Business Insider
Analyzing the top news stories across the web

April 29 2016 5:28 PM

Amazon Has One Edge Over Netflix: It Can Lose Money on Streaming Video

This post originally appeared on Business Insider

Netflix might be the king of content in the streaming video world, but there's one gargantuan advantage Amazon has in the space: it doesn’t actually have to make money on its Netflix competitor, Prime Video.

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Amazon CFO Brian Olsavsky highlighted the value of video to Amazon during its earnings call on Thursday. He said that Amazon is going to “significantly increase [its] content spend” on its video offerings because the company is seeing better engagement and conversions from Prime members who use the video service.

In plain English: Prime Video helps Amazon make money in other ways.

Here’s a simple example. In arecent survey conducted by CutCableToday (independent of its website), Amazon Prime subscribers were found to be 10 times as likely to rent or buy movies from Amazon Instant Video than non-Prime members.

Let’s break that down. Amazon has two tiers of video. The first is Prime Video, which is a Netflix-like service attached to Prime (oravailable separately for $8.99 per month). The second is Amazon Instant Video, which is a “rent or buy” service like iTunes. And you can browse both at the same time.

One of the advantages for Amazon is that once people get in the habit of going to Prime to watch videos, which are free except for subscription fees, the company has a chance to sell them on renting or buying videos that aren’t available. Here’s the scenario: you search for “The Revenant,” and it’s not available on Prime, but there it is sitting on your screen, available to rent on Amazon for $5.99 with one click. You might just go for it.

In the survey, 40% of 380 Prime members polled said they rent or bought video from Amazon Video at least once per month, as opposed to just 4% of non-Prime members. That’s a big difference. And while that difference might be affected by factors other than exposure to Prime Video, Olsavsky’s comments suggest Amazon sees video as a driver of other purchases.

This isn’t good news for competitors like Netflix, whose core business is providing high-quality movies and shows for a per-month fee. Amazon could theoretically never make a single cent directly off of Prime Video, and still have the project be a resounding success. But a bigger threat to Netflix might be if other companies, like wireless carriers, follow Amazon's lead and start using subscription video primarily as a tool to make money off of other products.

April 28 2016 3:41 PM

The Big Reason Uber Says It Doesn’t Want to Add a Tip Button

This post originally appeared on Business Insider

Tipping won't be coming to the Uber app any time soon. In a blog post Thursday, the ride-hailing company reiterated that "tipping is not included, nor is it expected or required."

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Why? Uber says it is better for "riders and drivers to know for sure what they would pay or earn on each trip — without the uncertainty of tipping." All the debate around tipping comes from an impending settlement the company reached in California and Massachusetts. As part of the agreement, Uber must clarify its language around tipping. Previously the company said there was "no need" to tip — although that's not the same thing as saying a tip is included. 

As a result, many riders thought tip was already included in their ride. Drivers could (and can still be) rated lower by passengers who felt it was uncomfortable to have "please tip" signs in the back of a car. 

As part of the settlement agreement, Uber is clarifying, but not rectifying tipping for drivers. While its competitor Lyft has tipping built in, Uber is arguing that adding tips would lead to bias from riders to drivers. In addition, it could incentivize drivers to "spend more time where tips are likely to be highest — typically the wealthiest neighborhoods" and not service the whole town. 

None of these arguments negate the fact that riders are allowed to do this anyways by just tipping cash. If drivers are looking for cash tips, they might be going to these neighborhoods anyways. As CNN's Ethan Wolff-Mann writes, the company is focusing more on user growth than finding a way to take care of its drivers: 

"But citing racism for not adding a tip-screen, when the company has already acknowledged that gratuity is not included, is a transparent ploy to focus less on the drivers, and more on its endgame of user growth. Adding a tipping screen would undoubtedly increase tips—which users wouldn’t have an outward problem with—but it would creep into the consumer’s mind that an Uber trip isn’t quite so cheap as advertised, raising the barrier for consumers to use it."

Despite the pushback, the company has started sending out letters to its riders in certain cities to clarify the tipping policy. As Uber general manager for NYC Josh Mohrer wrote in an email to NYC riders, "Today, riders tell us that one of the things they like most about Uber is that it’s hassle-free. And that’s how we intend to keep it."

April 27 2016 5:54 PM

How Foursquare Accurately Predicted That Chipotle's Sales Would Plummet

This post originally appeared on Business Insider.

Chipotle on Tuesday reported its first quarterly loss, along with a massive decline in sales. Comparable-store sales, or sales at locations open for at least one year, fell nearly 30 percent.

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The fact that Chipotle is suffering is not a surprise. Cases of E. coli last year were linked to some of the restaurant's locations in 14 states, and a federal criminal investigation is being carried out in relation to a norovirus outbreak in California. But most investors were still caught off guard by the scale of the drop in same-store sales. Chipotle shares slid 6 percent on Wednesday.

Not everyone was surprised, however.

It turns out that the decline was accurately predicted by Foursquare, the social-media app that has its users "check in" to tell their friends what they are up to. The company calls itself a "location intelligence" provider, because it turns out those check-ins are much more than just millennial chatter.

On April 12, Jeff Glueck, the CEO of Foursquare, published a post on Medium predicting that Chipotle's first-quarter sales would be down nearly 30 percent. That was based on foot-traffic stats built from explicit check-ins and implicit visits from Foursquare and Swarm app users who enable background location.

It isn't the first time Foursquare has had this kind of success predicting sales. In September of last year, it looked into foot traffic at Apple stores leading up to the launch of the iPhone 5, the iPhone 5s, and the iPhone 6, predicting that Apple would sell 13 million to 15 million iPhones over a weekend. The number came in at 13 million.

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Foursquare

Foursquare offers this data through a tool called Place Insights, and it counts retailers, brands, and analysts among its clients. The cost of access to this data depends on the depth of the data required.

The service offered by Foursquare, and its accuracy, is further evidence of the growing use of what is known as alternative data on Wall Street.

This is a business in which obscure data sets can be turned into tradable information. It's a cottage industry of tech firms that have sprung up in recent years, processing information on everything from the weather to web searches to location data and selling it for thousands of dollars to hedge funds looking for any advantage they can get.

"There is a whole class of emerging data, and that comes from the deployment of million of sensors around the world by governments, companies or consumers," Adam Broun, chief operating officer at Kensho, a startup in the field that is backed by Goldman Sachs, told Business Insider last year.

Fundamental and quantitative funds have zoned in on this kind of data, along with so-called quantamental funds, which mix quant approaches with bottom-up analysis.

They typically license data and crunch it using their own internals teams, pay for analysis crunched by third parties, or gather the data themselves. The slide below, from a white paper on alternative data published by Integrity Research Associates and written by Gene Ekster, sets out the process.

Ekster, who has worked with alternative data at companies including 1010data and Point72 Asset Management, told Business Insider last year that this kind of data would eventually go mainstream.

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Gene Esker

"At some point this isn't going to be alternative data anymore," Ekster said.

April 26 2016 4:43 PM

YouTube Wants People to Visit It for the Reason They Go to Facebook. Will This App Update Help?

This post originally appeared on Business Insider

Google just revamped its YouTube app, giving its home screen a sleeker design and, more importantly, an improved recommendation system designed to hook viewers into longer watch sessions. "We want to create the feeling thatYouTube understands you," says Johanna Wright, VP of product management at the video company. 

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The app now provides one ranked list of video suggestions instead of the previous, tiered selection that had categories like "Watch again" or "Recommended by [insert friend's name here]." In the old format, you could see many more options with less scrolling. In this new format, YouTube's betting that its first few recommendations will be so good that you'll want to click in. Its deep neural network systems factor in your geographical data, watch history, device, how much you've watched a given video or channel in the past, and more. 

In the company's beta tests with its new system, people did indeed spend more time watching with the ranked video list. "The reason we were able to do this is that we’ve made so many changes to our machine learning systems that we can now tell what users most likely want to watch," YouTube says in a statement. 

The improvement touches on one of YouTube on-going challenges: Getting users to think of it as a destination for discovery instead of a just a repository for any kind of content they might want to look up. 

There are 400 hours of video uploaded to YouTube every minute so if you're looking for something specific, the site is likely going to have the right kind of content to suit you. But it also wants people to open the app and find things they didn't even know they wanted. As Facebook—the ideal place for discovering clips you weren't specifically looking for—amps up its own video reach, YouTube needs to prove it can do both more than ever. 

April 26 2016 1:24 PM

Microsoft Made a One-Handed Keyboard for iPhone. Here’s How to Get It.

This post originally appeared on Business Insider

Microsoft's one-handed "Word Flow" keyboard has made its way onto iPhones. This is the second keyboard Microsoft has launched on iOS this month; the first was their productivity-centric "Hub" keyboard.

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Both the Word Flow and Hub keyboards have come out of Microsoft's Garage division. Word Flow originally premiered for Windows Phone users alongside Windows 8.1 in 2014, but now iPhone owners can use it too. This string of keyboard releases comes only two months after Microsoft acquired the keyboard-focused AI company SwiftKey.

Word Flow's main focus is on making one-handed use on bigger smartphones more feasible. Here's how it works.

In order to use Word Flow, or any third-party keyboard, you'll have to install it by going to the "Keyboards" section of Settings.

inordertousewordfloworanythirdpartykeyboardyoullhavetoinstallitbygoingtothekeyboardssectionofsettings

Once installed, Word Flow will show up alongside all of your other keyboards. Just tap on the globe key to find it.

onceinstalledwordflowwillshowupalongsideallofyourotherkeyboardsjusttapontheglobekeytofindit

Word Flow uses the same typeface as Microsoft's Hub keyboard, and a stock background.

wordflowusesthesametypefaceasmicrosoftshubkeyboardandastockbackground

But there are a number of themes you can select to personalize your typing experience.

butthereareanumberofthemesyoucanselecttopersonalizeyourtypingexperience

You can opt to give Microsoft full access to your keyboard to capture more data, but Word Flow works fine without it.

youcanopttogivemicrosoftfullaccesstoyourkeyboardtocapturemoredatabutwordflowworksfinewithoutit

You'll notice these two arch-shaped keys in the corners of the keyboard. These are used to access the most interesting part of Word Flow, its one-handed mode.

youllnoticethesetwoarchshapedkeysinthecornersofthekeyboardtheseareusedtoaccessthemostinterestingpartofwordflowitsonehandedmode

Tapping and pulling on one of the arch keys contorts the keyboard, shifting it closer to the bottom corner of the screen so it's easier to reach with whatever hand you're holding your phone in. Now you can type with one hand, though it might take some getting used to.

tappingandpullingononeofthearchkeyscontortsthekeyboardshiftingitclosertothebottomcornerofthescreensoitseasiertoreachwithwhateverhandyoureholdingyourphoneinnowyoucantypewithonehandthoughitmighttakesomeget

April 20 2016 5:37 PM

Start Hoarding That Xbox. It's Now Officially a Discontinued Microsoft Product. 

This post originally appeared on Business Insider.

It's official: After more than a decade, Microsoft is halting production of its beloved Xbox 360 video-game console.

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With sales of the console reaching 84 million since the November 2005 launch, this news marks the end of an era for video games.

But it also marks the end of an era for Microsoft itself, as the Xbox business is brought closer into the company's core after 15 years.

Something you hear from a lot of Microsoft employees is that the Xbox business is almost like a different company entirely, doing its own thing with minimal interaction or interference. It has a reputation for being isolated from the rest of Microsoft.

Indeed, Xbox has always been a weird case for Microsoft: The first Xbox console started as a Bill Gates-sanctioned experiment to improve Windows for the living room, but it shipped in November 2001 with a custom operating system mostly unlike anything else Microsoft offered. 

The Xbox 360 was even weirder, by Microsoft standards — not only did it not run Windows, it had a PowerPC processor under the hood. At the time of the Xbox 360's introduction, the only computers that were really using PowerPC processors were Apple's Macs. Like I said, weird. 

Still, both consoles were big hits. The Xbox 360 far outsold the competing Sony PlayStation 3.

But everything changed with the introduction of the Xbox One console in 2013, the successor to the Xbox 360. Like its forebearers, the Xbox One didn't run Windows, either. Unlike the Xbox and the Xbox 360, the Xbox One's sales were slow out of the gate. It carried a higher price tag than the PlayStation 4, and required the use of the lackluster Kinect sensor at launch.  

Since 2013, two important things have happened: First, Microsoft got a new CEO in Satya Nadella, who's had great success already in unifying the company under one banner. Second, the Xbox business is now headed up by Phil Spencer, a team player who's indicated his desire to bring the ship closer to the fleet, so to speak.

In late 2015, the Xbox One got an update that brought a custom version of the Windows 10 operating system to the console. Some time this summer, the Xbox One will get access to a version of the Windows Store app market, too. 

It means that an Xbox is finally running Windows, which it turn means that it's finally snuggling up to the company's core business units.

And with the discontinuation of the Xbox 360 console, it means that once the existing stock runs out, the only Xbox you'll be able to buy is one that supports Windows 10. That's important groundwork for Nadella's vision of a Windows-everywhere future.

April 19 2016 4:11 PM

Even the Yellow Pages Might Be Interested in Buying Yahoo

This post originally appeared on Business Insider.

YP Holdings, the company that owns the digital assets of the Yellow Pages, could make a bid for Yahoo's core business, according to Bloomberg's Alex Sherman on Monday.

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The report said that the bid would follow something called a Reverse Morris Trust, a deal structure that would allow YP to merge with Yahoo's spun-off core business in a tax-free manner.

Given that YP is worth only about $1 billion to $1.5 billion, such a structure would be the only option for YP to make a bid for Yahoo's core web properties, which some analysts say are worth at least $6 billion.

YP is controlled by Cerberus Capital Management, a private-equity firm that bought the company for $950 million in 2012. AT&T also holds a minority stake in YP, meaning that if the deal goes through, AT&T could wind up owning part of Yahoo, the report said.

The deadline for making preliminary bids on Yahoo's core business was Monday. Verizon and a number of private-equity firms, like TPG and Bain, are expected to place bids.

Although it's unclear how exactly a merger between YP and Yahoo would make sense for each company, there's one big benefit for Yahoo: YP owns the largest local-advertising sales force in the U.S., with over 3,300 sales reps. That's a huge team that could help sell ads against Yahoo's more than 1 billion monthly visitors.

April 18 2016 4:43 PM

Why Netflix Doesn’t Have to Sweat a Challenge From Amazon’s Prime Video

This post originally appeared on Business Insider.

On Sunday, Amazon began to offer Prime Video as a standalone streaming service for the first time, bringing it closer in concept to the likes of Netflix and Hulu.

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Prior to Sunday, to get Prime Video you had to subscribe to the entire Prime bundle, which included things like two-day shipping and access to Amazon's music streaming service. Setting aside the fact that at $8.99 per month, Prime Video is a bad deal, there’s another reason why it’s not a “Netflix killer.”

If you look at the overlap of users on the iOS apps for Netflix, Amazon Video, and Hulu, it suggests that the latter two services are as much complements to Netflix as head-to-head competitors.

First, let’s look at the overlap graph for Netflix (courtesy of SurveyMonkey Intelligence):

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SurveyMonkey Intelligence

These numbers suggest that a substantial amount of Netflix subscribers don’t subscribe to Hulu or Amazon Prime, which makes sense given the scale of its U.S. subscriber base (Netflix had 46 million U.S. subscribers at the end Q4 2015, versus Hulu's last-released 9 million subscribers as of April, 2015).

And if these kinds of percentages also held true for Hulu and Amazon Prime—if we observed that subscribers to those streaming services largely don't subscribe to Netflix—it would paint a picture of a zero-sum ecosystem where the three companies are fighting to become the single streaming service you choose (albeit with Hulu and Prime being much smaller). You pick the one service that best suits your needs, and call it a day.

That’s simply not the case.

Here is is a graph of Amazon Video’s user overlap:

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SurveyMonkey Intelligence

And Hulu’s:

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SurveyMonkey Intelligence

Here you can see that a huge portion of the user base of these apps also use Netflix: 53 percent for Hulu and 62 percent for Amazon Video.

While Netflix has won the battle for one-service users, that likely isn’t the market that Hulu or Amazon are betting on.

The high rate of overlap suggests that Hulu and Amazon’s subscribers are people who have begun to buy into a streaming future. This is a future where you create your own entertainment bundle via a mixture of standalone streaming services.

And in that world, Prime Video isn’t a dark horse “Netflix killer,” it’s just one more channel of content.

April 15 2016 5:02 PM

San Francisco Wants Almost All of Its Uber and Lyft Drivers to Get Business Licenses

This post originally appeared on Business Insider

Uber and Lyft drivers have cruised the streets of San Francisco for years. But the city has now decided that drivers who work for more than seven days in a year need a business license. Nearly 37,000 people have been identified by the city as drivers for either Uber or Lyft, according to a press release issued on Friday by city treasurer José Cisneros

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Cisneros did not say how the city came across a list of names, but the notice being sent to drivers comes from "two years of enforcement work, including multiple requests for information and subpoenas to get sufficient data about business operations" from companies like Lyft and Uber.  Knowing that both Lyft and Uber have both actively fought having information released, it's likely the data wasn't passed over voluntarily. San Francisco was not listed as a city that had requested data in Uber's transparency report, although its airport has information about 44,000 drivers.

"Uber partners with entrepreneurial drivers and as independent contractors, they are responsible for following appropriate local requirements," an Uber spokesperson said. Lyft, on the other hand, was worried that forcing registration would compromise driver privacy. "We have serious concerns with the City's plan to collect and display Lyft drivers' personal information in a publicly available database. People in San Francisco, who are choosing to drive with Lyft to help make ends meet, shouldn't have to compromise their privacy in order to share a ridem" a Lyft spokesperson said.

Cisneros will start by sending out three batches of letters to the identified drivers over the coming days, according to the SF Chronicle. Each driver will need to register him or herself as a business within the next 30 days and pay a $91 annual registration fee and display the registration in the vehicle, or face additional fines. If each driver registers, that generates approximately an extra $3.37 million for the city's coffers.

While the city says it's taken two years of enforcement work to get here, the move to require business licenses is also a reflection of the legal battles that the two companies are involved in. Lyft has been trying to settle a court case which would dole out cash to some drivers, but consider them independent contractors in the end. Uber's case is still up in the air as to whether they are employees of the company or independent contractors. 

Now San Francisco is flipping the argument around on the ride-hailing companies arguing that if their drivers are truly independent contractors, then they need these business licenses to be able to operate in the city.

April 15 2016 4:38 PM

McDonald’s New Restaurant Will Sell Infinite Fries

This post originally appeared on Business Insider

McDonald's is opening a restaurant in Missouri that's unlike any other McDonald's in the country. The new 6,500-square-foot location in St. Joseph will offer all-you-can-eat french fries, customizable desserts, sandwiches, and burgers, as well as table service, The St. Joseph News-Press reports.

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It will have several digital kiosks for customers to order their food—which McDonald's is now adding to restaurants across the country—a “party room” for rent, and modern-looking couches and arm chairs for hanging out.

The restaurant will also try to appeal to young moms by hosting events for mothers and kids during the day, such as play groups and children's book readings, according to its Facebook page.

That's something rival chain Chick-fil-A has been doing for years. Chick-fil-A also recently added a new “mom's valet” service to make ordering easier for parents.The new play area for kids will be unlike any other McDonald's play-place, featuring interactive light board tables and tabletop video games, according to the News-Press.

On top of all the design-based bells and whistles, there will be an almost unlimited number of options for customizing food orders. “There really are hundreds of different choices to build the burger of your dreams,” Chris Habiger, the franchisee who is building the restaurant, told the News-Press. “Once you’ve placed your order, you can find your seat because we’ll bring it out to you.”

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