>> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i'm emily chang. our focus is on innovation, technology, and the future of business. a few big stories we're following today. the new galaxy we are expecting later this month. we are getting new details of a bigger screen and a better battery. just how much better, we will talk about in the show. also, "house of cards" came out on friday.

more people are binging on the show than ever before. we will tell you how many. we also have more shocking storytelling. our lead story of the day is the company that makes the addictive and super popular puzzle game "candy crush" has filed to go public. they're planning to list as king on the new york stock exchange. the company is based in dublin. we got to see a lot of numbers. a lot of pretty good numbers, but not so good. what are your takeaways? >> these numbers are pretty much what we recorded six months ago. they are reliant on basically one game for the majority of the revenues. about 87%. what we need to find out from them is that they can parlay "candy crush" into others back and make a lot of money. >> basically the way to make

money is that users within the game by digital goods and that is where all of the revenue comes from. do they have big spenders, if you will? >> 4% of their people are converting to paying for virtual goods. that was about 2%-3% that zynga had. they are about the same. >> the number of people who are paying for the digital goods have decreased monthly. revenue growth decreased over the quarter. >> yeah. that is one of the things investors will be looking at when they start the roadshow. one of the things we have been hearing is that they were little bit concerned about that. their early-stage investors want to cash out now. >> they do have other games, but they are pennies compared to -- >> exactly. some of the investors really want to cash out.

they feel like they have been in for a long time and they want to strike while it is hot. they went to see what other investors think about it. >> i want to bring in the cofounder and ceo of the mobile day maker at rovio. he knows a thing or two about mobile gaming. also, jon erlichman. what do you think about team's numbers and the reliant on "candy crush" products? >> we are seeing a huge audience should to mobile devices. i look at mobile now and think it is really early days. when a company like king can go over 125 million daily users, that is bigger than the super bowl every day and shows the potential for the platform to reach a page engaged audience.

and they leverage the network effect to great more titles that can help them build their business? >> jon, what stand up to you having covered rovio and other gaming companies? what happened to zynga with the popularity declining, could that happen to candy crush as well? >> absolutely. the biggest mistake that zynga made as it went public was thinking that it had truly revolutionized the gaming business when at the end of the day, especially in towns like los angeles, you are only as big as your last hit. there is a new business model tied to things like gaming and relies heavily on the whales to pay for that game and the revenue profitability. the business king is impressive. what happens if people decides

there is another big hit? if you look at the risks that are highlighted in king's perspective as any company that is going public highlights, they point to electronic arts or zynga or bigger companies like amazon or apple or facebook or yahoo! or disney decide they've want to make a bigger push for king customers? >> let's talk about some other games. "pet rescue saga," "farm hero saga" -- if they have not developed the same kind of cult that "candy crush saga" has, will they ever? >> these games have been out for quite some time. they have been trying to cross advertise the customers. it has not resonated yet. with mobile, it takes a little bit of time. the problem that people have with a lot of these games is that they are so it did it that you want to play that one game into you have mastered it.

with "candy crush" they keep adding more levels of more complexity. you play a longer than you would with other games. >> when it comes to innovation and gaming, you can mccain make some of the current other games that are net hits yet, can they turn them into hits or do they have to start run scratch? >> i would say there isn't necessarily a formula. i think that serious amounts of eyeballs and a very big share of the wallet is going to companies like king. we are starting to see some big new companies in march on mobile, whether that be king or the likes of softbank and gung ho. i think that people are starting to vote with their wallets and their eyeballs. that will have a big effect on the entertainment and media

climate at large over the next few years. >> andrew, there aren't a lot of people playing games, but are they playing the games of established makers? we saw angry birds take the gaming community by storm. that was basically a one-man show. what does that mean for people like you who are in this as a business? how do you create longevity among users? >> on mobile, you can reach such a big audience. it is really possible to build something very vague. our business model is all about building games that are really an experience, they like a bit like a pixar movie. it is a pixar like mobile experience.

i think what is exciting is big audience, big reach, people are prepared to spend and are starting to vote with their wallets. when you've got content in everyone's pocket, you've got an opportunity to build something amazing. king is reasonably early the beginning of the journey. >> what about the ability to turn some of these games into bigger franchises? i know you guys try to do that with rovio and anger birds and thing parks and merchandise. how easy is it to make a game bigger than just a game? >> it is hard. building a brand is really hard work. you really need to marry the creativity and the technical know-how and the data. i believe that what you're starting to see emerge over the next few years is very big properties get built on mobile platforms.

games potentially being a key part of entertainment and the ability of companies to build and accelerate businesses whether it be books or toys with hasbro or whatever it may be. there are lots of opportunities to build. >> andrew of seriously hq and cliff edwards and jon erlichman. thank you. we will be back with more "bloomberg west" in a moment. ♪

>> welcome back to "bloomberg west." i am emily chang. this is apple's first-order in brazil, latin america. there are high import taxes. the iphone will cost seven times what it does in the u.s. the 16 gigabyte contract will cost over $1000 in brazil compared to $872 in china and $649 in the u.s. sticking with brazil in and around rio, millions of people live in homes that literally do not show up on the map. microsoft is sending a team to brazil to the old new mapping

infrastructures or these towns. we have a man in charge of leading this effort. did i pronounce that right? >> you did. favelas. >> some people call them shantytowns or slums. >> 80% who live in rio are middle class. we look worldwide coming millions of people live in these kinds of areas around the planet. these are connected towns. they have about one percent gdp in brazil. they have a tremendous penetration of mobile devices. they are taking a step function change above where even we were 15 years ago where huge number of people under 30 actually have us on their person. that step of getting the hardware is diminished.

>> if you search for this term tom you do not get much. there are reports that the government has asked to remove that specific word because it is so controversial. >> if you look 15 years ago, certainly there was a pejorative turn. there were dangerous places across brazil. in the last number of years, the government has stepped up efforts to bring them more into the mainstream and reduce crime and increase services. we looked at this as an opportunity to take people who are not even on the map. how disempowering is that that they do not even show up on the map? you can see the trickle in their eye when they see their street or the school show up on the internet. there are certainly sociological and psychological effects for the people. >> that makes sense. >> i think the really cool thing about this is once you build the

geo-infrastructure, they can buildings on top of that that we may not even understand is there today. part of this is scaffolding the skeletons come if you will, so people can build applications and services that make sense for those regulations in these places. >> what about the affordability for the internet at all? >> many have internet on their devices. we no longer have to say how do we get pcs in here? they already have them. people who do not have electricity -- >> what is the timeline for you guys? when are we going to see a bigger mapping bing presents? >> mapping is not the only

answer. it is one part the overall solution. we're working with about 450 ngos and government officials and entreprenuers to say, what else does the country need to do to really empower these people? we begin to see things rolling out later this year for us, but the overall initiative has been going on for quite a while. we think we contributed to a small part. the government and the ngos on the ground have been doing great work for years. >> facebook has made its mission to connect the world. they have partnered with bing and samsung in nokia. >> we are working with no caps on a mapping site. if you look at facebook in nigeria and areas like this, you have facebook being used as a great commerce platform. they find jobs and make payments.

how do you build an infrastructure? how to tap into the infrastructure that is in place to allow these economies diane that her scale options than they have today. >> i want to ask about another story that was breaking over the weekend. there were reports out of china to you guys were centering your chinese language search engine. can you respond? >> sure. that is not true. that is a good news. [laughter] we are censoring results in the u.s. for simple five chinese queries. we do not do it. there are assertions in the u.s.. in the u.s., there is no censorship happening for those

outside of china. >> can you elaborate on your experience with the new regime and china, the new chinese governments of the new president took over here and have things gotten more difficult? >> no, not that i have seen at least. there are local laws in that country. everyone who are doing these queries are free to do and see what they want to see. >> stefan weitz, thank you for joining us on "bloomberg west." you can watch us streaming on your phone, tablet, bloomberg.com, and on bloomberg tv. ♪

>> welcome back to "bloomberg west." i am emily chang. 3m may not be a household name, but their products touch our lives daily. we're talking about band-aids, cleaning products, and post-its. rachel crane goes inside 3m's labs to find out how it is

innovating. >> you might recognize their work, but the company's real value is in the glue that makes those tiny papers stake. >> you get up in the morning and you start your day and you wonder how many 3m products that i use today? more than you can count. >> 3m's bottom line is all about adhesive. it has got that market cornered. >> many of the products we produce are used in larger and different devices. our product is embedded in the final product so you do not know it is necessarily in there. >> the chemicals that make stuff stake is not new, but the technologies that they go into our. that is what is keeping these guys in business.

>> in order to great 55,000 plus products, you need one heck of a will of technology and capability. >> their second-biggest lab is of electronics and energy. you know, those wires that you do not see, but make your daily lives possible. 3m makes those materials and they have to be tested to their limits. >> this is our test lab. after we create new products, we bring them in here we test them until they blow up. >> this is a transformer. >> every year they test hundreds of products. a lightning rod might seem to a far cry from post-its, but it is part of the company's plan to dominate every market. >> touching every company, every home, and every life. >> we have to be broad and diversified. the future is bright because we have the intention of broadening the things that we do and broadening our technology. >> that was rachel crane inside

one of 3m's r&d labs. well if you were one of the people who lock yourself inside this weekend to watch netflix's "house of cards" we talk about original programming next. ♪

>> this is "bloomberg west," where our focus is on technology and the future of business. i'm emily chang with your bloomberg top headlines. a spotify job posting and they might be having an ipo. they're looking for someone to help to prepare the company for filing standards and set up all that is necessary to be fcc compliant. they said in a statement as a company grows, they're looking for people to help keep their financial reporting and order and up to standards. at&t said the company sought access to the content of more than 35,000 user accounts in the first six months of last year. in total, the company said it

received over a hundred thousand demands for information from federal, state, and local court in a year. it is a first by a top u.s. phone company since a january decision by the justice department allowing more surveillance information to be released. and warner brothers, "the lego movie" won the top spot over presidents' day weekend. and it was a huge weekend for netflix. this season two premiere of the hit show "house of cards" came out. according to the latest data, and watching in the first three days after the release was way up over last year. 16% of u.s. netflix subscribers

watched at least one episode of "house of cards" within hours of its midnight release pacific time on friday. i want to bring in jon erlichman. i also want to bring in the ceo of vuguru. guys, we have to try our hardest not to give anything away for people who haven't seen the first episode yet. i have to say that i am still reeling from the shocking plot twist in the very first episode. what do you make of netflix's ability to take the kind of a risk? >> the fact that we are talking about it right now on tv, i think that goes to the point that they are proving that anything can happen on netflix. people are talking about it. it is drawing a lot of people to the show. there are some that you wouldn't see on broadcast tv for sure. >> why wouldn't we see it on

broadcast tv? is there something about the format or simply the willingness to be a bit bolder? >> on broadcast tv, if you have a big star, it 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 market. netflix is saying we are going to take creative risks and will do what we want creatively. we have seen something similar this past season on "game of thrones" on hbo. there were real shockers in main characters and lots characters being killed off the show. that got people talking and the social media machine turned up. >> i was going to bring up "game of thrones." we're seeing with netflix and "game of thrones" with his plot twists, is it because they're not on broadcast networks or is

storytelling changing? >> first, let me figure dancing dangerously close. [laughter] >> we are. let's pull back a bit. >> i would say yes, 100%. when netflix signed up to do originals, they do not want the same kind of stuff you would see anywhere else. what was the first original that netflix did, they talked about the story of a lobster in norway and there were subtitles. they said to keep the subtitles. keep a weird and different. i think when you think of broadcast tv, we still see a lot of procedurals. programs that have wrapped up by the end of the hour or the half-hour, you know. there is a huge appetite for other markets to sell those shows. there is this kind of balancing act to do something like that,

which is cbs does a lot of, or to do or shows like "under the dome" so we stay competitive with programs like "house of cards." >> there is something else that viewers were complaining about. "house of cards" didn't have any sort of recap. it has been almost a year since we have seen any "house of cards" content. larry, can that be a problem in losing your audience along the way? >> you have the benefit of being able to catch up on season one. a recap would be convenient, but i think people can also come into the show from scratch. that worked very well for hbo. people see and hear about the controversy. they would go back to season one or episode one of the season and catch up. i bet you'll see a big uptick on season one on netflix. we have seen that on some of our

shows were new season comes out and then season one gets a huge bump and viewership. it might play to their advantage. >> are you also playing that viewers stick around for other shows? i wonder if anyone is signing up for netbooks for a month for free and then leaving. >> i think that is though is a concern. i think right now they have a lot of other shows. this is the first time we're seeing connected tissue between the original series on the back of the last episode. you will see a promo for "orange is the new black" season two. they're making a credible argument. stick around. there is a lot more coming. >> what do you know about how this original content has influenced the netflix business? what are the numbers telling us?

>> they have something that they can immediately point to and say this will help our subscriber numbers. he got a built in audience. you have got the traffic that tells us people are watching the show. it is a different place than when epochs was before to see if originals would work. they are using this as a way to boost the subscriber numbers. there is a tangible tie back to the financials. i think there is also a question of the idea of "house of cards" as a movie. how many times have you heard people say it is like watching a 12 hour movie? you almost wonder whether it should be "house of cards" and netflix versus additional tv, but versus the movie industry? is a potential for movies to be distributed in a way that is similar to the way you have "house of cards" as a way to keep people interested? at the end of the day, it is a fight for the time. all of these players and entertainment are vying for the

same hours you have got in the day. >> kevin spacey made that same comparison that "house of cards" -- what is the difference between "house of cards" and a film where actors like kevin spacey and robin wright, they are movie actors. what do you see in the netflix's ability to attract that kind of talent with this format? >> they are showing that they are willing to take creative risks. i think that is appealing to the time. there is unique storytelling that will attract movie talent. as you just described, they are creating a bridge between film and traditional tv. it is very appealing to tell these longer stories. a movie is a two-hour investment and then they are out. people like the idea of knowing

that they can stick around for 12 hours and watch for two hours or one hour. it is the best of both worlds. >> thank you to the ceo of vuguru and jon erlichman. i'm looking forward to more episodes this week. we will have more "bloomberg west" after a quick break. ♪

>> welcome back to "bloomberg west." i am emily chang. this particular smartphone will have a sharper and bigger screen. that is according to people who aware of the matter. it will be 5.2 inches and it will have a new and improved the battery and camera. it will be released at about that same time as a new galaxy smart watch. there has been pressure from at least one wireless carrier.

jimmy fallon made his official debut on the tonight show last night. it was his first time in 42 years that iconic show is back with old new york stomping ground. hollywood is not throwing in the talent just yet. it is not a coast-to-coast issue. peter cook is in new york with this story. i do not know about you, but midnight is too late for me. >> too late for me as well. i saw a few clips. this is a big story in new york. it is a symbolic loss for hollywood. the tonight show has moved back to new york. assuming there is plenty of production being done in los angeles, 191,000 jobs in california and $70 billion of wages in california because of the entertainment industry. that is far more than new york. the total entertainment employment is down 6.6% since 2000. the l.a. mayor is pushing the

government and the current $100 million a year in tax breaks at the state awards to the industry. that is well below what you see here in new york. $420 million a year and $100 million in los angeles. the tax breaks are making a big difference. >> i know he wanted it in new york. how did other stuff play into it? >> he is a new york guy, but the tax break did make a difference. the show did start here. there was a bit of a history. 30% tax credit offered by the state of new york.

you have to have a live studio audience of 200 people. that fits with "the tonight show." it had to be a talk show and needed to be a $30 million reduction budget. it had to have been filmed outside of new york for five years. it was tailored specifically to lure the show back. the production costs might be more than they were in hollywood, but the fact that they have got the tax break is making it cost-effective. >> what are the impacts in hollywood? i am presuming a lot of people lost their jobs in l.a. >> 160 people on the production staff lost their jobs. there's also the collateral damage. the burbank studio is there. the tourism punch. a lot of tourists visit the

area. this is a big fish that got away from los angeles. the mayor is trying to make his pitch to not let another one get away because of those tax breaks. >> all right. peter cook wearing his new year cap today. thank you for that report. we will be back with more "bloomberg west" after the break. ♪

>> welcome back to "bloomberg west." i am emily chang. i went to get to what is happening in ukraine right now. protests have become more violent and more deadly. we're looking at live pictures of protest in the square. more than 20,000 protesters we are told. we are seeing that happening now. i want to get to jon erlichman

in l.a. for more. >> how often have we covered this over the last couple of years? social media plays a role in these stories. the better timing than to have the director of the oscar-nominated film "the square" that is about everything that has happened in egypt over the last couple of years. is is a netflix film. let us begin with the reaction of what we're hearing about and how all of this builds through social media compared to your experience in cairo. >> i think what it shows is that even though the particulars of these struggles are different, there is a global movement happening of young people trying to claim their rights. we recently showed the film and demanded they show it there.

they subtitled in and translated it themselves. they sat in 15 degrees below and watched it and we skyped. at the end of the screening, they said they will not be free until the egyptian square is free. there is a connectivity that is happening that is truly amazing to watch. something that is important to remember that what we felt when filming our film is that often the news covers the head of this organization or that organization. in our case, it was the brotherhood of their military. what is important to remember is that of real people with real families that are struggling to change the situation on the ground, the struggle for human rights and the very basic freedoms that everyone across the world deserves, that is what the film brings the story back to.

it is these individuals that are currently on the front lines of change. >> it is amazing to hear people screening or hearing about your film and you hear they apply it to another country and use it as a learning experience as you see these events unfold around the world. can you elaborate on that? >> and has been incredible. we have released the film online. we have had people connect the online afterwards and going to #thesquare and talking about their experiences. it is meant to be a conversation starter. they want to show the film and their squares. it was a huge screening in mexico city. young people are connecting

online after they see the film by going to #thesquare. a conversation has started that we have no control over. it is inspiring to see. it is a new kind of movement of young people using public spaces to demand very basic human rights. >> what about when you're documenting all of this? what is it like to be on the ground and making a movie under the circumstances? >> i grew up in asia. i family lives in egypt. all of us who made this film at each other in the square. it was a true collaboration. we all had a big stake in what is going on in the country. documenting this, it was very important. i put cameras in the hands of egyptians. the main character in the film learns to film and about a quarter of the footage is his.

egypt is a country that has been colonized by many different people. the story of egypt and the being told by outsiders. it was important in this film to have the story come out of the revolution and be boring from that square and give experience of what it felt like to be expanding ever evolution live and in the shoes of the protesters. >> i want to ask a question about netflix as a platform and the process of your film finding a home on netflix. walk us through the process. >> we open the final cut at the toronto film testable. we were honored to have a lot of offers. we decided to go with netflix. we saw that they would reach the hearts and minds of the widest

and most diverse audience possible. the fact that it would be released online in 47 countries simultaneously, the fact that most people can afford netflix, we did our own little survey. what we found is that many people have netflix. it has a low. that was important to us. the second part is what is happening right now as we speak. there are situations happening on the ground. the situation in egypt is still unfolding. we want people to be able to connect online immediately afterwards and to affect the conversation that is happening on the ground. that has been amazing. >> and i know that was a fact for you in the filmmaking process. these were continuing to unfold. you had to go back and fill more. what do you think about the message that if you have a good night on oscar night if this

becomes a best winning film in the best documentary category and then a netflix is attached to that, what message does that send to hollywood? >> i will tell you a message is sense to the world, which is what it is about really, it is about the lead character in the film that grew up in a war area of cairo. he said, when we were nominated for the oscar, he says if this film gets out there and wins and people can see it around the world, it would mean that our voice will never able to be silent. that is so important right now for people struggling on the ground. they have international support. >> really interesting stuff. the director of "the square" joining us from new york. >> thank you. >> that is it for this edition of "bloomberg west." ♪

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