>> live from pier three in san francisco, welcome to "bloomberg west." our focus isang in on innovation, technology, and the future of business. samsung galaxy s5 is expected later this month and we are getting new details about what features it will have,

better battery, bigger screen and we will talk about that later in the show. out, "house of cards" came friday and more people are binging on this show than ever before. we will tell you how many and -- has netflix is more more shocking storytelling. our lead story is the company that makes the addictive and super popular puzzle game candy crushed saga has filed to go public. king digital entertainment raised $500 million in an ipo. the company is based in dublin. we got to see a lot of numbers and some pretty good numbers but not some great numbers. what is your take away? >> these numbers were pretty much what we reported about six months ago and it shows they are reliant on one game for the

majority of the revenue, about 87%. what we need to find out is if they can parlay candy crushed into other titles to make a lot of money. the next two titles fall off by a massive amount in terms of the amount of revenue. >> the way they make money is that users within the game by digital goods and that's where the revenue comes from. do they have the same kind of whale that zynga had, big spenders? >> they do, four percent other people are converting to actually paying for virtual goods. that was about three percent that zynga had at their peak. they are about the same. >> the number of people who are actually paying for these digital goods decreased monthly and revenue growth decreased? >> yes, that's one of the real things that investors will be looking at when they start the roadshow. one thing we have been hearing is that they were a little

concerned about that. some of their early-stage investors want to cash out now. they filing an ipo now? as you see in their filing, some of their investors really want to cash out. if you like they have been in a long time and they want to strike while the iron is hot and while they have this big revenue gain and see what other investors think. >> i want to bring in the cofounder of seriously in the executive vice president joining usvia skype from l.a. and jon erlichman. what do you think of the king numbers and the reliance on candy crushed saga. >> we are seeing a huge shift to mobile devices. i look at mobile now and think it is early days. when a company like king can't

get over 125 million daily users, that is bigger than the super bowl every day. it shows the potential for the platform to reach a very big engaged audience. can they leverage the network effect to create more titles that help them build that business over the longer term? >> what stands out to you, jon, having covered gaming companies? could what happened to zynga f wherearmville declined, can that happen to candy crush as well? >> absolutely, the biggest mistake that zynga ultimately made as it went public was thinking it had truly revolutionized the gaming business. like l.a.,in towns you're only as big as your last hit. it is true there is this new business model tied to things like damning and relying heavily on the wales to pay for the game

and the revenue and profitability of this business is impressive. what happens if people decide there is another big hit? if you look at the risks that are highlighted in the king respective, -- perspective, they point to electronic arts and zynga. there are bigger companies like if amazon or apple or facebook or anybody decided they wanted to make a more serious push for the king customers and how that might affect their business. >> let's talk about their other ifes -- pat rescue saga, these games have not developed a cult following that candy crush already has, will they ever? >> these games have been out for quite some time and they have been trying to cross pollinate the customers. it really has not resonated yet. with mobile, it takes a little

bit of time and some -- the problem that people have with these games is that they are so addictive you want to play that one name until you master it. they keep crush, adding more complexities and you play that game longer than you would most games. >> andrew, when it comes to innovation in gaming, can king make these current other games that are not hits yet into hits? do they have to start from scratch? i would say that there is not necessarily a formula. ofhink that serious amounts shares of entertainment is going to companies like king and we are starting to see the early signs of some very big companies emerge on mobile weather that the king or the likes ofs with supering up

bank or natural motion who sold their business to zynga. people are starting to vote with their wallets and that will have a big affect on the entertainment and media climate of large over the next few years. are a lot ofere people playing games but are they playing the games of established game makers? birds took the game world by storm. what does that mean for people like you who are in this as a business? how do you create longevity among your users? thinghink it's an amazing that i'm mobile, you can reach such a big audience. and integration of social features, it is possible to build something very big. our business model is all about building games that are really movieerience like apixar

but you engage in the world we are building through a pixar-li ke experience. is big audience, big reach, people are prepared to spend and are starting to vote with their wallets. inn you cut content everybody's pocket, you got an opportunity to build something pretty amazing. king is reasonably early in the beginning of their journey. >> what about the ability to turn some of these games into bigger franchises? i know you tried to do that at rovio with angry birds. how easy is it to make a game bigger than just a game? >> it's hard. building a brand is really hard work. theneed to marry creativity, the technical know- how, and the data. if you look at companies like disney who really have built

these ancillary revenue streams for their entertainment properties through the pillars of their entertainment business being television and film, i believe what you are starting to see emerge over the next few years is very big opportunity getting built on mobile platforms, games potentially being a key part of the entertainment ip and the ability for companies to really build ancillary businesses whether it be toys or whatever it may be. there are lots of opportunities to build ancillary revenue streams around the ip that emerges from the mobile platform. andrew, formerly ofrovio, thank you very much. we will be back with more on " bloomberg west" in a moment. >> i have breaking news out of

the ukraine. the situation there continues to develop. we are now hearing that protesters are clashing with authorities in the central square in gf. kiev. is onored vehicles o fire. the authorities have warned people to clear the square. they set a 6 p.m. deadline which is 11:00 a.m. new york time and now the clashes are continuing. the ukrainian police are attacking independent square from three sides. they're closing in on the protesters. they had warned women to clear the scare and closed the subway system in kiev. this is admitted to concerns on the part of the opposition that the ukraine is moving closer to russia politically and away from the european union. that is one of the central pieces of this argument. we will continue to update you as we get more developments from ukraine.

>> welcome back, apple has opened its doors in brazil. it is the first store in latin america which is one of the fastest growing smartphone markets in the world but it will not come cheap. taxes for high import electronics, the iphone will cost seven times what it costs in the united states. the contract is free and the will cost this much. ticking with brazil, in rio, millions of people live in shantytowns, homes that literally do not show up on the map. microsoft is sending a team there to build new mapping

infrastructure for these houses. the man charged with leading this effort is with us now. i wanted to pronouncefavellas right. why are we focusing on these? >> it's a misnomer. 80% of those who live in these places are middle-class in brazil. peoplede, 865 million live in these types of areas. these are very connected. these are places that have about one percent of gdp in brazil and have a tremendous penetration of mobile devices today. a functionking change above where we were maybe 15 years ago where are huge number of people under 30 in these places have internet access on their person. >> how do your efforts compare to google?

you don't get much if you search this term. the government has asked google to remove that word because it is controversial. , there was ago kind of pejorative term because they were dangerous lice is across brazil. in the last number of years, the government has stepped up effort to bring them more into the mainstream and reduce crime and increase services print we look at this as an opportunity to take people who today have this -- they are not on the map -- it is very disempowering. to see the tying goal in their eye when they can see their street or address or school show up on the internet, that has dramatic social and psychological effects. >> it makes sense for you guys are made business perspective. what about the next step? there is talk about tying this into the microsoft investment. >> that's quite a leap.

the cool thing about this is mappingu will the geo- infrastructure, the entrepreneurs in brazil can build things on top of that that we might not understand. you look at payment systems in world, itd around the is forming the skeleton so people can build applications and services. it makes sense of the populations in these places. >> what about the affordability to access the internet? >> we have about 90% of people under 30 who have access on their devices so that is a big step. we no longer have to ask how we getpc's or devices in here, they already have them and have internet access. the blue don't have electricity will have cell phones. that is the big change. it is allowing us to do this. >> what is the timeline for this?

brazil is hosting the world cup and the olympics, when will we see a mapping presence? >> that this is not the only answer. we are at the global innovation summit this week in silicon valley working with many government officials to say what else we need to do. what does the country need to do to empower these people? thingsl begin to see rollout later this year. the overall initiative has been going on for quite a while even in brazil and we thank we can contribute a small part of the technical piece of the situation. the government and the ngo's have been doing great work for years. >> facebook has made its mission to connect the world. they have partnered with samsung and nokia but what does that mean for microsoft? >> nokia is a partner but if you look at facebook in nigeria or areas like this, you have

facebook being used as a great commerce platform. they find jobs and make payments. it's about how to build an infrastructure and tap into the infrastructure already in place. it allows these economies would have better scale options and uses than they have today. >> let me ask you about another story -- there were reports out of china that you guys were censoring your chinese language search engine. can you respond to that? >> sure, it's not true. the report was that we were simplifiedr chinese inquiries. it's simply not true. in the u.s., there is no censorship of chinese language queries happening. elaborate on your experience with the new regime in china? has anything changed for got

more difficult? >> not that i have seen and the reality is that we have to abide by the local laws but outside the country, everyone doing these things or these queries in these languages are free to do what they want to do. >> thanks so much for joining us today. company behind the post-it note and coming up, we its research lab to find out what they are working on next. you can also on bloomberg television, streaming on your phone, your tablet, and bloomberg.com. ♪

>> welcome back. be a household name but there is 55,000 products that touch your life daily. packing tape, band-aids, reflectors, cleaning products and posted.

their crane goes inside research and development lab. you may recognize their work but the companies real value is in the glue that makes those tiny papers stick. >> you get up in the morning and you start your day and you wonder how many 3m products will you touch today? my answer would be more than you can count. the bottom line is all about adhesive and they've got that market cornered. >> in the consumer world with our post-it, it's a product you buy and many of the products we produce are used in larger or different devices. where our product is embedded in final product so you don't know it's in there. >> the chemicals that make stuff sticker not new but the technology they go into our. that is what is keeping these

guys in business. 55,000+der to create products, you need one heck of a pool of technology and capability. is aheir second-biggestlab electronics and energy. that you don't see but make your daily life possible? 3m makes those materials and those materials must be tested to the limits. >> this lab is our high voltage test lab and after we create new products, we bring them in here and wait test them until they blow up. this transformer behind me is 250,000 volts ac. >> every year, they test about 200 products. a lightning lab may seem like a far cry am a posted but it's all art of this company's plans to dominate every market. >> touching every company, every home and every life. >> overly ambitious? >> one might ask if you are

expanding into too many points? we have to be broad and diversified. the future is bright because we have the intention of broadening what we do and their technology. if you were one of the many who locked your self inside all weekend to watch the second season of "house of cards," stick around because we will talk about the risk being taken in original programming next. ♪ authorities in ukraine have set as the deadline for people to

clear the square so there are protesters clash as an security forces and those protests are continuing. we will continue to update you on the situation in ukraine as it develops.

>> you are watching "bloomberg west." us bona fide job posting may be hinting at an ipo. they are seeking an internal reporting specialist, someone to help prepare the company for sec filing standards. not comment on any ipo plans but they say that as the company grows, we are looking for people who can help us keep our financial reporting in order and up to global standards. the government sought access to the content of more than 35,000 user accounts in the first six months of last year.

this is under the foreign intelligence surveillance act. in total, the company received over 300,000 demand for information from federal, state, and local forces in the disclosures are the first by a top u.s. phone company sends a january decision by the justice department allowing more surveillance information to be released. bros., "the lego movie" won the top spot for a second week. it raked in $60 million. "about last night" placed second. it was a huge weekend for netflix. the season two premiere of the hit show "house of cards" came out. according to the latest data, binge watching in the first three days after the show's release was up over last year. 16% of u.s. netflix subscribers

watched at least one episode of the show within hours of his midnight release pacific time on friday. let me bring in jon erlichman. the heads ofe of the first studios to carry this. anythingo not give away for people who have not been able to see the first episode. i have to say that i am still reeling from the shocking plot twist in the very first episode. larry, what do you make of the netflix ability to take that kind of risk? >> the fact that we are talking about it right now on tv goes to the point of they are proving that anything can happen on netflix. people are talking about it and i think it is drawing a lot of people to the show. it is something you would not typically see on broadcast television, for sure. >> why wouldn't we see it on

broadcast television? is there something about the format or is it simply the netflix willingness to be a bit bolder? >> on broadcast tv, if you have a big star, you will use that talent to bring your audience back in week after week. if you lose a big star, it might hurt your ability to use them to market. netflix is saying that we are going to take creative risks and do what we want creatively. i think we have seen something similar. this past season of "game of thrones," there were some real shockers in terms of beloved characters being killed off on the show. that got people talking and got the social media machine churned up and brought people to the show. >> i was going to bring that up. do you think what we see with isflix and "game of thrones" it because they are not on the broadcast networks or is

storytelling changing? >> i feel like you're dancing dangerously close to give away territory. >> we are. say yes, 100%, and when netflix signed up to do these originals, they did not want the same kind of stuff you could see anywhere else. andt here.ve van z it was a story about a mobster in norway with subtitles. they tested it and they wanted to keep it different. if you think about broadcast television, we see a lot of procedurals, programs that have wrapped up by the end of the hour or the half-hour where there is a huge appetite for those in other markets. you can sell those shows because you can tie them up with a bow very quickly.

there's is a balancing act of doing something like that cbs does or will they do more shows so theyder the dome" stay competitive with "house of cards?" thatewers were complaining "house of cards" did not have a real recap. it has been almost a year since you have seen any "house of cards" content. can that be a problem in terms of losing your audience along the way? >> you have the benefit of being able to catch up on season one. butcap would be convenient you also enable people to come into the show from scratch. i think that has worked very well for hbo. a lot of people see and hear about the controversy in certain episodes of "game of thrones." season one or episode one of that season and catch up. you will see a big uptake on season one on "house of cards"

on netflix. and ourhat with us shows come out and season one gets a huge bump in viewership. it may like to their advantage. >> are you seeing that the viewers stick around for other shows? is anyone signing up for netflix and then leaving? >> i think that is always a concern. hbo has grappled with that. right now, they have a lot of other shows on this is the first time we are seeing some real connective tissue between their original series. on the back of the last episode of "house of cards" season two, you will see promos for the new" orange is the new black" season two. they are making an a credible argument to their subscribers to stick around. do we know about how this original content has influenced the netflix business? what are the numbers telling us? have something they

can immediately point to and say that this will help our subscriber numbers. you've got a built-in audience. you have highlighted the traffic that tells us many people are watching this show. it is a different place from where netflix was when they said we should try these originals. they are very much using these as a way to boost their subscriber numbers. there is a tangible tie into the financials. there is also a question of the idea of "house of cards" as a movie. some say it is like watching a 12 hour movie and you wonder if the question should be about these shows versus traditional television but vs the movie industry. is there a potential for movies to be distributed in a way that is cut up similar to the way you have "house of cards" as a way to get people interested. in the end, it is a fight for your time.

players ine entertainment are vying for the same hours you have. >> kevin spacey made that same comparison that "house of cards" -- what is the difference between that show in a binge were the format and a film? actors like kevin spacey and robin wright, they are movie actors. what do you see as the netflix ability to continue to attract that kind of talent with this kind of format? >> they are showing that they are willing to take creative risks. that is appealing to the talent. it is a very unique type of storytelling which will continue to attract movie talent. the fact that they are creating a bridge between gnome and traditional television and it's very appealing to tell these toger stories -- a movie is two-hour investment and then you are out.

people like the idea of knowing that they can stick around for 12 hours, they can watch for two hours, they can watch for one hour -- it is the best of both worlds. >> thank you very much for being with us. thisot all the way through series. i'm looking forward to more this week. we will be right back with more of "bloomberg west." ♪

"bloombergback to west." the new samsung high-end smartphone will have a sharper and bigger screen. aboutrger display will be 5.2 inches and the phone will include an improved battery and camera. it is said to be released about the same time as an upgraded galaxy smart watch and may sell for less than previous models. there was pressure from at least

one wireless carrier. fallon made his unofficial debut on "the tonight show" last night. it's the first time in 42 years the show is back in new york and hollywood is not throwing in the towel yet. a political story because of the tax breaks involved. peter cook cook is in new york with the story. midnight is too late for me. >> i saw a few clips today but this is a big story in new york. it is a symbolic loss for los angeles. the fact that the show has moved back to new york. that means there are still plenty of production happening in los angeles. in california, 17 billion dollars in wages in california because of the entertainment industry which is far more than new york or dc. still, the last little bit

california has taken half of the production days they have in 1996. total unemployment is down at least in the county of los angeles. the ellie mae or is pushing the governor and the legislature to at least double -- these are breaks by state. a big reason why a lot of those productions have moved otheplaces outside hollywood. the tax breaks make a big difference in learning "the tonight show." >> i know jimmy fallon wanted the tonight show in new york so how did this other stuff like intuit? >> he wanted to be in here. thtax breaks made a difference. the jimmy fallon tax break made a huge difference. 30% tax credit offered by the state of new york.

the requirement for any show that qualified, you have to have a live studio audience of 200 that fits with "the tonight show." it also had to be a talk show and a 30 million production budget and it needed to be filmed outside new york for the last five years, it's about the only show that qualifies. it was tailored specifically to lure the show. e breaks are saving mbc perhaps more than $20 million per year. the production costs may be more than hollywood but the fact that got those tax breaks makes it cost-effective to be here in new york. >> what are the impacts in hollywood? i'm sure many people lost their jobs in l.a.? >> about 100 62 people on the production staff apparently lost their jobs. there is the collateral damage from vendors nearby. that, many from all people waited in line and tourists visit the area. perhaps the biggest hit was the

psychological impact. this is a big fish that got away from los angeles. the mayor is trying to make his pitch to the governor and state legislature. they want to boost those tax breaks because they say they are losing out to other places. thank you very much. we will be right back with more of "bloomberg west." ♪

>> welcome back to "bloomberg west." i want to get to what's happening in the ukraine. protests have become more violent in central kiev. these are live pictures of protesters in the square, more than 20,000 of them. social media is playing a big role in the arab spring protest out of egypt and we are seeing

that happening now as well. let's go to jon erlichman. how often have we covered this over the last couple of years? the role social media continues to play and what better timing than halve the director of the oscar nominated film "the square." it's about everything that has happened in egypt over the last couple of years. this is a netflix film. let's start with your reaction to what we are hearing about in kiev and ukraine have this builds through social media with your experience in cairo? >> what it shows is that even though the particulars of these specific struggles are different, there is a global movement happening of young people trying to claim their right. we recently showed the film in the and the protesters in

middle of that square demanded to show it there and they subtitled it and translated it themselves into ukrainian. they sat in 15 degrees below and atched it and we skyped it in and at the end, they said they will not be free until the square is free. there is an interconnectivity that is happening that is truly amazing to watch. i think that something that's important to remember that we felt when we were filming our film is that often the news covers the head of this or that organization. in ourhe brotherhood and the military. what is important to remember is that there are real people with real families that are struggling to change the situation on the ground, to struggle for human rights and very basic freedoms that erybody across the world deserve. that's what our film brings the

story back to is these individuals that are currently on the front lines of change. >> it's amazing to hear about people in kiev seeing your film and you hear a lot in social media about the learning lessons are people studying what happened at other protests in other countries. i don't know if they necessarily apply that in another country but they use it as a learning experience as you see these situations on folder around the world. can you elaborate on that? >> it is incredible. because we released the film online and 47 countries simultaneously, we have had people connecting online afterwards by going to #the square and talking about their experiences. this is meant to be a conversation starter. people in south america, venezuela are asking to show that film and their squares for it we had a huge screening in mexico city. young people are connecting

online after they see the film by going to #the square. a conversation has started that we have absolutely no control over. it has been absolutely inspiring to see. it is a new kind of movement of young people using public spaces to demand very basic human rights. >>at about when you are documenting all of this? what is it like to be on the ground actually making a movie under these circumstances? >> i grew up in egypt so my family lives in egypt. all of us who made the film met each other in the square. it was a true collaboration in all of were there so we had a big stake in what was going on in the country. documenting this, it was very important for me that i put cameras in the hands of people.

the main character in the film learned how to film. are in a country that was colonized by many different people in the story of each of ends up being told by people outside of egypt. it was important in this film to really have the storyof the revn give their square and experience of what it felt like to be experiencing a revolution live and in the shoes of the protesters. >> i want to as of your film fig a home on netflix. we talk about their original television shows and "house of cards" gets a lot of attention. walk us through the process of your project coming to that we opened the final cut at the toronto film festival and we were greatly honored to have had a lot of offers. we decided to go with netflix ecindsf the

widest and most diverse audience possible. heatt was going to be released online in 47 countries simultaneously, the fact that most people can afford netflix, we did our own little survey and we found that many people have netflix because of its low cost. that was imrt as we speak, there are situations happening on the the situation in egypt a still unfolding said to be able to release it online and have people be able to connect online immediately afterwards and to affect the conversation happening on the ground as we speak, that has been absolutely amazing and that happened because it has been released online so widely through netflix. factor in the filmmaking process because things continue to unfold so you had to go back and film more. what do you think about the message that if you have a good

night on oscar night and this becomes a asked winning film in the best documentary category in the name netflix is -- is attached to that, what message does that send to hollywood? >> it sends a message to the world. achmed, they what lead character in our film, he groped poor area of cairo and his mother is a literate and he said and we were nominated for the oscar, he said of this film gets out there, if this film wins and people can see it around the world, it will mean that our story in our voice will never be able to be silenced. that is so important right now that people struggling on the ground realized they have international support. interesting, the director of "the square." >> thank you so much. >> we will continue to cover these protests as they unfold in kiev. and we will be right back.

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>> from bloomberg world headquarters in new york, i mark boughton. this is "bottom line." -- i'm mark crumpton. today, antigovernment protests in ukraine turned deadly. worldome iran tells powers it won't get rid of its nuclear facilities. and we will take you on an inside tour of 3m. to our viewers in the united states and those o joining us around the world, welcome. we have the headli