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tv   Best of Bloomberg Technology  Bloomberg  June 18, 2017 3:00pm-4:01pm EDT

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♪ emily: i'm emily chang and this is the "best of bloomberg technology," where we bring our top interviews from this week in tech. coming up, tim cook opens up about apple's car ambitions for the first time. more from our exclusive conversation with the apple ceo about the company's focus on autonomous tech and the push into cars. plus, travis takes an indefinite timeout. why the ceo says he takes a break from the company he cofounded and what it means for him uber ahead. and it is the biggest gaming
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event of the year. we will take you e3 in l.a. but first, to our lead, after years of speculation, apple is finally lifting the hood on its car ambitions, focusing on the technology that makes autonomous driving possible. for the first time ever, apple ceo tim cook spoke about apple's car ambitions in an inclusive interview, and also discussed the company's outlook on china. take a listen. tim: china, for us, we make our decisions for the long-term, and so we are not investing for next quarter or next year. we are thinking about many, many years out, and as i stand back and look at china, i see megatrends there that make china an incredible market. i don't just mean a market to sell in. i also mean a market for application developers. we have 1.5 million application developers in china now,
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probably closer to 2 million now. so it is an incredible marketplace for talent and in terms of the size of the marketplace. and so, the short-term kinds of economic moves up and down, i don't get too excited about. emily: how realistic is it to expect that double-digit growth for apple to continue in china? tim: i think i said last quarter that i think we will do better this quarter than we have the last several. that doesn't mean that we are growing double-digit or that we are going to grow. it means it will be better for a year over year than the previous ones. and i feel pretty good about
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that. iphone 7 is the most popular smartphone in china. last year, the size of our business was almost $50 billion in greater china. and so, we are going to stick at it because i think china is a huge opportunity over time. emily: how would you characterize tim cook's apple versus steve jobs's apple? tim: i guess i would point out that steve's dna will always be the dna of apple, or certainly as long as i am ceo and i think as long as anyone is, honestly. i think it is deeply embedded in the company. obviously, things evolve over time in some other areas as they would have if you were sitting here interviewing with you today. clearly, i am sure, there are some things, but that is probably a better question to ask somebody that worked for both of us. [laughter] emily: you said cars are an area
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ripe for disruption. how important is it that apple not miss out on cars? tim: i think there is a major disruption looming. not only for self driving cars, but also the electrification piece. if you have driven an all-electric car, it is actually a marvelous experience, and it is a marvelous experience not to stop at the filling station or gas station, or whatever you want to call it. plus, you have ridesharing on top of this, right? so, you have got kind of three vectors of change happening generally in the same timeframe and so, as we look at it, and what we talked about focusing on publicly, is the are focusing on autonomous systems and clearly, one purpose of autonomous systems is self driving cars. there are others. and we sort of see it as the mother of all ai projects. it is probably one of the most
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difficult ai projects actually to work on. and so, autonomy is something that is incredibly exciting for us, but we will see where it takes us. we are not really saying from a product point of view what we will do, but we are being straightforward that it is a core technology that we view is very important. emily: you are working across so many different platforms, whether it is tv, the watch, the ipad, the mac, the phone. what do you see now as your vision for the future of personal computing across all these platforms? tim: the great thing is they are all built on the same core technology, right? but we have thought through how they are used in the experience that is needed to get the best experience for the user in each of the cases.
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and so, out of that came watch os, tv os, mac os. we think that when you begin to merge, the risk is the lowest common denominator kind of approach, and we are staying away from that. i know others who have a different view, but that is our view, and we are straightforward with it. and so, with tv, we wanted to give an update that amazon is joining the tv app, and all apple tv's later in the year, and we will have more to say about what we're doing in that area later. i will keep you in suspense a while, there. emily: that was our exclusive conversation with apple ceo, tim cook. and our interview with capacity commentary and research notes from editors, of tesla were downgraded in may and the concerns were reiterated after hearing the interview. an executive publisher called me to discuss carmakers having to make room for apple.
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>> i think eventually it could lead to the apple car that we have all been thinking about and hearing for five years, different rumors. in the near term, it is more likely to lead to collaboration between apple and current carmakers, similar to what waymo, which is part of google, is already doing. and i do think you could easily see a world, where just like our phones are almost all either androids or apple phones, we could have a circumstance where our cars' technology, especially the autonomous versions are all powered by apple or google-based technology and operating systems. emily: and so, as apple potentially goes to market, do you see them partnering with a manufacturer, licensing technology to a manufacturer, or more likely coming to market with a car of its own? karl: probably all three in sequence. i think they will partner with an automaker, and helped to start empower their own autonomous vehicle systems and
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eventually they could become a final producer, a final holder of car design that the automakers make for them, essentially making the automakers a tier 1 supplier for apple. emily: there are two mobile operating systems that are dominant -- ios and android. do you see the same for cars or more? karl: that's a great question. i think we could end up with more at least initially. i would guess we could end up you with summer between five and 10 at the initial stages of autonomous vehicles, but then it would get peeled down to maybe two or three, kind of like our phones are now. him and i think that is likely what we will see in the next 10
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years. emily: apple is pretty far for all we know is pretty far behind. this is something google has been working on for a long time. can apple really catch up? karl: i think they can because it is not like the hardware situation or like a carmaker. if you've got the brain, trust, and the focus on the technology side, you can get there pretty quickly. you have to be careful how you do it. you don't want to take information from other companies already working on things. we know some other players are now claiming that is what happened to them. but i think apple has been working on this for years, and they have changed direction on how they want to execute it, but i don't feel like they are starting at ground zero. they have a lot under their belt. emily: after a month of negative headlines and serious investigations into harassment, uber ceo and founder takes a step back from the company he founded. we discuss the fallout. and later, it is at hottest ticket in gaming. we hear from the nintendo president and take2 ceo from the e3 conference in l.a. this is bloomberg. ♪
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♪ emily: uber founder and ceo travis kalanick is taking a leave of absence from the company without disclosing a return date. in the interim, the company will be managed by a management committee and the board will move to diminish kalanick's role when he comes back, by giving some of his responsibilities to an operating officer, a position for which uber has been actively recruiting. he wrote a memo to employees and said" for uber to point out to succeed, i need to work on travis two point become the leader this company needs and that you deserve." a managing partner at greenbrier partners and former head of medications at uber gave their reaction to the news and talked about what comes next at uber. >> it all sort of began with susan ballard, the software engineer at uber who wrote a
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blog post detailing her sexual harassment allegations in the general culture of dysfunction at uber. that launched an investigation that culminated in a public report of the conclusions of today and this past sunday of more private and exhaustive version to the board of directors. and now, travis is stepping aside right at the same time. so really, sort of taken aback by some of the results of the report. emily: more than 20 employees have been fired as a result of this investigation. the head of business is out. now, travis kalanick is taking an indefinite leave of absence. what is your reaction to this news having worked there and knowing travis firsthand? >> i think today is bittersweet for a lot of employees.
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it's great news for the company overall. emily: why? >> there are hopefully a lot of things coming in the future. we want the company to get back on track. we want some of the positive news about the company to start coming out, and we want to look towards an ipo. that is what the former employees are thinking about. i don't think we can get there until we start course correcting. it is a watershed moment. the flip side of it is travis is wonderful. there are people there who really believe in him. most of the company does. he is brilliant and he founded the company. so, it is sad for him to be leaving. especially at such a critical time. emily: did you see early warning signs about the company culture and challenges that might lie ahead. were there any attempts to course correct years ago? >> yeah. i think the company has been growing dramatically over the past couple of years. there has been a lot of course correction. the reality is there is over 14,000 employees there now and half of them joined in the last two years. so, it is pretty hard to say that there is a bad culture with 6000 employees that were not there at the beginning of the company's founding. i say there have been a lot of changes, but probably most of what we are seeing now happened a long time ago. emily: eric, talk to us a little bit about this leave of absence. is travis coming back and when? eric: there is a lot we don't know. at first, we heard it would be
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three months and now it is described as indefinite and we don't really understand how the management committee is going to run when they have to decide how much money to invest on autonomous cars, and who makes that decision, that is not clear. some of it will definitely go to the board, but i think a lot of people are just waiting for this chief operating officer, less become a mystical figure. whoever that person is, we need them to make these key decisions. so, i think it is sort of a holding pattern in truth until they can find that person. emily: do you think travis leaving is the right call? >> i think right now it is the right call. we cannot underestimate how tragic the past few weeks have been for him in the personal toll it has taken. one of the worst things happen to him that we can imagine happening in his life, he needs to take the time. but he needs to steer the ship. emily: his mother was killed in a tragic boating accident a couple of weeks ago.
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as for the coo, they have been looking for this person for a long time, and it has been a typical search because not only do you have find somebody willing to take the job, but someone that travis excepts. who do you think this mythical person is? >> uber is a multinational corporation and me to be looking at fortune 500 companies for the type of leadership and that is probably who we will see coming in to help course correct. emily: do we have any idea of who they have been talking to? >> we reported investors were interested in people like tom staggs, the old ceo at disney. i think that is more reflective of a category of person that any particular likely candidate. there have not been a lot of weeks about it. they have been able to keep the search quiet. but, maybe what does that say about what is to come? i think there is an expectation
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that hopefully this will come relatively soon. but there isn't much i can say and we are all waiting to see. emily: on that note, the executive bench is not very deep as part of the problem. they don't have a cfo, they don't have a coo. >> they needed general counsel. emily: exactly. exactly. so, how do you imagine a organization running by committee without people in these key roles? >> again, i think it is important to look at uber not as a startup, but a multinational corporation. who is managing the 14,000 people stuck out there is a bunch of department heads doing excellent jobs and making money for the company, expanding to new markets, running the business. i think those people continue doing what they are doing day in and day out. emily: do you think travis will come back? >> i think it is good to look at other companies like uber. so, at google, we had to amazing founders who changed their roles dramatically, but are still very involved. i think that is a good model for what happens next at uber. emily: that was lane kasselman and eric newcomer. meantime, automakers are seeking permission to put more experimental of driving cars on
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the road to speed up development. car companies like ford, gm, and toyota are asking congress to expand the cap on how many cars can be deployed under waivers from safety regulators. this according to the alliance of automobile manufacturers. the automakers are also asking congress to clarify state and federal oversight roles and update vehicle regulations that implicitly require a human driver. coming up, our exclusive interview with the london mayor, and how he expects brexit to impact the london tech scene. this is bloomberg. ♪
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♪ emily: this week, tech leaders came to the u.k. capital to celebrate london tech week, celebrating london's role as a leading global tech hub. in the city's mayor, sadiq khan, has big plans to push for more innovation. caroline hyde spoke with khan and asked his vision for the future while addressing brexit and his relationship with president trump.
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mayor khan: i'm really excited. it is europe's largest tech festival and it shows london as a hub for innovation and entrepreneurs. since brexit, we have had companies from facebook to google, snapchat to square announcing record investment, showing the confidence they have in london. but london tech week will see more than 300 events across london, more than 55,000 visitors from across the globe coming to london because they recognize we are europe's tech capital. caroline: talk to me about the vision you have for technology helping to adapt london. mayor khan: we are a small city. we have to be smarter. and use technology to help deal with issues in the failure of transport and how we deal with the issues of climate change, the causes and the effects, too. the global disability, helping
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those who have issues around disability to have access to better transport and jobs, export, and access to better skills. the great thing about london has been our ability to attract power and venture capitalists and to join the dots. the great thing is we haven't opened plexor, which will be a massive connected business campus, the largest in europe, making sure we can help startups to incubate and help flourish. it is important for people around the world watching this to recognize the system we have here that will help you flourish and thrive. caroline: you are also hiring new team members. mayor khan: what i have learned from other great cities around the world, we see what new york did and chicago and others and
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what i advertised for is london's first-ever, chief, digital officer. because we need a chief digital officer whose focus is making sure we are better connected, focus on making us smarter. how can we use open data to allow the private sector to pioneer? how can we make sure the local authorities across london use public services provided technology? we got to love from others. i am a great believer in that. caroline: why do you think the concerns around brexit haven't put off entrepreneurialism in london? mayor khan: i don't want the world to think because we voted to leave the e.u. the country that we are going to stop being open-minded, outward looking, that somehow we will change and become inward focused and the world must recognize that is not the case. london was the one region in the country that voted to stay in. one of the things i am doing is negotiating with the government
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a different deal for london if we can. in the meantime, we will be open to talent, innovation, innovation, to entrepreneurs. we are open to different backgrounds and different ideas, and that will not change. the key thing for us is to make sure the government recognizes the immigration deal. i respect that people in other parts of the country voted to leave the e.u. and one of the reasons was concerned about immigration. parts of the country do not want immigration. london voted to remain in the e.u. we need immigration and talent. london has to recognize that we contribute hugely to economic growth. if they want us to carry on being a success story, we need to attract talent.
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caroline: are you able to do this in the current political environment? mayor khan: well, what i am hoping is that theresa may and the cabinet recognize the results of last week cost general election. the country has rejected an extremely hard brexit. the government has to recognize that, otherwise, they will be forced to recognize the consequences. the consequence is not good for the government or anybody. the consequence is businesses are not choosing to come here, and it is not good for the government or london. caroline: you were just referencing an old adage that was david cameron's. mayor khan: being in london is a full-time job. i am not sure of other people's priorities. i do not have time to deal with tweets from trump. my views on donald trump have been consistent.
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the moment theresa may decided to invite donald trump on a state visit and offer him the red covered, i said it was wrong for a number of reasons. wrong because of his views and wrong because of him changing the long-standing, well respected policy of the usa relationship to refugees. and a whole host of policies that he has. at the time, i said the red covered was not the right thing to do to be rolled off the donald trump. we will see what happens. emily: that was london's mayor sadiq khan with bloomberg's caroline hyde. general electric shares rose in tuesday's session after the company announced jeff is stepping down as ceo. he will be replaced by john flannery, ending a 16-year tenure in which he dramatically reshaped the manufacturing powerhouse.
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during the facebook live chat tuesday, flannery encouraged his staff to finish what his successor started. >> we've got a track record we can be proud of. we got a window into the future where we will be even better. begun to build on our strengths, and make sure we are known as an execution company and deliver for all of our constituents, including customers and employees come and shareholders. they own the company at the end of the day. we are the vehicle to get there. emily: just last month we spoke to ge's cfo who, with these changes, will become vice chairman of the company. here is what he had to say about the big picture at ge. >> we are a global company. we serve global customers. we have a global workforce and that is the company we are and that is the company we are going to run. emily: coming up, bloomberg publishes an exclusive report that russian hacks on the u.s. voting system could be wider than previously known.
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all the details, next. and the might all episodes of "bloomberg technology" are live streaming on twitter. check it out. this is bloomberg. ♪
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♪ emily: welcome back to the "best of bloomberg technology." i'm emily chang. this week, federal reserve chairman janet yellen forged ahead with an interest rate hike along with additional plans to tighten monetary policy, despite growing concerns over weak inflation. now that capital is more costly to welland, how will that impact the tech ecosystem, specifically venture capitalists? and how could that trickle down to tech startups? >> micro always trumps the macro. the cost of capital or fed rate hikes is a lot less important
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than things like do we believe in the team and the vision? do they have a unique insight? do we think they can build something that's going to create new habits for people? emily: at the same time, softbank raised almost $100 billion, but there's so much capital built up in the system. how does that change the competitive landscape for you? >> when you were talking about that much money, it really is the latest stage companies that are going to be affected. in some instances, those financings are almost a substitute for a public offering. at the early stages, it is just impossible for a company to put $100 billion to work -- $1 million or $2 million or $5 million at a time.
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emily: so, do you see an impact on valuations longer-term? >> i don't think so. over the next few years, really, we will continue to see the fundamentals of the micro. the team and the quality idea and technology that changes in crates new disruptions, this one be a much bigger impact on valuations and opportunities than anything else. emily: you are the first venture capital investor in snap. snap shares are near their lows. can they fend off this competition from instagram? do you see innovation in the pipeline? >> i think that one of the things that snap has really done a good job of is to continue to focus on its vision of being a camera company. and that idea of additional functionality through the camera, ar, lenses is something that continued to push forward
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to the public offering. they made it easier for companies to spend money on them. so advertisers are finding more ways and easier ways to spend money on them. those are really two important factors that will continue to drive the value of the company. emily: that said, there are user growth issues abroad. can they really accelerate user growth, and if so, how? >> evan has been consistent talking about a focus on the developed world markets where the opportunities for advertising are the greatest. the behavior of the company has been consistent with what he has talked about. emily: you and i last spoke, jeremy, when we were trying out snap spectacles. you were sharing your pair with them. the were really bullish on them. seems like they haven't really gained the traction some people expected. what are your thoughts? some analysts are lowing their expectations. >> yes, at the time, evan characterized their spectacles as a toy. you should think about it in the context of a camera company. it will continue to make more experiments and try to figure out how to engage with users. i think you are going to see more and more interesting new
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product launches in the months and quarters ahead. emily: when it comes to other, exciting, consumer-facing investments, that is your focus. are you seeing opportunities out there? are you seeing the next snapchat? or is there a drought in terms of the pipeline? >> you know, we believe consumer technology has become popular culture. because of that, the key driver is not the technology itself, but rather the unique insight into consumer behavior that can precipitate a new company. and so, we are seeing that disseminated not just from silicon valley, but companies with those insights, whether it be in new york, l.a., or anywhere in between. i have been to arkansas to visit companies, i have been to
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illinois, tennessee. one of the things we are excited about is the democratization of entrepreneurship because it is so easy to build an app now. or to set up an e-commerce site. it is generating a new wave of interesting companies. emily: now, lifespeed partnered with apple on its foray into original content. the show, planet of the apps did get mixed reviews. so why should viewers give this show a shot? >> so, one of the things that is compelling is that for this new generation of entrepreneurs, if you are in chattanooga, tennessee, and you are interested in building an app, you don't have a good view into the silicon valley ecosystem. what sort of questions you might be asked. how you should be thinking about market size or competition? the last 20 minutes of each episode gives people a view into what it is like to engage with a venture capital firm. because we made investments in more than a dozen companies over the course of 10 episodes, and it gives people an opportunity to be a fly on the wall and watching happy with those conversations look like. where did we asked for questions, for more information? where were we ok with the risk?
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so foreign entrepreneur anywhere in the country who is thinking about wanting to raise capital and to realize the huge opportunity, it is going to give them a dry run as to what that is going to look like. emily: that was lightspeed venture partner jeremy lou. meantime in washington, u.s. attorney general jeff sessions testified before the senate intelligence panel about the firing of former fbi director james comey and the investigation into russian hacking in the 2016 presidential election. this is what attorney general sessions had to say about his participation in any collusion. gen. sessions: the suggestion that i participated in any collusion, that i was aware of any collusion with the russian government to hurt this country, which i have served with honor for 35 years, or to undermine the integrity of our democratic process, is an appalling and detestable lie. relatedly, there is the
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assertion that i did not answer senator franken's question honestly at my confirmation hearing. colleagues, that is false. emily: bloomberg also reported that russian hacking during the u.s. presidential election was much wider than previously reported, with the voting systems of the 39 states hit by cyberattacks. jordan robertson covers cybersecurity. he joined us from washington. jordan: a lot could be made about jeff sessions' refusal to answer almost all the material questions that were put to him, but we did actually learn a couple of really critical things. for one, for what may be the first time, a trump administration official has acknowledged that russia
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tampered with the election in a pretty critical way. but at the same time, attorney general sessions said he never received any briefings regarding the cyberattacks on the u.s. electoral infrastructure in 2016. which is remarkable when you consider he would be the person responsible for prosecuting and charging any potential perpetrators behind those attacks, if they were arrestable. emily: now, jordan, you have been reporting on this russian hack into the u.s. presidential election. you say 39 states may have been compromised. talk to us about the extent of what you learned. jordan: sure. this is a pretty big deal. as we reported today, as many as 39 states across the u.s. had indicators of compromise, showing that portions of their electoral systems were infected by the same russian group responsible for attacking the dnc and hillary clinton's campaign. these were not all statewide
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systems. some of these were county systems, some of these were local systems. but that doesn't mean they want important systems. in fact, some of those local and county systems are the most important electoral systems you can have in a state, because these are systems that actually run elections. the big point is this -- the previous number we knew, with systems in 20 states reported by nbc last year. now, we know it's as many as 39. the real question for us as a country is, how do we know how deeply these attackers have burrowed themselves into our electoral system? the fact is, we don't know the extent of it. and unfortunately, the government doesn't know either. that is a pretty scary prospect considering we are going into another election cycle. emily: so, on that note, do we have any evidence to show this actually affected the election results? jordan: we don't. as former at br director james comey testified previously, there is no evidence that the hackers actually changed votes in this election. but we do have evidence out of illinois, the canary in the coal mine that alerted the government to this ongoing hack with the florida registration systems,
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that at least in that state, the attackers tried to alter or delete voters' names and addresses. that is a big deal. what that would do, if you tinker with enough of those data fields, and people go to try to vote and they are not in the voter rolls at their precinct, they will not be able to vote. or if they can, they have to vote on provisional ballots, which takes forever and creates chaos at the polls. so, the idea of tampering with the vote can take many different forms. it is pretty apparent that the hackers in this case were experimenting with a few different varieties of how to tinker with electoral systems. emily: coming up, it is game on this week in l.a. we are going to e3 with executives from nintendo and take two. this is bloomberg. ♪
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♪ emily: instagram is trying to make it clear to users when influenced her post are paid ads. in doing so, the social fast will let users to tag a brand within the post. if the brand confirms the relationship, the post be marked as an ad with a pay partnership at the top. the brand is being tested with a handful of celebrities and will be rolled out more widely if successful. now, to the biggest videogame conference of the year -- e3 held in l.a. this year. among the biggest announcements, the xbox one x. on the software front, nintendo in particular, stirring up serious competition, unveiling pokemon and metro for the switch. the nintendo america president talked about his outlook for the gaming industry.
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>> we've got a great lineup of coming for the nintendo switch console. starting with this friday, a brand-new franchise called arms. we will be hosting an arms tournament here at our booth. the highlight is a new super mario game. the lines had been around the booths, and consumers have big smiles on their faces. things are going well for us. emily: there was a lack of third-party gaming announcements. should we expect other games to be announced later this year? >> you know, so we announced here at e3, a number of different games for nintendo switch. we have a new game coming later this summer. there is a franchise that we have announced a new edition coming later in the fall. we've announced well in
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development, a new metroid game. we got a wealth of games. plus, there are great third-party games from ea and bethesda, a lot of content coming, not only for nintendo switch, but for nintendo three ds as well. emily: microsoft and sony are going head-to-head on gaming consoles. why stay in the race for the fastest, hottest console in the market? >> are two competitors think it's all about processing power and beautiful graphics. candidly, nintendo believes in fun. our content brings smiles to people's faces. we enable grandparents to play with their grandkids. our content focuses on a fun, enjoyable experience. for us, the technology is really a small part of what we deliver. we deliver smiles and we deliver fun. emily: mobile gaming continues to be a big growth driver for you. what are the lessons you learned from mario on the iphone? >> you know, it is interesting. super mario run on the iphone and android, we are selling this
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application and games that have never been able to enjoy nintendo content before. countries like india, china, korea. all of these markets are enjoying this application. which means and maryam is freaking types of consumers. we also launched a game called "fire emblem heroes." this is a game doing exceptionally well, continues to be in the top of the charts for android and ios. so what we have learned is how to bring our content is more devices effectively, how to monetize it, and that bodes well for our future efforts including our next application, which will be in the animal crossing franchise. emily: apple ceo tim cook visited japan last year. he visited nintendo's office. how did that does it go? >> it went incredibly well. this visit happened as we are doing the planning for the launch of super mario run. we had our key game developer there and apple conference a
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year ago. but we have been able to foster is a very strong relationship with apple, strong relationship with google and android as well. but i think what we offer these marketplaces is a type of content that consumers love, that consumers have fond memories of in terms of intellectual properties. and that is important to them. those relationships are important to us as well. emily: when can we expect mobile games to be a majority of nintendo's revenue? >> emily, that is a great question. you know, today, the vast majority of revenue is driven by our dedicated games business. mobile is important to us, but mobile is only one of two other
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key platforms for us as we think about our growth. the relationships we are doing with the other broader companies like universal studios, is going to be important to us. i would say what we are doing with the licensed merchandise area, like the shirt i am wearing enables consumers to show off their love for i.t., that will be an important growth-driver. these are all of the different areas nintendo is going to drive revenue and profitability into the future. emily: you have more than $8 million on your balance sheet. do you plan to use it on m&a? >> you know, for us, it all depends on the opportunity, and how we can do something that would structurally add value to the business. we are fortunate. we have been a highly profitable company, and we are sitting on some cash. we are not eager to make any type of move. but to the extent that it can help us drive our strategic focus areas, there is the possibility. emily: what about virtual reality? we talked about this over the years. how bullish are you want the are you on vr now? >> here is what is interesting. at the show, i would say the amount of vr content this year is dramatically down. we have said all along that virtual-reality needs to be fun
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and it needs to be social. and it really hasn't been able to do either of those things yet. in our view, we think that augmented reality is potentially a more interesting space. obviously, pokemon go and what that did in the augmented reality is very important to our industry. we are continuing to look at these technologies and see how they apply to our business, but in the realm of virtual-reality, we are continuing to really just evaluate whether or not this is going to be an important trend for the consumer. emily: that was nintendo america president reggie fils-aime from e3. coming up, more coverage from e3. the ceo behind some of the biggest blockbuster video games in the world joins us for an update. strauss zelnick from take-two is ahead. and if you like bloomberg news, check us out on the radio. you can listen to us on the bloomberg radio app,, and in the u.s. on sirius xm. this is bloomberg. ♪
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♪ emily: while movie and tv studios continue to be disrupted by new forms of digital entertainment, videogame companies have come through looking like winners from an investor standpoint. take-two interactive is one company in the industry handily outperforming the broader market. we caught up with ceo strauss zelnick, asking exactly what is driving videogame stocks? strauss: there are a couple of things driving growth in our stock. the first is, i think, the promise of the business is beginning to be translated into the reality of how these companies are doing, ours included, and the promise has been interactive entertainment is the most rapidly growing part of the entertainment business and has been for some time. and with a cohort of consumers, that is now about 37-years-old on average, and skewing only
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slightly more male than female, there is plenty more growth in the population ahead. we also have the explosion of new gen platforms. about 85 million of them are out there, and we expect that to nearly double in just the next you years. the launch of nintendo switch. and most importantly, the ongoing engagement of consumers in between big releases. what we call "recurrent consumer spending." consumers are not only buying big video games now. they are staying engaged in the products they love. and we and our competitors are able to monetize that engagement. emily: some of the biggest announcements at this year's e3 -- microsoft's new, powerful console, the success of playstation 4, how are you positioning yourself for these announcements? strauss: well, these machines
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are backward compatible. so, they are effective for titles that are tailored for them, and they are also playable for titles that are already in the market. i think every time that there is more technical room for our creative folks to express themselves, they are excited by that opportunity, and we pride ourselves on making the most deep, the most immersive, and the highest quality experiences in the business. so, having a sort of, more exciting and deeper canvas on which to paint is always good news for us. emily: big news from take-two recently was the delay of red dead redemption 2. what's the reason for that delay? strauss: at the end of the day, we are always trying to put out the highest quality titles in the marketplace. while it is difficult to slip a title, when our development teams feel that more time is required to deliver the best possible experience, then that is the decision that is made. and it has paid off for us over and over again. at the end of the day, we are in the business of delivering the highest quality titles to the market. emily: nba 2k continues to grow, but there's a chance ea is going
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to bring back nba live this year. how concerned are you about renewed competition? strauss: we are always looking over our shoulder. we don't take anything for granted. i'm fond of saying that "arrogance is the enemy of continued success." our nba title, nba 2k17, is the highest rated sports title of new generation consoles. we are really proud of that. we have sold in nearly 8 million units of the title. our current consumer spending is up 70% year over year on nba. there's a lot to be proud of. our development folks will also tell you there's a lot more that we can do. and we believe that the title that is coming up this fall is going to be nothing short of extraordinary. emily: strauss, you and i have talked about the prospects of virtual-reality over the years, and you have very much taken a wait-and-see approach. what are the biggest challenges
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that you see that still remain to virtual-reality going mainstream? strauss: i think i am sort of an outlier in expressing some concerns about whether virtual-reality would be an appropriate market for the entertainment business. i think we can establish that it is very exciting technology for military uses, for health care, potentially. for entertainment there is some challenges. we put out a title for vr, carnival games, we have the nba experience. the market is still small for us and for our competitors. that said, if there is a market, if there is an installed base, if consumers want vr experiences, we stand ready and have the technical abilities, and i think creativeness, to bring those titles to the market. i am a little bit skeptical. emily: why are you skeptical? strauss: the notion -- there are any number of issues with regard to what is currently the vr experience. the notion of wearing occluded vision and a sound headset.
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the fact that the experience is solitary. it can create what those in the industry called discomfort -- the rest of us call it nausea. there are all kinds of problems associated with the current technology that make it inconsistent with the way people consume entertainment, and specifically interactive entertainment. emily: that was take-two's ceo strauss zelnick from e3. and finally, there is one big winner as the exciting nba season wraps up. disney's abc. the golden state warriors championship clinching victory over the cavaliers was the highest rating for an nba game since 1998. the game was also the second-most streamed nba contest, with an average audience of over 500,000 viewers. the only other nba game with a larger streaming audience -- the decisive game seven final of the 2016 season. and that does it for this edition of the "best of bloomberg technology." we will bring you all the latest in tech throughout the week. tune in every day. 5:00 p.m. in new york and 2:00
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p.m. in san francisco. remember, all episodes of "bloomberg technology" are live streaming on twitter. that's all for now. this is bloomberg. ♪ oliver: welcome to "bloomberg
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businessweek." i'm oliver renick. i'm coming to you from the magazine's headquarters in new york. in this week's issue, apple ceo tim cook talks about doing business with president trump while western union finds itself in the crosshairs of the white house. then, fallen hedge funder phil falcone is making new bet on vietnam. all that ahead on "bloomberg businessweek." ♪ oliver: we are here with


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