? live from pier 3, welcome to "bloomberg west," will recover information, technology, and the future of business.
Will the un-carrier be acquired after all?
After rejecting talks from sprint and iliad, deutsche telekom is open to 17 mobile if the price is right -- to selling t-mobile if the price is right.
Samsung beats apple to the punch, announcing a smart watch just days before apple may announce one of the run.
The gear s has a curved screen and can make calls without a smartphone.
And, the video platform that has turned everyday people into global stars.
Later, we look at how you to has turned the entertainment industry upside down, and how hollywood is now embracing it.
First, our lead story.
Deutsche telekom is not closing the door on its subsidiary t-mobile u.s., the nation's fourth-largest wireless carrier.
The german company will consider a sale that values t-mobile at a minimum of $35 a share.
Earlier this month, t mobile rejected an offer from france's iliad and talks for a commendation with sprint.
Is another company going to get into the mix?
Cory johnson is with us in the studio, and from new jersey, john butler, an analyst with bloomberg intelligence.
John, what is your take on this?
Lookm, deutsche telekom has been trying to find a way to sell t-mobile for years.
They have wanted out of the u.s. and to carriers within the u.s., is an attractive prospect.
This market really cannot support four carriers,m four big boys.
You have verizon and at&t at the top, and sprint and t-mobile struggling to keep up.
What is t-mobile's outspoken ceo saying about this?
He -- john leger, who has been very vocal about this.
His last tweet, hello kitty apparently not a cat.
I would not expect him to have a lot to say about this potential acquisition for the company.
The company that owns two thirds of the business, wanting to get out.
He want to grow the businesss.
They barely made any money last quarter.
They are investing so much in growing the network and changing the business model.
It will be a struggle.
What does it mean for him?
He was supposed to leave the sprint-t-mobile tie-up if it happened.
What does this mean for john leger?
He really has taken a no-namebrand, in my view, and turned it into something quite cool he has a lot of followers on twitter.
They have denigrate job with advertising.
Frankly, in terms of just branding, t-mobile, the genius behind it is john leger.
When you put a black leather jacket on i guess it makes it cool.
Who are potential buyers?
They are limited.
The best -- this price is outrageous.
Iliad might not be a buyer.
They don't have the financial resources.
For $35 a share?
We are talking about $18.7 billion to do a deal like this.
As cheap as money is right now, it might be hard for them to get this.
They already have an enormous amount of debt.
It is not out of the question that they could have more, but presently the company has borrowed a lot of money.
You can't just add more debt.
The question is, can they continue to grow prescribers?
Everybody thinks that is not really possible, etc.
John leger, who claims he can keep doing it.
John butler, who are potential buyers, realistic buyers for t-mobile at this price?
It is hard to say.
If you look at the usual suspects, the most outspoken has been charlie at dish.
Reuters said earlier that he is not talking to cable companies, cox, charter , and others, about putting together a bid for t-mobile.
They -- beyond dish, there is interest out there.
Sprint counted itself out.
But this has been a very interesting game in terms of the developments.
So it will be interesting to see how it plays out.
With everyone who has been in the fray, i keep eyes on dish.
Dish has made similar comments to us.
The sec was clear, he wanted there to be four separate carriers and the u.s. market needed that.
At&t want to t-mobile at one point.
That is off the table.
Four wireless carriers for the u.s., for the long-term future?
Until there is a change in washington, i don't think we can expect a change there.
With t-mobile emerging as a stronger competitor and seeing a growth in subscribers, i think that is how this will go forward.
Someone from another industry who might be parallel to this.
Dish, all of them are so busy right now with other merger plans.
What does this mean for customers, john?
Is not much going to change?
T-mobile has been shaking up certain data plans, arriving prices down.
How long will that continue?
Look, emily, it bought them a lot of success.
They are out there as the low-cost provider, and i don't see that changing.
They have stuck to their guns, branding themselves as the consumer-friendly carrier out there, using price as the key weapon, and for good reason.
If you look at telecom, it's a commodity service.
Again, leger is taking the right tack, and i don't expect any changes.
John butler, thanks so much.
Joining us from new jersey.
Samsung is gearing up to launch a new smart watch.
And a new leader, with the company's patriarch struggling with a heart attack.
Welcome back to "bloomberg west." megan smith is the top candidate to be google's new chief technology officer.
Smith has served as vice president of google x. time after time, samsung has created a major apple event with an announcement of its own.
Now they have done it again.
With reports apple may unveil a smart watch september 9 in cupertino, samsung has upped its announcement of the new gear s. its global smartphone share is slipping, and the chairman is still in the hospital after a heart attack in may.
Joining us is the senior director of trade at the korea economic institute.
I started by asking crawford what he thinks about the new wearables.
This is a move toward what we call the smart wearable market.
We expected of economist devices.
-- autonomous devices.
It speaks to the moves we are seeing carriers make.
Add another sim to your contract, and allow this to be autonomous with 3g. 3g will not be a big deal, because it will be bursting small amounts of data.
More about notifications.
We think this will just get started, one million units in 2015, to just under 10 million by 2018. not the largest category, but the most pricey category.
We just got the official invitation to apple's event.
Reportedly they will unveil a smart watch of sorts.
We don't know for sure.
This would mean apple is unveiling two new phones and a watch.
We will see.
Hopefully they are correct.
We know they have been working on this watch for some time.
Over 100 employees at headquarters working on the wash design -- watch design.
But we also know that if it is not right, they will not launch it.
One reason they are so secret is that they will frequently pullback products right before lunch if they are not quite right.
This might be a small market, but because the company is so big.
Back in south korea, the head of samsung is still in the hospital.
The heriir apparent, we presume he is ready.
But we did a big profile on jae lee, who is set to succeed his father.
Is he ready, and what kind of turmoil is going on at headquarters with this succession crisis?
Clearly, this is a big time for samsung, with the head being in the hospital and having to do this transition under the circumstances.
The way samsung is structured, right now jae lee is the only person in position to succeed.
In terms of is he ready, this is something we will see in time.
He is going to take more and more of the company reporting to him.
He is behind much of the partitions with apple, doing things that have pushed samsung forward in the smartphone market.
In terms of where samsung needs to go in the future, technology, software, services, he is well-positioned both in terms of his prior experience and personal predilections going that direction.
Meantime, samsung is under global pressure because of where the smartphone market is going.
Jae lee is a low-profile guy.
He negotiated a deal with steve jobs back in the day to get some chips in the phone.
How big of a job does he have ahead of him?
A massive job.
In a very tough situation going right now, but going forward, the world has changed faster than samsung has been able to change.
He could be a breath of fresh air.
Somoeone said recently to me, the commendation of samsung and google lets a stream.
-- lets us dream.
They experiment, they try things.
The watch is one thing.
The first device was panned.
And we have video of the samsung galaxy s5 taking the ice bucket challenge.
Obviously a feature the iphone doesn't have.
Apple figures it all out and says, this is what you will want, then start to experiment with it.
Apple sets the grid very tightly.
Samsung has not been that dream partner google could use because they have been so focused on the old-school way.
We build, we ship, we put it out there.
Under new leadership, they could do even more experimentation.
The trick is, how do they experiment on a global scale, but more profitably and without taking massive risks?
Maybe a separate division.
Maybe they experiment in new way they really have to continues.
On this path if they will challenge apple.
It cannot just be, this is what the general says and everyone marches in that direction.
They have to be more democratic.
They have to be a little more consensus-driven.
The world has changed.
Coming up, finding fame on youtube.
Some of the brightest young stars have skyrocketed to fame on the video site and has shaken up hollywood in the process.
That is next.
? welcome back to "bloomberg west." i am and lee chang.
Hollywood heavyweights have their eyes on you to's biggest -- youtube's biggest stars.
Today, we look at youtube, with special coverage we call "greetings from hollytube." one group that has made it big is "epic mealtime." the channel now has more than 700 million views.
Last year, collected digital studios snapped them up, and now they have a cable show.
Felix gillette found out what happens when a youtube sensation goes hollywood.
It is a thursday at san manuel stadium east of los angeles, and he is getting ready to shoot the latest episode of his tv show, "epic meal empire." before, there was "epic mealtime," a youtube show that made him a youtube sensation.
I would not call it a cooking show.
I would call it a celebration of food show.
It was an internet show i made four years ago in my backyard.
The first video got 120,000 views.
Next week, 600,000 views.
I quit my job as a teacher and committed to making the videos.
Four years later, we have 700 million views.
It has a media company looking to cash in on the success.
We started getting phone calls from hollywood.
Maker studios, they wanted to represent epic mealtime.
We had faith in them.
Collected digital studio produces and promotes youtube channels.
They were already established.
We got very aggressive.
The vision was always that this is the kind of property that is multi-platform, really strong.
He sees a new role where stars generate audiences online.
We are in a place in the industry world where we realize they are not as mainstream as they think.
The mainstream is sitting in the halls of youtube.
They take a show from a backyard to the mainstream media.
We have a tv property.
A number of brands they have long-term agreements with.
A bacon sponsor.
With all that money, there is always the concern of losing creative license.
It is not that we lost creative freedom.
We are definitely a little more censored.
On television, there's a lot more censorship involved.
But it also means bigger budgets.
The first episode cost $70. now they cost $20,000. we made a full car that i could drive, and we ate it.
Felix gillette, joining us now from new york with more on his cover story.
The hollywood-ization of youtube.
I cannot decide if i am hungry or i don't ever want to eat again after seeing that.
A lot of bacon.
What money are these guys making?
The big stars are making good money now, but the challenge with the ecosystem is it is incredibly fragmented.
So many different talents.
It's a vast universe.
There's millions of channels out there, so the challenge is trying to figure out, with all the inventory, how do you organize it to make sense for the creators, for the advertisers, and make sense for -- to turn it into big business.
Who are some of the biggest stars on youtube?
There is freddie wong, he's huge in this videogame business.
Summer, with a show that subway paid for that has done well.
It's not hundres of -- hundreds of stars, is tens of thousands of stars.
We will be speaking to freddie wong himself in a matter of minutes.
With dreamworks -- disney buying maker studios, dreamworks investing in awesomenesstv.
What does this say about the future, and who was going to own it?
Right now they are still making lots of money in television and movies, but there are signs of weakness.
The summer box office has not been great.
The upfront advertising market was pretty weak.
They have cash, and what you do with that?
They are looking at this parallel universe on youtube, and right now that has a huge amount of attention.
Lots of young, rabid fans, but it is not making that much money.
These independent companies have done a lot of the initial hard work, organizing this ecosystem and trying to figure out how to make money from it.
But they have not made a lot of money yet.
Big media companies like dreamworks and disney find now is a great time to buy in, because you can snap up these independent networks foirr not much money, and you have this growing audience of young people.
Felix gillette of "bloomberg businessweek." much more to come in our special coverage.
We will be speaking to one of you to's biggest -- youtube's biggest stars, drawing over one billion page views.
Freddie wong, up next.
? you are watching "bloomberg west" and i am emily chang.
Today, we are talking about the business of youtube in a special we are calling "greetings from hollytube." one of youtube's most popular channels has almost 7 million subscribers.
Rocket jump founder has turned making youtube videos into a full-time career.
The digital movie studio specializes in original web content that mixes special effects, humor, and a love of videogames.
I'm joined once again by felix gillette, who wrote this wii's cover story on youtube and freddie wong from l.a.. thank you for joining us.
I have been watching some of your videos.
How did you get started and when did you realize this can be a career?
Leslie started getting going with youtube in 2010. my friends and i have been doing a lot of directv and films and we realized there was a shift in where people were watching thanks and youtube, we could get a response and build an audience without having to go through with the traditional middleman.
We dedicated doing everything we do online with the goal of holding an online audience and exploring a new distribution platform for entertainment.
How do you come up with ideas for these videos?
We are watching you jumping over something exploding and shooting a gun in the process.
A lot of it just comes from brainstorming, driving us, long showers.
It just comes from a love of videogames and videogame culture, the stuff we grew up with, stuff in our videos, gaming and gaming influence.
It also comes from our love of movies growing up.
A lot of the stuff my generation grew up with.
New generation of filmmakers, you're not find them in hollywood, but online and on youtube.
He recently signed a deal with lions gate, the hollywood studio.
What does that do for you?
Prior to this point, we have been doing a lot of short form content.
How do you get something that costs more to make than your typical youtube video, it is difficult in terms of where to get the financing.
An ability to allow us to do these longform television length and feature length projects, the kinds of things we have been working toward without having to worry about the intricacies.
It lets us make a longer form feature-length projects because -- and we are excited because it allows us to tell longer stores and engage our audience in a deeper way.
What do you know about the commitment of your audience?
Youtube, i may log on and look at a couple of videos and i do not come back for another month.
How to you -- how do you cultivate an audience you can rely on and keeps coming back?
It is a generational difference.
People my age and older, we treat youtube like wikipedia.
We go on and look at stuff, we see videos and that is it.
But you are looking at an entire generation of viewers and content consumers that approach it in a different way.
They had showed -- they approached channels and people who create who are almost celebrities in their own right.
Using all the various means teenagers have on smart phones and social media.
For us, it has always been about telling stories and using that as the baseline.
The principles movies have always created to tell stories.
When young youtube creators come to talk, what kind of advice do you give them?
There are a lot of things you can do and trends you can create for what is popular online.
Things can go viral one week and no one remembers it the next.
My advice to creators is always work on the fundamentals of filmmaking itself.
Do what you want to do and do what you love.
The way the world is, you will find the audience for it.
Do what is true to you and what is organic to you, and follow those principles of visual storytelling and filmmaking.
I will be rude and ask you how much money you make and if it is ever going to be or if it is already the multimillion dollars that hollywood stars make versus being a holly to start?
To be honest, it is not what traditional celebrities make.
We are not going around and getting rand endorsement deals for what we do.
What we do hits an online audience there it it is an audience where everyone is trying to figure out how to properly monetize.
An audience that no longer has a cable description watching things online.
My company as a whole, we make enough to support my company up in burbank.
But it is nowhere near the huge numbers you will see with traditional celebrities and traditional entertainment.
That will change over the course of the next 5-10 years.
Thank you both so much for joining us.
We will talk more about how the dollars are flowing from cv versus digital.
Next, how are advertisers using youtube?
You can watch us streaming on your phone, tablet, bloomberg.com, amazon tv, and amazon fire tv.
? ? that was a clip from a totally awesome youtube viral video campaign for a movie.
We have been talking about the business of youtube in a special.
While youtube stars have caught the eye of hollywood studios, the platform is drawing interest from advertisers.
A viral marketing agency behind that video has carried out youtube campaigns.
And you for more, i am joined now in new york.
Michael, this video, i remember it when it came out.
In it is astounding.
Have big an impact did the video have on the marketing of the movie?
There were other marketing done.
But when it comes to digital marketing and youtube, it was extremely effective.
We are in the business of sharing content that promotes the movie.
We reached about dixie million people on youtube alone are the way we measure success is not by the view count on the video but the free media we can generate with it.
News morning stows -- shows talk about it.
It created huge was for the in a movie and did really well.
I had to go back and look it up.
I did not watch the movie but i did see this video.
How much does that matter?
Are the views converting into customers?
A good question.
It matters a lot.
Especially reaching the target audience for the movie, people watching it and tweeting about it on twitter, they are plugging in the message, check out this amazing promo for the movie.
It starts out as a video, but hey, this is a clever ad for the movie.
It is done in an engaging way and that is what we do.
We create high-quality content and people do not realize their sharing and add.
New york city, the time square iphone hack.
What goes into creating one of these things?
Is there a formula?
A lot of people try to make a science out of it and create a formula out of it and replicate it and modify it.
What it really comes down to essentially is a great idea and a great execution that comes with it.
There is a right way and a wrong way.
We do it with highly original ideas and without buying any media.
Everything is organic.
We do not pay for placement revenue and we do not buy views.
Everything is organic and it is designed to go viral.
It has the right ingredients and recipe.
Your last two videos, hundred million views.
Tv is still getting 67 billion dollars worth of advertising.
How much will that change and how fast?
We would like to have a chunk of that, i will tell you that.
We are seeing a big shift in the field.
The digital marketing field is being taken seriously more and more urine more people are recognizing agencies and movie studios where there is great value in doing this.
Also, it is different.
It is something shareable and it did not exist before youtube was created in 2005. it is the way to go.
I cannot help but laughing at some of these videos you produce.
How much does a viral ad campaign like the one with kerry, how much does something like this cost?
It is based on the complexity of the project.
Usually, in our price range, things start at $500,000 and go up to $1 million.
We like to do things for real.
One of the signatures of our videos is that we do not do cgi.
We actually do it for real.
We create a real stunt, the real thing, and it really flies.
That differentiates us from others.
People like to see the setup.
It does really well.
How long does it take?
It sounds intensive.
A great question.
Sometimes we kind of have to step in and save the day and then we have a limited amount of time to pull something off.
In most cases, we prefer a 12 week turnaround time.
We are fast production wise and post production wise, we do everything in-house.
We use a pool of talented people to help us create these things.
We are pretty quick.
I cannot wait to see the next viral video.
Thank you for joining us.
Now for a look at what is coming up at the top of the hour, mark crumpton joins us from new york.
What are you following today?
Of elements in the ukraine are fluid at this hour.
A de facto russian incursion is taking place, it is said.
Moscow says it is not involved in the unrest and nato says otherwise.
We will have latest in an cory johnson is looking at a news on artificial intelligence.
Coming up next, you may recognize their cars from last year when he appeared on stage.
We will take a look next.
? ? welcome back.
I am emily chang.
The company just launched its service in 24 new cities, many of them college towns like georgia, charlottesville, virginia, indiana, and oxford, mississippi.
The company also launched services in the new zealand capital and australia gold post.
The company says 35 of the world's top 100 cities still do not have the service.
Uber has been facing a lot of heat lately -- lately with aggressive steps for drivers.
From black heart is robotic -- from black cars to robotic cars cars, a driver pushing the limits of intelligence with toy racecars.
This allows players to race toy cars using these devices.
Cory is taking a test drive right now.
Who is winning.
I am sure i am getting destroyed.
There is a very interesting technology behind this thing.
I am getting my but kicked.
Artificial intelligence allows the cars to stay on the track and celebrate performance.
He is destroying me right now in this game and he joins me now.
What is the latest on the game?
One of the most unique things about it is even though it is a physical product, from the time people bought it, it has an extended.
We have new characters.
We can redefine every element of the game play software.
You are one of the artificial intelligence ceo's is.
I wanted to see artificial intelligence.
What is it about this that is artificial intelligence and how is it cutting-edge?
We have a videogame and sorry -- inside of our phone.
The phone understands everything that is happening.
Even though we are playing here, we have artificial intelligence controlled characters.
It becomes a videogame.
I understand how that is intelligent.
What is going on here that is different years -- from years ago?
These phones end up being the brains behind all these characters so we can play against opponents nobody else is controlling but the game is controlling.
They become intelligent.
They have their own personalities.
What do you mean?
Each is unique.
One is aggressive and one is more defensive in nature.
Do you program parameters?
They evolve over time.
You upgrade and the cars drive faster.
That is all part of the platform and the ability to bring the video games to life.
We are programming a videogame by using the combination.
Using the parameters for the types of development that might happen, you let the method run amok?
That is right where it is not too different from videogame.
We're using ai to synchronize with the physical world.
I am having a rematch, by the way.
Every one of the characters, you understand where they're located.
They can move very precisely.
That means we can have them think and decide what to do in order to compete and win.
That is not going on here, it is going on the phone.
It is both.
There is a computer here, but most of the brain is in the phone.
Because the phone understands everything happening in the game, we can make these characters very intelligent.
When i hear and read about artificial intelligence, it creates parameters.
My definition of robotics is the extension of computer science in physical form.
The moment you have something that understands its physical environment, you can give it purpose and personality.
For us, reinventing toys and physical gaming is a great way to start before we move onto other things.
All right, who better, him or me?
[laughter] you are pretty tough last time.
I am competitive.
[laughter] we have time for the bwest byte, one number that tells a whole lot.
Click, topic of robotics, funny $6.8 billion.
Tell me about this.
You brought the study to our attention.
What does it tell us about the future of robotics?
The number is almost entirely industrial robotics and high-end nonconsumer robotics.
We have effectively gone from zero to what will be a number focused on the consumer market.
$42 billion in 2020. the reality is the degree of computation and sensors and overall ability to understand the physical world, has opened up all of these applications.
Artificial intelligence is such a buzzword.
How will it impact our lives on a daily basis?
Robotics takes many different forms.
It could be something physical that moves around like this or even just the science of understanding multiple data streams and being much more intelligent about what your products are telling you.
A rematch now.
Another round here?
Here we go.
[laughter] thank you all for watching this edition of the show.
Let's ride it out.
I am in blue.