Marketplace - American Public Media

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Updated: 33 min 21 sec ago

Why the Reddit CEO stepped down

Thu, 2014-11-13 11:00

Reddit CEO Yishan Wong stepped down Thursday. In a blog post, investor Sam Altman said the departure was over a fight with the board about a new office.

That's right: Wong didn't get the office he wanted so he quit.

"To be clear, though, we didn't ask or suggest that he resign — he decided to when we didn't approve the new office plan," Altman explained.

Whether this is actually what happened or just corporate nonsense is up for the debate.

 

Why toymaker Hasbro could buy DreamWorks Animation

Thu, 2014-11-13 08:27

Deadline Hollywood reported this week that Hasbro—the second-largest toy maker in the United States—is in talks to acquire DreamWorks Animation. 

DreamWorks Animation has been looking to get acquired—a deal with Japanese SoftBank fell apart just last month. And Hasbro has been looking to get more involved in the movie business. 

But why? 

For DreamWorks Animation, part of it is a need to diversify beyond a marketplace for movie ticket sales that is increasingly challenging, especially for computer animated films.

"Like any technology, it's become easier, cheaper and faster," says Phil Contrino, chief analyst at BoxOffice.com. "So what that means is there's more competitors than in 1995, when Toy Story came out."

Now, DreamWorks Animation competes not only with Toy Story's Pixar, but with Sony and Universal, with its "Despicable Me" franchise. 

As DreamWorks Animation has sought more revenue elsewhere, it has, in part, turned to merchandise. This is a business where Hasbro has excelled, with profits bouyed by toys based on the Star Wars movies and those of Marvel comic books, like Spiderman and Iron Man. 

But it also works the other way around. Hasbro has profited off games and toys that have turned into movies: GI Joe, Ouija and—most of all—Transformers. 

"The Transformer movies have been very lucrative not just because of the toy side but also because the toy side provided the [intellectual property] to make movies which did very well at the box office," says Martin Brochstein, senior vice president of industry relations and information at the International Licensing Industry Merchandisers' Association.

This trend can be seen throughout the toy industry. "Mattel, Hasbro, Lego have kind of turned on to the fact that they have this asset that can be mined," says Brochstein. 

In other words: Toys are the new comic books.

PODCAST: Movies become child's play

Thu, 2014-11-13 03:00

We know that unleaded is less than $3 dollars a gallon on average now. The Department of Energy is now saying it'll stay that way for 2015. More on that. And a Hollywood trade publication Deadline.com was first to report that the toymaker Hasbro is in talks to buy DreamWorks Animation. More on the move to make movies out of toys. Plus, we take a look at a new book that shows how a currency crisis was pivotal to the history of George Washington, and to the United States as we know it.

World of Warcraft competes in a 'freemium' world

Thu, 2014-11-13 02:00

The latest incarnation of the World of Warcraft video game is released Thursday. The PC-based online multi-player game is among the most popular with more than seven million subscribers, who pay a fee up-front to join the game.

But the subscriber base is down from a peak of 12.3 million in 2010. That decline is opposite the rest of the video gaming industry, which has seen rapid growth—four times that of the rest of the U.S. economy, according to industry data.

A lot of the growth has been in free mobile game apps—so-called freemium apps, which mobile consumers can download for free, but which entice players to pay for extras inside the game.

"The question of whether or not free to play is evil, is of course a fair question,” says Joost van Dreunen, who heads SuperData Research, a firm that tracks the video game industry. Van Dreunen says a lot of game designers themselves refer to "freemium" apps as "evil."

But despite any misgivings or criticisms, growth of mobile has changed video games, says van Dreunen, to the point that “only 20 to 25 percent of games in the app stores are charging people up front." 

And Brian Blau, research director at the technology-focused firm Gartner, says the free-to-play model is expanding. 

"There are many games across all platforms that are looking at the free-to-play monetization model as their ticket for the future,” says Blau.

That may mean a lot more freemium games, and certainly a continued growth in the mobile market, as the global video games industry is forecast to hit the $100 billion mark by 2017. 

Average college student debt on the rise

Thu, 2014-11-13 02:00

New statistics on student loans show the cost of newly minted bachelor’s degrees continuing to rise. The latest report from the Institute for College Access and Success says the average debt for undergraduates sits at $28,400, up 2 percent from last year.

But the people with the really big debt loads are not the ones to worry about.

Across the country, student debt levels vary widely, from student to student and college to college. Lauren Asher, president of the institute, notes that even though the rate at which tuition is increasing is going down, “that’s still growth on top of growth on top of much-faster growth before—far exceeding inflation, let alone where family wages are.”

Asher says that even as unemployment rates among college graduates improve following the Great Recession, loan defaults still continue to rise.

But those students with the highest debt are typically entering more lucrative career fields. 

“The people with the largest debts are the ones who went to professional school,” says Susan Dynarski, an economist at the University of Michigan. “They’ve got a B.A. already, typically the default rate for that group of students is about 3 percent.”

Compare that with students with just a bachelor’s degree defaulting at 16 percent, and even higher for those who drop out before graduating.

An apartment in the sky, for just $20,000 one-way

Thu, 2014-11-13 02:00

Have you ever day-dreamed about flying first class and getting those precious extra inches of space? Well, how about 125 square feet of space? 

Abu Dhabi-based Etihad Airways is offering what it calls the first-ever apartment cabin on an airplane, called “The Residence.” It has three rooms—a living room, bedroom and bathroom—and comes with a butler and personalized cuisine provided by an on-board chef. 

Among the other amenities are a two-seat reclining leather sofa, a chilled mini-bar, two LCD TVs and a shower in the bathroom. The bedroom boasts a double bed with Egyptian cotton sheets. 

The service is aimed at the ultra rich of the Persian Gulf. The airline says the experience is comparable to staying at a fine hotel, traveling by yacht, or having a private jet. 

It also costs $20,000 for a one-way ticket. 

“These are societies where there are some of the highest proportion of millionaires and billionaires per capita anywhere in the world,” says David Andrew Weinberg, a senior fellow at the Foundation for the Defense of Democracies, who specializes in the Persian Gulf region. 

The three big airlines in the region all have ties to the area’s monarchies, says Weinberg.

“All of these are prestige projects for principalities in the Gulf," he says. "It’s an outbidding contest of who can build the most luxurious new feature.”

But the airlines are also an important part of the region’s future economic plans. Those billionaires and millionaires were created through oil wealth. The oil will run out eventually, and Weinberg says the area’s governments are trying to build up industries, including airlines, that can take over.  

The 10-year-old Etihad Airways became profitable only a couple of years ago. In 2008, it spent $43 billion to purchase new airplanes. It has 220 aircrafts on order, including 10 Airbus A380s and 71 Boeing 787 Dreamliners. 

It is building one residence apartment in each of the new Airbus A380s that come into service, the first of which will be active in December. The apartment is first being offered on a London/Abu Dhabi route, but the airline plans to expand the service to New York, Paris, and other cities. 

“International airlines are leading the way in super-premium services,” says Andrew Schmahl, an airline industry consultant with the firm Strategy&.

Etihad Airways is competing with a host of international carriers, which are all trying to out-luxury each other. Etihad’s competitor Emirates Airlines announced it also plans to offer apartments on some of its planes.

The first-class amenities on international airlines are starting to trickle down to U.S. carriers, as well. Amenities such as lie-flat beds, higher end cuisine that can be custom ordered, and even luxury cars that ferry first-class passengers between connecting flights. 

Schmahl says airlines are willing to offer high-end luxury service to their first-class passengers, because while competitive pressures keep prices down for the vast majority of travelers, first-class passengers are willing to pay more for better service—and that means higher profit margins for airlines. 

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