Infinity and Beyond

Figures just in from last week report that “Grand Theft Auto IV” has surged past “Halo 3″ and “Pirates of the Caribbean: At World’s End” to set the record for the biggest opening week of any entertainment product.”

Selling over six million units in the first week to gross over $500 million, ‘IV’ surpasses ‘Halo 3′ by $200 million. $310 million of it’s total gross came from the 3.6 million units sold on its opening day alone. It also helped that ‘IV’ was released on multiple platforms and not just Xbox 360 like ‘Halo 3′. While it’s hard to compare video game sales to the multiple windowed film format, it is easy to say that ‘POTC: AWE’ grossed a worldwide b.o. total of $960 million over a period of 19 weeks and ‘IV’ grossed over half that in one week.

I’m a big fan of the ‘Halo’ franchise as well as ‘Pirates’ but the GTA series is just not one I’ve been able to get excited about. Aside from the mature content, the style of game just isn’t my style. I don’t think Take-Two is really bothered by my lack of interest but it is interesting to see what content has brought about the ‘biggest opening week of any entertainment product’ ever.

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Fox, Warner Bros., Paramount, Sony, and Universal are all going to join up to where Disney has been for months. All the major studios will be “making all their new releases available through the iTunes Store… from the moment their DVD and Blu-ray counterparts hit store shelves.”

I had mentioned earlier that Fox and Paramount were already experimenting with iTunes sales and all the studios had jumped on-board back in January with the movie rental scheme Apple has put forth. This will be a big step forward to help invigorate the sagging DVD market.

New release downloads will cost $14.99 and catalog downloads will run for $9.99.

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At the Westminster eForum on Web 2.0 held in London, the VP of Legislative Affairs at AT&T stated that by 2010 the Internet will have reached it’s max capacity.  This is, of course, with out billions in dollars worth of upgrades–$55B in the US alone, and $130B globally.

The idea of the Internet maxing out seems a bit far fetched to me.  Specifically, this quote made me think that the problem might be getting blown out of proportion:

“In three years’ time, 20 typical households will generate more traffic than the entire Internet today.”

Really?  My neighborhood is going to generate more traffic than the entire Internet?  I find this really hard to believe.  And a statement like that makes me doubt everything else Cicconi talked about.  Perhaps if every appliance in my home is downloading full-length HD-quality movies, plus bonus features, and streaming porn, and making video calls to other appliances down the street, and running their own stock markets and research projects.  But at least at this time I don’t forsee my toaster actually taking up that much bandwidth.  And is AT&T going to provide me a reasonably priced 1Gbps pipeline to my house?  Probably not.  Even if they do provide such a pipleine I doubt most homes would pay the price for it.

Some who heard the speech felt that Cicconi was in a roundabout way advocating for bandwidth shaping and prioritizing their Internet traffic (i.e. slowing down or restricting users who are downloading movies via file sharing sites).  Cicconi of course claims that’s not the case, and with good reason given Comcast being put in the hot seat over that issue.

I think it would be interesting for the big providers to publish some data on their current capacity levels–most people aren’t maxing out their bandwidth all the time. But I’m curious to know what level of usage on average the companies are actually seeing.

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It might have taken 20 years but Sony is can now claim victory in the latest format war. We’ve been reporting on an on-going basis as more and more retailers have made Sony’s Blu-Ray format their choice and now the bitter loss of the betamax battle can finally be put behind them. Not only have retailers made their choice but the studios have as well. Sony, Disney, and Fox were the original strongholds of the format with Warner Bros. straddling the fence until recently and Paramount and Universal being bribed to stay with HD DVD. Now all that changes. Universal said they will be shifting their focus to Sony and Paramount has stopped now that ‘Things We Lost in the Fire’ and ‘Into the Wild’ were released in early March.

The only group not jumping ship as quickly as possible is Dreamworks Animation. The ‘K’ in Dreamworks SKG, and CEO of Dreamworks Animation, Jeffrey Katzenberg, had thisto say about the situation, “We have a partnership with Toshiba and have an obligation to see this through. As you know, we have been well-compensated for our support [see bribed above]. It really is in their court at this point to really declare what the next step will be. We’re poised either way to jump into the marketplace when the conditions are right to do so.” The plan for Dreamworks Animation at the moment is to continue until the manufacturing plants are shut down and they are free to move on to the Blu-Ray format.

After battling for the last few years a congratulations is in order to Sony. They created a superior product that outlasted the competition and this time they remain on top. This doesn’t mean they are taking the future in stride. With streaming online hi-def right around the corner Sony might have won the battle but the longer war is still yet to be determined.

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Saying a no go Disney plans to cut their longtime ties with THQ Inc. in order to develop the new Toy Story 3 game in house. The Wall Street Journal is reporting on this general trend that Hollywood studios are taking. They are slowly planning to stop outsourcing video game production to companies like EA. Disney will be increasing its budget for interactive entertainment to more than $180 million for this year and an additional $350 million annually within five years. With box office receipts slowly rising and dvd sales sinking the only growth is found in interactive media.

Obviously with this trend Disney isn’t the only one bringing it home. Both Viacom and Time Warner are setting aside $500 million for future developments. The failures of the past still linger though as names like Atari and Midway Games Inc. haunt the companies decisions today after years of recovering from failed ventures.

By the end of 2010 Disney plans to self-publish 80-90% of its games. Only time will tell if this decision will be a successful one. Even though I’m not much of a gambling man I think that with the support of Pixar’s John Lasseter that even if it does fail it won’t be for lack of trying.

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Analysis to come later but, Toshiba has announced they are giving up on the HD DVD format. The announcement came after massive blows to their growth potential were announced by retail outlets such as Blockbuster, Walmart, Target, and Best Buy who all have gone Blu-Ray only in recent months.

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After 100 days the Writers Guild strike is over! 92.5% of the ballots cast were in favor of ending the strike and 283 votes of the 3,775 were in favor of continuing to picket and hold out for more.

The informal negotiations that finally broke the impasse is largely creditedto News Corp.’s Peter Chernin and Walt Disney Co. CEO Robert Iger who stepped in only a month ago when the talks had come to a stand still. While their end goal was the same both companies had different reasons for reaching them. Disney owned ABC struggles without new content and Fox relies heavily on its motion picture group to succeed.

It looks like new episodes will start to come back in late March early April and the shows will be able to go on as scheduled, just shy of a full season (roughly 24 episodes). Already Disney has renewed nine shows for next year and no word as of now whether or not the regular season might head into the early summer months.

So, welcome back writers, and everyone else who has been displaced by the strike. Let’s get countless movies and TV shows up and running again and hopefully take away some of the reality programming that has been crowding the program schedules for the last few weeks.

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Here’s an article from the AP about Reality TV growing up.  Many reality shows were dusted off during the midst of the writers strike.  Despite their potential return, the reality shows are still going to stick around.

Survivor started it’s sweet 16 last week.  Big Brother returns this week.  The Mole and Paradise Hotel are being brought back.  Ohh boy, get out your Tivo remotes and start programming!

Perhaps when the writers come back they’ll write something good enough to put the reality shows back on the shelf.  But I doubt it.

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As expected, the Yahoo board rejected Microsoft’s bid to purchase the company in a letter this morning. The board seems to be indicating an interest in the bid if the value were upped to $35-36 per share, or potentially as high as $40 per share (an amount Microsoft supposedly offered a year ago which was rejected at the time). The board said they are continually evaluating all the options to provide the best value for shareholders.

Despite the rejection, MS will not likely back down easily from the offer. Ben Romano from the Seattle Times outlined some possible responses the company has to the Microsoft rejection. The most logical first step would be to raise its bid. Another option would be to woo large Yahoo shareholders into seeing Microsoft’s point of view–which has reportedly already begun.

Moving into the more hostile arena, Microsoft could make a tender offer to purchase significant quantities of Yahoo shares, thus giving it temporary sway in the company. The most hostile approach would be to attempt to get a sympathetic board nominated to replace as much of the existing Yahoo board with pro-Microsoft votes. Then again, the company could just walk away, although most analysts see that as unlikely.

What I found interesting was the fact that Microsoft’s initial offer was both cash and stock. Given the recent decline in Microsoft shares since the announcement, the offer is now worth less and would actually cost Microsoft nearly double in terms of actual cost and depleted shareholder wealth. The declining stock price would probably have to be factored into any new offers Microsoft puts on the table.

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OK, so the last time I checked, everyone loathed the big bad software giant in Redmond. After last week’s surprise unsolicited bid for Yahoo!, everyone is up in arms praising how sweet and amazing this deal will be. How much it will spur innovation. How it will help to stop the evil Google empire.

Um, when did Microsoft stop being the evil empire and Google take the crown?

I’ve got to hand it to the MS PR department. Last year they bought aQuantive and breezed through regulatory approval. But they threw a fit and complained on the hill when Google dared purchase DoubleClick.

Now with the Yahoo! bid people are singing the praises of how great this will be. How right it is. Microsoft is almost playing it off as if it will potentially be hurtful to them, but if they must do it to stop the evil machine of Google then they’ll do it for the public good, even if it means cannibalizing their own businesses.

Google of course is not sitting idly by. They’ve fired back with a response of their own. Sure it would mean a lot for search.  But it would also give MS a near monopoly on the free email services and instant messaging.

Yet to hear people like David Kirkpatrick, sr. editor at CNN, say this will drive innovation (see: “Why Microsoft’s Yahoo bid makes sense”) just makes no sense to me. I can’t recall the last time that Microsoft was *truly* innovative.  And innovation is driven by a market with a lot of competition.  Microsoft isn’t competing–it’s trying to just stay in the game.  And somehow I don’t see a lot of innovation coming out of a group with just two major players in it.  That being said, at least Yahoo! took steps to keep up with Google in making their online email system slicker, unlike Hotmail/Live.  And there’s even been rumblings of Google enabling other companies to come in and block Microsoft’s bid with a counter offer, just to keep Yahoo! a bit more “independent” if you will.

I slightly dread the power this combo would give MS over the Internet.  Yahoo! has some of the most-trafficked sites on the net.   I really don’t want a Vista-like experience to be brought to my browser.  “Are you sure you want to Google that?”  “You’ve clicked on the link to access your email.  Would you like to give yourself permission to access your email?”  Seriously?

And lastly, they’re going to spend $44.6 BILLION dollars on Yahoo! (not counting all of the legal fees, acquisition costs, marketing, integration, etc. etc.). And they’ve identified $1B in savings. WOW! A whole ONE billion?? With $44.6B you’d think you could throw some darts at a pile of startups and find two or three which could generate $1B for you. And investors can kiss that sweet giant dividend payout goodbye.

I think it really should be settled with an arm-wrestling contest between Bill Gates and Jerry Yang.  If Bill wins, MS gets Yahoo!  If Jerry wins, Yahoo! stays on it’s own, and gets to take a baseball bat to the Hotmail servers just for fun.

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