Subscription platforms and the smaller cloud gaming services are just a tiny piece of the overall global games market.
Only games lag far behind in shifting away from traditional retail models and downloading toward subscription services and streaming.
Video games aren’t experiencing a Netflix or Spotify moment after all. At least not at anywhere near the pace that other forms of media adopted subscriptions and streaming over the last decade.
While subscription gaming services have been on the rise for the past few years, thanks largely to the growth of Microsoft’s Xbox Game Pass platform, the shift in consumer spending and consumption hasn’t followed. Instead, subscription platforms and the smaller cloud gaming services often bolted onto them make up a tiny slice of the overall global games market.
It may take years or perhaps even decades, alongside major advances in internet speeds and coverage as well as streaming technology, before these distribution methods supplant the traditional retail model in gaming. And for many popular titles that are given away for free and monetize entirely through in-game purchases, these models may never mesh well.
“I don’t believe that subscriptions will become the dominant monetization of the game sector as it has done progressively within the video and music sectors,” said Ampere Analysis researcher Piers Harding-Rolls at the Game Developers Conference last month. “79% of the total market opportunity in 2021, in terms of consumer spending, was based on in-game monetization. That means I think it’s very unlikely that we’re going to see a wholesale shift to subscription monetization.”
Subscription and cloud gaming represents just 4% of North America and Europe game markets, or roughly $3.7 billion, according to a recent study Harding-Rolls published at Ampere. Of the available services, only 5% are streaming-only offerings, while a majority (60%) use Xbox Game Pass.
The study found that most Game Pass users download their games and do not stream them at all. Harding-Rolls said he expects the combined subscription and cloud gaming market to grow to about 8.4% of the U.S. and European game markets by 2027, a far cry from the adoption of subscription services and streaming in the music and video markets.
This tendency to compare games with music and video makes sense. Games are a relatively new form of media, compared with film and recorded music, and yet all three simultaneously underwent the same forms of disruption caused by widespread internet access, digital distribution and the advent of streaming.
Yet only games lag far behind in shifting away from traditional retail models and downloading toward subscription services and streaming. That’s largely because of the complex economics of how games are funded, sold and monetized and the variety of styles, file sizes and length in entertainment hours they provide.
The music industry, due to complex factors involving piracy, digital distribution and the technical sophistication of streaming music files, embraced Spotify and other subscription platforms at much more rapid clip than other forms of media. After all, most songs are around the same length, and streaming an MP3 is a much lighter lift than a video or an interactive video game stream.
About 83% of all U.S. music revenue now comes from streaming services, according to the Recording Industry Association of America, and industry leader Spotify has more than 400 million monthly users and a 31% market share of the more than 500 million paying subscribers worldwide.
TV lags behind much further, in part because of the tangled knot of economic relationships at the heart of TV production and distribution. Streaming platforms like Netflix and Hulu account for only 26% of time spent watching TV, according to a report last year from research firm Nielsen, while most of America (64%) still spends a majority of their time watching cable and network TV.
The film industry, which suffered severe drops in theater attendance due to the pandemic, has long since shifted to predominantly digital distribution, according to the Motion Picture Association of America’s 2021 report. But the share of viewing is evenly split among cable and satellite providers and subscription services, the report said.
Meanwhile, many of Hollywood’s most powerful incumbents are also incentivized to maintain the traditional theater model. When some media conglomerates tried releasing films they funded directly onto the streaming services they owned, a number of directors and theater chains aggressively pushed back, turning the trend into a short-lived experiment in trying to sidestep the economic impact of COVID restrictions.
Now, viewers are forced to either pony up if they want to see new films outside the theater or wait about 45 days for it to land on a streaming service. (Granted, 45 days is much shorter than the standard 75-, 90- or 120-day windows of the pre-pandemic years, and being able to pay even $20 or $30 for a film still running in theaters, as Amazon and Disney now allow, is a substantial shift in the film distribution market.)
And then there are video games, which only saw the scales tip in favor of buying digital in 2020, thanks to the pandemic. Prior to that, most consumers bought video games on Blu-ray discs from big-box stores like Best Buy, Walmart and GameStop and ecommerce retailers like Amazon.
Games are still overwhelmingly downloaded locally on devices like consoles and PCs, rather than streamed over the internet through a cloud service like Xbox Cloud Gaming or Google Stadia. The transition toward these new distribution formats for gaming is not accelerating at anywhere near the rate it is with film and TV, which is seeing record highs in subscription sign-ups and shifts in viewing behavior.
Harding-Rolls found that less than 10% of Xbox Game Pass’ more than 25 million subscribers only stream games. This suggests that subscription services may play a larger role in helping bridge the gap between consoles and PCs and the markets in which gamers are mainly using mobile phones.
“Streaming distribution will gradually become more important to the games content subscription market over the next five years,” Harding-Rolls said. “While console users represent the core of Microsoft’s service for example, its future growth will increasingly rely on converting non-console users through its streaming functionality.”
Sony made arguably the most public rejection of a subscription-first future for the game industry when it rolled out an understated refresh of its PlayStation Plus platform. Instead of trying to compete directly with Microsoft’s Game Pass, Sony said it was uncertain about the long-term viability of releasing big-budget games onto a Netflix-style subscription platform that cost much less per month than the cost of a single game.
Sony’s new PlayStation Plus, coming later this year, now includes two more costly tiers that offer a mix of classic games and newer first-party games that had been on the market for at least a year or more, in addition to a cloud streaming component borrowed from the company’s PlayStation Now service for the priciest plan. Missing from any of the three tiers are first-party games the day they release to retail channels, as Microsoft does with Game Pass.
“It’s not a road that we’re going to go down with this new service,” PlayStation CEO Jim Ryan told Gamesindustry.biz last month, referring to releasing major first-party games like Horizon Forbidden West into its higher-ter subscription offerings. “We feel if we were to do that with the games that we make at PlayStation Studios, that virtuous cycle will be broken. The level of investment that we need to make in our studios would not be possible, and we think the knock-on effect on the quality of the games that we make would not be something that gamers want.”
“Subscription has certainly grown in importance over the course of the last few years,” Ryan added. “But the medium of gaming is so very different to music and to linear entertainment, that I don’t think we’ll see it go to the levels that we see with Spotify and Netflix.”
“It’s very hard to launch a $120 million game on a subscription service charging $9.99 a month,” Shawn Layden, a former PlayStation exec in charge of its internal studios, said last year. “You pencil it out, you’re going to have to have 500 million subscribers before you start to recoup your investment. That’s why right now you need to take a loss-leading position to try to grow that base. But still, if you have only 250 million consoles out there, you’re not going to get to half a billion subscribers. So how do you circle that square? Nobody has figured that out yet.”
Even Microsoft has gone out of its way in recent months to reassure developers that subscription gaming isn’t the one business model to rule them all, and that it does in fact believe in having a variety of different approaches to game distribution. That could be in part because Game Pass, while still growing, has failed to scale as fast as the company expected, adding just 7 million users from January 2021 to January 2022.
“For us at Xbox, there’s not one business model that we think is going to win. I often get asked by developers, ‘If I’m not in [Game Pass], am I just not viable on Xbox anymore?’ And it’s absolutely not true,” Microsoft Gaming CEO Phil Spencer said in an interview with Xbox executive Sarah Bond at GDC 2022.
“It’s really about the diversity of business models, and this is where I sometimes contrast against other forms of media we get compared to whether it’s music, whether it’s video. Where, the models have really condensed down to maybe one or two business models that are working,” Spencer added. “I fundamentally believe a strength for us in the video game business is the diversity of business models and the strength of those.”
Indeed, having a diversity of business models, with a variety of price points, is one reason why the gaming industry has ballooned into a much larger economic force than Hollywood and the music industry.
But it’s those same factors that make it difficult for new forms of distribution to catch on, at least not without significant investment from some of the most cash-flush companies in the tech and gaming space. Microsoft, thanks to its Office, Windows and Azure businesses, can afford it. Many other companies, including Nintendo and Sony, cannot, and we see that play out with how hesitant Microsoft’s competitors are to jump into the deep end of subscription gaming.
For now, however, it looks like the “Netflix for games” moniker may be applicable only to Game Pass, based on the scope of Microsoft’s ambitions. And it may take a very long time until we know just how early Xbox has been to gaming’s next big distribution shift.
Monday, April 25
Robinhood and Coinbase have a fix for volatile trading revenues
Cloud spending is hard to control. Cloud providers only do so much to help.
The FTC is going after dark patterns. That’s bad news for Amazon Prime.
How sharing cars can make cities more livable
Tuesday, April 26
Truebill turned canceling subscriptions into the ultimate recurring-revenue business
Most consumers don’t appreciate subscriptions. Productivity nerds do.
Subscriptions won’t take over the game industry anytime soon
It’s possible to save money on cloud computing, but it will cost you
Wednesday, April 27
Voter engagement as a service: Votus plans a personal touch for politicians
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Nick Statt is Protocol’s video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at [email protected].
Google Cloud’s president and the No. 2 executive under CEO Thomas Kurian is out.
Robert Enslin is leaving Google Cloud to be co-CEO of UiPath.
Rob Enslin, Google Cloud’s president and top executive in charge of global sales under CEO Thomas Kurian, is leaving the cloud computing provider, according to an internal email seen by Protocol.
Enslin will become co-CEO of UiPath, the robotic-process automation company, it announced in a release after this story was published.
Google Cloud is using Enslin’s departure to streamline its sales and customer success organization, which also will see the departure of John Jester, the vice president of Customer Experience, who led professional services, enterprise support, customer success and executive engagement globally for the last three years. The idea is to consolidate points of contact for customers, based on feedback from them and Google Cloud’s Partner Advantage program members, according to the source.
A 27-year SAP veteran, Enslin joined Google Cloud in April 2019, four months after Kurian officially took the reins of the No. 3 cloud vendor. Enslin oversaw a tripling in size of Google Cloud’s customer-facing organization.
Enslin is credited with building Google Cloud’s international sales force through regional and industry leaders, tapping talent from enterprise tech companies including Oracle, Salesforce and SAP. As much as 40% of Google Cloud’s organization is now outside the United States. Enslin also was responsible, in large part, for the uptick in Google Cloud’s SAP business.
Enslin and Jester will leave Google Cloud effective May 1, according to an email Kurian sent to Googlers this morning that was viewed by Protocol. Their roles will not be refilled. Kevin Ichhpurani — who in January added channel chief duties to his role as corporate vice president of Google Cloud’s global ecosystem and channels, and had reported to Enslin — now will report directly to Kurian.
“Over the last three years, Rob and John have led our go-to-market organization and helped us build a solid foundation for the future, and I want to thank them for everything they’ve done,” Kurian wrote in the email. “I have personally learned a lot from working closely with them, I respect them both immensely, and I know we all wish them the very best in their next endeavors.”
Google Cloud confirmed the executives’ resignations and the realignment of its sales and customer success teams.
The announcements come a day after parent company Alphabet reported $5.8 billion in Google Cloud sales – which includes Google Cloud Platform and Google Workspace — for the first quarter that ended March 31, a 44% increase from the same period last year. While still unprofitable, Google Cloud trimmed its operating loss to $930 million from $974 million.
Google Cloud’s planned changes include unifying its sales, technical account management, professional services and customer success personnel under two teams: one covering the Americas and the other covering Google Cloud’s other international territories.
“These changes will put our resources closer to customers and partners, and will accelerate our ability to help them digitally transform,” Kurian wrote in the email to Googlers.
Kirsten Kliphouse, currently a Google Cloud president leading its North America customer-facing organization that works with enterprises and other commercial customers, will lead the new Americas region encompassing the United States, Canada and Latin America. Kliphouse joined Google Cloud in June 2019 from Red Hat and spent 25 years at Microsoft. Eduardo Lopez, Google Cloud’s vice president of Sales for Latin America, will report to Kliphouse.
Adaire Fox-Martin, an SAP veteran who’s been president of Google Cloud’s sales organization in Europe, the Middle East and Africa (EMEA) since last July, will lead the new international region, which also will include Japan and Asia-Pacific. Tomoyuki Hirate, vice president of Sales for Japan, and Karan Bajwa, vice president of Asia-Pacific sales, will report to Fox-Martin.
Lee Moore, the Americas vice president of Cloud Customer Experience, also will report to Kliphouse, while Dana Eaton, EMEA vice president of Cloud Customer Experience, will report to Fox-Martin. Both previously reported to Jester.
“This team will continue its very important mission of helping organizations innovate and drive change to business processes, culture and customer experiences with our products and services,” Kurian wrote in the email.
Bhanumurthy Ballapuram, who has been serving as vice president of Customer Experience for Japan and Asia-Pacific, will take on a new role leading global delivery. His replacement will report to Fox-Martin.
Vice president Atul Nanda will continue leading Google Cloud’s customer support team, which Kurian wrote is a “critical strategic differentiator for the company as we help customers solve their most difficult problems and drive their digital transformations.”
“Beyond these top-level reporting shifts, we are intentionally minimizing changes to ensure our teams stay focused on serving our customers and partners and to continue our strong growth during 2022,” Kurian wrote.
This story was updated to include the announcement that Enslin is going to UiPath.
Trusted Future is a non-profit organization dedicated to the belief that we need smarter, better-informed efforts to enhance trust in today’s digital ecosystem in order to expand opportunities for tomorrow.
Co-Chair, Trusted Future
The most important element for building trust in the digital ecosystem is to have producers of products and services dedicate themselves to infusing trust into the lifecycle of their products and services. Only with trust can we maintain a global information infrastructure and obtain the full benefits of technology into the future. From software and hardware development, to supply chain, to product security and incident response, to threat modeling, to certification, to vulnerability management, to treatment of customer data, to corporate governance, to relations with governments globally, to security information sharing with others in the ecosystem, and through employing a systems engineering approach to trust management — employing this holistic approach to trust is the cornerstone of trust going forward.
To get there, we are creating the first holistic Trust Framework that existing and emerging technology producers and users can use to instantiate trust and answer the simple question — should I trust this product or service in my infrastructure, or with my data? As producers adopt and users demand this Trust Framework — the trust needle will move.
Learn More
Co-Chair, Trusted Future
For those that are designing, developing or deploying cutting-edge technologies, trust has now emerged as a central factor in determining whether and how fast transformative new technologies will be adopted in the marketplace. We’ve all seen how technologies have transformed the way we work, live and learn. And just over the horizon a new set of breakthroughs offers even more potential.
Innovators across the country are unlocking new technological frontiers using AI, 5G, IoT and the cloud to create opportunities never before possible that fundamentally expand our ability to solve important problems —technologies that can improve health outcomes, cut greenhouse gasses and make factories more competitive. But we risk squandering or even delaying these opportunities when people lack the foundational trust necessary to take full advantage of their potential. For example, a small factory owner may not adopt smart manufacturing technologies to improve business if they don’t trust it to protect them from factory-idling ransomware or a consumer privacy data breach. It is more important than ever that we infuse strong privacy, robust security and inclusive design into our technologies from the start so that we can trust that the technologies of tomorrow will be even better than today.
Learn More
Chair of DLA Piper’s U.S. Regulatory and Government Affairs Practice
Trust, by its nature, is a function of human expectations about the reliability of another party (or parties) in the context of some relationship. For our purposes, building trust in the digital ecosystem requires consideration of the existing relationships that parties in that ecosystem have with each other.
In the United States, the trust relationships between many public and private institutions that are prominent participants in the digital ecosystem (from government agencies to tech and telecom companies) and communities of color are notoriously weak.
These relationships are frequently stained by deep-seated and historically reinforced suspicion, trauma and fear of exploitation or persecution. For example, survey data shows that many in communities of color harbor particularly strong distrust of the government when it comes to their personal information. This data also shows stark differences in community perceptions of how much control individuals have over personal data, privacy risks and concerns about information disclosure.
In order to foster greater trust in the digital ecosystem, we must approach our task from a culturally and historically informed perspective. This approach is essential to effectively communicate to all consumers how holders of data are managing the security and privacy of their data, to best develop and implement policy and to understand the efficacy of those policies.
Learn More
3Com Founders Principal Research Scientist at the MIT Computer Science and Artificial Intelligence Lab, Founding Director of the MIT Internet Policy Research Initiative and an adviser to Trusted Future
Trust depends on knowing that those who hold data about us are managing the security and privacy of that data. Yet, you can’t manage what you don’t measure. We’ve made real progress on digital privacy and security — we know more about how to build more-secure systems, many organizations have chief privacy officers and chief security officers and there are new laws like the GDPR that demand companies pay more attention to privacy.
But we’re still in the Stone Age when it comes to our ability to actually verify that systems are worthy of public (or regulatory) trust.
We’re measuring all the wrong things. For example, in cybersecurity, we count the number of threats detected and averted, number of systems with up-to-date software and how many potential vulnerabilities are visible to adversaries. But that only tells us how much effort we are putting in, not whether the billions of dollars we spend on cybersecurity are pointed in the right direction. What we really should care about is which potential risks are likely to cause actual losses. The only way to do this is to also collect data about actual losses from among the billions of otherwise harmless attacks. It’s understandable the firms don’t want to share sensitive (and embarrassing) information but without it we are flying blind. In my research group at MIT, we’re closing this gap with a tool called SCRAM that allows us to collect data on security losses privately and then analyze what specific failures are the cause of those losses. That will allow firms to make better investment decisions, and regulators to craft more sensible, efficient cybersecurity rules. The result will be systems that we can all trust.
Learn More
Chair, Baker Botts’ Global Antitrust and Competition Practice
Strong privacy protections that safeguard consumers’ personal information are essential to building trust so that consumers may feel confident enjoying the many benefits of innovative products offered in today’s dynamic marketplace. Consumers need to be able to trust that their sensitive personal information, such as health and financial information, real-time precise geo-location information, Social Security numbers and children’s information, will not be used or disclosed in ways that could result in harm. It’s also vital that businesses honor the privacy commitments they make to the public. A false promise to provide certain privacy or data security protections undermines consumer choice about whether to use a product or service, and erodes consumers’ trust in the ability of businesses to protect their information. Without this trust, many consumers may be less willing to share their data or participate in the benefits of the Internet economy.
Learn MoreVotus CEO Brandon Harris understands the pitfalls of political messaging platforms. He wants to build communities through social media, not help campaigns send spam.
“If you’re canvassing someone in real life, how would you talk to them? That’s how you should message them.”
Hirsh Chitkara ( @HirshChitkara) is a reporter at Protocol focused on the intersection of politics, technology and society. Before joining Protocol, he helped write a daily newsletter at Insider that covered all things Big Tech. He’s based in New York and can be reached at [email protected].
If you’ve donated to a political campaign in the past decade, you’re probably familiar with the unpleasant aftermath: email after email after email asking for more money. Then there are the “urgent” subject lines and the random midnight deadlines that seem to appear out of nowhere. Eventually, after becoming an unwitting participant in the 50th A/B test, you might get frustrated enough to unsubscribe. Or you’ll wish you spent that $5 on an actual cup of coffee — but that money is gone, along with any warm feelings you once had toward the candidate.
Votus (it rhymes with “POTUS”) is a subscription software platform that places a particular emphasis on one-on-one political messaging. Which is to say, it’s one of the reasons all those politicians keep sliding into your DMs. But Votus CEO Brandon Harris made clear that he understands the pitfalls of the field: “We don’t want to be just a mass DM tool,” he told Protocol, saying Votus helps campaigns figure out how to “turn chaos into community.”
Votus is still a relatively small operation with only three full-time staff members, but it’s gathered momentum in the last year. Maricopa County Democrats and Florida gubernatorial candidate Nikki Fried both use Votus software. In the summer of 2021, Votus raised funding from Higher Ground Labs, a venture fund that aims to advance progressive policy through technology. And at the beginning of 2022, Votus launched its first full iteration of a SaaS messaging product, after focusing on social listening in the 2018 campaign cycle.
Harris didn’t set out to become a tech founder. In fact, the two-time Howard University student association president always thought he’d become a politician. He played everything right for that goal, too: After graduating from Howard, Harris went on to law school at Vanderbilt. That’s where he started Votus as a side project to help political campaigns leverage social media to build community. And yes, “building community” is sometimes a euphemism in politics for fielding donations — but Harris set out to do much more than that.
In an interview with Protocol, Harris spoke about the politicians growing more receptive to software, how campaigns can avoid veering into spam territory and whether having a political mission comes with revenue trade-offs.
This interview has been edited and condensed for clarity.
How difficult is it to sell software subscriptions to political campaigns? Are campaigns generally resistant to adopting new technology?
Everybody is using technology at this point. You can’t avoid social media; you can’t avoid using data to make decisions on how you’re going to do messaging. Sometimes we get too addicted to the churn and burn. Right? So like, “Oh, we want to just DM everybody all the time,” [or] “I want to send six DMs at once.” That’s not what we’re building this for. And there have been tech founders of political tech companies who have become depressed, because tools they made for real communication become spam machines. It’s not so much that they’re not using technology — everybody is using technology. But are you using it to really build community or is this just always about small-dollar donations?
How would you advise political campaigns to use your software in such a way that it’s not veering into spam territory?
The way Twitter is set up, you can only DM a thousand people a day. We have a bot, technically, but we can’t do an entire stream conversation because each of those messages counts against the limit and you basically are going to lower the amount of people you can talk to on a daily basis.
If you do send a message, use an open-ended message. Most people want to send a message that is a paragraph long with an ActBlue link at the end. If you’re canvassing someone in real life, how would you talk to them? That’s how you should message them. Like, “Hey, [I] appreciate you for following me. Would you mind checking out this video or coming to this event or can you tell me what three issues you’re passionate about?” That type of communication is really crucial. Because [not] everybody is going to respond, but those people that respond, especially if they respond positively — those are people that are receptive to your message, you’re meeting them where they already are. So the messaging you use is a big thing. And then, trying to go deeper and understanding that it’s a value-add to do that.
How does software fit into the broader avenues of campaigning? For instance, can it replace canvassing? Or should it only be complementary to that?
I think it has to be complementary. When you canvas and when you meet people in person — you can take that same approach on social media. Because then what’s going to happen, especially if you’re a more local candidate, is when those same people do meet you in real life, they’re even going to be more excited.
People say Twitter is not real, and our whole premise is: Part of it is real and we’re going to find that part that is real. There are real people on Twitter because I’m on Twitter; I have friends who I know are real people on Twitter. You can get those real people to speak for you on Twitter and that is going to inform the public square.
I wanted to get your thoughts on being a political tech company in D.C. Does being in D.C. make it easier to attract talent? Are there network effects there?
We started in Memphis and then I came to D.C. because I felt like the opportunity was here. The network effects are definitely here. The thing about political tech is … your total addressable market is much smaller in political tech than in most spaces. But on the flip side, the market is a lot tighter in terms of [it being] easy for everybody to know about you fairly quickly and for you to capture the market. And so I think there’s a benefit there. You’re not going to necessarily build a billion-dollar company, unless you’re like NGP VAN, which is so connected to the DNA of the Democratic Party. But you could easily be a $100 million company or $200 million company. Maybe you had to get less fundraising because there’s only so many beachhead customers. People in this space talk so much, we’re so connected, there’s also so much turnover.
So are you going to [become] a billionaire working on political tech? Most likely not. But you can make a very good living, and do something you’re very passionate about. And so I think if you care, and you’re passionate, there’s definitely a place for you to do it. And you don’t have to be in D.C. I think being in D.C., especially [in] getting your company off the ground helps, because you’re just going to be able to make a lot more connections. And [there are] just people here all the time. People travel through here, too. So if you live here, people that you need to meet with [who] live in other cities are probably going to be here at some point.
Does Votus have a political mission? And if so, how do you balance having a mission and being a startup that’s presumably concerned with revenue growth? Are there trade-offs?
We don’t work with Republicans. We work with progressive campaigns. There are certain things I just don’t want to see ever — like, I don’t want Blue Lives Matter using Votus. And the other thing with us is: We are a social media tool. You think about Cambridge Analytica and everything [that] happened with it … You have to be very careful with who you’re letting use your technology because — we take a lot of precautions to safeguard our systems, but if you have malicious actors using your technology, it can still get very wild.
And in the sector in general — there’s a stereotype that Silicon Valley leans left. Would you say that impacts access to technology on different parts of the political spectrum?
I actually think that Silicon Valley leans libertarian. Most tech CEOs you meet are going to be socially liberal and fiscally conservative. And some are more liberal. It’s rare that you find a lot of social conservatives who are in tech, just because of the way tech is. But you definitely have some [who] are fiscal conservatives.
I think Republicans deploy technology a little differently and they use it differently. There are certain things that I would never do that they might do. They have good technology. Up until the last couple cycles, you could argue that [their] technology was better than the progressive side. The other thing I’ll add is, I think, Democrats are more risk averse. That reflects sometimes in how we use technology.
Monday, April 25
Robinhood and Coinbase have a fix for volatile trading revenues
Cloud spending is hard to control. Cloud providers only do so much to help.
The FTC is going after dark patterns. That’s bad news for Amazon Prime.
How sharing cars can make cities more livable
Tuesday, April 26
Truebill turned canceling subscriptions into the ultimate recurring-revenue business
Most consumers don’t appreciate subscriptions. Productivity nerds do.
Subscriptions won’t take over the game industry anytime soon
It’s possible to save money on cloud computing, but it will cost you
Wednesday, April 27
Voter engagement as a service: Votus plans a personal touch for politicians
Hirsh Chitkara ( @HirshChitkara) is a reporter at Protocol focused on the intersection of politics, technology and society. Before joining Protocol, he helped write a daily newsletter at Insider that covered all things Big Tech. He’s based in New York and can be reached at [email protected].
Beric Alleyne shares his hottest takes on the future of DEI.
Beric Alleyne, global head of Diversity and Inclusion at eBay, says there are no all-knowing DEI experts.
Amber Burton (@amberbburton) is a reporter at Protocol. Previously, she covered personal finance and diversity in business at The Wall Street Journal. She earned an M.S. in Strategic Communications from Columbia University and B.A. in English and Journalism from Wake Forest University. She lives in North Carolina.
Beric Alleyne, the global head of Diversity and Inclusion at eBay, has a hot take: There are no DEI experts.
A financial services veteran, Alleyne has brought a business-minded focus and a slightly varied perspective to his role within the tech industry. He believes in crowd-sourcing to find answers and leaning on some of the same business strategies that once helped him rise within the ranks in finance. Now, just over four years into leading DEI initiatives at eBay, he’s sharing what’s kept him around and what’s motivating him in a rapidly changing role.
Alleyne sat down with Protocol to speak about his hot takes on DEI, the role of chief diversity officers and why he’s optimistic about the future of diversity and inclusion at eBay.
This interview has been edited for brevity and clarity.
You were at Goldman Sachs for several years before joining eBay. How does having that kind of untraditional background and path to DEI in tech affect how you view the role?
I spent a lot of time on Goldman driving strategic transformational change. And it happened in several different ways, from helping launch new products to integration of acquired entities to talking about global footprints on location strategies and target-operating models. And what I gained at Goldman was a relatively firm grasp on how to drive true, long-lasting transformational change in an organization in service of our ultimate business objective.
And the more senior I got, and the more I started to look across the breadth of the organization, I just recognized that there weren’t a lot of folks like me. And I was so busy and focused on the grind and trying to crawl my way up and I didn’t really take stock as I went along the path. And then I got to a relatively senior position and I was sitting in various rooms and it really started to hit home.
I had a leadership role in the Black affinity network at Goldman and we would do some good things, but I saw a huge gap between what we were talking about in those affinity circles versus what was happening in the actual rooms. So it made me really start to think about: H ow can I leverage my engineering background, my strategy background, my tech background? How can I use those skill sets and really put them to use in service of the DE&I business objectives? I saw this as any other business objective that a firm or company might be trying to do better in. It is no different than growing revenue, it’s no different than reducing operating costs. It’s just a challenge for business leaders to solve. I started to make a bit of a hypothesis on myself: How do I use these skill sets to address DE&I? And then I started to look into roles. And Damian [Hooper-Campbell], my predecessor, was building up the team here at eBay and the rest is history.
You’ve seen the challenges in diversity at work in finance, and now in the tech industry. Are they that different at all? And if so, in what ways?
I think the root of the challenges are the same. I think Wall Street has just had a lot more time to figure it out. Like Goldman, when I left, I think had just celebrated 150 years. eBay celebrated 25 years, I think, a year or two ago. So when you just look at the organizational maturity they’re just in very different places. Wall Street is also significantly more regulated than it is in some cases in tech. I think there are also clients on Wall Street who demand that folks who staff their accounts, who staff some of their deals, be representatives of these groups.
I think the root causes [across industries] are the same in DE&I. The hiring, finding talent, growing talent, providing stickiness, providing career development … getting to an environment where microaggressions can be addressed. They’re the same. They’re just in my mind at different stages of maturity because of the business.
You are known for your belief that there is no all-knowing DEI expert. Why is that?
Because this work continues to evolve … look at the evolution of how publicly this work is discussed and what is being disclosed. The work will just continue to evolve, and it is up to us to stay informed and plugged in so we can evolve as this work evolves.
Look at the unfortunate loss of George Floyd. That by itself drove a significant amount of change in how folks were thinking about roles, whether it was performative or whether it was genuine. There are a lot of folks who started to recognize we need to look at this work a bit differently, and we as organizations need to have very fluid points of views on specific topics. That by itself was a change.
It was the first time eBay ever spoke out on a social issue. Our CEO took to LinkedIn and wrote a note, ensured that we made financial contributions, ensured that we invested $25 million into a fund to help drive systemic changes around economic empowerment. You started to see these very tangible steps and actions being taken. And now, guess what? Our employees want to talk about them way more than they would have welcomed in the past.
So I think this work continues to evolve. When we talk about cross-cultural learning, there is no cross-cultural expert. You can’t ask one person what every nuance of every single culture across the world looks like. It’s humanly impossible. It has to continue to be a crowd-sourced evolving way of working, understanding of the work [and] addressing different needs. The needs also evolve over time. You have to continuously engage, educate yourself, educate others, build empathy, because there’s always new stuff to learn from other people’s experiences. So this work never ends. It’s an ongoing cycle.
Since there is no expert, who do you go to for that education? What do you read? Who are you listening to?
I listen to folks who represent different communities. I listen to all [eBay’s] employees who span dozens, if not hundreds, of cultures, hundreds of backgrounds and different lived experiences. I consume what some in my close circle might consider nontraditional outlets of information. I don’t follow a particular side of a conversation if there is a conversation to be had. I am very open to listening to all perspectives because somewhere in there you find kind of what your truth is and find a way to bring people together.
So there’s no single source for this. It has to be, I believe very strongly, in hand-to-hand conversation. You have a dialogue directly with someone. I also encourage our company and our employees and leaders to do the same.
Something that Protocol has done a lot of research into is what tenure looks like for DEI leadership roles. It’s frequently shorter than other C-suite positions. Why do you think that the tenure is so short in these roles? And what do you think that you’re doing differently that’s making you kind of stick?
I can’t speak for everyone, but what I have heard is a lot of folks leave because they don’t think organizations are taking this work seriously … So they get in and they recognize there’s a significant amount of messaging, but there’s very little modeling. And then, most importantly, there aren’t a lot of leaders who are willing to hold themselves or anybody else in the organization accountable. If I had to guess, I would think that drives a significant amount of change.
When I talk to folks who are in the CDO role, those who’ve been at organizations for a longer time, those who kind of jumped around a few times, that is the No. 1 thing I hear. They got in and recognized this organization isn’t committed, they’re not serious [or] they don’t want to make the investment and they’re not willing to hold folks accountable. Senior leaders demonstrate it by their actions or inaction in many cases.
So that being said, what has helped you stay at eBay and continue doing this work?
We recently had a new CEO join. Jamie Iannone joined maybe just around two years ago, around that same time as when my predecessor left. And Jamie asked me to step up and lead this work. In Jamie, what I found is a significant commitment and willingness to demonstrate and do the actual work required for us to actually be better.
A few examples: We are getting ready to release our sixth DE&I report in the next four weeks or so. And when I look back at the past two years I’ve seen ourselves grow from kind of saying the right things and having some programs to us being more institutional in how we want to drive this work and how seriously we’re taking it.
Our compensation committee has now been expanded to be the Compensation Human Capital Committee. And the No. 1 agenda for that newly formed committee was to understand what we’re doing around DE&I, where we’re making progress, where we have gaps to fill. And then also how we are now thinking about tying executive compensation to actual outcomes related to the DE&I. So there are a lot of good signals that have been put out that keep me grounded, that keep me here, that keeps me excited about the work.
Last, what is your biggest hot take on the role?
I could say representation matters. I could say over time, not overnight. I think there are a lot of folks who expect these changes to happen quarter to quarter. It doesn’t quite work that way. I would also say it takes all soldiers because it’s not just on the DE&I leaders to make this work successful. It’s on every individual in the organization.
Amber Burton (@amberbburton) is a reporter at Protocol. Previously, she covered personal finance and diversity in business at The Wall Street Journal. She earned an M.S. in Strategic Communications from Columbia University and B.A. in English and Journalism from Wake Forest University. She lives in North Carolina.
SaaS companies are helping lower cloud subscription costs, as long as you subscribe to their services.
Although it might seem counterintuitive, the best way to manage cloud spending could be spending money on spending control tools.
Aisha Counts (@aishacounts) is a reporter at Protocol covering enterprise software. Formerly, she was a management consultant for EY. She’s based in Los Angeles and can be reached at [email protected].
The rise of the cloud made businesses faster, quicker and more agile. But it created a new problem: Usage-based billing models at cloud providers like Amazon AWS, Microsoft Azure and Google Cloud Platform have made it easier than ever for enterprises to lose control of computing costs.
There’s an underlying assumption that moving from on-premises servers to the cloud will help companies save money, said ServiceNow IT asset manager German Bertot. But that’s not always the case. “The promise is there, and it is great. But companies are having a hard time realizing those savings,” he said.
“People are very surprised at how much money cloud computing is costing [them] over traditional computing,” said David Linthicum, Deloitte’s cloud strategy leader. While some of that is just the price of access to computing power, the majority of it is due to inefficiently managing spending, he said.
That’s why SaaS companies like Flexera, Apptio and ServiceNow are helping companies lower their cloud subscription costs — as long as you subscribe to their services, which, of course, aren’t free.
The reason cloud costs can balloon so quickly is that managing expenses associated with compute power is a lot more complicated in the cloud than it was when companies bought and managed their own servers.
With data centers, it was common for CIOs to only purchase new technology every few years or so, said Flexera Senior Director Brian Adler. In response, IT employees would ask for as many resources as they could get, especially because most companies provisioned more computing power than they needed at the time. “But that was the way to do it; that was the behavior that we had because I was hoping I would grow into it,” said Adler.
Because it took such a long time to purchase and deploy infrastructure resources when operating on-premises data centers, this was fairly common behavior, said Forrester Senior Analyst Tracy Woo. The difference with the cloud is that provisioning “is something that you can demand and get online within minutes.”
However, when many customers first moved from on-premises operations to the cloud, they often brought the old data center mentality along with them. Instead of scaling up resources as needed, for example, many companies still feel the need to over-provision up-front. But with the cloud, “I don’t buy the peak, I can rent the peak. So that’s a new behavior that folks need to learn,” said Adler.
At other times, because there was no reason to turn off applications in data centers, customers would leave virtual machines in the cloud running. In data centers “it didn’t matter if I turned off my virtual machine, the physical host was still going to run and chew up money; there was no benefit,” said Adler. But in the cloud, if you leave things running, you have to pay.
The other aspect that makes managing cloud costs difficult is that IT spending isn’t as centralized as it used to be.
For one, the ease of getting started on the cloud means it’s a lot easier to subscribe, deploy and then rack up large bills. “You don’t need to get a purchase order out to your hardware provider, bring them in, pay for it up-front, get the hardware into your data center, install it and so on,” said Bertot. In fact, nearly any employee with a corporate credit card can sign up for a SaaS application and pay for a service.
The fact that most cloud providers bill based on usage also means that it’s fairly easy to drive up costs if companies aren’t paying attention. Even gaining visibility into where spending is coming from can be a challenge, because a company could have hundreds of engineers using resources, but only get one bill. And those bills are so complicated that no one could look at all that data and determine if they’re being overcharged, said Adler, who has seen Flexera customers with 12 million rows of information in a single monthly bill.
That’s why software is absolutely required to truly understand cloud spend at the enterprise level, said Apptio vice president Eugene Khvostov. “By day two of the month, you’re getting so much data that you can’t possibly run it through without any software,” he said. “So you have to either build or buy specialized software.”
Although it might seem counterintuitive, the best way to manage cloud spending could be spending money on spending-control tools. That’s why the major cloud providers AWS, Azure and Google as well as SaaS companies like Flexera, Apptio and ServiceNow all offer services to help companies cut their cloud costs.
Although many of these services require purchasing yet another subscription, according to industry practitioners and analysts, the savings can be massive.
How do third-party software providers like Flexera, Apptio or ServiceNow actually help lower cloud costs? There are many different tactics, from lowering subscription tiers based on usage to turning off machines when they’re not in use or reserving instances in advance.
On the SaaS application end, understanding which users are consuming licenses, and how much they’re using, can help determine which subscription tier to purchase or who to give licenses to. If a user is consuming a license but not using it, “are there ways for us to analyze the usage patterns and suggest a lower level subscription … and in the process achieve savings?” said Bertot.
Other times savings can come from rationalizing SaaS applications. “How many different communications platforms do I have? Do I have Zoom and GoToMeeting and Teams and Citrix? What if I consolidate those?” said Khvostov.
At Deloitte, Linthicum has seen clients save as much as 200% on their cloud bills after using a spend management tool. Although that’s an outlier, “in many instances it’s going to be 30% to 50% savings,” minimum, he said. And “there’s always going to be some sort of savings 100% of the time in my experience.”
At Apptio, which owns the Cloudability spend management tool, Khvostov has seen similar results. “When we typically onboard a customer we find anywhere from 10% to 30% savings right away.”
Even incremental savings on cloud infrastructure costs could amount to significant amounts of money. While only a small number of companies spend a million per month on cloud services — Woo calls them power users — a lot of companies still spend hundreds of thousands per month, she said.
And because many of the cloud spend management tools are fairly affordable — typically, 1% to 3% of what customers spend on cloud services in a month — the return on investment far outweighs the cost of subscribing. “Generally you see an ROI for these within two weeks to three months,” said Woo.
Although the major cloud providers all offer tools that can help customers analyze their billing, they have limitations.
While the cloud service providers give visibility into how a company is spending with them, they can’t do the same across other cloud providers or with SaaS applications, for instance.
If a company analyzes its spending with just one cloud provider, that’s only going to create a silo, said Linthicum. “You’re going to understand everything about a particular cloud provider, but not holistically,” he said.
When a company starts to do cloud at scale, for instance, it’s likely using a multicloud or hybrid approach. “So I might want to be handling visibility across multiple clouds and plop that in one portal or one control plane,” said Woo.
At ServiceNow, for example, the company’s spend management tool connects directly into SaaS providers and also analyzes deployments that are still on-premises. “That’s something that no cloud provider will ever be able to do,” said Bertot.
While customers who are new to the cloud will face many of these problems, over time they will get better at understanding how to manage their own spend. “Initially, it’s usually a pretty big bang for the buck, and then it peters out over time,” said Adler.
But what does this mean for companies selling spend management tools? As customers become more adept at managing their own spend, could demand for these services wane? To some the answer is no, because cloud spend management requires ongoing monitoring.
In the cloud, cost governance is about the ability “to not only have observability so you can see where the costs are going, but have observability around the interdependencies, observability around how things are going to be billed moving forward, and do that across platforms,” said Linthicum.
Without spend management tools, companies would have to build their own internal processes and software to have that level of visibility over their cloud spend. While that’s possible, it’s a lot easier to buy a subscription.
Monday, April 25
Robinhood and Coinbase have a fix for volatile trading revenues
Cloud spending is hard to control. Cloud providers only do so much to help.
The FTC is going after dark patterns. That’s bad news for Amazon Prime.
How sharing cars can make cities more livable
Tuesday, April 26
Truebill turned canceling subscriptions into the ultimate recurring-revenue business
Most consumers don’t appreciate subscriptions. Productivity nerds do.
Subscriptions won’t take over the game industry anytime soon
It’s possible to save money on cloud computing, but it will cost you
Wednesday, April 27
Voter engagement as a service: Votus plans a personal touch for politicians
Aisha Counts (@aishacounts) is a reporter at Protocol covering enterprise software. Formerly, she was a management consultant for EY. She’s based in Los Angeles and can be reached at [email protected].
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