Weekly Roundup: Uber vs Google, eSports on ESPN, Magic Leap Trying to be the Next Apple
Uber Invests in Lime
Uber joined in on a $335 million investment round in the e-scooter company Lime. What separates this from a regular investment is that it comes as a partnership between the two companies. Uber will promote Lime within the Uber app, and slap its logo on many of their scooters. This all part of Uber’s strategy to become a hub for all types of “sharing economy” transportation. They also bought Jump Bikes, an e-bike company, back in April for an estimated $200 million. The goal is that no matter what type of transportation you need, you simply open the Uber app and choose one of the plentiful options available to you.
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I agree with this strategy, and I certainly agree with them diversifying their revenue streams from simply ride sharing. Remember that despite being valued at $70 billion, they have yet to make a profit. Profit is certainly not a priority for them in the short term, and I’m not saying it should be. They’re following the Amazon approach of spending aggressively to gain market control. But, Uber is going to have to show investors a path to profitability if they want to keep raising money at even higher company valuations. And especially if they want to go public. As of right now, that path doesn’t exist and Uber lives solely off of investor dollars rather than their own cash flow. By creating going into new areas like e-scooters and e-bikes where they can quickly deploy those services to their massive user base, they are adding potential profit streams.
And again, it all molds into the grander plan of being THE transportation hub for everyday life.
eSports Are Coming to ESPN
ESPN struck a deal with Blizzard, the maker of the very popular first-person shooter game Overwatch. They will be broadcasting the league’s Grand Finals on the weekend of July 27th. The games will air not only on ESPN, but the championship match will be on ABC. This is the first time eSports will be on network television in the US.
This is a great deal for both sides, obviously for Blizzard getting their game broadcasted to millions of homes across the US, but also for ESPN. ESPN has been making many strategic maneuvers over the past 24 months after falling face first into a cable cutting crisis. They overpaid for rights to sports like the MLB whose viewership has been consistently dropping, on top of ESPN waiting way too long to build out a strong digital presence. But now they’ve gone all in. They launched ESPN+, a $5/month online only subscription service for exclusive content, and they’ve invested into growing sports like the NBA and now eSports. All of this is part of their strategy to grow within the 18-34 audience who were slipping from their grasp just two years ago.
I’m sure this is only the very beginning of Disney & ESPN’s push into eSports, I would expect even more deals like this to come in the future.
Magic Leap is Following in Apple’s Path
The secretive $2.3 billion augmented reality startup, Magic Leap, is coming out of the shadows. They announced earlier this year that they would be coming out with a pair of AR goggles sometime in 2018, now they’ve said the product will ship this summer.
The bigger news in all of this is that AT&T announced they will be the sole distributor of the new Magic Leap One headset. This is an interesting approach for Magic Leap, on one hand they’re limiting their potential sales by cutting off access to non-AT&T distribution channels. But, because AT&T knows they will be the sole beneficiary of any marketing efforts they will likely push the product much more than they would have otherwise.
This is exactly what happened during the initial release of the iPhone. AT&T was the sole carrier of the iPhone when it came out and they spent major advertising dollars pushing the product on Apple’s behalf. Magic Leap is a tech company run by mostly engineers and developers, bringing on a partner like AT&T to access their sales experience and distribution channels could prove to be a very good idea. This would allow Magic Leap to remain solely focused on the further development of their technology. Their goggles will be the most advanced available at the consumer level, but they are still far away from their product being suitable for the mass market. The Magic Leap One won’t be cheap, they will somewhere between $1000-$1500, and the capabilities are still very limited. That’s not a very enticing combo for the average consumer.
By outsourcing the marketing and promotion to AT&T Magic Leap is removing that extra burden to let them focus on what they do best: creating great products.
Self-Driving Car Competition is Heating Up
Alphabet/Google’s Waymo unveiled their new self-driving SUV prototype. They are making them in partnership with Jaguar and are planning on having an official roll out later this year. This is all part of Waymo’s road map (cheeky pun right there) in which they plan to have 20,000 of these vehicles operating as a fleet that can give over 1 million rides per day by 2020.
In contrast to most self-driving cars out there, Waymo and Jaguar are building the I-Pace from the ground up to be a self-driving electric car rather than retrofitting current models. By designing the vehicles with the sole intent of them being autonomous they hope to solve many problems that come from jerry rigging existing models.
I anticipate Waymo to be a serious competitor to Uber & Lyft because Google has a massive user base and will be able to bring customers into their ecosystem easily through their other products like Google Assistant and Google Maps. Google could easily make Waymo the default option for Google Assistant and suggest Waymo rides to users of Google Maps when looking for directions. It will be interesting to see how this all plays out.
In other autonomous car news, Daimler, the parent company of Mercedes-Benz, announced that they will be rolling out a self-driving taxi service in 2019 as well. This will only be limited testing and they’re partnering with Bosch and NVIDIA to handle the “brains” of the car. Needless to say, the competition in this space is certainly heating up. One could even say there’s going to be “Way Mo” competition in the ride sharing space soon. Okay, I’ve met my pun quota for the day.
Facebook is Slowly Becoming a Media Company
Facebook is launching a new “News” section under the Facebook Watch tab that will feature up to 20 media outlets including CNN, Fox News, ABC, Bloomberg and more on July 16. All of the partners will be creating custom content made just for Facebook.
This does a few things for Facebook, all of which should be positive. One, it shows they are actively trying to increase the trustworthiness of their new platform by bringing on established journalists. It also shows their commitment to publisher monetization. Right now, Facebook doesn’t have a good method to monetize creator content in the way that sites like YouTube do. This has led to much complaint from creators and publishers, and is a large reason why many of them have not embraced the Facebook Watch platform despite it having millions of users. If they can figure the monetization out, they will certainly attract more creators looking for new revenue streams.
But for me what this shows most is Facebook’s full intention of becoming an even larger media platform. I’ve discussed before that Facebook is in an arms race for content with the likes of Netflix, Google, Amazon, Disney, and others, and this is further proof that they’re accepting the challenge. They’ve been keen on attracting sports audiences as they’ve inked deals with the MLB, MLS, and other leagues. By adding a wide range of news outlets and announcing they intend to do the same for gaming content, Facebook is upping the ante on their content spending. And quite frankly, they can afford it.
Facebook is drowning in money and their revenues keep growing, and they can afford to outspend many of their competitors for exclusive content. I actually think they’re not being aggressive enough. It’s only a matter of time before one of the major tech companies wins the bid for a major sporting event like the World Cup, the Olympics, or something similar and I think Facebook should be the first.
That’s all for this week’s roundup, see you next Friday.