The 2017 tech year-in-review

The year is about to come to an end and I wanted to jot down a few thoughts about some of the events that I have found most significant in the tech and startup spaces over the last 12 months.

(1) Amazon goes brick and mortar

 If there is one major corporate transaction that I would highlight that would be Amazon's $14bn purchase of Whole Foods. We are all well aware of Amazon's clout and how much many of us rely on it for buying and selling stuff. This acquisition is a game changer and, even more importantly, it seems like it is not going to be the last of its kind, as in recent weeks there have been multiple rumors, in particular around French leader Carrefour, about Amazon acquiring in Europe.


As NYU Stern's professor Scott Galloway usually says, Amazon is slashing value out of traditional retailers and is likely to become the first $1tn company in the world.  Interestingly, he also points out how Amazon is a threat for competition and advocates for antitrust action that could easily to breaking the company up in different pieces.

Even in such a scenario, Amazon is a global "darling". Case in point: the beauty pageant / auction launched by Amazon among American cities for the purpose of erecting its second American HQ. An astonishing 238 proposals have been received. Game on.

(2) The crypto hype
As blockchain technology evolves, 2017 will be remembered as the year when cryptocurrencies became a new hot thing in tech. I would not dare say the became mainstream but it is obvious that when your mother asks you what bitcoin is and how she can invest in it, there is something going on. I already blogged about this some months ago.

The main cryptocurrencies (in particular bitcoin and ethereum) have had dramatic price increases (chart below; source: Coinbase), which has led to lots of market debate as to whether we are in a new bubble or if, on the other hand, bitcoin is for instance the new refuge replacing gold. There are arguments and interest of all kinds. From Jamie Dimon's - JPMorgan Chase's CEO - calling people "stupid" for buying bitcoin to the CME Group's launch of bitcoin futures a few weeks ago.

But this crypto frenzy has gone past bitcoin and ethereum. ICO is the acronym of the year and funds raised through this mechanism have exceeded $3bn. We have seen a proliferation of new ethereum-based tokens relying, in many cases, in dubious business models.

I took the time this year to learn a bit about all these topics and decided to invest (ie. gamble) some money in various cryptocurrencies to give this thing a shot. It did not go badly, although I am kind of expecting a short term correction and have therefore cashed in for the most part. In any case, in spite of diverse theories, I'd argue nobody has a real clue about how to value these new assets and how things are going to go down the road.

(3) The Uber crash

Uber has been for years the darling among startups and venture capital investors. Aggressive growth all over the world, increasing valuation round after round, huge losses relying on future market domination...and all of this relying on a "bro-kind-of culture" of work hard play hard.

In 2017 the foundations of Uber became under substantial scrutiny as a result of a very unfortunate  sexual harassment scandal which, rather than an isolated event, proved to be part of the company's culture itself. The whole thing led to CEO Travis Kalanick's resignation and to significant user backlash...and planted the seed for the #MeToo movement - which Time magazine has fairly acknowledged as "person of the year" - that exploded with the whole Harvey Weinstein "plot" .

I am very curious to see how Uber recovers under new CEO Dara Khosrowshahi after having moved into such a slippery slope. Corporate culture matters and now that culture-related scandals are reportedly bringing valuation down, executives will most likely pay more attention to it.

(4) Disney threatens Netflix

Star Wars: Episode VIII premiered in L.A. on December 9 and just a few days later in Europe. But this was not the only surprise that The Walt Disney Company had for us before the year end. On December 14 it was announced that Disney would be acquiring 21st Century Fox film and tv studios for $66bn (including debt) which, among others includes the FX and National Geographic networks, a large additional stake in Hulu and valuable franchises such as Alien and Avatar, or TV shows such as "How I met your mother". A massive move that I expect will change the playing field very significantly in the coming years.

I have thought for a long time that entertainment consumption has changed forever and that TV as we have known it is doomed. Disney has understood this and in the last year they have amassed a ton of content on top of their traditional stuff, including Marvel, the Star Wars franchise. Now it is this bold move.

In the last months there have been rumors about Netflix being a target for Disney. However, this may no longer be the case. After deciding to pull content from Netflix, all points in the direction of launching its own service, either from scratch or on the back of Hulu. If you add sports content (i.e. ESPN) to the mix, we do have a new streaming battle ahead. Watch out Netflix, Amazon.

(5) The advent of fake news

2017 has been the year when fake news have become a major threat globally. It all started at the time of the US presidential election in late 2016. As it has been proven, Russia played a a central part in creating fake news that substantially contributed to changing public perception and generating opinion in favor or Trump. Upon becoming president, Trump started a PR war accusing CNN and others of being fake news. Several examples of this unacceptable activity followed for instance with the French election and, more recently, with the pathetic allegations against Spain's democracy fabricated by the Catalonian pro-independence block (and the likes of Russia and Venezuela) supporters) in their crazy and illegal pursue of independence.

Fake news are a 21st century weapon aimed at bringing down the foundations of democracy as we know it. And it is in this instance that technology companies - in particular Facebook and Google given their size and business models - have a huge responsibility to prevent, or at the very least minimize, fake news from happening. They have the budget, the resources and, increasingly, the technology (e.g AI) to address this. I am hoping that they honor their duty.

It's been an interesting year. I am sure 2018 is going to be a ride, which I am going to have to follow even closer. More to come soon.

Happy holidays!

Netflix as a paradigm...or it's the content, stupid!!

There is no doubt that the significance of content in the media and digital spaces is paramount, and that thousands of reports, articles, books and posts have been written about it. Even major corporate deals have been reportedly completed - Verizon's recent acquisition of AOL is a case in point - on the basis of content. 

Content is king and becoming more and more significant. And when speaking of content, Netflix is one of those names that comes to mind right away. I have had some sort of direct experience about this most recently. 

Netflix, HBONow, Sling, Hulu, Amazon Prime... it is amazing how quickly you can get used to the seamless experience of having all the shows, documentaries and movies (i.e. content) you want within your reach at any time, without neither ads nor schedule constrains. Today, I am all in when it comes to cutting the cable cord. And I was not aware that I felt so strongly about it until circumstances have forced me to change my adopted habits and get back to cable tv.

My entertainment menu while in the U.S. came from over-the-top services such as Netflix, Amazon Prime and, more recently, HBONow. I have digested content like crazy, at my own pace, whenever I have wanted to. However, after landing in Spain I confirmed my fears: none of these services is available in Spain (well, Netflix just announced its forthcoming Spanish launch on October 20, thank god). That has led me to Telefonica's pay-tv offering which, in turn, has quickly discouraged me from watching tv at all. I can't stand the experience, I seldom find interesting content at a time that works for me.

Unfortunately, Spain has traditionally be at the very top in the global piracy rankings, both in relative and absolute terms. It is also often said that this is the result of a country culture. I am not gonna say that the latter is not partially true, but I am also pretty sure that the reality would be a very different one had Netflix or others been around for quite some time. Changing the existing mindset and making people pay monthly to get content is going to take a while.

Speaking of Netflix as a paradigm of good and relevant content, I couldn't help sharing their latest native advertising campaign - Cocainenomics, on the occasion of the premiere of "Narcos" - on the Wall Street Journal. It is jaw-dropping.

Native advertising is a growing trend in digital advertising: it is the practice of making an ad on a platform resemble the look and feel of whatever content the user is there to see or read. This a growing digital advertising segment has been forecasted to be worth $5-10 billion in 2016.  

All experts point out that, in order for native advertising to become the more engaging tool it is for the user, advertisers need to be able to tell stories, to connect with their audience, to address the later's needs. And content - more accurately, the meaningful and quality content - is the secret ingredient that guarantees success, for both publishers (more money) and brands (more brand awareness)...and readers (engagement). 

Spanish TV model

At the end of this week CNN+, the tv station partnered by CNN and Spanish media giant Sogecable will be shutting down after 12 years on the Spanish tv grid. The rumor is that it will be replaced by a 24-hour Big Brother show. Bad news, but a reality of the kind of crap that the average Spaniard watches on tv. The big bucks are on gossip.... really sad.

This decision comes in the context of the Telecinco-Cuatro (owned by troubled Sogecable) merger, a large corporate transaction that will be bringing some changes to tv in Spain. Telecinco has now significant decision power at Sogecable and the CNN+ shutdown is one of the first decisions so far.

A little over a year ago the Spanish tv migrated from analogue to digital. Following the analogue blackout, the new TDT model promised lots of new channels and more options for viewers. The reality, after a year, is that we have lots of shitty channels with virtually no content. Plus the big audiences - the ones driving the $$ - keep focusing for the most part on the Spanish networks, which are exactly the same thing they used to be (simply broadcasting in digital now) . The result is that there is no room for niche quality channels such as CNN+, which will say goodby with less that a 1% share.

Spaniards are not used to paying for tv content. Not even for high-quality one. In fact, some years ago the government passed a law declaring some events (mostly sporty ones) "of general interest", making it mandatory for them to be on free-to-air. Likewise, less than 10% of Spanish population is subscribed to some kind of pay-tv package. This prevents relevant international players (ESPN is the most obvious one) to enter the Spanish market.

The current model with just a handful of domestic players is here to stay. I virtually watch no tv. I can find 90% of the content I find relevant online. I could get rid of my tv tomorrow and nothing would change. Maybe some kind of disruption - to come from the online world - is needed to shake things up a little.

Good luck Jack!

It's the end of an era. I have just finished watching the last episode of the last season of "24", which is expected to be the last one.

I have loved the show a lot but I really feel like it was time for it to finish. After so many seasons, though the plots have always been intriguing and fun, the originality was gone. It must be pretty hard to come up with ideas linked to terrorists attacks in US soil.

Jack is gone, he vanishes on the screen as the countdown goes all the way to zero. If I did not know I'd say that this is just the end of the season and that a new one will be coming next fall. But that's it. Enough suffering for Jack.

It is obvious that Kiefer Sutherland has always carried the weight of the show on its shoulders but we cannot forget about Chloe O'Brian, Tony Almeida, President David Palmer and a bunch of other characters that have made this show memorable.

Good luck Jack wherever you end up going!

Piracy in Spain

Earlier this week, the LA Times argued that Sony Pictures might be thinking about closing its DVD business in Spain. Word says that the other big studios might follow. Sad as it is, I do understand it.

Spain has climbed to the third spot in the world ranking of piracy, after South Korea and China. In absolute terms, which is insane considering that we are roughly 45 million people.

According to different sources the number of DVDs sold or rented in Spain in 2009 dropped by 30%, compared to 2008. On the flipside, the number of illegal downloads jumped from 132 million in 2006 and 350 million in 2008, according to the data of the studios. The studios further report that sales of DVDs in Spain generate three to ten times less income than in the UK or Germany. Likewise, the number of DVD rental businesses has dropped dramatically in Spain over the recent years.

It is clear to me that big media players have not adapted yet to the new times. Or at least not around the world (for instance, I keep reading about new iPad deals cut between Apple and content distributors for the US... but what will happen outside of the US? See my post from February 3 on geographies). People share and consume content in a different way. Is it that hard to understand? The music business had to learn this the hard way but it seems to be on the track to recovery. Motion picture industry should pay more attention to everything going on around it.

But having said the above, there is no justification for what is going on in Spain. And the more I think and talk about it, the more assured I am that it is something cultural. I do not trust all those people shouting out there about "sharing" content on P2P platforms. But when I talk to more educated people, a majority of them seems to also believe that P2P users are not stealing content. And it really amazes me.

In this context, in my view, 'sharing" is just a way to justify "stealing". Period. You "share" a movie with someone at the other side of the P2P application and  you do not buy or rent the movie any more. That's reality. It worries me that people do not want to see this, but it worries me even more that people do really think that they actually doing something legal.

A number of legal measures are being analyzed by the Spanish government in order to regulate further these activities. The minister of culture is being attacked by lots of associations of internet users claiming that things are fine the way they are now. Culture of cheap (i.e. free) perks?

Super Bowl advertising: an event on its own

It's been some weeks since the 2010 Superbowl where the New Orleans Saints defeated the Payton Manning's  Indianapolis Colts. The Superbowl is one the biggest - if not the biggest in terms of audience - single sport event in the world. It is not a very popular sport in Spain but it is huge in the US and I was lucky to be living in NY when the Giants won a couple of years ago.

Massive sports events bring big advertising dollars with them and in this respect Superbowl is THE EVENT. I remember analyzing this back at Stern at professor Geeta Menon's marketing course (she is now at Wharton). Back in 2007, a 30-second spot on tv was priced at around $2.5m. This year it's been at around $3m. I could not believe it when I first knew about it.

But on top of the tv dollars, the internet revolution has provided advertisers with a big opportunity to leverage their investment in tv time. In addition to the 30-second spots, commercials are widely followed online, which increases the number of impacts and, in turn, brand awareness. In fact, the Superbowl has become a landmark event where corporations showcase their best creativity, to the extent that commercials themselves have become a very important part of the Superbowl. There exist a lot of expectations about who will be advertising and a huge buzz is generated after the game to assess who had the best commercial. This is pure gold for brands. The power of viral.

Visible Measures, a Boston-based start-up that measures online video audience which I had the opportunity to know about at a  NY Video 2.0 meetup in 2008, has conducted some research on the occasion of the 2010 Superbowl. According to their study, the top 20 commercials were viewed in aggregate more than 50 million times, being 'Doritos' House Rules" the one carrying the most views at 9+ million. I liked Google'(s) (!!), Megan Fox plays her usual part for Motorola, Dodge's is the typical commercial for men... and how couldn't I mention the eternal Bud's Clydesdale! You can find them all here.

New HBO online service

A few days ago I read about the beta testing of a new HBO site named HBO GO. The service is being tested by some subscribers and  considering how HBO usually does things, I am sure it will be great. Apparently the idea is to provide full availability to tv shows and movies. The catch is that you will need to be a cable subscriber to access the online service.

If the service is as good as I would expect it to be and considering the depth of HBO's library, I just wonder what the point of having a cable subscription would be. The only idea of having HBO anywhere  on your laptop is just great, so I guess that anyone who is a tv subscriber would be eager to sigh up for the online service.

HBO's current site is pretty slick so I am sure that whatever these guys come up with it will be cool.

TV shows: the media turtle

There is little doubt that the internet and technology overall have changed the consumption patterns of media. From cds to Spotify, from the Blockbuster across the street to Netflix, from your weekly tv show to Hulu, from the typical movie at a theater to Avatar, from your free-to-air tv to Boxee. From your local theater or home tv to your laptop. But not only have they changed habits, they have changed - or more accurately, they have forced to change - business models.

I am an avid tv shows fan. But I have a problem: I live in Spain and I think that Spanish tv, on average, sucks. Is it because I have lived for a long time in the country that we identify with the showbiz? Maybe...or maybe not. Perhaps it is just about quality.

I mean this because when I think about how things have changed in the media arena in the last years, I feel like the tv show business  is a turtle surrounded by cheetahs. And I pretty much refer to the fact that it is still treated more as a domestic thing than some of its media brothers and sisters.

There is no doubt that viewers all over the globe value good content, regardless its country of origin. A nice movie, relevant news, an addicting tv show... But at the end of the day the industry treats them in a completely different way. Can anyone think of, for example, Avatar being released in Europe 5 months after it is so in the US? Likewise, probably even more obvious, nobody would see the Superbowl or the NBA Finals a week after they are played. But with tv shows it is a completely different story.

As I was saying, I live in Spain and I can't access Hulu, I can't see the last episode of House on Fox.com, I can't buy episodes on iTunes, I have to suffer the previous season on Spanish tv and see the same old boxes on music stores. It sucks.

Why is it like that? Of course I am aware of distribution rights and so forth. But if the windows for movie releases has just shortened (work needs to be done, though, to take a few more steps ahead), please do the same with tv shows. I hate being unable to share my views simply because I am gonna have to wait for months to catch up with my friends. I strongly believe that a huge development is needed.

 I strongly support the real globalization of the business. If the whole world wears Nikes, Reeboks and a couple of other brands, why isn't it possible for us to consume HBOs and Showtimes? Instead, we are force to consume what we don't like and to look for shady ways (piracy) that damage the business and that makes our experience way less enjoyable. I know it will take time but maybe one day...

Futbol y TV

Espana es un pais en el que el futbol es sin duda el deporte rey, mueve masas, pasiones y cantidades ingentes de dinero. Ahi tenemos al Real Madrid, que ha gastado cerca de 300 millones de euros en fichajes en solo un par de meses, rompiendo el mercado, tal y como hizo en la anterior epoca de los galacticos. Asi lo explicaba Ferran Soriano (ex vicepresidente economico del Barca y actual presidente de Spanair) en una conferencia de Expomanagement hace unos meses (y en su libro La pelota no entra por azar).

Y gran parte del dinero que el Real Madrid o el Barca en Espana, o el ManU en Inglaterra, o el Milan en Italia, entre otros, utilizan para fichar viene de las televisiones, de la venta de los derechos de emision de sus partidos. La irrupcion de las televisiones en el futbol hace ya varios anhos fue como mana caido del cielo para las decrepitas arcas de los clubs... y al dia de hoy me pregunto durante cuanto tiempo este modelo sera sostenible, inicialmente para las televisiones (que quizas no ingresen lo que luego pagan a los clubs) y, posteriormente, para los clubs (cuando ya no reciban ese mana).

En Espana se ha desatado una nueva guerra del futbol, esta vez entre Sogecable y Mediapro, a cuenta del reparto de los derechos de emision del futbol. Que si en abierto, que si en una plataforma, que si en la nueva television digital terrestre de pago, que si conversaciones de fusion de operadoras, que si favoritismos gubernamentales, que si entrada de nuevos inversores... vamos, los lios de siempre.

El caso es que los mismos problemas y escasas soluciones a la vista. Mientras, yo me estoy plantenado el  pagar 15 euros al mes para poder ver 3 partidos a la semana...aunque para ello nos obliguen a comprar un nuevo descodificador de TDT que costara a los ya vacios bolsillos de los consumidores 60 eurazos. Viva la crisis!