Yi He is overseeing a $7.5 billion portfolio, with more investments to come, making her one of the most powerful investors in the industry.
Binance co-founder Yi He will oversee $7.5 billion in assets.
Binance co-founder Yi He isn’t as well known as the crypto giant’s colorful and controversial CEO, Changpeng “CZ” Zhao.
That could soon change. The 35-year-old executive is taking on a new, higher-profile role at the world’s largest crypto exchange as head of Binance Labs, the company’s venture capital arm. With $7.5 billion in assets to oversee, that instantly makes her one of the most powerful VC investors in crypto.
It’s her first turn at running the crypto powerhouse’s investment strategy after serving as Binance’s chief marketing officer, a position she still holds. But she has the experience of a decade-long career in crypto, including five years with Binance, which He co-founded in 2017.
“I’m one of the most OG in the Binance group,” she told Protocol.
Crypto’s new enough that 10 years can make you old-school. But Binance’s track record of controversial, even questionable investments makes He’s new role all the more challenging.
Just recently, Binance got embroiled in an M&A controversy over WazirX, a crypto exchange it said it had acquired in 2019. Amid reports that the Indian government was investigating the exchange for alleged money laundering, CZ caused a stir on Twitter when he said the deal was never completed. WazirX’s founder Nischal Shetty has disputed that claim.
Binance also drew fire for investing in Terraform Labs, whose failed UST stablecoin and luna coin helped drag down the crypto market this year. CZ has said the $1.6 billion loss on its Terraform-related holdings was almost entirely on paper, since it got the tokens as part of a $3 million seed investment.
Binance’s investments outside crypto have also raised eyebrows and prompted some head-scratching. The company signed up to back Elon Musk’s troubled bid for Twitter, committing $500 million to the takeover proposal.
In February, Binance announced a $200 million strategic investment in Forbes. The publication put CZ on the cover in 2018, shortly after the company launched; Binance later sued Forbes for defamation over a different story about its approach to regulation. (The suit was dropped last year.)
In explaining the investment, CZ said “media is an essential element” to educate the public about blockchain and Web3 technologies. But recently, he cryptically said that the planned Forbes investment was “changing” after a planned SPAC deal collapsed in June.
Forbes is a “fantastic business,” He said, even as she addressed the perception that Binance might be trying to buy media influence. “Even with the investment that the editorial would be completely independent,” she stressed.
But she acknowledged that Binance has struggled with its public perception. The company has been accused of letting criminals use its services and wrestled with regulatory challenges in major markets, including the U.S.
The company has been essentially banned in CZ and He’s native China, which blocked the Binance.com site the year the company launched in 2017. Last year, Binance disallowed trades involving the Chinese yuan after China declared crypto transactions illegal. It seems like a painful irony for He, who came up with the Chinese name for the company, which translates as “safe coins.”
Binance, which now has more than 6,000 employees, operates from regional offices in Dubai, where He now spends most of her time, and France; she travels to Europe frequently.
She grew up in a rural area in Sichuan province in western China, where her parents worked as teachers. “I’m from a very small village and a very poor family,” she said.
Her father died when she was young, which she said brought on new challenges for her family but “made [her] stronger.” Her mother wanted her to also become a teacher, but He pursued other paths.
Her first job was promoting a new soft drink by standing outside a supermarket and offering consumers a free taste. It was a hard job and “all the talking and hawking led to a hoarse voice,” she said in a biographical summary prepared by the company.
She also worked as an art school assistant and a travel TV host before venturing into marketing, a career that eventually led her to tech and crypto.
She met CZ at a crypto meetup when she was working as a vice president at a mobile video tech company. CZ invited her to join him in launching Binance in 2017.
She agreed, though it was a rocky launch. Binance’s native BNB cryptocurrency crashed by 50% on its first day, though it quickly recovered, she said.
Binance’s rise as a major crypto industry player was meteoric. The media spotlight has been directed mostly at CZ, while He stayed mostly in the background. Ray Wang, chairman of Constellation Research, said she played a critical role as an executive who “understands all the angles” of the crypto ecosystem.
Wang gives He credit for making “smart moves in building alliances in the crypto space with key winners like FTX and Polygon.”
Last year, Binance said it had integrated the Polygon blockchain network. The company announced in 2019 that it had made a strategic investment in the then-new FTX. That relationship ended after FTX, which has emerged as a major Binance rival, bought back Binance’s shares in the company last year.
It’s a critical time for He as Binance Labs’ new leader.
Binance remains the biggest crypto exchange, with more than $16 billion daily trading volume. Coinbase is a distant second with daily trading volume of roughly $2.3 trillion, according to CoinMarketCap. (Binance bought the market-data site in 2020, another sign of its acquisitive reach.)
Binance Labs, which covers around 200 portfolio projects, announced in June that it had closed a $500 investment fund for blockchain and Web3 technologies. In announcing He’s new role, CZ said it was “the perfect moment” for her and the company. “This market presents an unparalleled opportunity to identify those projects with the tenacity to thrive in tough market conditions,” CZ said.
Melody Brue, analyst with Moor Insights & Strategy, said He is known for being “strategic, but aggressive.” That’s also how Wang describes her, noting how He has emerged as a major female figure in “a very male-dominated space.”
“Many executives have underestimated her fierceness and resolve to win,” Wang said. “She’s learned to round out her rough edges, and folks value the continuity in her approach.” Wang said she can be “a hard person to work for,” according to friends of his who work for her.
“But you work hard and you also get rewarded,” he said. “She’s got super-high standards. She’s ultimately tough but fair.”
He’s aggressiveness could pay off in a key area for Binance: dealing with regulators. Wang said she’s “not afraid to jump into the fire.”
“Instead of shunning regulators, she’s been going head-on and engaging them,” he said. “She knows the winners in crypto will be regulated.”
It’s an issue that’s top of mind for He in her new role. “A lot of people feel, ‘OK, it’s a bear market. It’s a crash. It’s time to buy,’” she said. But He said she wants to pick her targets well, going after companies based on what Binance needs now.
With regulation a major concern, it makes sense to buy a company with the needed licenses: “That’s valuable,” she said.
“If they don’t have a license, if they don’t have a user base, and [they] lose money every month, and you buy it, it’s [like buying] a bigger hole, and you’re just continuing to lose money,” she said.
Brue said the downturn offers many opportunities “to pick from the rubble.” The Binance co-founder “has been through bear markets before and, like many VCs in crypto, sees the long view,” Brue added.
Patience will be key, He said: “It takes time to grow bigger. We are far from being successful. Forward thinking, fast executing and risk awareness will eventually take us there.”
Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.
The Knight First Amendment Institute just lost a battle to force the Biden administration to provide a report on the collection of social media handles from millions of visa applicants every year.
Visa applicants have to give up any of their social media handles from the past five years.
Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email: akramer@protocol.com), where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.
Would you feel comfortable if a U.S. immigration official reviewed all that you post on Facebook, Reddit, Snapchat, Twitter or even YouTube? Would it change what you decide to post or whom you talk to online? Perhaps you’ve said something critical of the U.S. government. Perhaps you’ve jokingly threatened to whack someone.
If you’ve applied for a U.S. visa, there’s a chance your online missives have been subjected to this kind of scrutiny, all in the name of keeping America safe. But three years after the Trump administration ordered enhanced vetting of visa applications, the Biden White House has not only continued the program, but is defending it — despite refusing to say if it’s had any impact.
On Monday, in response to one of two lawsuits filed by the Knight First Amendment Institute, the State Department refused to release a report detailing the effectiveness of enhanced vetting, which requires the nearly 15 million people who apply for U.S. visas annually to hand over all social media handles they used in the prior five years. That includes anonymous accounts, private ones, public ones and those they barely use.
Putting aside the ethical quandary of whether a visa-processing official can be trusted to judge someone’s intent from their internet presence, the policy might be illegal, according to a complaint filed by the Knight First Amendment Institute in December 2019 in the District Court for the District of Columbia. The Knight Institute — affiliated with Columbia University — accused the government of hobbling the free speech not only of people seeking to enter the U.S., but also of those already here.
“We think this violates the First Amendment,” Anna Diakun, a staff attorney at the Knight Institute, told Protocol. “It chills the speech and association of not just the visa applicants — many of whom have expansive ties to the United States — but also the people in the United States who want to engage with them.”
The policy conditions someone’s “ability to obtain a significant benefit (a U.S. visa) on their willingness to register their online speech and associations with the U.S. government,” Knight Institute attorneys wrote in a brief. In essence, the Knight Institute argues that the procedure and the cascading decisions it creates for visa applicants casts a pall over speech for countless individuals.
The State Department and Department of Homeland Security have moved to dismiss the Knight Institute’s suit. Photo: Yasin Ozturk/Anadolu Agency via Getty Images
The State Department did not respond to requests for comment. Attorneys for the Department of Justice, on behalf of the State Department and the Department of Homeland Security, have moved to dismiss the suit and allege that the Knight Institute does not have standing or a valid First Amendment claim.
“The social media policy passes constitutional muster,” attorneys for the agencies wrote in a June 10 brief. “The policy plausibly relates to the Executive Branch’s goal of strengthening screening and vetting protocols for foreign nationals who seek to enter the country, especially with regard to ‘detecting foreign nationals who may commit, aid, or support acts of terrorism and […] preventing those individuals from entering the United States.’”
The Trump administration implemented social media screening in 2019 after proposing it alongside other new immigration policies, including the infamous restrictions that became known as the Muslim travel ban. While President Biden revoked the Muslim travel ban upon taking office, he kept the social media vetting in place and pledged a report on the impact of the policy.
A little over a year later, in February 2022, the Biden administration proposed expanding the program to include nearly everyone who travels to the United States without a visa, such as those who are not required to obtain visas as they’re staying 90 days or fewer. That proposal is still awaiting approval or rejection from the Office of Information and Regulatory Affairs. Customs and Border Protection justified the proposed expansion as a way to “enhance our vetting processes and assist in confirming applicants’ identities.”
The Knight Institute has filed two lawsuits in response to the social media policy: one seeking to have a federal judge throw it out, and the other demanding that the Biden administration release its report on the policy’s impact. A judge has yet to rule on the request to have the policy declared invalid.
In response to the other lawsuit, the Biden administration cited several Freedom of Information Act exemptions for keeping the report private, including one that allows the president to withhold documents used solely for presidential decision-making.
“We expect that the report does address whether or not this is effective — if there are benefits, what they are; if there are costs, what they are. And we think the public deserves to know this information,” Diakun said.
The Knight Institute is negotiating with federal attorneys to try to release other related documents, such as emails about the report’s conclusions, and will eventually try to fight the government’s refusal to release the full report.
As for the Knight Institute’s attempt to have the entire policy thrown out, Diakun said there’s no telling when the judge will rule on that.
Even if the social media handles are used just to verify identity, the Knight Institute attorneys and those they represent — filmmakers for two documentary organizations — fear the longer-term consequences of social media collection. Those records aren’t deleted after someone enters the country, but are instead stored by DHS in an immigration file system for 100 years after someone is born. Other U.S. federal agencies can sometimes access that information, and other countries have information-sharing agreements with DHS that could potentially give them access to the same data, according to the lawsuit.
“We think that requiring 15 million people a year to turn over this information is wildly overboard and unnecessary,” Diakun said.
Finally, legality aside, there’s that simple ethical question about the stated use of a policy that, to most U.S. citizens, sounds far-fetched and even dystopian.
“Take bias of the reviewers, linguistic challenges, not understanding cultural context, misunderstanding hyperbole or sarcasm,” Diakun said. “We think it is a flawed way of trying to determine who is eligible for a visa.”
Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email: akramer@protocol.com), where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.
Blockbuster hacks are no longer the norm – causing problems for companies trying to track down small-scale crime
Chris Stokel-Walker is a freelance technology and culture journalist and author of “YouTubers: How YouTube Shook Up TV and Created a New Generation of Stars.” His work has been published in The New York Times, The Guardian and Wired.
Cybercrime is often thought of on a relatively large scale. Massive breaches lead to painful financial losses, bankrupting companies and causing untold embarrassment, splashed across the front pages of news websites worldwide. That’s unsurprising: cyber events typically cost businesses around $200,000, according to cybersecurity firm the Cyentia Institute. One in 10 of those victims suffer losses of more than $20 million, with some reaching $100 million or more.
That’s big money – but there’s plenty of loot out there for cybercriminals willing to aim lower. In 2021, the Internet Crime Complaint Center (IC3) received 847,376 complaints – reports by cybercrime victims – totaling losses of $6.9 billion. Averaged out, each victim lost $8,143.
Many identity thefts and online scams, however, net perpetrators even less: just a few hundred dollars. For just $25, cybercriminals can purchase a cloned VISA or Mastercard, plus its PIN. That card data opens a treasure trove for criminals, including locally purchasing gift cards, or other fencible commodities such as electronics and jewelry sold off at a discount.
“Criminals have two primary goals: making money and staying out of harm’s way,” says Nick Biasini, head of outreach at Cisco Talos. Cybercrime provides an attractive avenue for both. “The inherent risk associated with committing cybercrime-fueled fraud is far lower than selling drugs or other types of crime. Additionally, the margins are far better. A criminal can turn a small investment into big profits simply from buying stolen information and using it to commit some form of fraud. During the pandemic unemployment fraud has been a lucrative favorite of criminals. Plus by keeping the monetary values lower they are less likely to draw the attention of state and federal authorities.”
A growing problem for local law enforcement
Cyber criminals can attack virtually anyone from virtually anywhere, and cybercrime as a service, where the non-technically minded can hire tools to hack accounts without any specialist knowledge, has become commonplace. Even organized crime syndicates in Spain and Italy are getting into the game.
Federal authorities, usually alerted by IC3, put their scarce resources toward solving large-scale crimes. They work with financial institutions or corporations most impacted by specific breaches. This means the majority of crimes – with their far smaller paydays – tend to fly under the radar.
A look at the data
But some companies are tracking the rise of small-scale cybercrime. Cisco Talos analyzes data to spot trends that help its incident response team alert customers to potential cybersecurity attacks, and then respond and recover to breaches rapidly.
It has found while drug felonies over the last eight years dropped drastically, before stabilizing during the pandemic, cybercrime has shot up. From 2015 to 2021, the number of reported cybercrimes nearly tripled, and losses soared nearly fivefold.
“Criminals today have a far better technical understanding then they did five or ten years ago,” says Biasini. “Additionally, it shows how they really understand inherent risk, it’s just safer to commit fraud and cybercrime than it is to sell drugs. As an added bonus, they also have become proficient in cryptocurrencies, providing alternative avenues for purchasing illicit goods and money laundering.”
Source: New York Police Department
Source: IC3 2021 Internet Crime Report
An evolving challenge
If this trend continues, the emerging wave of cybercrime will look less like epic breaches and more like scamming citizens out of their tax return or signing them up for fraudulent unemployment benefits. Those two crimes already rank in the top five of identity theft types for 2021, with unemployment scams leading the pack.
How, then, can we expect local law enforcement to possibly keep up? After all, they’re already busy policing and prosecuting what most people consider ‘real world’ crimes. Cybercrime is an entirely different problem. It requires pouring over data both from the criminal themselves and the victims they target with their fraud, trying to somehow build a solid, forensically sound case.
“Cisco Talos has always worked closely with local, state, and federal law enforcement organizations to help them succeed in their tasks,” says Biasini. “We are always willing and able partners to help take cybercriminals off the streets. We provide law enforcement with information we uncover during our investigations and oftentimes lend our people, processes, and technologies to help investigations already underway.”
One solution is for local law enforcement to identify staffers in their ranks with an aptitude for online sleuthing. Cybercrime units are perfect for people who have a research bent, because digital detective work is a big part of the job.
Another alternative forces are pursuing is recruiting young people from computer science programs, or tasking high schools with helping train up a new generation of defenders with the mentality and skills to turn what today is a sideline for police into a mainline function. It’s already happening worldwide: in the UK, a $7 million government program led to the creation of cybercrime units in every police force in England and Wales.
And we’re seeing it here too in the United States. Several organizations have stepped up as resources for law enforcement. Every state has at least one agency devoted to helping police fight cybercrime. And the National Computer Forensics Institute offers courses, both in-person and virtual, to train basic and advanced examiners, first responders, and prosecutors and judges.
It’s all in the aim of trying to crack down on small time cybercrime, preventing the small leaks that turn into a torrent of losses that we know about from thousands of years of history.
People have been swindled since before man created monetary systems. These aren’t new crimes; just new ways to commit them. But as cybercrime increasingly goes small-time, those on the front lines will need new and more effective ways to fight it.
Read the detailed blog on the shifting trends in small time cybercrime in Nick’s blog here. Click here to get to know Cisco Talos, the industry-leading threat intelligence group fighting the good fight.
Chris Stokel-Walker is a freelance technology and culture journalist and author of “YouTubers: How YouTube Shook Up TV and Created a New Generation of Stars.” His work has been published in The New York Times, The Guardian and Wired.
The Biden administration will attempt to roll back China’s chipmaking abilities by blocking tools that make a widely used type of transistor other chipmakers have employed for years.
By using a specific, fundamental building block of chip design as the basis for the overall policy, the White House hopes to both tighten existing controls and avoid the pitfalls around trying to block a generation of manufacturing technology.
Max A. Cherney is a senior reporter at Protocol covering the semiconductor industry. He has worked for Barron’s magazine as a Technology Reporter, and its sister site MarketWatch. He is based in San Francisco.
The Biden administration has for several months been working to tighten its grip on U.S. exports of technology that China needs to make advanced chips, with the goals of both hurting China’s current manufacturing ability and also blocking its future access to next-generation capabilities.
According to two people familiar with the administration’s plans, President Joe Biden’s approach is based around choking off access to the tools, software and support mechanisms necessary to manufacture a specific type of technology that is one of the fundamental building blocks of modern microchips: the transistor.
To achieve its objectives, the administration has elected to work to block China’s access to transistors that use a specific design called FinFET. The plans include blocking domestic exports of tools that are capable of printing chips with FinFET transistors, while also preventing the tool makers — such as Applied Materials, Lam Research and KLA — from servicing or supporting equipment they have already sold to various Chinese companies, according to the sources.
Big chip manufacturers achieved high-volume production of the transistor technology targeted by the Biden administration roughly eight years ago, but it is still widely used today to manufacture advanced chips designed for servers and iPhones alike. China’s largest chipmaker, SMIC, disclosed in 2019 it recently began high-volume production of FinFET-based chips.
“Officials walk a very fine line between too much control and too little control,” William Reinsch, senior adviser and Scholl Chair in International Business at the Center for Strategic and International Studies, told Protocol. “You control too little, and then bad guys can get stuff you don’t want them to have. You control too much, and what you end up doing is kneecapping your own industry, because you deny them the revenue they need to invest in next-generation production.”
By using a specific, fundamental building block of chip design as the basis for the overall policy, the White House hopes to both tighten existing controls and avoid the pitfalls around trying to block a generation of manufacturing technology.
Yet in some corners of the industry, the administration targeting of FinFET transistors hasn’t been clear. Prior reports have pointed to the Biden administration’s plans to choke off China’s access to tech used to make chips with a 14-nanometer or below manufacturing process, which has led to industry insiders questioning how effective that approach might be.
According to chip industry experts, using the nanometer naming conventions as the basis to block tech exports has a key problem: At one point the names referred to the size of a specific feature on a chip, but today they are just marketing terminology. Intel’s 22-nanometer manufacturing process used FinFET transistors, for example, while TSMC and Samsung didn’t adopt FinFET designs until they produced chips with a 14-nanometer process or 16-nanometer process.
“How do you actually classify equipment and say, this can process 14-nanometer and smaller — because there is a lot of equipment that can also process 28 nanometers,” Gartner analyst Gaurav Gupta said. “And if the same tool can also process a smaller node, does it really qualify within that export control or not? That’s why when you set up these definitions, there are obviously some loopholes.”
The Biden administration’s feature-specific approach for logic chips — the type of silicon that powers data centers, smartphones and PCs — narrows the Trump-era strategic decisions. Under former President Donald Trump, the White House and federal agencies largely continued policies the Obama administration had begun, such as adding SMIC to the U.S. entities list, according to one former Commerce Department official.
The Trump administration also worked to block China from obtaining a technique called extreme ultraviolet lithography, used for next-generation chipmaking. EUV tools are exclusively manufactured by Dutch firm ASML, but the administration was able to convince the Netherlands to block ASML from selling the equipment to China because one of the vital submodules is made in California. Without that component, ASML can’t build the EUV machines.
“There’s a certain part of technology intellectual property which belongs to the U.S.,” Gupta said. “And that’s why they’re able to control and stop ASML. But they’re also pushing [the Dutch government and ASML] to stop exporting [deep ultraviolet lithography] to China, but the U.S. doesn’t really have control over the IP.”
Adding similar restrictions for the EUV’s older sibling, deep ultraviolet lithography — machines made by ASML but also Japanese competitors — will likely be more difficult. Despite reports indicating the Biden administration intends to halt DUV equipment sales to China, it’s not clear if the U.S can succeed with that objective, Gupta said. One of the people familiar with the administration’s plans said the White House is attempting to get allies on the same page to block FinFET equipment.
The portion of the chip industry that will feel the restrictions most acutely is the collection of businesses that build the various manufacturing tools and systems. China is a big chunk of U.S. equipment makers’ business, representing roughly 30% of revenue for companies such as KLA, Applied Materials and Lam Research.
Part of that China revenue derives from the service and support necessary to keep the advanced tools humming along, pumping out working chips. As the tools become increasingly complex, they require more service, and teams from the tool makers are frequent visitors to chipmaking factories around the world. That’s not to mention software upgrades and other optimization that equipment requires. In its most recent quarter, for example, Applied Materials reported that about 22% of overall revenue came from its services and support operation.
Of the major U.S. tool makers, two — KLA and Lam Research — recently disclosed in earnings calls that they had received notification from the Commerce Department about tool exports to China. Though Applied hasn’t yet disclosed that it has received a notification letter, industry sources said that it likely has or will soon. The notifications were something of an opening effort, according to one of the people familiar with the administration’s plans, and the White House intends to follow the notification letters it has already sent out with an additional export control rule in the coming weeks and months.
Despite the likelihood of the U.S. government implementing further restrictions, Wall Street isn’t too worried about the potential damage to the tool makers’ business in either the short or the long run.
“I think it’s fairly neutral because the demand is going to be there — so whatever can’t be built in one geography [is] going to get built into a different one,” Baird analyst Tristan Gerra said. “I think that it’s going to be fairly neutral for the equipment companies, but the Chips Act is clearly going to really drive an expansion of capacity in the U.S.”
Max A. Cherney is a senior reporter at Protocol covering the semiconductor industry. He has worked for Barron’s magazine as a Technology Reporter, and its sister site MarketWatch. He is based in San Francisco.
A closer look at the company’s nascent gaming initiative suggests big plans that could involve cloud gaming and more.
Netflix’s acquisitions in the gaming space, and clues found in a number of job listings, suggest it has big plans.
Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety’s first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.
Netflix’s foray into gaming is dead on arrival — at least according to the latest headlines about the company’s first few mobile games.
“Less than 1 percent of Netflix’s subscribers are playing its games,” declared Engadget recently. The article was referencing data from app analytics company Apptopia, which estimated that on any given day, only around 1.7 million people were playing Netflix’s mobile games on average.
It’s true: Netflix has yet to release a true blockbuster game, and its small but growing catalog of mobile games isn’t nearly as popular as some of its biggest shows and movies. However, the company’s gaming efforts are on an upward trajectory, according to data mobile intelligence company Sensor Tower recently shared with Protocol. In fact, July was the best month yet for Netflix’s gaming efforts.
“Netflix is really just at the beginning of implementing its strategy for a new games business, and it’s not off to a bad start,” Sensor Tower mobile insights strategist Craig Chapple told Protocol. “With an increasing portfolio of globally recognizable entertainment IP, there’s a lot of potential here.”
Netflix itself has kept mum on key aspects of its gaming strategy, but the company’s acquisitions in this space, and clues found in a number of job listings, suggest it has big plans, which appear to include building its own cloud gaming infrastructure. Ultimately, these plans could make the first few months of Netflix’s gaming initiative, with its relatively modest usage numbers, look like a trial run.
Netflix’s foray into mobile gaming began in earnest in November. Since then, the company has published a little over two dozen games for iOS and Android and has plans to nearly double its games catalog by the end of the year. Since November, the company’s games have been downloaded around 17 million times on iOS and Android, according to Sensor Tower estimates.
Downloads actually declined this spring, but got a significant bump from the release of the latest season of “Stranger Things” on Netflix. The company has acquired and published two “Stranger Things” mobile games, both of which saw a significant boost in downloads after the fourth season of “Stranger Things” premiered on the service in May.
Stranger Things: 1984 and Stranger Things 3: The Game continued to be the two most popular Netflix games in July, followed by Netflix Asphalt Xtreme. Altogether, Netflix’s games were downloaded 2.9 million times in July, according to Sensor Tower, making it the best month yet for the company’s gaming efforts.
There are a few things worth noting about these numbers, aside from the fact that they are third-party estimates. Many of the games published by Netflix are actually being re-released, and some already had sizable audiences before the company acquired them, which likely has an impact on the audience the titles are now attracting.
Stranger Things: The Game was published by BonusXP in October 2017, and accumulated close to 14 million downloads before it became a Netflix title. Asphalt Xtreme was published by Gameloft in October 2016, and clocked nearly 40 million downloads before Netflix re-released it, according to Sensor Tower estimates.
Netflix also hasn’t done a whole lot of promotion for these games, as Chapple pointed out. “It appears that the company is not investing heavily in user acquisition,” he said. “Large marketing campaigns are typically how the world’s top mobile titles become so popular and successful.”
And finally, comparing Netflix’s video audience to its games audience should come with a notable asterisk: It may well be that only 1% of Netflix subscribers are daily active users of its games. However, the company’s games library is also an order of magnitude smaller than its video library, which currently consists of nearly 3,800 movies and over 2,100 TV shows, according to JustWatch.
Aside from a few remarks during earnings calls earlier this year, Netflix has said little about its game initiative. “We’re still intentionally keeping things a little bit quiet,” acknowledged Leanne Loombe, who is heading the company’s efforts to license games from external partners, during a June Tribeca panel. “We’re still learning and experimenting and trying to figure out what things are going to actually resonate with our members,” Loombe said in remarks first reported by Variety.
Loombe said the company was still experimenting with how to best surface games to its subscribers. Netflix is using mobile as an on-ramp to more easily get feedback and evaluate what’s working to then fine-tune its games catalog over the coming years, she said.
That strategy is also echoed in a variety of job listings for positions within Netflix’s nascent games division. Multiple listings mention that the company is looking to “launch games fast at minimal cost, learn fast, and iterate quickly.” As part of these efforts, Netflix is looking to build a Game Studio Tech Lab team, which will be tasked with rapidly prototyping “smaller, experimental games and projects.” Applicants for open positions on that team are expected to have “passion for making video games, especially in a rapid, focused, smaller form vs multi-year investments.”
That’s very different from the way Amazon initially approached the space. The ecommerce giant created its own studio as part of a multiyear push into gaming, and the company invested hundreds of millions of dollars into its own AAA titles. Amazon’s game developers worked six years on the company’s first title, Crucible, only to pull the plug on it after an unsuccessful beta test in 2020.
Amazon has since refocused its efforts around live service games like New World and the successful Korean multiplayer game Lost Ark, and Amazon has also been working with publishers to populate its Luna cloud gaming service. Both of those strategies appear to be on Netflix’s road map as well: The company hired a head of live services in June and has been looking to fill technical roles for a push into cloud gaming for a few months now.
“We are looking for a rendering engineer to support our cloud gaming service,” one of the related job listings reads. Applicants will “help optimize the rendering of games so we can render multiple games on our cloud gaming appliances” and “assist with the development of SDKs to enable game developers to succeed in writing high-quality games for the Netflix cloud games ecosystem.”
Cloud gaming could help Netflix expand beyond mobile, and smart TVs in particular could provide Netflix with a massive growth vector. The company’s app is already pre-installed on virtually every new smart TV sold. It also could help the company find a way to the TV screen without having to deal with the gatekeepers of the major console app stores — something Loombe alluded to when she talked about the “friction that might exist [on non-mobile] platforms.
Netflix has acquired three game studios over a six-month period, and it spent $72 million on Next Games alone. Netflix COO Greg Peters called these acquisitions “a key part of our strategy to … produce the games titles that we think are really going to unlock value for our members” during the company’s Q1 2022 earnings call. Peters went on to describe Netflix’s goal as building franchises that span across movies, TV shows and games. “To deliver on that, we think the internal development capacity is going to be key,” he said.
For Netflix, those acquisitions aren’t without risk. The company has long resisted the urge to acquire tech IP and teams and opted to build its own technology in-house instead. Without a history of mergers and acquisitions, Netflix may find itself unprepared to deal with culture-clash issues as it absorbs the newly acquired entities.
Drake Star CEO and managing partner Greg Bedrosian, whose company has brokered M&A deals for multiple game studios and other entertainment companies in the past, still thinks it was smarter for Netflix to buy than to build. “Often the most successful strategy is to make one or two thoughtful acquisitions,” Bedrosian told Protocol recently. “In my experience, that seems to work better than just organically trying to enter a new market like that from scratch.”
By acquiring a few studios at the onset, a company like Netflix isn’t just getting its hands on content and IP, but also at the DNA necessary to better understand the space, Bedrosian said. The fact that Netflix doesn’t have much institutional M&A history could actually help it make those deals count. Other companies have built what Bedrosian called “great M&A machines” capable of ingesting companies, but not necessarily striking transformative deals.
Ultimately, it’s important that acquisitions that are meant to help a company build out a new line of business have buy-in from the highest levels, Bedrosian said. “If there’s that board and CEO commitment, that’s when we tend to see those strategic deals getting done in an intelligent way.”
At Netflix, that buy-in appears to exist, at least for the time being. “We’re going down the game path because I think it fits us really nicely,” said co-CEO Ted Sarandos during Netflix’s Q1 earnings call. “Our ability to tell stories and build worlds are very consistent with our existing skill set and culture, and we think that we can build a big revenue and profit stream by adding games.”
That revenue stream will take time to manifest itself. “Netflix will need at least a couple of years to really build up its games division into a serious business,” said Chapple. Not helping the matter right now are a number of external economic pressures facing the gaming market, with analysts now forecasting a decline this year, and new Apple privacy features that have made advertising, and by extension user acquisition, more difficult for mobile game developers.
Still, executives seem clear-eyed about Netflix’s timeline. Peters pointed out during the Q1 call that the company was on a “long road” to build franchises that encompass both linear entertainment and games, which he described as the “multiyear vision” behind the push into gaming.
Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety’s first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.
Zoom employees disclose whether it’s OK to ever eat on camera.
Zoom employees — Zoomies — have their own ways of using the tool.
Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She’s a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school’s independent newspaper. She’s based in D.C., and can be reached at llawrence@protocol.com.
Ever wondered how the companies behind your favorite tech use their own products? We’ve told you how Spotify uses Spotify, how Meta uses Meta and how Canva uses Canva. In this installment, we talked to Zoom execs about how they use Zoom.
Sam Kokajko has been in up to eight Zoom meetings at once. Someone else on the Zoom events support team has a simultaneous Zoom record of 36. Even with all the handy Zoom tips in the world, I’m not sure my brain could take that much stimulation. It’s part of the job, though, when coordinating large-scale events via the platform.
“All of us have our different Zoom calls, bringing the audio and video back and forth, but we also have another Zoom call that we’re on, that we call our comms call, to communicate with each other,” Kokajko said.
Most Zoom employees are not in this many meetings at the same time. But they are inside Zoom more than your average worker, and thus have valuable insights into the best ways to use the tool. Protocol spoke with employees across Zoom about how best to run hybrid events, Zoomie etiquette and whether it’s socially acceptable to eat on camera.
A major televised event or even just a corporate keynote is typically managed by a huddle of people controlling the video on set. Kokajko runs an entirely remote operation, organizing feeds and team members from all over the country. The event services team consults customers on everything from small business webinars to awards ceremonies like the Emmys. On the side, the team also runs internal Zoom events. The events team is in constant communication while producing events, using screen share and remote control to collaborate on what feed to show the audience.
“Zoom has allowed us to take what used to be a centralized control room and ‘video village’ where everyone’s working and distribute that all over the country and world to work on these events in tandem,” Kokajko said.
Presenting for both remote and in-person audiences is still a relatively new challenge, and one Kokajko spends pretty much all his time tackling. He has to pull remote speakers, studio audiences and virtual participants together into one cohesive event. Kokajko’s team was behind a Zoom “Innovators at Work” series last year in which, with the help of a green screen and virtual set, presenters in New York and Australia appeared to be sitting across from each other.
For all Zoom events, Kokajko is focused on ensuring everyone has equal opportunity to participate. “If someone has an ability in a session to get on a mic and say something in the room, then someone in a virtual audience should have the ability to ask that same question,” he said. Keeping the chat open for active audience engagement is crucial, he said. Zoom always displays a QR code for live audiences to scan and enter the chat, too.
Kokajko, who’s worked remotely for Zoom over the past five years, was the mastermind behind Zoom’s virtual holiday party last year, opening several Zoom rooms with different activities: virtual poker and a cake-decorating competition, to name a few. Zoom teams took photo booth-esque pictures in front of virtual backgrounds. It’s too soon to tell what format Zoom’s holiday party will be this year, but Kokajko “can’t imagine any events that don’t have a virtual component going forward.”
The other day, one of Sharvari Nerurkar’s team members was eating during a meeting and decided to use the Zoom panda avatar to hide their face. Avatars are one of the ways Zoom employees try to have some fun with the platform. In this case, the avatar was socially convenient as well — though Nerurkar doesn’t have a problem with people eating on camera.
“When I used to go to the office, I would eat sandwiches in a meeting,” Nerurkar said. “I’m taking that forward. As long as you’re not eating chicken wings.”
Nerurkar, the head of Zoom’s chat product, is all for flexibility when it comes to meeting etiquette. There is no formal set of rules inside the company. Everyone is expected to act like an adult, of course, but turning yourself into a fox with a hoodie is fair game. “In customer meetings, we try to, for example, coordinate our background,” Nerurkar said. “But I have never seen a meeting or an event where I said to myself, ‘Man, we need to publish some rules.’”
There are some meeting rules Zoomies abide by. For example: send written materials at least 24 hours before a scheduled meeting; don’t hold meetings on Wednesdays. Nerurkar accidentally invited CEO Eric Yuan to a Wednesday meeting once. He declined (and she won’t make that mistake again).
Zoom is firmly in the American lexicon at this point — so much so that even the newest Zoomies know the product well. Nicole Perzigian, Zoom’s global emerging talent program leader, said the interns and new graduates come in with a solid Zoom knowledge. Perzigian started Zoom’s first-ever early in career program a year and a half ago. Her team used Zoom’s events platform to onboard about 155 new grads in the U.S. and 60 in India.
“Everyone knew Zoom, which is great,” Perzigian said. “But what I have to do as a leader is prove what these interns and new graduates can come and learn at Zoom. I find myself making sure they know this is the brand we want. You’re going to come in and do meaningful, impactful work.”
Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She’s a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school’s independent newspaper. She’s based in D.C., and can be reached at llawrence@protocol.com.
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