TSMC Lifts Chips, Amazon's Green Goals
From the hardware, innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. Live from new york and san francisco. This is Bloomberg Technology. Coming up, tsmc soars as the chip maker hikes its revenue outlook.
I hardware exuberance. Is it back? Plus met his new effort to stop sextortion across instagram. A first look at the campaign made to keep teens safe across its platforms. And Amazon embraces nuclear power to ensure its energy needs are met. A CEO joins us live with details on the clean energy effort.
But first, go to check out the TSMC trade at. Yeah, TSMC is our top story Taiwan Semiconductor manufacturing. These are the ads the US listed shares. They are up big. In fact, the shares are trading at their highest level since 1997 when they first started trading in the United States. The outlook for revenue growth for 2024 is boosted about 30% in dollar terms. And the big picture, Kara, is that we kind of feel better about the outlook for the chip industry in general.
Why? TSMC is the contract manufacturer to the world. They make the most important chips that we care about, namely those high performance GPUs in the context and post ASML. We had a lot of anxiety around hardware and chip making, but doesn't seem like it's there right now because Bloomberg's Pete Strong can join us from London for more. And Peter, just give us that context of what TSMC manages to prove to the market. That really echoing in video, the demand is insatiable. That's right.
Caroline, as you alluded to, all eyes were on TSMC after this ASML report. The Dutch equipment company came out and it said that bookings in the chip industry were only about half of what analysts had been expecting. And that really startled the industry. Nvidia's stock was down and everybody
was wondering who was the weak player in the industry, which company is which chip company is struggling. And now we know it's not TSMC. TSMC has done very, very well here. They boosted their guidance, they beat earnings estimates and they reassured the market really that demand for AI in particular is very, very strong at this point.
Si Si Wei, the CEO, got a lot of questions in the call after results about that and he said that the demand is real. He called it in saying at one point he said it's very, very strong at this point. So that's there's a reassurance play that's going on here too. Peter, TSMC boosted its capital expenditures outlook for 2025. Why is that important? Well, it's partly important because ASML is the company that sells the Chipmaking machines to all these companies. TSMC is the most advanced producer of these chips. And so there is a there's a question
about who's going to buy these machines from ASML and then others in the industry. We know that a couple of the key players are struggling right now. Intel and Samsung are both having quite a bit of trouble. TSMC appears to be doing very well, partly because they are in video. They also supply the chips to Apple, which is trying to sell its phones in part because of their capabilities.
So we're seeing this bifurcation in the market right now where you have some weak players, some struggling quite a bit, and then you have some like TSMC, like in video like guess Connex in Korea too that are doing very well and TSMC committing to capital expenditure globally. Right. They're going to be building out manufacturing not just in Asia where you usually sit. That's a very important point. For many decades TSMC only produced its chips within Taiwan. It felt it was easier to kind of concentrate all its production in one place.
And over the past few years we've seen that business model really evolve, where they've been asked by the US, by Europe, by Japan to to build these chipmaking plants in their domestic markets, partly because of the supply chain shocks that we saw during the COVID pandemic. All these countries want to make sure that they can get those chips. TSMC is the best chip maker out there, so they want TSMC to come to the United States, to Japan, to Europe and beyond to try to make those chips and make sure that they're being produced locally.
So far, that model seems to be working pretty well. Linda, it's Peter Ahlstrom, who's the executive editor leading our tech coverage from Asia. Hours into Europe, now into the US. And by the way, one of the names up big on the same logic is in video camera. Another top story you've got to look at in video at a new record high. Let's switch to Apple now because secretly it worked with Chinese automaker B wide for years. According to Bloomberg sources, the tech
giant partnered with be widened to develop long range EV batteries as part of what its now canceled car project. Gabrielle Coppola is with us. And Gaby, the context here is a wonderful big take that you have going deep into the be wide success story. But just take us to the Apple relationship and what it helped BYD achieve. Sure. Thank you. You know, I want to be clear. I think this was really a two way street. You know, I think, boy, I'd like a lot
of battery makers in China have been working with the new chemistry called left P lithium ion phosphate, and they had made a battery cell that was really impressive in terms of its safety metrics, its resistance to fire risk, but also could hold a lot of energy. I mean, while Apple was working on the Apple car and they were working on a design for a pack to have an EV that would have maximum range, that was one of their kind of key targets for that project. And these two companies came together from about 2017 to 2020 and kind of put their best and brightest together to work on a battery that would be best in class for the Apple car. Now, ultimately, as we know, Apple pulled the plug on that project earlier this year. Meanwhile, BYD, which took that work that it you know, it had its own IPO. I want to be very clear, BYD did comment to us that there is no Apple IP in its own famous blade battery.
But today you look at all the cars that BYD is selling, every single one of them has this blade battery in there. It was a game changer for the company. It's what helped them improve their sales really rocket from being kind of a nobody and also ran in the China market to being the number one in the world's biggest car market. And what my colleague and I, Mark Gurman, uncovered is that there was some influence from Apple in that journey. I don't want to take away anything from BYD because they themselves are a very innovative company. But we did the world did not know. We thought this was all something that went on in the labs in BYD, in Shenzhen, and that's not the case. There was a lot of collaboration between
Apple and BYD. Right. Really important piece of reporting about BYD's prowess in batteries, in history and batteries. And then there's the electric vehicle side, specifically in the cheaper categories. And that's the whole point of the big take. Let's start with the basics. What is the conclusion you reach about BYD and its strides globally? I would say that my biggest takeaway from reporting this story over the last few months is that if you want to understand why it is the biggest carmaker in China, why they can make cars that are have such impressive technology and yet such a low cost that truly terrifies auto executives all around the world, whether they're in Tokyo, Wolfsberger, Detroit. You got to understand that the story is
much more complicated than subsidies. Obviously, right now we're in the middle of a really intense period of trade, war and tariffs with the US and China, with Europe and China. And there's a lot of rhetoric going around about, you know, how subsidies are, what's making these companies grow. And I don't want to deny that at all. China is not a free market economy. The level of subsidies, people always say, yeah, well, the US has subsidies to or the US subsidies too. That's true, but the scale of subsidies in China is much greater than any other free market democratic country.
So having said that, if it was just subsidies, you would see 20 bids, whereas there's only one. And that is really a testament to the innovation, the engineering breakthroughs, the determination that kind of stick it to in this of the founder Wan Tom Fu. And that's really what I try to tell in this story. Gabrielle Coppola, thank you so much for joining us on Bloomberg Technology now. Coming up, Instagram set to launch a new campaign meant to keep teens safe from sextortion scams. We have met as head of global safety
here on the program. This is Bloomberg Technology. Now let's turn to Instagram, whose parent company Matter has today launched a new campaign meant to help protect teens on its platform. The campaign raises awareness of sextortion and includes this ad. Let's talk about sextortion. That's when someone threatens to expose a sexual image or video to get you to do something like send money.
Here are some red flags to look out for someone coming on too strong. Asking to trade photos or move to another app. Here to talk more about the changes is I'm taking any day. This is a global head of safety for matter. And it's not just the ad campaign or crisis line, but it's also product features, updates. Can you talk us through them?
Yeah, absolutely. I'll give you three of the most compelling features. So one is the prevention of screenshots. So if you send a view once image or video, we're going to prevent somebody from screen shotting that image or recording that video. That's important because you're sending a signal that you want to protect that image and you don't want someone sharing that with somebody.
And the other is blocking the follow requests of potentially scammy accounts. This is important because we already block message requests even from just unconnected accounts for teens. But we want to make sure that we're closing down the avenues for these scammers to try to find teens on the platform. And then the other one is hiding the follower and following lists of teens from these potential scammers. The reason that's important is because once they have that image, they threaten to share with the friends and family that they find on those lists and taken. Why is the campaign being launched today and not previously a year ago when when data showed spikes in this kind of activity that you're now trying to prevent and crack down on? Yeah. Thank you very much.
This has been building on initial additional protections that we had already launched. So recently we launched teen accounts that put teens automatically into private accounts and have our strictest messaging restrictions. This is taking it another layer out and it reflects a change in the crime. It's moved to becoming a financial crime where people ask for more money. And with that, there's been a spike of this across the Internet. And typically, how's the technology changed if there's a change in the crime? What my colleague Olivia Colville reported, for example, was in the case of Facebook in Nigeria, for example, technology is used to as a counter to suspicious activity. So you have the video, which we showed.
But what's the role of technology here? Yeah, it's a very, very good question. The technology tries to identify potentially scamming accounts and they'll do things like they see a new account that sends a lot of follow requests to a team that is outside of the two teens that are outside of the area where that initial individual is is messaging from a following from. Those are the kinds of signals we use. We use a large range of signals to identify these scamming account, potentially scamming. They're not scamming. If they're scamming, we're going to
remove them, but potentially scamming accounts. You're, of course, helping hide from these potentially scamming accounts. Why not let a team just hide full stop their followers and who they follow? Well, it's a good, good question. These are features that are important
for connecting and finding the people that you're interested in, and we want to protect those valuable features for enjoying the app, but we want to find ways to make sure that they can't be exploited by these scammers. If you, I'm sure, face countless questions and indeed your company and others face countless lawsuits now from families, from authorities that feel that what you offer on social media is harmful for children, whether indeed it's extortion or indeed addiction. How are you fighting those fights? How do you feel that it's coming to you at a lawsuit perspective? Well, from my perspective, the thing that's most important is to listen to parents and understand what it is that they're worried about and make sure that they feel that we can that we have the protections that give them the peace of mind. So we know, for example, parents are worried about the amount of time that teens are spending on the platform.
So when we launch teen accounts, we've now created it so that between 10 p.m. and 7 a.m., they're not getting notifications to their account. And we're sending an auto reply saying, Hey, this is time for time for sleep and take it. I'm interested in the audience you're
trying to protect and how they use the technology. You have the family of apps largely smartphone centric, but sometimes they're accessed through a web browser right on the computer. How do you adjust your technology and your policy for that, how people actually access your applications? That's a that's a really good question. One of the things that I can give you an example of is for screen.
So we are now preventing screenshots, as I mentioned, for certain types of image sharing on the browser. You can't really prevent that screenshot. So we're just preventing them from actually sharing, seeing the image. I go back to the point that you say you're listening to what parents and indeed I'm sure some teams are saying to you, what about as you see these legal efforts proceeding? Do you, in your heart of hearts, feel enough is being done for the parents, for the teams using it? And do you think the legal way in which they're pursuing the claims is the.
Right way for them to try and make change. I think one of the things that parents are struggling with is a set of standards that they can understand for assessing whether their teen should use a particular app. One of the things that we've been pushing for is legislation that would require the operating system or the App Store to provide apps like ours with the age of the user that would enable us to ensure that we can provide an age appropriate experience. And they could also set it up so that parents can not approve of of an app download if they want to. These are the kinds of things we need to make it much simpler for parents. Anthony Davis, thanks for spelling out some of the changes for those parents and teens today.
Head of global safety for matter here in the studio. Now coming up, we speak with Matt Garman, CEO by the company's new nuclear investment. This is Bloomberg Technology. Big tech is going nuclear in order to secure the energy needed to fuel air. Here's what Google's senior director of climate and energy told us yesterday on Bloomberg Technology. The world needs more carbon free energy, and this agreement that we signed with Kairos is an important milestone in what's been a 15 year journey at Google to make the transition to clean energy.
It's our first nuclear energy deal and we feel that nuclear is a very important technology for going carbon free for offices, datacentres, communities where we operate because it's an always on carbon free energy resource. Google is not the only one. Amazon also announcing half a billion dollar investment in nuclear clean energy. Here to discuss it, Matt Garman, CEO of US and Matt, welcome back to Bloomberg Technology. It's so thanks for having me. To see that thank you. To see the hyperscalers so focused on
this. I think we start with y s'mores, right? That's a very specific avenue to go down. Yeah, I think some cars are a great new technology and they're an important part of the the energy landscape that we're looking at. We made a $500 million investment in a company called X Energy that are really I think they're one of the leaders in this space. And they're really pushing on the technology smarts. They have a couple of advantages. They're able to be constructed in a
smaller footprint, which means you can put them closer to where the energy needs to be. They're also incredibly safe and easily manufacturable. And so they're a very promising technology. And and we're quite excited about our investments in the space and the partnerships that we have coming up.
Small modular reactors. Smiles for those getting in the acronym LINGO. Matt, it's great to have you. What about other deals? I mean, is this the first of many? Yeah. And so a couple of details on the things
that we announced yesterday. One, we have this investment with X Energy and as a producer of these, but we also have announced two partnerships with utilities. And so we're actually well down the path on going and actually implementing some of these deals. So we have a partnership with Dominion in Virginia to go implement and some R as part of their energy footprint here in Virginia and with Energy Northwest in Washington and Oregon. And our goal is deliver more than five
gigawatts of nuclear energy. We think that it's a fantastic opportunity for us to keep pushing on the carbon energy footprint that's needed as we continue to scale around the country. Matt, if you're well down the path and based on what you just said, do you have a clear line of sight on what the dollar per megawatt hour is going to be out of those facilities? We don't know that yet. We're we're still we are still early and we're still learning many of these technologies for these reactors or probably won't come online until 2030.
So we'll still be learning there. But we still we feel that as we scale and in the fullness of time, these energy sources are going to be quite competitive from a cost perspective. And it's one of the reasons that we're so excited about them. Would you bring back a full nuclear plant like Three Mile Island in Pennsylvania? And if so, which one? Well, not that I wouldn't have done that one in particular, but we actually have a partnership with Talon where we're bringing more energy online in Pennsylvania. And that's a we're actually the very first company to announce a deal with Talon several months ago. And so I think that some of these large nuclear plants are also excellent sources of energy, and they're an important part of that. And as I said, I think small modular
reactors are going to be a component of what we need for a carbon free energy world. But but large nuclear plants are going to be an important part of that, too. And and we've said that will take as much as almost a gigawatt of power that we're bringing back online from this large plant in Pennsylvania, where we'll also be building data centers nearby. So I think it's all an important part of the portfolio as we move to decarbonize the energy. Let's talk about the decarbonization,
because back when you announced that deal in March with Susquehanna, you talked about how still the aim is to be by 2025, 100% renewable energy. Is that attainable with a sudden desire to have a I and the energy that goes with it? Yeah, In fact, we we announced that this year we hit 100% carbon free energy in our system. And I think that now our goal is how do we as we look at all of the energy demands that the business and the world frankly needs, how do we get to a continued path on growing carbon free energy? And so that's what a lot of these deals are about, is for the future as we look at power that we're going to need in 25, 27, 30, 20, 40, how do we make sure that we have a ramp of power so that as the energy needs grow, whether they're from electric vehicles or from companies increasingly digitizing or from generative AI, that we have enough carbon free energy to support them. And so it's really a long term view that we have.
And part of this is, is on that long term view, how we continue to have enough power well into the future. Let's talk about the short term view, if we can for a minute, Matt, though, because right here, right now, do you have the power that is necessary from the places you want to be getting it from? We work really hard to make sure that we do. Our business is continuing to grow rapidly and and we're adding new, new power and new data centers all of the time. And so we continue we look further out. We have power that we're adding in 24, power that we're adding in 2025 and continue out. And as you you may have heard it over the last five years, Amazon has been the single biggest purchaser of renewable power contracts in the world every year for the last five years. And so we continue to do that. We continue to add power to our
footprint and we plan multiple years out because these projects that we go and launch, they take many years to come online. And so we have lots of plans and we continue to grow as the needs of our customers grow. Matt, will you have any Blackwell online by the end of this year? No, unfortunately, Nvidia's timelines have shifted on that. And so and so we have samples in the lab and we're working on them right now. But production qualities, our production quantities, we expect to be early next year. We worked very closely with NVIDIA on GPUs and super excited about that launch. And, and Nvidia's own large research
cluster is actually launching in eight of us. So we'll have the first production quality is will be in AWP when they're ready. But so right now we're working with them and we have early samples but as they get their yields up and the reception of the black well Chip, it'll probably be early next year before we really get production samples in real volume. Another partnership, then anthropic work on the chips. How how is that going? Briefly. Fantastic. Anthropic continues to to deliver
fantastic new models. Their Sonnet three five model is one of the most powerful ones that is out there today and customers are really enjoying using it on a variety of tasks. I think the reasoning is, is industry and world class and a bunch of the capabilities that enterprises are able to deliver and the value they get from those models is really it's fun to watch. And and we really enjoy that partnership and, and we continue to expect it to go for a long time. Matt Gorman, CEO, we appreciate your time.
Thank you. And coming up, the evidence CEO, the top banks and I will talk about it next. This is Bloomberg. Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York. And I'm Ed Ludlow in San Francisco. Let's take a quick check on the markets and actually carry the S&P 500 is off its session high. But at one point in the session, reached an all new time high on an intraday basis. Technology has a part to play in that,
right? There are many names moving to the upside Nvidia. You will not be surprised to hear is one of them. And part of that is in carry through. On the optimism around tsmc's guidance that updated revenue growth outlook. We talked about it earlier. So if you're just joining us, those are
tsmc's US listed shares. This is the contract manufacturer of chips to the world and what they said is yet things are pretty good. The outlook for 2025 is pretty good. And it was in stark contrast from what we heard earlier in the week from ASML, which is the company that makes the machines, that makes the chips. Netflix is down a percentage point and I flagging because going to talk about it later in the show they have earnings after the bell. Maybe that's some positioning.
What will we hear? Who knows. When the here and now we're going to talk about adoption and in the financial sector is rapidly increasing as well. According to a new report by AI benchmarking platform evident now, the rate of utilization is actually happening twice as fast, though, in the top performers, the top ten banks. And this index has to go in evidence. CEO Alexandra musa Visit is with us now. And Alexandra, it does seem to be that if you put a lot of talent and focus and energy in R&D and you're winning and you're going to continue winning.
Yes, you are. Caroline? Yes, we released the index today, and as you know, it's covering the 50 largest banks in the in the US and Europe. And we cover all of those aspects as in looking at the talent stack and the innovation levels that the banks are pulling. We're also very, very carefully tracking what the banks are reporting on in terms of their use cases and their ROI.
And also looking at the responsible side. And what we see is that the leaders are pulling ahead and leading more at double the pace of the rest of ten. Top ten ranked banks in the index are moving at double pace from the rest of the banks in the index, which should indicate and does indicate a bifurcation in the rankings. So the leaders are leading more and the ones that are following or standing still are actually falling behind in this in this race. Now, Alexandra, I'm pretty certain that social media accounts like overheard on Wall Street and Wall Street means are listening to this because there are two things here. Banks and I and in all world, that is
everything. So here's the question. What is it that makes a bank good or not good at AIG? Well, we look at the strength of the capability of the bank. So all of the aspects that goes into a very strong ecosystem that moves the use case from ideation to production. So a good bank is able to move that through the system. So identify where you have problems,
where I can be a solution to those problems and move them into a testing phase and then into a production of a use case using AI. So a good bank can do that very quickly. And all of the elements that are needed to move the use case into production swiftly and well and with ended are why have those the strengths of those component parts.
Okay so we're showing JPMorgan, Morgan, Capital One and RBC. And so based on your report, they are top three performers. Is it that they just hired the best computer scientists, the best engineers early? What did they do differently to the rest of the list? Yeah, the common denominator of the leading banks is that they went out early and they went in big and they reorganized the bank to look like more like a tech company.
So an AI first business that has a research lab that is attracting the best talent, that is reorganizing the bank from inside, looking at the data infrastructure, looking at this question of build versus by looking at the decision making, whether that lies in the in the center of the bank or if it's federated and striking that balance. So what these leading banks did is that they went out early. Jamie Dimon famously laid out the strategy for JPMorgan in 2018 and established a research lab and really went to work on looking at how to reorganize the bank so it could respond to the oncoming technology swiftly and easily and get that time to production down and really infuse the bank with, you know, his thinking and mindset and a nimbleness. And that is what they're reaping the benefits of now, not that they're standing still, they're moving at double pace of other banks continuously and to spend more and I hire more people and continue the research and the patents and the partnerships that are delivering the impact that they hope to get from their investments. Jamie Dimon said this year that the ROI for his from his investments is at $2 billion. So that's why it's making money. Who else is managing to see a return on investment? Because everyone's desperate for that. Everyone's measuring the impact
internally. Only two banks in the 50 list of 50 are actually talking explicitly about their ROI. That's JPMorgan and that's DBS out in Singapore. But this is going to ramp up. So we think that in the next 6 to 12, maybe 18 months, really as use cases move into production more solidly and the pressure to show ROI off that investment is going to ramp up and the ROI is being measured internally in the banks. And we're seeing many of the banks
looking at how is it impacting on non numerical terms and numerical terms. But we're going to see a cascade of announcements of ROI, we think probably from about 6 to 12 months on. Well, that's what's so interesting. On the timing of the report. We've just had bank's earnings season, so I guess did you see any early evidence that gets you excited for future reports of ROI? Absolutely. Absolutely. I mean, it was also other factors that
were going on in the earnings calls that were around the rates and geopolitics, of course. But there were four banks that were asked about their strategy and spend and use cases and the impact it's having. And so Jamie Dimon was asked there was also Ted Pick from Morgan Stanley was asked why and Bank of America were asked specifically about what they were expecting to see in terms of their investments and where they see that having an impact. And to pick actually went into a lot of detail on a tool that they've rolled out across Morgan Stanley, call debrief. That is something that they're trying to put in the hands of many across the bank and service that helps manage meetings and responses and so on.
But we must remember that we're in the early innings. It is a big and monumental transformation and we're only two years in. So there's a lot to come and the tools are getting better and better with much more reliability and speed. But we're looking at a in the next year or two, seeing what we call again, TKI come in and being tested out and being a potential tool for the banks to consider and are considering already. And that's going to be a real game
changer on many accounts. So agents front and center, what are they using? They're using models. Are they building all on open age largely? And what are the frustrations on the again, TKI, I know just more broadly what models have been to. Floyd, Are they building them from within? Depending on own large language models deploying from Openai, AI and the competitors deemed that most of the banks are looking at the variety of models out there.
So it could be Openai AI and Twitpic that you were mentioning before Mr. Ball hugging face. Every model has has a uniqueness, and when you're looking at the variety of use cases and problems that you're trying to solve in the bank, there will be different types of models that need to be deployed and fitted. And then the building and the engineering of making it fit on your own data used for your own systems in a particular way that is unique for you. Depending on what type of bank you are, you're looking at. You're looking at these variety of large language models that each have their own features and but then they get bought in and then they get implemented and fitted into the data, into the system of the bank. Alexandra So please to come back to hear
how this latest evidence index has gone evident. CEO Alexandra is a visitor on the latest in financial aid. Meanwhile, coming up, Unity just announced at the latest version of its gaming engineer software is out. CEO Matt Romig joining us next.
This is Bloomberg Technology. Okay. Unity releases its latest developer platform today called Unity Six. It's a suite of tools and it's used by the gaming industry and professionals to create market and grow games and VR experiences across a variety of platforms. Unity CEO Matt Bromberg joins us now. And Matt, I've come to learn in the last
couple of years that loads of video game developers, publishers and video game industry people watch this show, but many won't know what the engineers the tools are. Why is Unity six so important? And welcome to the program. Thank you so much. And thank you for having me. Yeah, unity is really a global platform
that enables, enables and sort of powers very large chunks of the video game industry. For example, more than 70% of the mobile games in the world are built on top of our platform. So it's a really important fundamental piece.
And we're the only company in the world that can help developers kind of from beginning to the end of the lifecycle. So prototyping. Building the game. Operating the game in live service and then going out to find users for that game or monetizing advertising inventory inside the game. So it's really a full suite and we're really very close partners with with game developers all over the world, by the way, as well as non-game users. Right. And there are plenty we'll dig into the non-game uses in a moment. But really, when you think about these developers, you're having to win back their trust. You're trying to focus really on being a
good partner because you're relatively, relatively new to the role. The previous CEO had to leave because there was a pricing pain point. How are those relationships building how you'll discussions around Unity six? Yeah, the first five months of my tenure have been really exciting because it's given me an opportunity to fly all over the world and spend time with as many of our customers as I possibly can. I've been really, really excited about how willing they are to reconnect with us.
The ecosystem is really best when we do well because you're building when you choose, you know, you're building on top of us for maybe ten or 20 years in the operating game. It's really important that you trust us. It's really important that we deliver what is needed and what customer has told us all over the world was, Hey, we're happy to pay you more. We just don't like the way you've asked for it.
And that was the easiest decision in the world to reconnect with folks and find a way to charge them that that work for their business and and regenerated our relationships where there is tough competition, epic games, Unreal Engine being one of them, and there's open source game engines as well. How have you managed to retain or even build on or lose market share? Your unit has been developing as a platform for more than 20 years and as I said, the vast majority of mobile developers are on the platform. We already know them. And so what we have to do is do things like release Unity six, write better software, more performant software, but software that's also stable and kind of stable is a rock.
So if we keep doing that, we feel really good about our position. Matt, a question from the developers in our audience is you will raise prices right over time. Just explain the cadence by what percentage and the rationale behind it. Yeah. So we announced that we were reverting to a very typical kind of subscription model, just very, very common in the SAS business. And we talked about making the software more available for our community.
So really small use that don't generate meaningful revenue with our software and then raising some prices on our largest customers. And it's been the the news has been really, really well received. As I said, not even so much because of the price increase, but because of the way we did it. Part of reconnecting with our customers has been really spending time with them to listen to them, to test our ideas with them and to not surprise them. And so the way we rolled out the pricing
and the nature of it is, again, has been really well received. And we think in a will, we'll just revert to some annualized increases, which is typical in our industry. And, you know, there's there won't be much drama. What's the unity story going to be under your leadership? There was a time where unity was like, okay, we're going to be a metaverse company.
And I get why. It seems like you're doing hard reset back to being a video games company. Yeah, I think one of the exciting things about unity, but also one of the challenging things as we sit at the intersection of so many powerful forces, three 3D digital advertising, interactive entertainment, it's just the metaverse. Right. So you could be forgiven for wanting to pursue lots of wonderful things. But to your point, what we've wanted to
focus on is making sure that we deliver for our core customers, set in video gaming, make sure we deliver rock solid software that they can build their businesses on, that they can use to help acquire new users and sell their advertising inventory, and to make sure we nail that so that folks trust us, that we reconnect. And then, you know, once people trust you, then they you can begin to dream and make all kinds of other investments. O other investments. Would they be inorganic rather than organic? You looking at developing generative AI offerings by buying partners rather than building around? Our focus right now is on building our own business in general.
But I will say that A.I. is a really important piece for us. I think as a platform we're really interested in being able to change the economics of the industry. So the best thing that could happen to a game developer is for us to create a tool that enables them to make games more quickly, more efficiently. That changes how many games they can make and changes the real calculus for them. So as a platform developer, we can use AI to obfuscate the complexity of our software and help them move more quickly then that's the best thing we could possibly deliver. New York We didn't hear that. You're not going to buy anyone. You said you could focus on organic, but
would you buy someone? We are. We are really focused on what we are doing right now and being better. Matt, I want to just bring this all together.
I think the question from this point is how to video games change. Unity six Great. A.I. Great. We just want better games.
Can you promise that that's going to be the case? I can promise. I'm going to tell you why I worked in the video game business making video games for more than 15 years before I got to Unity. And I know that there is there's a lot of talk about where we are as an industry and perhaps, you know, with growth is flattening. But I think it's really important to remember that the video game business is a very big, vibrant business. It's bigger than streaming video, streaming music and global box office combined. And sometimes when you get late in the hardware cycle, you start to see some flattening as we are now.
But one thing I can promise you is that the creative geniuses in our business are going to create amazing interactive entertainment. They're going to release that entertainment. They're going to be new platforms and growth is going to return to our market. Matt Bromberg, Unity CEO, thank you so much for joining us here on Bloomberg Technology Caroline. It's time now for talking tech. The EU says it may include revenue from several of Elon Musk's businesses when calculating a fine for violating content moderation rules.
So not just X, but potentially could include sales from SpaceX, some exit from the boring company because Tesla is actually publicly traded, it would be exempt, but no final decision on whether to penalize Musk has been reached. Meanwhile, Tesla with an optimist robot update. The company has responded to Blowback about its robots relying on human help at an event last week in a new video post. Now the 92nd clip posted on X, it shows the bot walking a factory floor, navigating a charging dock and even responding to stops visual cues and passing over popcorn and drinks in captions on the video. Tesla says Optimus can now explore unseen spaces autonomously and avoid obstacles using neural nets. Plus, Apple's chief people officer is
leading the company after less than two years, according to people familiar with the matter. Now, the role was created for Carol Surface in early 2023. She's responsible for overseeing H r inclusion, diversity and recruitment for Apple's 160,000 employees. And coming up on the program, Netflix reports after the BOE is analysts see the end of the road for his latest growth drive as we discuss what's next for the streamer.
That's tripled in value in recent years. This is Bloomberg Technology. Cable companies are not only seeing a drop in TV subscribers, they're also struggling with broadband. Look at Charter's broadband subscription data. For the past six quarters, according to Bloomberg Intelligence, cable providers may lose up to 481,000 Internet customers in the third quarter. That would be the worst ever decline for the industry. Analysts say it's due to the expiration of a government subsidy program as phone companies bundle home Internet and wireless offerings. Correct.
Trouble for cable providers also extend to rival Netflix, which reports earnings today. Shares have tripled since May 2022, hitting a record high earlier this month. But can we sustain this? Maybe Revenue growth is slowing a little bit. We've seen the password crackdowns already. Has that been priced into where we currently standing? Most Felix Gillette, I'm not going to ask you as to whether we should be trading at this valuation, but this set of numbers, fiscal third quarter, do look like they're going to remain strong, four and a half million subscribers added. Is that enough to keep us enjoying about Netflix? Yeah, I mean, I think for the time being, four and a half million is pretty solid growth. It's down from the third quarter last
year, which is closer to 9 million. But the huge run up in the stock price that we've seen since May of 2022 is really driven by two things. Yeah, it was the password crackdown, which has been very effective. It's also been driven by the introduction into this lower priced ad tier. Right. And so I think that's really what to keep an eye on going forward is how many subscribers do they have in that advertising tier? How much is the advertising revenue growing? I think a big part of that is Netflix is also, you know, they're going more heavily into live programming, right? In order to get advertisers and viewers sync up, you want to have live events. And the more we've seen this past year
has been, you know, all of this increase in live production. You had the Joe Rogan comedy special, live comedy special over the summer Hot Dog Eating contest. That's all pretty small compared to, I think, what's going to be coming down the pipeline for Netflix in the next couple of years, which is really live sports. When you and I were hanging out in Hollywood last week, rubbing shoulders with all the celebrities and moviemakers, I guess what they weren't talking about so much was some kind of crisis when we were one year ago. Are they looking to the horizon for a crisis? I mean, I think everyone's happy that the strikes are over. And, you know, we're in the belt tightening phase of Hollywood.
It feels like the major crisis has passed, but there's still production is still way down from what it was during the TV years. You know, in terms of what Netflix has come in, you know, I am still curious about their gaming investments. They had a shake up in their gaming department over the summer. They haven't had much success there. You know, they're going to point to big things, you know, like squid game to next quarter. Okay.
Yeah, plenty to get excited about in terms of the content on that. Felix Gillette, we thank you. That does it for this edition of Bloomberg Technology. Ed, good show if I say so myself. Recap on the podcast. You know where to find it. This is Bloomberg Technology.
2024-10-19 07:56
