The fast-evolving world of hotel automation aims to lower labor costs and streamline services for guests by replacing humans with automatic liquor dispensers, noise sensors, offshore concierges on video monitors and more.
Welcome to the world of hotel automation, where wall monitors and chatbots have replaced in-person interactions with human staff.
Guests staying at a Sextant hotel in New Orleans check in without any interaction with a human being. They’re greeted by a virtual concierge visible on a computer monitor but based thousands of miles away. And if they want to wind down from a stressful flight, a shot of Maker’s Mark bourbon from the lobby’s automated booze dispenser will cost them $5 — but if someone isn’t there in-person that day to check their IDs and present them with a special card for the machine, they’re out of luck.
Welcome to the fast-evolving world of hotel automation, where wall monitors and chatbots have replaced in-person interactions with human staff, and third-party tech and services partnerships are a core part of the business model.
For hospitality startups like Sextant Stays, which owns and operates apartment buildings and homes in Fort Lauderdale, Miami and New Orleans that are available for short- and long-term stays, the desire for contactless interactions during the COVID-19 pandemic accelerated a mission to make larger spaces and premium amenities accessible to guests at lower prices by integrating automated tech and reducing labor costs. Yet, while automation adds novelty and convenience, it opens the door to new technical glitches and introduces unique labor dynamics that go beyond the usual tensions when robots replace humans.
“We don’t want to take away all human interaction. We’re just trying to rethink traditional hotel cost structure,” said Sextant Stays CEO Andreas King-Geovanis.
Some large hotel chains introduced contactless features during the pandemic such as online check-out and digital room keys, and many use automated systems to enable personalized, digital communications with guests. A minimal number of hotels today have experimented with actual robots to enable check-in and concierge services or to deliver drinks or food to guests. However, hospitality startups like Sextant, Sonder and others are paving the way toward what the broader hospitality industry could look like someday.
“They are a sign of things to come,” said John D. Burns, president of Hospitality Technology Consulting, regarding Sextant Stays.
Note: Sextant Stays did not pay for or subsidize my stay at The Lola. I chose to stay there while in New Orleans in June to observe a computer vision conference, not realizing when booking the room that my stay would involve automated self-check-in and an array of interactions with emerging tech.
Guests staying at The Lola, Sextant’s historical building near the Ernest N. Morial Convention Center in New Orleans, may be surprised to see in the lobby what at first glance appears to be the disembodied head of a woman giving them a smile. A closeup of her face appears on a small tablet-sized monitor. Depending on the robotic hardware used in a given location, the monitor may be positioned on a pole attached to wheels or, in a newer iteration, on a wall.
A virtual concierge (right) greets guests in the lobby at The Lola hotel in New Orleans.Photo: Kate Kaye/Protocol
This is how Sextant presents one of its 10 full-time virtual concierges, all of them based more than 8,000 miles away in the Philippines. She may greet guests at New Orleans properties one day and Miami the next.
Sonder, another hospitality company, operates hotels and apartment-style properties in 40 markets around the world using automated self-check-in and digital tools for requesting room cleaning or other services, but the company does not use virtual concierges the way Sextant does.
“Some of our larger markets and properties, specifically our hotels, may have staffed front desks, and our local teams live and work in the market and are either present or regularly moving across our properties in a given city,” said Deeksha Hebbar, chief operating officer at Sonder.
Sextant’s approach to virtual concierge employing overseas workers is “really quite rare,” said Burns.
For Sextant, it’s all about cost savings, allowing the company to pay a lean concierge staff of 10 people instead of the 30 they’d need on staff in a traditional in-person setup. “That traditional front desk agent — 80% of the time they’re not really interacting with people outside of that 11 a.m. to 4 p.m. rush. Our concept was, let’s make sure that we’re as productive as possible to rethink the traditional hotel cost structure,” King-Geovanis told Protocol.
The company has 90 full-time staff in the Philippines, some of whom do entry-level accounting or marketing-related work if they’re not concierges. They are paid a starting wage of $6 an hour — higher than the 570 pesos, or $10.25, people in Manila make for a full day’s work.
“In 2020 we really started to say, ‘Hey, if people can take phone calls and respond to messages in the Philippines, why couldn’t they do entry-level accounting or marketing?’” King-Geovanis said.
The impacts of offshoring labor or replacing humans with automation and robotic tech have been studied for years, but use of virtual workers to replace people in the travel and hospitality industry could have unique implications on tourism-driven economies where jobs are inherently linked to in-person work. And for a culturally rich destination like New Orleans, offshoring labor could change the way people experience a place, removing interactions with the very humans who are steeped in that culture.
“One reason why people travel is to experience the local culture, and this type of system is basically eliminating that experience of the local culture. Eventually over time people will stop expecting that as part of the experience,” said Lisa Kresge, a lead researcher at the UC Berkeley Labor Center who focuses on digital and algorithmic technologies.
“Technology is an enabler but cannot yet completely replace the necessity of human interaction at some level in the hospitality experience,” said Hebbar. “We believe that human service will continue to be a critical part of travel and exploration; technology can serve as a first port of call for simple and quick service, with human service (either remote or in-person) still being important to serve more complex guest needs.”
The rooms inside The Lola are decked out with emerging tech, but they’re decorated with a nod to yesterday’s now-fetishized analog machines. Photos on the walls in one room featured closeups of a vinyl record spinning on a turntable and a vintage car. A small beverage fridge in a bedroom resembled a 1950s-era model.
An Orbitz listing for the property notes in special check-in instructions that “A front desk is not available at this property” and “Guests will receive smart lock details,” but it’s not always clear to guests of automated properties that the human staff they expect to be present at a hotel won’t be there. The Sextant Stays website itself does not mention this about The Lola.
“You have to advise people in advance and set their expectations,” Burns said.
Before they encounter the virtual concierge, Sextant guests are asked to validate their identity by uploading a selfie and a photo of their driver’s license, passport or national ID card using software from Sextant partner Superhog. But despite the company’s extreme automation goals, Sextant doesn’t use facial recognition to match the selfie to the guest when checking in, according to King-Geovanis. Instead, he said the selfie and ID data is used by Superhog to verify a guest’s identity to avoid credit card fraud. According to Superhog’s terms and conditions, the company relies on its own partners to check criminal and sex offender databases as a security precaution.
Another security measure: Sextant’s self-check-in system generates a unique code for guests to use to enter its properties. But with additional tech comes additional glitches.
When I stayed at The Lola in June, the automatic locking system was not working, and the building’s front door was left ajar multiple times, creating a security vulnerability. Sextant has security personnel who roam properties in each market, King-Geovanis said.
But all in all, it’s rare to find a Sextant worker physically present in its buildings.
Guests can buy forgotten aspirin or shaving supplies in CVS-branded kiosks or can access a supply closet where extra toilet paper or coffee is stored. Sextant shares revenue from sales of products in the CVS machine, but it pays a fixed rental fee to have it. “It seems to net out about even for us,” King-Geovanis said.
Other devices replace what may have required a call to front desk personnel in the past.
Digital touchscreens provided by GuestView Guide made by Sharp NEC Display Solutions that are affixed to walls in Sextant guest rooms use customers’ booking data to enable personalized welcome messages and let guests click to order $100 mid-stay cleaning services. Noise sensors made by NoiseAware monitor for the sort of loud partying or sounds that can make for a bad night for other guests. The system monitors for sustained, loud noises, but does not record people’s voices, according to the company’s website.
For now, depending on the size of a building or day of the week, between two and eight human beings may be present at any given time to clean the rooms, maintain equipment or check IDs for the alcohol-dispensing machines. The company also has valets and someone at the front desk in its larger buildings with 50 or more units.
As automated systems remove some humans from the process of operating a hotel, they are changing what remaining workers are required to do and how they’re managed. For instance, a housekeeping supervisor at The Lola assisted in communicating with the virtual concierge when my room door code was not operable during an early check-in, a task someone in a customer-facing role would usually handle.
“One of the challenges of these efforts to save labor through these technological [systems] is they often ironically create more labor to deal with them than they would otherwise,” Kresge said.
Training employees to take on multiple roles is part of Sextant’s strategy. “We cross-train employees to be multifunctional,” King-Geovanis said. For instance, in its larger properties, valets — referred to as guest service agents — are also trained to perform front desk duties.
Automation is also altering how hotel housekeepers and maintenance workers are managed. Even some larger hotel chains route and schedule room cleaning through automated software. Listings for Sonder and Sextant Stays housekeeping jobs require cleaning workers to be comfortable with use of mobile apps for collaboration and communications, for example.
“They are essentially being managed by a technological system,” Kresge said regarding some hotel housekeepers who now get their cleaning orders from an app. “If the workforce is not unionized, the ability to have recourse or voice concerns about how the system delegated those tasks is practically nonexistent,” she said.
Automation and virtual work are also altering how workers perceive one another. When an air conditioning unit in a room at The Lola was on the fritz, a maintenance tech who was summoned from another Sextant building to assess the equipment referred to the human-yet-virtual concierge as “the robot.”
“One of the challenges of these efforts to save labor through these technological [systems] is they often ironically create more labor to deal with them then they would otherwise.”
“For those workers, they’re not the ones having the conversations with the concierge, so it is in effect a technology in their reality,” Kresge said.
The company itself has referred to its virtual concierge role using the term, noting, “As a Virtual Concierge, you’d assist our guests through Telepresence Robot.”
While we often talk of anthropomorphizing robots by attributing human characteristics to them, the use of “robot” to describe a human concierge reverses the concept. But King-Geovanis stressed the humanity of his company’s virtual concierges. “These are very real people,” he said, noting that Sextant’s leadership team met with all of its Philippines-based employees in Manila in May.
“A robot almost makes this service seem a lot colder,” King-Geovanis said. “If you’re a maintenance worker, for instance, they haven’t had that opportunity [to meet the virtual staff]. I think ‘robot’ almost makes the service seem a lot colder and dehumanizes,” he said. “They are real people with real emotions. Our guests actually do interact with them.”
The hospitality industry may need a lot more time before it contemplates such ethical and philosophical questions surrounding automated tech, said Burns. “We do not have the luxury of thinking about these things yet, but the sociology of it is going to become a discussion at some point regarding how robotic versus real-life staff are regarded.”
Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of “Campaign ’08: A Turning Point for Digital Media,” a book about how the 2008 presidential campaigns used digital media and data.
The Biden administration will attempt to roll back China’s chipmaking abilities by blocking tools that make a widely used type of transistor other chipmakers have employed for years.
By using a specific, fundamental building block of chip design as the basis for the overall policy, the White House hopes to both tighten existing controls and avoid the pitfalls around trying to block a generation of manufacturing technology.
Max A. Cherney is a senior reporter at Protocol covering the semiconductor industry. He has worked for Barron’s magazine as a Technology Reporter, and its sister site MarketWatch. He is based in San Francisco.
The Biden administration has for several months been working to tighten its grip on U.S. exports of technology that China needs to make advanced chips, with the goals of both hurting China’s current manufacturing ability and also blocking its future access to next-generation capabilities.
According to two people familiar with the administration’s plans, President Joe Biden’s approach is based around choking off access to the tools, software and support mechanisms necessary to manufacture a specific type of technology that is one of the fundamental building blocks of modern microchips: the transistor.
To achieve its objectives, the administration has elected to work to block China’s access to transistors that use a specific design called FinFET. The plans include blocking domestic exports of tools that are capable of printing chips with FinFET transistors, while also preventing the tool makers — such as Applied Materials, Lam Research and KLA — from servicing or supporting equipment they have already sold to various Chinese companies, according to the sources.
Big chip manufacturers achieved high-volume production of the transistor technology targeted by the Biden administration roughly eight years ago, but it is still widely used today to manufacture advanced chips designed for servers and iPhones alike. China’s largest chipmaker, SMIC, disclosed in 2019 it recently began high-volume production of FinFET-based chips.
“Officials walk a very fine line between too much control and too little control,” William Reinsch, senior adviser and Scholl Chair in International Business at the Center for Strategic and International Studies, told Protocol. “You control too little, and then bad guys can get stuff you don’t want them to have. You control too much, and what you end up doing is kneecapping your own industry, because you deny them the revenue they need to invest in next-generation production.”
By using a specific, fundamental building block of chip design as the basis for the overall policy, the White House hopes to both tighten existing controls and avoid the pitfalls around trying to block a generation of manufacturing technology.
Yet in some corners of the industry, the administration targeting of FinFET transistors hasn’t been clear. Prior reports have pointed to the Biden administration’s plans to choke off China’s access to tech used to make chips with a 14-nanometer or below manufacturing process, which has led to industry insiders questioning how effective that approach might be.
According to chip industry experts, using the nanometer naming conventions as the basis to block tech exports has a key problem: At one point the names referred to the size of a specific feature on a chip, but today they are just marketing terminology. Intel’s 22-nanometer manufacturing process used FinFET transistors, for example, while TSMC and Samsung didn’t adopt FinFET designs until they produced chips with a 14-nanometer process or 16-nanometer process.
“How do you actually classify equipment and say, this can process 14-nanometer and smaller — because there is a lot of equipment that can also process 28 nanometers,” Gartner analyst Gaurav Gupta said. “And if the same tool can also process a smaller node, does it really qualify within that export control or not? That’s why when you set up these definitions, there are obviously some loopholes.”
The Biden administration’s feature-specific approach for logic chips — the type of silicon that powers data centers, smartphones and PCs — narrows the Trump-era strategic decisions. Under former President Donald Trump, the White House and federal agencies largely continued policies the Obama administration had begun, such as adding SMIC to the U.S. entities list, according to one former Commerce Department official.
The Trump administration also worked to block China from obtaining a technique called extreme ultraviolet lithography, used for next-generation chipmaking. EUV tools are exclusively manufactured by Dutch firm ASML, but the administration was able to convince the Netherlands to block ASML from selling the equipment to China because one of the vital submodules is made in California. Without that component, ASML can’t build the EUV machines.
“There’s a certain part of technology intellectual property which belongs to the U.S.,” Gupta said. “And that’s why they’re able to control and stop ASML. But they’re also pushing [the Dutch government and ASML] to stop exporting [deep ultraviolet lithography] to China, but the U.S. doesn’t really have control over the IP.”
Adding similar restrictions for the EUV’s older sibling, deep ultraviolet lithography — machines made by ASML but also Japanese competitors — will likely be more difficult. Despite reports indicating the Biden administration intends to halt DUV equipment sales to China, it’s not clear if the U.S can succeed with that objective, Gupta said. One of the people familiar with the administration’s plans said the White House is attempting to get allies on the same page to block FinFET equipment.
The portion of the chip industry that will feel the restrictions most acutely is the collection of businesses that build the various manufacturing tools and systems. China is a big chunk of U.S. equipment makers’ business, representing roughly 30% of revenue for companies such as KLA, Applied Materials and Lam Research.
Part of that China revenue derives from the service and support necessary to keep the advanced tools humming along, pumping out working chips. As the tools become increasingly complex, they require more service, and teams from the tool makers are frequent visitors to chipmaking factories around the world. That’s not to mention software upgrades and other optimization that equipment requires. In its most recent quarter, for example, Applied Materials reported that about 22% of overall revenue came from its services and support operation.
Of the major U.S. tool makers, two — KLA and Lam Research — recently disclosed in earnings calls that they had received notification from the Commerce Department about tool exports to China. Though Applied hasn’t yet disclosed that it has received a notification letter, industry sources said that it likely has or will soon. The notifications were something of an opening effort, according to one of the people familiar with the administration’s plans, and the White House intends to follow the notification letters it has already sent out with an additional export control rule in the coming weeks and months.
Despite the likelihood of the U.S. government implementing further restrictions, Wall Street isn’t too worried about the potential damage to the tool makers’ business in either the short or the long run.
“I think it’s fairly neutral because the demand is going to be there — so whatever can’t be built in one geography [is] going to get built into a different one,” Baird analyst Tristan Gerra said. “I think that it’s going to be fairly neutral for the equipment companies, but the Chips Act is clearly going to really drive an expansion of capacity in the U.S.”
Max A. Cherney is a senior reporter at Protocol covering the semiconductor industry. He has worked for Barron’s magazine as a Technology Reporter, and its sister site MarketWatch. He is based in San Francisco.
Blockbuster hacks are no longer the norm – causing problems for companies trying to track down small-scale crime
Chris Stokel-Walker is a freelance technology and culture journalist and author of “YouTubers: How YouTube Shook Up TV and Created a New Generation of Stars.” His work has been published in The New York Times, The Guardian and Wired.
Cybercrime is often thought of on a relatively large scale. Massive breaches lead to painful financial losses, bankrupting companies and causing untold embarrassment, splashed across the front pages of news websites worldwide. That’s unsurprising: cyber events typically cost businesses around $200,000, according to cybersecurity firm the Cyentia Institute. One in 10 of those victims suffer losses of more than $20 million, with some reaching $100 million or more.
That’s big money – but there’s plenty of loot out there for cybercriminals willing to aim lower. In 2021, the Internet Crime Complaint Center (IC3) received 847,376 complaints – reports by cybercrime victims – totaling losses of $6.9 billion. Averaged out, each victim lost $8,143.
Many identity thefts and online scams, however, net perpetrators even less: just a few hundred dollars. For just $25, cybercriminals can purchase a cloned VISA or Mastercard, plus its PIN. That card data opens a treasure trove for criminals, including locally purchasing gift cards, or other fencible commodities such as electronics and jewelry sold off at a discount.
“Criminals have two primary goals: making money and staying out of harm’s way,” says Nick Biasini, head of outreach at Cisco Talos. Cybercrime provides an attractive avenue for both. “The inherent risk associated with committing cybercrime-fueled fraud is far lower than selling drugs or other types of crime. Additionally, the margins are far better. A criminal can turn a small investment into big profits simply from buying stolen information and using it to commit some form of fraud. During the pandemic unemployment fraud has been a lucrative favorite of criminals. Plus by keeping the monetary values lower they are less likely to draw the attention of state and federal authorities.”
A growing problem for local law enforcement
Cyber criminals can attack virtually anyone from virtually anywhere, and cybercrime as a service, where the non-technically minded can hire tools to hack accounts without any specialist knowledge, has become commonplace. Even organized crime syndicates in Spain and Italy are getting into the game.
Federal authorities, usually alerted by IC3, put their scarce resources toward solving large-scale crimes. They work with financial institutions or corporations most impacted by specific breaches. This means the majority of crimes – with their far smaller paydays – tend to fly under the radar.
A look at the data
But some companies are tracking the rise of small-scale cybercrime. Cisco Talos analyzes data to spot trends that help its incident response team alert customers to potential cybersecurity attacks, and then respond and recover to breaches rapidly.
It has found while drug felonies over the last eight years dropped drastically, before stabilizing during the pandemic, cybercrime has shot up. From 2015 to 2021, the number of reported cybercrimes nearly tripled, and losses soared nearly fivefold.
“Criminals today have a far better technical understanding then they did five or ten years ago,” says Biasini. “Additionally, it shows how they really understand inherent risk, it’s just safer to commit fraud and cybercrime than it is to sell drugs. As an added bonus, they also have become proficient in cryptocurrencies, providing alternative avenues for purchasing illicit goods and money laundering.”
Source: New York Police Department
Source: IC3 2021 Internet Crime Report
An evolving challenge
If this trend continues, the emerging wave of cybercrime will look less like epic breaches and more like scamming citizens out of their tax return or signing them up for fraudulent unemployment benefits. Those two crimes already rank in the top five of identity theft types for 2021, with unemployment scams leading the pack.
How, then, can we expect local law enforcement to possibly keep up? After all, they’re already busy policing and prosecuting what most people consider ‘real world’ crimes. Cybercrime is an entirely different problem. It requires pouring over data both from the criminal themselves and the victims they target with their fraud, trying to somehow build a solid, forensically sound case.
“Cisco Talos has always worked closely with local, state, and federal law enforcement organizations to help them succeed in their tasks,” says Biasini. “We are always willing and able partners to help take cybercriminals off the streets. We provide law enforcement with information we uncover during our investigations and oftentimes lend our people, processes, and technologies to help investigations already underway.”
One solution is for local law enforcement to identify staffers in their ranks with an aptitude for online sleuthing. Cybercrime units are perfect for people who have a research bent, because digital detective work is a big part of the job.
Another alternative forces are pursuing is recruiting young people from computer science programs, or tasking high schools with helping train up a new generation of defenders with the mentality and skills to turn what today is a sideline for police into a mainline function. It’s already happening worldwide: in the UK, a $7 million government program led to the creation of cybercrime units in every police force in England and Wales.
And we’re seeing it here too in the United States. Several organizations have stepped up as resources for law enforcement. Every state has at least one agency devoted to helping police fight cybercrime. And the National Computer Forensics Institute offers courses, both in-person and virtual, to train basic and advanced examiners, first responders, and prosecutors and judges.
It’s all in the aim of trying to crack down on small time cybercrime, preventing the small leaks that turn into a torrent of losses that we know about from thousands of years of history.
People have been swindled since before man created monetary systems. These aren’t new crimes; just new ways to commit them. But as cybercrime increasingly goes small-time, those on the front lines will need new and more effective ways to fight it.
Read the detailed blog on the shifting trends in small time cybercrime in Nick’s blog here. Click here to get to know Cisco Talos, the industry-leading threat intelligence group fighting the good fight.
Chris Stokel-Walker is a freelance technology and culture journalist and author of “YouTubers: How YouTube Shook Up TV and Created a New Generation of Stars.” His work has been published in The New York Times, The Guardian and Wired.
A closer look at the company’s nascent gaming initiative suggests big plans that could involve cloud gaming and more.
Netflix’s acquisitions in the gaming space, and clues found in a number of job listings, suggest it has big plans.
Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety’s first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.
Netflix’s foray into gaming is dead on arrival — at least according to the latest headlines about the company’s first few mobile games.
“Less than 1 percent of Netflix’s subscribers are playing its games,” declared Engadget recently. The article was referencing data from app analytics company Apptopia, which estimated that on any given day, only around 1.7 million people were playing Netflix’s mobile games on average.
It’s true: Netflix has yet to release a true blockbuster game, and its small but growing catalog of mobile games isn’t nearly as popular as some of its biggest shows and movies. However, the company’s gaming efforts are on an upward trajectory, according to data mobile intelligence company Sensor Tower recently shared with Protocol. In fact, July was the best month yet for Netflix’s gaming efforts.
“Netflix is really just at the beginning of implementing its strategy for a new games business, and it’s not off to a bad start,” Sensor Tower mobile insights strategist Craig Chapple told Protocol. “With an increasing portfolio of globally recognizable entertainment IP, there’s a lot of potential here.”
Netflix itself has kept mum on key aspects of its gaming strategy, but the company’s acquisitions in this space, and clues found in a number of job listings, suggest it has big plans, which appear to include building its own cloud gaming infrastructure. Ultimately, these plans could make the first few months of Netflix’s gaming initiative, with its relatively modest usage numbers, look like a trial run.
Netflix’s foray into mobile gaming began in earnest in November. Since then, the company has published a little over two dozen games for iOS and Android and has plans to nearly double its games catalog by the end of the year. Since November, the company’s games have been downloaded around 17 million times on iOS and Android, according to Sensor Tower estimates.
Downloads actually declined this spring, but got a significant bump from the release of the latest season of “Stranger Things” on Netflix. The company has acquired and published two “Stranger Things” mobile games, both of which saw a significant boost in downloads after the fourth season of “Stranger Things” premiered on the service in May.
Stranger Things: 1984 and Stranger Things 3: The Game continued to be the two most popular Netflix games in July, followed by Netflix Asphalt Xtreme. Altogether, Netflix’s games were downloaded 2.9 million times in July, according to Sensor Tower, making it the best month yet for the company’s gaming efforts.
There are a few things worth noting about these numbers, aside from the fact that they are third-party estimates. Many of the games published by Netflix are actually being re-released, and some already had sizable audiences before the company acquired them, which likely has an impact on the audience the titles are now attracting.
Stranger Things: The Game was published by BonusXP in October 2017, and accumulated close to 14 million downloads before it became a Netflix title. Asphalt Xtreme was published by Gameloft in October 2016, and clocked nearly 40 million downloads before Netflix re-released it, according to Sensor Tower estimates.
Netflix also hasn’t done a whole lot of promotion for these games, as Chapple pointed out. “It appears that the company is not investing heavily in user acquisition,” he said. “Large marketing campaigns are typically how the world’s top mobile titles become so popular and successful.”
And finally, comparing Netflix’s video audience to its games audience should come with a notable asterisk: It may well be that only 1% of Netflix subscribers are daily active users of its games. However, the company’s games library is also an order of magnitude smaller than its video library, which currently consists of nearly 3,800 movies and over 2,100 TV shows, according to JustWatch.
Aside from a few remarks during earnings calls earlier this year, Netflix has said little about its game initiative. “We’re still intentionally keeping things a little bit quiet,” acknowledged Leanne Loombe, who is heading the company’s efforts to license games from external partners, during a June Tribeca panel. “We’re still learning and experimenting and trying to figure out what things are going to actually resonate with our members,” Loombe said in remarks first reported by Variety.
Loombe said the company was still experimenting with how to best surface games to its subscribers. Netflix is using mobile as an on-ramp to more easily get feedback and evaluate what’s working to then fine-tune its games catalog over the coming years, she said.
That strategy is also echoed in a variety of job listings for positions within Netflix’s nascent games division. Multiple listings mention that the company is looking to “launch games fast at minimal cost, learn fast, and iterate quickly.” As part of these efforts, Netflix is looking to build a Game Studio Tech Lab team, which will be tasked with rapidly prototyping “smaller, experimental games and projects.” Applicants for open positions on that team are expected to have “passion for making video games, especially in a rapid, focused, smaller form vs multi-year investments.”
That’s very different from the way Amazon initially approached the space. The ecommerce giant created its own studio as part of a multiyear push into gaming, and the company invested hundreds of millions of dollars into its own AAA titles. Amazon’s game developers worked six years on the company’s first title, Crucible, only to pull the plug on it after an unsuccessful beta test in 2020.
Amazon has since refocused its efforts around live service games like New World and the successful Korean multiplayer game Lost Ark, and Amazon has also been working with publishers to populate its Luna cloud gaming service. Both of those strategies appear to be on Netflix’s road map as well: The company hired a head of live services in June and has been looking to fill technical roles for a push into cloud gaming for a few months now.
“We are looking for a rendering engineer to support our cloud gaming service,” one of the related job listings reads. Applicants will “help optimize the rendering of games so we can render multiple games on our cloud gaming appliances” and “assist with the development of SDKs to enable game developers to succeed in writing high-quality games for the Netflix cloud games ecosystem.”
Cloud gaming could help Netflix expand beyond mobile, and smart TVs in particular could provide Netflix with a massive growth vector. The company’s app is already pre-installed on virtually every new smart TV sold. It also could help the company find a way to the TV screen without having to deal with the gatekeepers of the major console app stores — something Loombe alluded to when she talked about the “friction that might exist [on non-mobile] platforms.
Netflix has acquired three game studios over a six-month period, and it spent $72 million on Next Games alone. Netflix COO Greg Peters called these acquisitions “a key part of our strategy to … produce the games titles that we think are really going to unlock value for our members” during the company’s Q1 2022 earnings call. Peters went on to describe Netflix’s goal as building franchises that span across movies, TV shows and games. “To deliver on that, we think the internal development capacity is going to be key,” he said.
For Netflix, those acquisitions aren’t without risk. The company has long resisted the urge to acquire tech IP and teams and opted to build its own technology in-house instead. Without a history of mergers and acquisitions, Netflix may find itself unprepared to deal with culture-clash issues as it absorbs the newly acquired entities.
Drake Star CEO and managing partner Greg Bedrosian, whose company has brokered M&A deals for multiple game studios and other entertainment companies in the past, still thinks it was smarter for Netflix to buy than to build. “Often the most successful strategy is to make one or two thoughtful acquisitions,” Bedrosian told Protocol recently. “In my experience, that seems to work better than just organically trying to enter a new market like that from scratch.”
By acquiring a few studios at the onset, a company like Netflix isn’t just getting its hands on content and IP, but also at the DNA necessary to better understand the space, Bedrosian said. The fact that Netflix doesn’t have much institutional M&A history could actually help it make those deals count. Other companies have built what Bedrosian called “great M&A machines” capable of ingesting companies, but not necessarily striking transformative deals.
Ultimately, it’s important that acquisitions that are meant to help a company build out a new line of business have buy-in from the highest levels, Bedrosian said. “If there’s that board and CEO commitment, that’s when we tend to see those strategic deals getting done in an intelligent way.”
At Netflix, that buy-in appears to exist, at least for the time being. “We’re going down the game path because I think it fits us really nicely,” said co-CEO Ted Sarandos during Netflix’s Q1 earnings call. “Our ability to tell stories and build worlds are very consistent with our existing skill set and culture, and we think that we can build a big revenue and profit stream by adding games.”
That revenue stream will take time to manifest itself. “Netflix will need at least a couple of years to really build up its games division into a serious business,” said Chapple. Not helping the matter right now are a number of external economic pressures facing the gaming market, with analysts now forecasting a decline this year, and new Apple privacy features that have made advertising, and by extension user acquisition, more difficult for mobile game developers.
Still, executives seem clear-eyed about Netflix’s timeline. Peters pointed out during the Q1 call that the company was on a “long road” to build franchises that encompass both linear entertainment and games, which he described as the “multiyear vision” behind the push into gaming.
Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety’s first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.
Zoom employees disclose whether it’s OK to ever eat on camera.
Zoom employees — Zoomies — have their own ways of using the tool.
Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She’s a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school’s independent newspaper. She’s based in D.C., and can be reached at llawrence@protocol.com.
Ever wondered how the companies behind your favorite tech use their own products? We’ve told you how Spotify uses Spotify, how Meta uses Meta and how Canva uses Canva. In this installment, we talked to Zoom execs about how they use Zoom.
Sam Kokajko has been in up to eight Zoom meetings at once. Someone else on the Zoom events support team has a simultaneous Zoom record of 36. Even with all the handy Zoom tips in the world, I’m not sure my brain could take that much stimulation. It’s part of the job, though, when coordinating large-scale events via the platform.
“All of us have our different Zoom calls, bringing the audio and video back and forth, but we also have another Zoom call that we’re on, that we call our comms call, to communicate with each other,” Kokajko said.
Most Zoom employees are not in this many meetings at the same time. But they are inside Zoom more than your average worker, and thus have valuable insights into the best ways to use the tool. Protocol spoke with employees across Zoom about how best to run hybrid events, Zoomie etiquette and whether it’s socially acceptable to eat on camera.
A major televised event or even just a corporate keynote is typically managed by a huddle of people controlling the video on set. Kokajko runs an entirely remote operation, organizing feeds and team members from all over the country. The event services team consults customers on everything from small business webinars to awards ceremonies like the Emmys. On the side, the team also runs internal Zoom events. The events team is in constant communication while producing events, using screen share and remote control to collaborate on what feed to show the audience.
“Zoom has allowed us to take what used to be a centralized control room and ‘video village’ where everyone’s working and distribute that all over the country and world to work on these events in tandem,” Kokajko said.
Presenting for both remote and in-person audiences is still a relatively new challenge, and one Kokajko spends pretty much all his time tackling. He has to pull remote speakers, studio audiences and virtual participants together into one cohesive event. Kokajko’s team was behind a Zoom “Innovators at Work” series last year in which, with the help of a green screen and virtual set, presenters in New York and Australia appeared to be sitting across from each other.
For all Zoom events, Kokajko is focused on ensuring everyone has equal opportunity to participate. “If someone has an ability in a session to get on a mic and say something in the room, then someone in a virtual audience should have the ability to ask that same question,” he said. Keeping the chat open for active audience engagement is crucial, he said. Zoom always displays a QR code for live audiences to scan and enter the chat, too.
Kokajko, who’s worked remotely for Zoom over the past five years, was the mastermind behind Zoom’s virtual holiday party last year, opening several Zoom rooms with different activities: virtual poker and a cake-decorating competition, to name a few. Zoom teams took photo booth-esque pictures in front of virtual backgrounds. It’s too soon to tell what format Zoom’s holiday party will be this year, but Kokajko “can’t imagine any events that don’t have a virtual component going forward.”
The other day, one of Sharvari Nerurkar’s team members was eating during a meeting and decided to use the Zoom panda avatar to hide their face. Avatars are one of the ways Zoom employees try to have some fun with the platform. In this case, the avatar was socially convenient as well — though Nerurkar doesn’t have a problem with people eating on camera.
“When I used to go to the office, I would eat sandwiches in a meeting,” Nerurkar said. “I’m taking that forward. As long as you’re not eating chicken wings.”
Nerurkar, the head of Zoom’s chat product, is all for flexibility when it comes to meeting etiquette. There is no formal set of rules inside the company. Everyone is expected to act like an adult, of course, but turning yourself into a fox with a hoodie is fair game. “In customer meetings, we try to, for example, coordinate our background,” Nerurkar said. “But I have never seen a meeting or an event where I said to myself, ‘Man, we need to publish some rules.’”
There are some meeting rules Zoomies abide by. For example: send written materials at least 24 hours before a scheduled meeting; don’t hold meetings on Wednesdays. Nerurkar accidentally invited CEO Eric Yuan to a Wednesday meeting once. He declined (and she won’t make that mistake again).
Zoom is firmly in the American lexicon at this point — so much so that even the newest Zoomies know the product well. Nicole Perzigian, Zoom’s global emerging talent program leader, said the interns come in with a solid Zoom knowledge. Perzigian started Zoom’s first-ever comprehensive intern program a year and a half ago. Her team used Zoom’s events platform to onboard about 155 interns in the U.S. and 60 in India.
“Everyone knew Zoom, which is great,” Perzigian said. “But what I have to do as a leader is prove what these interns can come and learn at Zoom. I find myself making sure they know this is the brand we want. You’re going to come in and do meaningful, impactful work.”
Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She’s a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school’s independent newspaper. She’s based in D.C., and can be reached at llawrence@protocol.com.
How Alto Pharmacy CEO Jamie Karraker decided to let Amazon’s Alicia Boler Davis take the helm.
Alto Pharmacy’s James Karraker (right), with fellow co-founder Matthew Gamache-Asselin, said letting Amazon’s Alicia Boler Davis take charge would maximize the company’s chance of changing the pharmacy industry for the better.
Sarah (Sarahroach_) writes for Source Code at Protocol. She’s based in Boston and can be reached at sroach@protocol.com
Jamie Karraker is the co-founder and CEO of Alto Pharmacy, a prescription delivery company that he and Mattieu Gamache-Asselin launched in 2015. The company’s grown to almost $1 billion annualized revenue, but Karraker said it still only represents 2% of the pharmacy market. The company believes it found just the right person to take Alto to the next level.
Alicia Boler Davis, a member of Amazon’s S-Team who served as SVP of global customer fulfillment, will become Alto’s CEO on Sept. 1. Karraker said letting her take charge of Alto would maximize its chance of changing the pharmacy industry for the better.
Karraker’s story, as told to Protocol, has been edited for clarity and brevity.
I don’t think there was one point where we said, “Oh, now we need a new CEO.” We’re constantly talking to senior executives as potential advisers or board members or candidates for any particular role. And we’re always looking for people that we think can complement our own skill sets well and have always been open-minded to what that might mean in terms of a role or a title … It was just so obvious that we needed Alicia on the team and needed her at the helm. It was a little less about it being time for a new CEO and more “Alicia is the right person for us.”
Matt and I have always been not particularly attached to any role or title. And we’re relatively humble about sort of what we’re good at and what we’re not good at. And the opportunity that we have in front of us and the scale of the opportunity is just getting bigger and bigger. We’ve come a long way since we started back in 2015.
We’re not hiring Alicia because there’s a huge problem that needs fixing immediately. We’re actually making more progress right now than any other point in the company’s history. But it’s so obvious to us that if we want to keep getting better, and keep staying ahead of the rest of the pack, it’s important to look ahead and hire for the next few years versus for right now.
“It was a little less about it being time for a new CEO and more ‘Alicia is the right person for us,'” said Alto Pharmacy co-founder James Karraker on naming Alicia Boler Davis CEO.Photo: Alto Pharmacy
Alicia has an insane amount of leadership experience at the highest levels for really challenging operational problems. She most recently led all of fulfillment for Amazon, which is a team of over 800,000 people reporting up to her, which is a quite massive scale. She was responsible for doubling Amazon’s fulfillment network capacity during COVID, which is a pretty insane task to undertake at Amazon’s current stage.
I think we’ve always been able to recruit a bit above and out of our league. And a big part of that in my mind is that it’s actually very rare to have an opportunity where you can create tremendous business value. This is a $500 billion market, and completely broken. There’s a huge opportunity to fix it and to monetize that and create a valuable, lasting, large business and actually really help people live happier, healthier lives. And I think a lot of experienced executives are looking for more than just a job. They’re looking for more than just another opportunity to make money … And that’s exciting to some people like Alicia.
Matt and I aren’t going anywhere. We’re more committed and optimistic than ever and will be 100% full-time with the company. There is no shortage of important problems to work on. For at least the first six months we’ll be focused on helping Alicia get ramped up … After that, we will look at where the biggest gaps are and the biggest opportunities are, and we will go find where we can make the biggest impact. That will then lead to the title, the scope definition.
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Sarah (Sarahroach_) writes for Source Code at Protocol. She’s based in Boston and can be reached at sroach@protocol.com
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