Microsoft’s TV Future: Bloomberg West (04/07)

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April 7 (Bloomberg) -- Full episode of "Bloomberg West." Guests: AlienVault Lab Director Jaime Blasco; Chertoff Group Principal Brian White; CircleUp COO and Co-Fonder Rory Eakin; Microsoft President of Entertainment and Digital Media Nancy Tellem and Upworthy Co-Founders and Co-CEOs Eli Pariser and Peter Koechley. (Source: Bloomberg)

Cracks live from pier three in san francisco, welcome to bloomberg west recover innovation, technology, and the future of business.

I'm emily chang.

Microsoft is the latest to want a piece of the entertainment five.

We take you to santa monica studios were there working on original shows starring big names.

A viral content website with a twist.

He will speak with up were the cofounders for finding content that matters and their catchy headlines.

All of next year's visas for highly skilled workers have been billed as than one week after the government darted accepting applications for the 85,000 available.

Businesses use it to bring foreign engineers, programmers, and other workers to silicon valley and elsewhere.

They're fighting to get the 85,000 cap raised.

Google is licensing hotel booking software from room 77 as it looks to improve its presence in the online travel business.

It is an expedia backed startup.

Many of the employees will join google and its brands and apps will remain.

Hbo says the premiere of game of thrones got 6.6 million viewers in its first airing.

Up 52%. it was so popular on hbo go that the service crash for some viewers and wasn't completely restored until four hours later.

Meanwhile, silicon valley, a show about a tech startup received 2.5 ilya and viewers.

-- alien viewers.

Million viewers.

Cory johnson here to talk about yahoo!

And their ability to dominate.

We have the same infrastructure whether it is google or amazon or netflix or yahoo!

Or microsoft or aol all looking at original content.

Looking at 10 episode shows that might cost anywhere from 700,000 to a few million dollars per episode.

They go toward search.

Now going to this original content business and what it might mean.

Can you only watch online?

The success that netflix has had drawing customers, we want some of those same people and we have the cash to spend.

Netflix has produced a number of hits.

Amazon, we can't name a single one.

Let's bring in jon erlichman that got a look inside of microsoft xbox entertainment studios.

They are making its own original series with the likes of steven spielberg.

It is a pretty fascinating story.

I year-and-a-half ago, microsoft hired a very well-known person for her work at cbs and before that at warner bros.. everyone has been asking the question, what is the xbox team working on?

They have not said much until now.

We got an exclusive look of what we have been doing behind the scenes.

Inside this low-key office building, microsoft is plotting its tv future tied to this.

Xbox entertainment studios is a unit of xbox created to make original tv shows.

Led by longtime hollywood executive, xbox studios is developing all stores -- sorts of shows.

A steven spielberg produced halo series, live coverage of the bonner room music festival.

To watch, fire up your xbox and if you're one of the 48 million members of xbox live, you might be able to stream originals the same way you watch netflix or play interactive video games.

Microsoft may also have partnership deals.

If you are up for it, you will be able to do funky stuff the gamers like to do.

Microsoft is doing this to keep the waitlist happy and broaden its reach.

Each xbox sold is worth a thousand dollars of purchases to microsoft.

A number that would climb if the tv is a success.

There's also a goal of making it the anchor of the home entertainment network.

Traditional places -- adding to the tech office feel as a ping-pong table, a well stacked lunchroom.

We commemorate successes by ringing this bell.

Let the games and tv shows begin.

For those curious about when these shows start, other shows will follow through that.

Maybe the one where there is less development at this stage.

The halo show being produced by steven spielberg is in the early days.

We will have more with the former president of cbs and now president of xbox entertainment and digital media.

What did you think of yahoo!

Getting into this game?

Yahoo!

Has tried original shows.

What we have heard from the content creators in hollywood is when i make one of these shows, where does it end up?

There are different positions of power.

You asked that question.

Where does this stuff go.

It is a very important question.

They know they have this time of year where you have to make splash announcement in front of the advertisers.

They've got to have traditional tv dollars.

The rising cost of content, i wonder how much of a game changer -- it is an accounting challenge for netflix.

They make the show a lot more expensive to them.

The problem will be that we never know the experience -- specifics of how many people are actually watching these shows.

That clicks got a bit of a break from people following the company because the subscriber numbers continue to climb as house of cards was rolled out.

It is very clear that they paint a lot of pictures for that show.

They don't know how many people are watching it.

It sets us up for the golden age of television, really high spending by everyone hungry for content.

The end result may not be a winning formula or everyone.

Big stars in these shows as well.

This is expensive talent.

How does yahoo!

And everyone else keep up with that?

I think the benefit that a lot of these big players have aside from generally having deep pockets is different business models.

If you go with the example of boosting overall numbers of subscribers, which really used to be a show living or dying on television based on how many people are tuning in.

And we just profiled microsoft for the xbox, if they can sell more consoles and get more people to sign up for xbox live, maybe that is a metric for success.

The figures coverage to a certain degree for all of these potential big spenders in new tv content.

We look forward to that interview later.

We will be right back with more after this break.

? welcome back to bloomberg west, i'm emily chang.

Microsoft is pulling the plug on windows xp support tomorrow.

The most popular operating system ever, more people using it right now.

A lot of atms use windows xp and they are worried about security issues.

How big of a security risk will this be?

Who still uses xp?

15% of internet users.

The u.s. is 15%. when you go to countries such as china, more than 50% it really blew my mind.

[indiscernible] we have all the lights, the laziness.

I have this image of hundreds of hackers in eastern europe getting extra rest, drinking.

A lot of atms still use windows xp.

They have financial institutions and they do other security measures.

They are not connected to the internet -- jeanette.

Whornet.

Who is at risk echo bigger attacks and bigger targets with ways we have not seen over and over again.

The 15% of users are going to be the target of such attacks.

We are making criminals life easier.

Cyber criminals are stealing.

They will spend that many resources and we will give them vulnerabilities for free.

How much does it cost to upgrade?

The best case scenario, we are running all hardware and it is very likely that we will not stop with the new version.

The company to upgrade took 15 to 18 months.

We have known that there is support tomorrow for windows xp.

Companies did not have enough time to operate those systems and that is several years.

Probably they are not in a hurry.

Tomorrow, they will have -- we will monitoring tomorrow.

Thank you for joining us on bloomberg west.

Tech companies play a big role in protecting your data.

Tips and tricks that people can use to try to keep your identity safe and keep yourself safe or online.

Streaming on your tablet and phone.

And apple tv.

? welcome back to bloomberg west.

I'm emily chang here with cory johnson.

Since all of the nsa issues, there have been a lot of questions about what we can do to make ourselves more secure.

So we decided to take a closer look at that.

It shows you what your risks are as a consumer and the business.

Target really reeling from this thing.

One of the biggest hacks in history.

We have brian white with us to give us some of his tips and tricks to staying secure while online.

Where does this start?

I think it is great you're doing something like this because many of the problems we can solve by having consumers take control.

And consumers understanding what their risk is and doing some prudent and necessary steps.

I think they can sleep a little bit easier about the cyber risk that they read about every day.

I think that is the hardest thing.

How do you do this?

You start with one password and your banking sites with something else.

You have to go ahead and think through the upper and lower case letters, symbols, and numbers.

We have to be honest.

Some are moving towards a passphrase.

A word or sentence that you go ahead and use the first letters of each sentence.

I would say that you should have at least three passwords.

Maybe a media site, another from social media sites that are increasingly concerned about.

As the most secure password i put on my banking sites.

As people start to pick those sites, it's going to this strange and unusual sight that involves downloads and other pieces of software.

You're hitting another issue that i think is important.

If you look at downloads, it is presumed you're guilty, he should not click on it or download it.

I think you need to think about who sent you something and why did they.

Are you expecting it?

Download it and save it.

If anything is suspicious, it's very easy to copy that link and put it into your browser.

It is easy to see what comes back.

Oftentimes there is something in the middle.

The link might say yahoo.com and it takes you to an eastern european download site.

Where that is happening is the social media sites.

Because we use the site so often, you click on it and all of a sudden you have malware on your machine.

Let's talk about browsers.

Google chrome is expected to be the most secure.

Bestie firefox and internet explorer being number two and number three.

It is hard to tell the difference between all of them right now.

What is important is making sure that you are taking the -- it was built on open-source code and has the ability to incorporate more security features and protocols.

You have to make sure that you do the updates.

Take the update down because if you are using an outdated version of internet explorer, those are not secure.

Which sites are more secure backup i know there is a difference between https and http.

Https is quickly becoming the de facto standard.

But that does is enables encryption between the browser and the other browser.

That move is encrypted.

That has been adopted elsewhere.

If you don't see that, the very reticent about what you actually do online.

Windows xp is going to stop being supported by microsoft.

I wonder what are the best practices for a company to make sure they are not exposing users.

What you have to think about is how your network is architected.

And the risk of individuals.

You have to assume that your employees are going to hit those sites.

Must be concerned about what is leaving the network.

How you push this software is up-to-date.

You want to make sure that your up-to-date with software.

Make sure to lock the device.

Somebody can take it.

You can go ahead and put on geolocation.

Whether it is the apple app store or the android app store.

Those are both developed to look at each application to see if there is any bad code in those apps.

Security 101. amazing how many people don't do these.

Very simple and obvious steps.

Still ahead, we sit down with the former president of ces -- cbs and now president of xbox and digital media to talk about microsoft's push into original programming.

You can watch bloomberg.com, apple, and amazon fire tv.

? you're watching "bloomberg west." i am emily chang.

I want to get your lead story of the day, tech companies and the fight for original content.

We took you inside microsoft santa monica studios, and we're back now with more from l.a. and a peschel interview.

Went your item microsoft a year-and-a-half ago, the tv team existed of one.

-- consisted of one.

Keep team focusing on the hollywood story in the santa monica offices, that is where we ought up with nancy.

I asked her about how broad the different tv originals xbox is focusing on will be.

Here is what she said.

We're dealing with the series, we're dealing with limited series, or what i used to call miniseries.

Feature lenghtth projects, live sports, because all jobless -- across all genres.

Where you can find it is through xbox live.

We are still trying to figure out from a strategic standpoint where it fits.

It is something that is really unique to our platform, and it will be under the banner of xbox originals.

Quick should be think about these shows being produced start to finish by microsoft or by xbox?

Or is it in partnership with other studios?

We are open to all.

We have an arrangement with channel four and u.k. that we're producing a series together.

We can coproduce, we will solely produce, we will bring in talent.

We are very flexible with whom we will work with.

Use showtime as an example.

Tv you think it 30 minutes, an hour, even some of the new lab form shows like netflix, you still think in those terms.

What are you guys thinking about in terms of how long a show should be?

For our platform if someone comes and says i have a great animated.

I think can go for 11 minutes or 10 minutes, or we see something that really only should be nine minutes, that is all used to be.

One of the shows you're doing with humans that is a thriller.

You're also covering a live event, a music festival.

There is a real range of stuff you're doing.

What is the thought process behind the kinds of shows you want to be doing echo?

Will focus on who is on xbox, and using our service.

It is primarily millenials, and gamers at this point in time, both women and men.

We will be looking at why they are on our platform to integrate the technology to make their tv experience much richer and more engaging.

When you talk about von rue, a lot of people would like to attend, or they would like to listen to some of the music, and avoid going to tennessee.

What we're hoping to do, while it was unbelievably low attendance cover you can actually have a virtual festival in your own living room by being able to change this page you want to watch, have interactions with the talent before and after they are on stage using sky.

The earth look at what we saw my come out was of course halo cover the signature game, and steven saylor -- spielberg producing on that program.

What is the timeframe for that show you?

We have not much of to say about that except that we are in development.

The other project that we are developing, on certain aspects we're looking at franchise building of an looking at certain levels of ip that can really expand the franchise or build a successful franchise that can lift not only with television but also in games as well.

The many flagship games that have come to represent xbox cover these are all fair game in terms of becoming television shows?

I must say, and this is was a wonderful discovery for me was that there is a rich a lot of i.t. at microsoft owns.

Whether it is from fable or age of empires, gears of war, or amazing card games, or halo.

These are things that frankly, if we were not attached to microsoft everyone would you're due have.

-- yearn to have.

It is an amazing platform to work from.

What's we also asked her details with the new microsoft ceo thoughts about the tv strategy.

And what about saudi -- n sony?

You busy all of that online at bloomberg.com.

All right.

Thank you so much.

Coming up of it is one of the fastest growing media site online.

Find out how a poor there makes content that matters go viral.

? look him back to "bloomberg west." upworthy is on a mission to bring attention to things that matter.

The mission first media site that is known for its catchy headlines has over 50 million users that watch and share its content every month.

We recently announced upworthy collaborations, a way to part with brands and organizations seeking to draw attention to topics important to society.

We sat down with the cofounders and co-ceos, and started by asking what they think the most important topics of the world archive and who decides.

Like any other media site given that is something that our readers trust us to help figure out.

We think far too much media focuses on trivial stuff, celebrity news, gossip about stuff that does not help people be better citizens or understand what is going on.

That is one reason we started up with the dutch upworthy, registered publishing stuff about that important topic.

You get so much attention for your headlines, just a couple of recent headlines, scientist are trying to talk to aliens, and it is make interesting.

Unless your're ridiculously wealthy, this grass might make you angry.

We have an excellent team of curators who are very interesting, and we give them the mission of just trying to make stuff interesting, try to figure out why somebody who is very busy, has 1000 other things to do, as 1500 things in their facebook news feed that they could click on, how do you make them care about this right now?

We basically started by throwing out the old playbook of the proper way to write a headline the, the proper way to run a company, and they how would we do it for our friends and people that we know?

As upworthy's traffic has shot up, so has controversy around the site.

What do you say to people who claim you're stealing their content and just changing the headline?

We actually get very little feedback like that.

The actually feedback that we get are from the people that put their heart and soul into a video, and it got 100 views on youtube.

One of these upworthy curators found it, packaged it and shared it with our huge audience, and got 500,000 or one million, or 5 million views.

Some pretty interesting stuff.

How would you guys and define the phrase click fraud?

Click fraud generally refers to someone else running up the numbers.

What we do is try to devise headlines that bring people to content that they will love you upworthy only works if people get to the content and love it so much that they want to share it with all of their friends.

That is why the average media site gets about 600 social action shares and comments.

We get about 31,001 that is how much people want to share our content.

Talk to us about your audience.

Who do you consider your target audience?

You're the fastest growing media company in the world, tell us how fast it is growing.

It is actually in the known universe, the latest that we heard.

[laughter] the way we think better audience, we think of a million core subscribers as the upworthy community that they get every day.

This passionate group of people who are not given up on the world.

They in turn share the upworthy content out to about 50 million people a month.

What you do to increase the value of them to your advertisers?

The numbers of clicks are there, the number of people going to the site seems to be there, but what you do to increase the value over time?

I think the value really is in tapping into this trend of people who want to do well and to do good.

Believe in ballets that go beyond just buying things and want to bribe products that are good for the world -- byproducts that are good for the world.

There's a consultation among our audience that went to be introduced to products and brands that actually help them make better, more socially conscious decisions.

Quick count you think you guys compared to buzz feed, or even the secret apps out there like whisper and secret?

Whisper hired a guy from gawker and nurturing to resurface viral content as well.

The real differentiating big about upworthy is that we start from mission first.

We try to go to the topics that matter.

On day one we set the rule that we're only going to post things that really achieve that mission.

A lot of media sites make the general trade-off or they're going to have the content that they really proud of that might win them a feel its their command and have the content that they know will drive traffic.

At upworthy we set out tuesday was make content that we're really proud of you that really move the needle forward for society, and make that drive the traffic.

What is the most shared upworthy post about time?

This amazing 20 minute video of a teenager and his battle with cancer.

It's this great video, it got seen over 17 million times.

It is an amazing thing that we have learned in our journey over the past two years, the stuff you think will go viral is not the stuff that goes insane ely viral.

It is a very serious, very real video.

He loses the battle with cancer, and it is the number one of all time for our site.

You guys are launching upworthy collaborations.

What is that, and where is the future for you guys?

Upworthy collaborations are a new way for us to work with brands that i focus on the things that we are past that and a a lot of brands are trying to do as well.

Draw attention to important topics and brand values and other issues of note.

We can work with brands in a number of ways.

Our number one way is to work on sponsor duration -- cur ation, not just are you selling this product, but when you try to invoke in the world?

Cofounders and co-ceos of upworthy.

Coming up, when president obama signed the jobs i can do lockable one of the goals was to encourage more investments in small business.

How is that working out?

? welcome back to "bloomberg west." it has been two years since president obama signed the jobs act into law.

How time flies.

The amazing thing that really change the investment landscape in a lot of ways, not just for copies in their ability to give out less information when they go public, but also ways for credit investors to invest in small business.

We have seen company like twitter, filed to go public secretly.

It has also been great for crowd funding to helping small businesses raise the funds they need to survive.

Joining us here to discuss it circle of foun -- circle of founder ceo.

You just started two weeks before this job act with june ent into law.

Investors can find diligence and investment, all through an online platform records i've been to friday because my believe is that this is going to work great when the market is going up to bat horribly when the market goes down.

These investors stand to lose so much for the company that does not of the kind of rigor that a public company might have.

What have you seen in terms of results?

The results are coming in.

Right now the average company that raise capital on the platform has risen 80% in europe tour year after they raise q gross margins would start so critical in the consumer product degrees from the four percent to 39%. one of the reasons we focus on consumer goods, we allow investors to do better diligence.

You can visit your local grocery store, see the product on the shelf.

We believe online investing helps improve the availability of information across the borders, instead of isolated conversations within investors you're able to compare one company's financials with the others and see them all in comparison on the platform.

Was talk about a company that was called funded -- let's talk about a company that was called rowd funded.

They raised money on kick started by people who gave the money are upset, saying i did not get a product, and i also do not get any part of this to billion dollar upsides.

Equity crowd funding aligns itself in little bit better.

Kickstart her funded the oculus for $2 million, one of the largest donation-based crowd funding has ever seen.

We have some proof of some signal from the noise.

Until you have equity investment, or interest, we think that equity road funding is the better way to go in the long run.

You mentioned the tangible notion, do you think that is the only thing that works in this format?

Over the long term every will see a whole host of different companies raise capital, but any -- in these early days is is a different type of funding environment.

We want to be information rich, compare different onyx about that is the right way for the market to begin -- a different products.

It is a great market, a different business.

We have a respect for kickstart her because we share investors.

Their goal is to support creative projects, creativity.

It is a different market entirely from sustainable growth for for-profit companies.

Equity in all types of capital markets.

Have a companies have you rejected from the platform?

Over 3003 weeks except about two percent of the companies that apply.

What is the criteria?

My big worry as recovered short seller, in my old business i used to look for people who work liars and cheats and could convince bab -- could convince us we were selling good goods.

We do a background check of the business and the entrepreneur, we look for a distinguished break of a somebody who sits on a shelf and has both strong historical performance -- so what have you found that a background check would floag?

Any history of fraud or security related activity that does not pass muster.

You have found that?

We have.

We have passed on companies for that reason.

All right.

He why so much -- thank you so much.

It is time now for the bwest byte where we focus on one number that tells a whole lot.

We have a special guest joining us today, our tech editor.

What do you have?

Two.

There will be two classes of alibaba's shares when the company goes public pretty soon here.

Mark mobius, chairman of templeton emerging markets group says he will not invest in ali baba over concerns over corporate governance.

Listen to what he has to say.

It is a big field.

It is no question about that china is going to be more tech oriented, internet shopping is a global phenomenon now, and it is growing very fast.

You have to pay the attention.

But corporate governance is an issue.

Interesting stuff here.

Is no longer there a lot of big companies and technology that have dual share class, and it has been the way that owners and technology companies lately have been looking to control the company made google was one of the first.

When you make of mark mobius's comments?

This is a structure that is becoming more prominent in technology companies.

A lot of technology companies like facebook of and going back to google and zynga, they been able to get away with this because there has been so much demand for their stock at the time of the ipo.

After, shareholders of basically been able to and willing to say we're not would have a vote and we are not going to have control, but we cannot miss out on this opportunity.

That is the only way a company can get away with this, if they have the leverage.

It depends on what kind of shareholder and you are.

Are you one that believes the company and that they will look out for the best interests of shareholders, or do you think the shareholders need to have the ability to fundamentally question the roles and policies and decisions made by management?

Why does the u.s. allow this?

I think a lot of investor laws are written around investors that know what they're doing and take the risk.

A notion that a certain company could be more risky than another, this is very concerned with corporate governance, very concerned with eigenvalue.

He likes alibaba even though he says the corporate governance issues should be better.

You wonder why people are not always questions into -- calling this into?

Question more.

We wrote about how much control was in the hands of so few.

You can only get away with this and companies that have been in a rocket ship all of the way up.

The owners have not been diluted, they have taken so much given to capital money -- have taken so much venture capital money.

They did not run into their first wall until the ipo could and then all of a sudden you have these investors that have no say in what goes on, who are seeing the socktock plummet.

That raises questions, but does not hamper their efforts.

Thank you so much.

You can catch that full interview online, tl for hank you all for watchibng.

? -- watching.

?

This text has been automatically generated. It may not be 100% accurate.

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