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Xbox and the future of gaming

PLUS: This startup is doing grandkids on demand.
September 28, 2020
The Hustle

In one of the bigger tweets over the weekend, MMA superstar Conor McGregor wrote: “Anyway all water under the bridge who gives a fook. I’m boxing Manny Pacquiao next in the Middle East.”

We’re definitely excited about the match, but probably 1000x more excited by the fact that: 1) Pacquiao plans to donate part of his take to COVID-19 relief; and 2) McGregor actually typed the words, “who gives a fook.”

The Big Idea

PlayStation and Xbox are making very different bets on the future of gaming

Console gaming is back in the spotlight, with major announcements in recent weeks:

  • Sony will release its new PlayStation 5 on November 12 (starting at $399.99)
  • Microsoft will release its new Xbox Series S/X on November 10 (starting at $299.99)

These releases come after Sony mercilessly (without mercy) trounced Microsoft in the previous round of the console wars.

Since 2013, the PlayStation 4 has sold a remarkable 100m+ units

In comparison, Microsoft’s last-generation console — Xbox One — moved less than 50m units.

Tech writer Ben Thompson says there are a number of reasons that the PlayStation 4 was able to score a 2:1 sales advantage over the Xbox One:

  • Positioning: Sony treated its console as a niche gaming device whereas Microsoft wanted the Xbox to “take over the living room.”
  • Bets: Because Sony was focused on being a gaming console, it invested in exclusive titles for the PS4. Microsoft bundled in its motion sensor Kinect camera, which raised the XBox One price.
  • Digital Rights Management (DRM): When a game is downloaded, it is locked to the console. Microsoft tried applying the same policy to its physical game disks — an unpopular move it later reversed.

The gaming strategies are diverging

Per Thompson, Sony is staying true to its gaming niche and following the traditional razor (PlayStation 5) and blades (exclusive games, online services) model that has long defined consoles.

Conversely, Microsoft wants out of the (loss-leading) hardware business and is transitioning to a services model.

And it’s doing so by pushing Game Pass, a cloud gaming subscription starting at $9.99/month. It’s available on Xbox, but also for PC and Android phones.

Not Microsoft’s first pivot to subscriptions

When Satya Nadella became Microsoft CEO in 2014, he shifted the firm’s focus from its license-based Windows operating system to a cloud-based business built on recurring services revenue.

Since the shift, $MSFT’s market cap has increased more than 5x to $1.6T.

Microsoft is rolling out the same playbook for the Xbox, and its recent $7.5B acquisition of ZeniMax Media (Doom, The Elder Scrolls) will help further the strategy.

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  • Telepath is a new “kinder” social network that emphasizes content moderation (AKA no @ssholes). Founded by 2 ex-Quora employees, the startup is in beta.
  • Google will help employees with student loans by matching $2.5k in payments per year. In the race for tech talent, another perk never hurts.
  • OnlyFans isn’t just about tasteful nudes: People on the platform have started raking in extra money by selling cookies, hair, bath water, and other random products.
  • We are still skeptical of “+” signs in streaming service names, but Fast Company makes a good case for why they make sense.
  • The world’s most expensive potato chip comes from Sweden, and it will cost you $15 a pop.
Take Care

The gig economy is coming for elder care

If driving for Lyft isn’t cutting it for you, you can always become a “grandkid on demand.”

Papa, a platform that connects young people to elders in need, just closed an $18m funding round.

Its goal is to turn total strangers into star grandkids: on Papa, workers (called “pals”) help elders with things like cleaning and groceries, but also offer companionship.

Eldercare might be the future of the economy

Even before the pandemic, the US Bureau of Labor Statistics predicted that personal care aides would be the fastest-growing job category through 2026.

But now, with older people isolated from families and friends because of coronavirus health concerns, the need for caretakers has accelerated.

Not everyone has the chops to become a “pal”: Papa, which is now available in 17 states, claims that 20k people per month apply for a gig, but only 8% get approved.

The pay — $15 per hour — is admittedly a bit less than competing services. As we reported on Trends, Mon Ami — another elder-care gig platform — offers $20 per hour.

These aren’t your grandma’s robots

Other firms tackling elder care have banked on robots to feed (Secom’s My Spoon bot), bathe (Sanyo’s bathtub robot), and even dance with (Pepper) your grandma.

But some experts are concerned that going bionic might leave older people feeling lonelier — which is why the 100% flesh-and-blood humans that Papa offers are so important.

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“What’s your story?” 

It’s a simple question that can be surprisingly hard to answer.

But when it comes to your business, it’s one you need to have nailed down. Why? Because these days, customers have millions of options, so it’s often your story — not your product — that will make you stand out.

So, how do you “tell your story”? Here are some tips:

Explain why your business matters

According to Accenture, 63% of consumers prefer to purchase from purpose-driven brands. Not sure what your purpose is? Start by thinking about your mission and the type of people you want your company to serve and work back from there until you have a clear set of values.

Be real

Authenticity has never been more important to consumers. Don’t be afraid to sell yourself, but do it with honesty and transparency in mind — even if that means sharing your struggles. It may just help folks to relate to you and your brand even more.

Ready to develop your story? Read more from Square on how to tackle this challenge here:

Keep reading →
Bulking Up

Apparently, Costco doesn’t need ecommerce to bag record profits

You gotta respect Costco for staying consistent.

As the world turned to online shopping during quarantine, Costco’s ecommerce business barely budged from 5% to 8% of total revenue according to Business Insider (BI).

Even so, the discount wholesaler pulled in a record $4B profit (on $163B revenue) for its full fiscal year as shoppers stocked up on comically large jugs of cashews and other quarantine-friendly goods.

Costco’s digital offering is much less robust than competitors

Here is the competitive landscape according to BI:

  • Target plans to roll out its curbside pickup option to 1,500 stores by year-end
  • Walmart just unveiled its Walmart+ program, which offers free unlimited delivery (a la Amazon Prime)
  • Kroger has partnered with Ocado to build automated warehouses

Costco does offer some grocery delivery and dry goods through a partnership with Instacart. However, it doesn’t do curbside pickup and digital innovation is not a priority.

Shoppers are still happy AF

Costco’s membership-renewal rate hit 91% in its fiscal Q4. As The Hustle has previously noted, the company’s membership model strongly aligns its interests with those of its customers.

And, what are those interests right now (other than America’s cheapest 12-pack of canned tuna)?

Costco’s CFO says customers are redirecting their travel and dining money to “categories like lawn and garden, furniture, mattresses, exercise equipment, bicycles, housewares, cookware” and more.

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Green Gold

The future of avocados is cryogenic freezing

In Queensland, Australia, a next-gen Noah’s Ark is taking shape — and it’s piled high with frozen avocados.

After a year of failed experiments and a lot of “brown mush,” a researcher named Chris O’Brien just figured out how to cryogenically freeze avocados.

It’s all for a valiant cause: Ensuring that people in the distant future can continue to splurge on avo toast.

Avocados have been in danger for a while

Their popularity has shot up 7x since 2000. But droughts and wildfires have made the crop harder for farmers to grow.

Some avo-kingpins are warning that the fruit might be absent from shelves in just 25 years.

Which is where O’Brien comes in: He’s already frozen — then revived — 80 avocado plants at the University of Queensland. The next step would be to create a giant crypto-preservation archive, so even if all other avocados go extinct, O’Brien’s won’t.

So what does this mean for our future?

As the western US faces historic wildfires, tons of avocado plants will be burned through.

But no matter what happens, we can take some comfort in the fact that, if cryogenic freezing works, Walt Disney might get to add some avocado to his quesadillas in the year 2350.

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