Axios Login

A smartphone with different colored buttons floating above its surface.

March 01, 2019

A bipartisan working group has tentatively agreed that it is, in fact, Friday.

1 big thing: Video game subscription wars are on

A video game controller with an angry face

Illustration: Rebecca Zisser/Axios

Google, Microsoft, Apple and Amazon are each said to be working on their own versions of a "Netflix for games," as the tech giants enter a heated battle to own the subscription business for video games.

Yes, but: It's easier said than done, Axios' Sara Fischer reports. Netflix rose to the top in part because it was able to exploit a gap in the market years ago around content licensing. An exact parallel to that doesn't exist in the gaming industry.

Driving the news:

  • Google is planning to unveil its video game service at the Game Developer’s Conference next month in San Francisco, Fortune reports. The search giant is reportedly spending heavily to get game publishers to license their content.
  • Apple is looking to build a service that allows users who pay a subscription fee to access a bundled list of titles, Cheddar reported in January. Apple could choose to use a March 25 event, where it is expected to introduce news and video subscriptions, to also debut game subscriptions.
  • Microsoft's service could let users play high-end video games anytime on any device, not just Microsoft's own Xbox console, Business Insider reported in January.
  • Amazon is building a subscription streaming service for games, The Information reports. Like Google, it's also reportedly in talks with game publishers.

The big picture: Subscription bundles for games have been around for a long time, but some of the new streaming services will aim to move not only the software but the processing for the game into the cloud.

  • That would represent a big shift in the gaming industry, eliminating not just the need for players to buy individual copies of games but also, in some cases, the requirement to use expensive specialized hardware to play them.

Be smart: The problem is that the economics right now don't incentivize game publishers to license their content to tech companies.

How it works: One key difference between video games and entertainment programming is that with gaming, there isn't as big a market for catalog content — material that people want to consume over and over even when it's old (think "Friends" or "Seinfeld").

  • This means that tech companies need to come up with lots of cash to convince game makers, like Electronic Arts or Activision, to license them their newer stuff.
  • But game makers have little incentive, even with a lot of cash being thrown at them, to give up a cut of their sales revenue to tech distributors when they can still sell directly to consumers for now.

What's next: A likely outcome of the streaming wars will be that tech companies begin by licensing and selling individual games a la carte instead, says Michael Pachter, a research analyst at Wedbush Securities.

  • "Could Amazon be successful? They would have to do it the way Apple did it," Pachter adds. "A la carte sales first (iTunes), and a subscription option later (Apple Music)."

2. Tesla delivering $35K Model 3 but closing stores

Tesla store in Paramus, New Jersey.

Tesla store in Paramus, N.J. Photo: Michael Brochstein/SOPA Images/LightRocket via Getty Images

Tesla is finally launching that long-promised $35,000 Model 3, but to meet its target price, the company is closing all of its 378 stores worldwide, Axios' Joann Muller reports. The move will result in laying off retail employees and shifting all sales online.

Why it matters: That $35,000 price tag enables CEO Elon Musk to fulfill his 2006 secret master plan to deliver a mass-market electric vehicle, but he told reporters today "there's no other way" to produce it than by closing all its stores and eliminating jobs. Even so, he says the company won't be profitable this quarter.

What's happening: Shifting all of its sales online — plus cutting other costs — means Tesla can lower the price of its vehicles, including Models S and X, by about 6% and achieve the $35,000 Model 3 price point earlier than expected.

  • Tesla will be winding down most of its stores over the next few months.
  • A small number of stores will transition into galleries or information centers.
  • The change to online sales will allow anyone in the U.S. to buy a Tesla, even in states where franchise laws currently prohibit Tesla-owned stores.

Details: Tesla is offering two new budget-priced Model 3s — a standard $35,000 model and a slightly upgraded $37,000 version — but they'll have smaller battery packs and won't travel as far as currently available versions of Model 3.

The catch: Tesla also changed the pricing on its Autopilot packages, shifting some features around, which will make automated driving features more expensive.

Go deeper: Joann has more here.

3. NY wants Amazon to rethink HQ2 pullout

Photo of protestors at NYC council meeting on Amazon HQ2 at end of January 2019.

Protestors at the Jan. 30 New York city council meeting on the deal for Amazon's second headquarters in Long Island City. Photo: Andrew Lichtenstein/Corbis via Getty Images

A wide group of New York politicians and business people is calling on the retailer to reconsider its decision to abandon Long Island City as a part of its HQ2 expansion.

The latest: In an open letter to CEO Jeff Bezos published in the New York Times, a number of CEOs, venture capitalists, union leaders and politicians make the case that a majority of the region wants Amazon despite some vocal protests.

Details, in the letter:

"A clear majority of New Yorkers support this project and were disappointed by your decision not to proceed."
"We understand that becoming home to the world’s industry leader in e-commerce, logistics and web services would be a tremendous boost for our state’s technology industry, which is our fastest growing generator of new jobs."

Meanwhile, New York Gov. Andrew Cuomo also personally appealed to Bezos to reconsider, per NYT.

What's next: The ball is squarely in Amazon's court.

4. Amazon has a misinformation problem, too

An illustration of the Amazon logo under a microscope

Illustration: Aïda Amer/Axios

A new report from CNN finds that a search for "vaccine" on Amazon yields a results page dominated by anti-vaccination books and movies.

Why it matters: Amazon has until now avoided the "fake news" drama that its rivals Google and Facebook have faced, in part because it's considered a hub for products, not a platform for ideas, Sara reports.

To be clear: Amazon, like other tech companies, faces no legal responsibility to curb the spread of misinformation on their platforms in the U.S.

  • Amazon's content guidelines say that it provides customers "with access to a variety of viewpoints, including books that some customers may find objectionable."

The big picture: Many companies are taking stronger action against false vaccine-related information than they have in other areas of dubious content. In the past month...

  • YouTube announced it will begin reducing recommendations of borderline content and content that could misinform users in harmful ways, including videos promoting anti-vaccination content.
  • Pinterest says it's currently blocking results for searches like "vaccine" or "vaccination" altogether.
  • Facebook says it is working with health experts to decide how to make anti-vaccine misinformation on its platform less visible without removing it.

The bottom line: Any platform that relies on open contributions of unvetted material, whether it be articles posted on Facebook or products sold on Amazon, will inevitably end up offering material containing fake or misleading claims.

Go deeper: Sara has more here.

5. Take Note

On Tap

Trading Places

  • HBO chief Richard Plepler is exiting after nearly 3 decades at the now-AT&T-owned cable network. Also leaving AT&T's WarnerMedia unit is Turner Sports head David Levy.


6. After you Login

A tweet from the Anaheim Fire Department on what happens if you block a hydrant and fire breaks out

Thinking of parking in front of a fire hydrant? Well, here is what one fire department says will happen if you do so and a fire breaks out.