bubble. That’s the working definition we’ll be using here.

In the chart below, we display the number of known acquisitions made by U.S.-based unicorns that haven’t gone public or gotten acquired (yet). Keep in mind this is based on a snapshot of Crunchbase data, so the numbers and ranking may have changed by the time you read this. To maintain legibility and a reasonable size, we cut off the chart at companies that made seven or more acquisitions.

As one would expect, these rankings are somewhat different from the one we did two years ago. Several companies counted back in early March 2017 have since graduated to public markets or have been acquired.

Who’s gone?

Dropbox, which had acquired 23 companies at the time of our last analysis, went public weeks later and has since acquired two more companies (HelloSign for $230 million in late January 2019 and Verst for an undisclosed sum in November 2017) since doing so. SurveyMonkey, which went public in September 2018, made six known acquisitions before making its exit via IPO.

Who stayed?

Which companies are still in the top ranks? Travel accommodations marketplace giant Airbnb jumped from number four to claim Dropbox’s vacancy as the most acquisitive private U.S. unicorn in the market. Airbnb made six more acquisitions since March 2017, most recently Danish event space and meeting venue marketplace Gaest.com. The still-pending deal was announced in January 2019.

WordPress developer and hosting company Automattic is still ranked number two. Automattic <a href=”https://www.crunchbase.com/acquisition/automattic-acquires-atavist–912abccd”>acquired one more company — digital publication platform Atavist — since we last profiled unicorn M&A. Open-source software containerization company Docker, photo-sharing and search site Pinterest, enterprise social media management company Sprinklr and venture-backed media company Vox Media remain, as well.

Who’s new?

There are some notable newcomers in these rankings. We’ll focus on the most notable three: The We CompanyCoinbase and Lyft. (Honorable mention goes to Stripe and Unity Technologies, which are also new to this list.)

The We Company (the holding entity for WeWork) has made 10 acquisitions over the past two years. Earlier this month, The We Company bought Euclid, a company that analyzes physical space utilization and tracks visitors using Wi-Fi fingerprinting. Other buyouts include Meetup (a story broken by Crunchbase News in November 2017) reportedly for $200 million. Also in late 2017, The We Company acquired coding and design training program Flatiron School, giving the company a permanent tenant in some of its commercial spaces.

In its bid to solidify its position as the dominant consumer cryptocurrency player, Coinbase has been on quite the M&A tear lately. The company recently announced its plans to acquire Neutrino, a blockchain analytics and intelligence platform company based in Italy. As we covered, Coinbase likely made the deal to improve its compliance efforts. In January, Coinbase acquired data analysis company Blockspring, also for an undisclosed sum. The crypto company’s other most notable deal to date was its April 2018 buyout of the bitcoin mining hardware turned cryptocurrency micro-transaction platform Earn.com, which Coinbase acquired for $120 million.

And finally, there’s Lyft, the more exclusively U.S.-focused ride-hailing and transportation service company. Lyft has made 10 known acquisitions since it was founded in 2012. Its latest M&A deal was urban bike service Motivate, which Lyft acquired in June 2018. Lyft’s principal rival, Uber, has acquired six companies at the time of writing. Uber bought a bike company of its own, JUMP Bikes, at a price of $200 million, a couple of months prior to Lyft’s Motivate purchase. Here too, the Lyft-Uber rivalry manifests in structural sameness. Fierce competition drove Uber and Lyft to raise money in lock-step with one another, and drove M&A strategy as well.

What to take away

With long-term business success, it’s often a chicken-and-egg question. Is a company successful because of the startups it bought along the way? Or did it buy companies because it was successful and had an opening to expand? Oftentimes, it’s a little of both.

The unicorn companies that dominate the private funding landscape today (if not in the number of deals, then in dollar volume for sure) continue to raise money in the name of growth. Growth can come the old-fashioned way, by establishing a market position and expanding it. Or, in the name of rapid scaling and ostensibly maximizing investor returns, M&A provides a lateral route into new markets or a way to further entrench the status quo. We’ll see how that strategy pays off when these companies eventually find the exit door .


Source: Tech Crunch

Oppo announces 5G and 10x lossless zoom handsets

Saturday afternoon is a rough time for a press conference — particularly with the official kickoff of Mobile World Congress still a few days away. That said, there are certain advantages to being an early bird. Chief among them is the ability to claim firsts — namely having the first 5G handset of the show.

That might not mean a lot in the grand scheme of things, but in a week that’s expected to be dominated by 5G announcements, it’s a way to stand out from the crowd. Of course, like the rest of the promised 5G handsets we’ve heard about so far — with the noble exception of Samsung’s — details are still pretty scarce

What we do know is that the handset — along with so many others set to be announced this week — will be powered by Qualcomm’s Snapdragon 855. Fitting, given that we can almost certainly expect some 5G news out of the chipmaker this week. Oppo also says the device will be on display on the show floor this week — actually firing it up and experiencing those next generation speeds in person, however, is a different thing entirely.

Another bit of news out of the event is the promise of 10x lossless zoom (16mm-160mm) for the company’s next flagship. If its works as advertised that’s a nice little distinguisher from the competition — though 10x zoom likely isn’t a day to day feature for most smartphone users. That device is due out at some point in Q2. 


Source: Tech Crunch