>> live from pier three, welcome to "bloomberg west" where we cover innovation, technology, and the future of business. iphones are not the only product getting larger, get ready for bigger ipads. they are getting ready to make them with 12.9 inch screens compared to the current 9.7 inch. production is set to start early next year. the rivalry between uber and lyft takes a new turn. huber has a new recruitment

program. the brand ambassadors are requesting rides from lyft, recruiting the drivers resulting in canceled lyft drives. we're are joined by our bloomberg contributing editor, paul kedrosky. are you surprised that it has gotten this down and dirty? >> no, not really. travis is an aggressive business guy. the smashing out marketing is what they have done all along. the idea that you might use brand ambassadors to try to recruit lyft drivers to uber should not surprise us.

>> you just wrote a big cover story on uber, they have denied this in the past. the ceo said this has not happened but also saying that he believes that competition is good. let's take a listen to what he had to say. >> competition is good for the consumer but i like to say if you're out on the court, if you are lebron james, you are going to want to dunk on somebody. competition can be fun but it is better for the consumer, better for the driver. >> do you believe him? >> they have not denied this in the past. they came out and actually said that they had been too aggressive. where they are trying to stay on is where they are undermining

drivers of other services their ability to make a living. really, -- >> they are admitting to have this operation, the verge is reporting that it is a lot dirtier than is suggested. >> are they deliberately canceling rides and other services? they say they're not, they have a history of doing that. the intention is not to do that. >> i asked an investor about their tactics in general. he said that yes, the tactics are aggressive, across the line, not necessarily but sometimes the kind of taxes can backfire. >> it is fairly rare. this is a new era for technology, we have these companies, possibly immature people running tech companies

that are not facing -- technology buyers were with other companies. now they are consumers, individuals, in this case, we have companies like lyft and uber and smaller competitors that are dealing with new customers in the thousands and so they are suddenly embracing this businesses and embracing a petition with regular individual consumers. >> you mentioned apple. this is something that they want? >> it makes it feel that microsoft is right about something. the whole idea was you don't need to worry about the small toy tablets. they are theorizing justifiably

that iphone will move steadily upmarket, probably eat the ipad mini and increasingly eat the tablets. hard-core users will not be abandoning those laptops. it doesn't make sense. >> i don't know, why would they have different laptops? >> i was amazed when i went to the conference in las vegas about two years ago and they saw all of these hard-core illustrators and others using the tablet to do their artwork, not putting it on the macintosh. actually using the tablets. we see architects using this. for some, that nine inch screen is not enough.

this reflects the material availability that apple has. they could actually make a lot of stuff in a lot of different form factors because of the capacity to do so. >> apple is realizing our potential markets. they came into the tablet market with a one-size-fits-all mentality. >> that is what we were thinking of the tablet. >> the ipad mini has done well. maybe they have opened their eyes. there are educators, hospitals, game players that watch on these devices. it would not surprise me that the 13 inch tablet has a keyboard attached. apple is realizing that people want to do a lot with these devices. >> snapchat is getting a $10 billion valuation. the talks have stalled. what do you think? are they worth $10 billion?

>> it must be if kleiner says it is. for me, this speaks more about their need to prove their relevancy in the market. they are bidding to get in late, to all of these consumer centric tech deals. to what made them profitable and successful. this is kleiner bidding up as much as it is snapchat's dominance. these are gigantic numbers and they probably justify something in this neighborhood. it takes two to make this deal work. >> well, this is something that will continue to follow. snapchat famously turning down that offer from mark zuckerberg. paul kedrosky, are bloomberg contributing editor. up next. the bloomberg special, "the way

we watch," we look at the future of media.

>> welcome back to "bloomberg west." to our special, "a way you watch" focusing on the media and the evolution of what, how, you watch it. amazon is hoping to become a bigger player in the streaming business buying twitch tv for one billion dollars. they are a powerful media platform with 55 million viewers watching expert gamers play titles like "league of legends." we spoke to a partner who led an early investment in twitch and is on the companies board. i started by asking if this could -- if twitch could be the next espn. >> this is not some fringe

activity that people do in their basement. this is something we all do. think of your teenage years sitting around the living room watching friends played the new games or even earlier than that, watching people play together. what they have done is taking the experience and brought that to the internet. it is not so out of the mainstream. it is real and it is happening. >> why is amazon buying this? >> they are making a huge bet on video. with amazon studios in l.a., they are making a dozen dramas and comedies. they just greenlight five new kids pilots. they are spending on licensing content. twitch tv becomes another channel in the lineup. >> we have seen some numbers in extrapolation of four and a half

hours per month per user. i have read that a lot of the users, 50 eight percent spend as much as 20 hours a week. are those kind of numbers right and what does it mean? >> there are a lot of users that spend a lot of time watching video game content. if you think about it, it is not so different than what we all do what we watch the world cup. we want to watch great people play games. >> and game players learn tricks from other game players. from a media standpoint, is what is really curious. >> there is tons of entertainment and learning value and also marketing value. for the entertainers to show this is what these games do. this is what taps into that. >> who are the people posting the content, how did twitch recruit them? >> they have diverse broadcasters that stream.

the best in the world to someone who has a funny, entertaining show around a particular type of content. you have a million different broadcasters broadcasting on twitch. >> a lot of the revenue comes through the dedicated players to belong to a certain stream. when you look at amazon's other plans to monetize content because a lot of the work has really about selling stuff, using streaming to sell stuff. where does this fit with a different model? >> we know they are building a huge ad business right now. e-marketers say it will be a $1 billion business in 2014. the thing you notice when you have these devices it is not there because amazon does not use google services.

i think twitch tv brings it kind of up to speed partially in the user-generated space. it gives people another reason to hit up amazon. >> it's hard to name one of them but the other shows that they are buying, if it is a show that i want to watch, i will find it. who has the power? is it the content creators, is it these upstarts? twitch has only been around for three years. >> you tap into a community. they create all of this content, you very quickly have the power. something that jeff bezos said around wine they were making this acquisition is that they want to learn how to do that. i think they want to understand, they are keeping twitch as an independent company.

>> broadcasting and watching gameplay is a global phenomenon and twitch is a content that brings together tens of millions of people who watch billions of minutes a games every month. >> they acquire a company really just to get the engineering talent. has amazon done that? >> not as much. they have a build it here for you. they made a lot of mistakes in the late 90's. google, we're just seeing that. it is so hamstrung in trying to make acquisitions. they are under the microscope. >> didn't they try to buy twitch and it didn't work out? >> i cannot comment on any particular rumors. they built something very special. i think a lot of people took notice of that. >> do you think that google right now is more hamstrung because of antitrust concerns than they were even a year ago?

>> that is hard to say. corporate priorities are probably more hamstrung than any particular revelatory concern. where they want to spend their energy. >> how are they reacting to this acquisition? a lot of people are passionate about this network and whether it remains the same. >> it has been very positive and that is something that they took great care and how this was gone about. we saw in the townhome, he said, we are keeping twitch independent. the same office, the same team, the same policies with respect to broadcasters. >> it was interesting to see complaints about google not being able to get the deal done. they have brought certain elements of that, i wonder if that will decline. >> i think they like it as an alternative and amazon is committed.

>> as you mentioned, amazon gaming studios. what is happening in the rest of amazon gaming studios? >> they are trying to build a gaming function. they're developing some of their own apps, they are hiring. it is a huge corporate priority in the same level as video. obviously, this gives them another access to gaming. >> congratulations. thank you so much for joining us. up next, netflix gets shut out of the major emmy categories but it is still the hottest topic and a rising threat to networks like hbo. we look at how hbo is fighting back when the special edition of bloomberg west, "the way you watch" returns. ♪

>> today we have a special show we are calling "the way you watch" focusing on the way we watch media and the rapid evolution of television. nbc said that the show drew in good numbers. they were booted on monday night. one that was not a winner was netflix. it did pick up seven creative arts emmys. it was a contender for best comedy but "modern family" ended up winning for a fifth straight year. "house of cards" failed to take home an award.

"breaking bad" taking home best drama and best actor. hbo won 19 emmys including an award for "veep." there was a make out session between julia louis dreyfus and bryan cranston. they appeared together on an episode of "seinfeld." the big question, what is time warner doing to make hbo more accessible to its viewers? scarlet fu checking it out. so, what do you make of how the awards broke down? it was a lot of talk about netflix. >> they played the disruptor role. what every nominee says, it is an honor just to be nominated.

when it comes to hbo, it is certainly time warner's crown jewel. when you look at how they have done compared to netflix. netflix topped them in subscription revenue after topping it in u.s. subscription numbers a few quarters prior. netflix booking $1.5 billion in streaming revenue. hbo is still much more profitable, more than seven times profitable. if the goal here is to get your growth rate back up, hbo needs to adjust with the times, especially since time warner made clear that he does not want to be acquired by fox. >> the big question is what is ado about the cord cutters.

the latest episode of the hbo shows like "game of thrones" but they cannot because they are not available on streaming services. >> we are talking about legal options where people are not stuck paying $200 a month. the cheaper options allow you to link up with a cable tv provider which includes high-speed internet access or limited television plus hbo. here are some of the options out there. at&t charges a $99 installation fee, there is a contract. the package pricing is only good for one year. price could go up anytime. the challenge turned out to be that it means to attract new customers and then want to attract some of the customers who do not currently subscribed to cable tv. this pushes them towards the cheaper options. >> cheaper or even free.

"game of thrones" is the most pirated show in the world, i believe. they do have some standalone offerings. what can you tell us? >> in countries like sweden, denmark. they began offering this a la carte option around the same time that netflix expanded. it cost about $12-$13 a month according to analysts at barclays. it has led to an increase to subscriptions. the threat of cannibalization has not played out in those countries. we know that hbo has teamed up with amazon to make some shows like the sopranos, the wire available to amazon prime streaming customers. that might be a model in the coming weeks and years. >> scarlet fu, thank you so much. so, how bad of a night was it for netflix?

does it really matter that much? we will try to answer those questions when a special "bloomberg west," "the way we watch returns."

>> welcome back to "bloomberg west." back to our special show, "the way you watch" focusing on the future of media and the rapid evolution of how, where, and what we watch. the emmys were held in l.a. >> it is like network tv holding an awards show and giving all of the awards to cable and netflix. >> our editor at large is back with us and joining us from l.a., the ceo of an independent

multi platform studio that develops scripted series for tv and digital. does it matter that netflix didn't win any of the most prestigious awards? >> they were very present. they were mentioned, they were called out, they were featured. don't forget, a lot of people are going to go over to netflix to watch the back episodes of "breaking bad" that was so heavily featured during the telecast as well. >> mtv has a video awards show and they don't show music videos. i look at this twitch video acquisition on the same day and i wonder what, if the future of content isn't about different

distribution methods and different kinds of content and if hollywood might be left holding the bag. >> i think that the emmys focus on broadcast for comedy. maybe, twitch, they spent almost a billion dollars on it, that it will be the place for people to watch. >> it is interesting, shows on broadcast networks did well as well but there is such a set formula. julianna margulies won the award and reminded us there are 22 episodes a year. what can they do that the broadcast networks cannot do to make the shows better?

>> really started with hbo and their ability to have certain language and violence and other types of element in the programming that you could not have on podcast. >> are you saying it is all about sex and violence? >> and language. also serialized programming. netflix, the straight to series model allows the creators and producers to think about the show in its entirety and in some cases they are able to produce the entire show like a movie. they think about it as one full story. that benefits them. this gives a different time horizon. >> i wonder if netflix will learn and maybe amazon might be learning now how difficult the business is. they had such great success with their first two out-of-the-box,

with -- >> it was not, they had some that did not work. >> when you don't see those awards show up, we don't know the results they get from the subscriber addition. could a couple of failures by netflix really in peril the whole business or at least netflix's part in it? >> you see the chelsea handler show moving. hbo has movies, they have dramas, to have comedies. they are in all of the categories which is what part of what leads to such a strong representation of hbo and the emmys. i start to think you will see amazon. >> i wonder if netflix can sustain these hits. we are into the third season of house of cards, the second season of "orange is the new black" and critics say the later

seasons have lost momentum. >> if you look at the types of shows that they have in development, they just launched their first animated series that has been well received. this is really still maybe not the first inning. maybe this is the second inning for them. amazon is just getting into the game. i can tell you from the creative community in hollywood, people really want to work with netflix and that drives a lot of great product and development. people want to be there and they want to work with netflix.

i will have access to the best shows out there a long with hbo and the other premium cable networks. >> whether it is netflix, hbo, cbs, whatever, what is the impact of all of this spending and content in l.a. right now? >> it is a great time to be a studio and an owner of content because there has never been more buyers for programming. the biggest scarcity is actually in the writing talent and in the show runners. the environment in hollywood right now is very positive because there are lots of places to sell shows and the budgets are going up. >> a lot of shout outs to writers last night. >> we can write. >> thank you so much. coming up, one airbnb landlord found out the very hard way what can go wrong on the home sharing site. we will ask her what happened. ♪

>> turning to airbnb, what do you do when a rental goes very wrong? a san francisco-based rehabilitation therapist found out when she rented her palm springs condo. the tenants refused to leave after 30 days, claiming california law allowed them to stay. she had to hire an attorney.

airbnb said -- earlier, cory johnson and i spoke with cory herself and i started asking her what actually happened. >> it started out as a complete nightmare. i have a small condo that i use as a vacation rental. when i am not using it, i let family and friends use it. i rented out to people on airbnb to people that wanted a short vacation. these individuals wanted a six-week stay, they said they were going to be working on a work project. they are videogame developers. it was two brothers. i thought, ok, six weeks, we can do that. very long story short, they

ended up paying for the first 30 days of the reservation and then we went not able to process payment any further. >> after 30 days, they claim squatters rights, essentially under california law they were legal and allowed to be there as tenants and if you wanted to get rid of them, you had to evict them. >> well, they reportedly came from austin, texas and they were taking advantage of the state of california law which states that once a tenant is in a property, whether it is a short term vacation rental, once they had 30 days, they had tenants rights. >> did you know about that? >> a lot of my critics who are professional landlords, they said, how did you not know this? i talked to other hosts for people that do airbnb and they do more of a temporary vacation

rental for the second home. they were surprised. they said, that could have happened to me, i had no idea. >> not only are they predatory, they apparently are accused of taking some money from kickstarter and now starting the project. i presume they are probably looking for their next scam. what do you do when you look at the people that you might rent to and how might you do that? >> that is a really good question. i feel like this is a cautionary tale and i have learned a lot. lots of the people are learning from it. if someone is going to be more of long-term rental, to do more vetting like a background check, credit check. >> this got kind of ugly. you gave us some text messages, you told them that their power was going to be shut off. they write back saying that they have spoken with their attorney

and they're going to press charges for blackmail and damages caused by your malicious misconduct. what did airbnb do about this? >> they responded pretty quickly. it sounds like everything is taking a long time. this goes through the legal process of unlawful detainer. >> you're not mad at airbnb? >> no, not at all. i love the service. >> do you think they should have given you more information about this 30-day issue or more warning? >> i think it is an emerging company and i think that they are figuring it out. as a result of my situation, they have tightened up their customer service, policies, procedures.

maybe the next host that gets this rental will get a pop-up warning. >> they hired a 24-hour live it investigation service to camp outside of the condo and somehow catch these guys as they were going in and out. >> in the beginning, when we had just realized that the squatters were not going to leave, their intention was to pay for 30 days and try to ride out free rent. airbnb was trying to contact them through their cell phone, their e-mail. they made what ever offers they could to try to draw them out. like i said, once the 30 days were up, -- >> so, they were not staking out the house or you are unsure? >> i am unsure. kind of what was happening was a combination of things. my dad is my property manager. he was locally -- the neighbors were staking it out. just trying to monitor, are they still there?

>> maybe they did not hire professional investigators to actually monitor the property. i wonder what this means for their business model. they have attracted a huge valuation as they have added over 550,000 rooms. there is a presumption that they continue to do this without trouble. what we see in new york city where there are certain buildings that the government might be getting involved about this. there are renters laws like in california. these are big issues. what do you think it means for the future of airbnb? is their growth limitless? >> it is an emerging industry. i think it will continue to grow. people who might see this whole media explosion as a bad thing. i see it as probably good. for example, i have relatives who live in smaller markets or maybe like the baby boomer generation and are asking, what is this airbnb?

you can use it to stay an apartment in paris, that is really cool. we live in a big metro city. >> ultimately, these guys nobody saw them leave. they did not pay. have you been compensated at all? >> they did, yes. >> how did they compensate you? >> they took care of all of my out-of-pocket expenses. >> did they pay you for missed rent? >> i'm not comfortable speaking about the details but i did have to hire an attorney to take care of unlawful detainer. that is just the way it works. >> what are you going to do it this condo? are you renting it out on airbnb again? >> that is a great question. i was just down there a few days ago like to do the reclaiming of the condo. when i have friends or families

around, it is fine. i did feel that creepy sensation come over me, emotionally unsettled. >> what are you going to do? >> my advice from other people, they said, wait a month. let everyone settle and calm down. then make a decision. do you want to keep renting it, put it on the market? in palm springs, like you had mentioned, airbnb in new york, or here. in palm springs, they are organized and they make it pretty easy for people to pay taxes. you apply for a permit, it is totally legit to have like a vacation condo down there. you write them a check and it is all good. maybe other markets will adapt. >> we will be right back. ♪

>> welcome back to "bloomberg west." chicago mayor rahm emanuel has vowed to double down on his city's tech sector by recruiting both talent and companies. this was when he was elected back in 2011. how is he fulfilling that promise? can this second city compete with the likes of silicon valley? sam grobart sat down with mayor emanuel.

first, they had a fun talk. >> "house of cards" or "veep?" >> "house of cards." >> cubs, white sox. >> don't do that, it is chicago. >> are you a deep dish guy or a thin crust guy? >> deep dish. with my hands. >> i was going to ask iphone or android. >> no. we have motorola. >> of course, you do. >> bloomberg's sam grobart with chicago mayor rahm emanuel. be sure to tune into "bloomberg west" tomorrow. we will have more information on the network the city of chicago is installing.

time for the bwest byte when we focus on one number that tells us a whole lot. >> 2195, $21.95. for $21.95, a customer acquired the very latest in technological innovation. it is called the knee defender. he installed the device to keep the woman in front of him from reclining her seat. there were arguments, there were incidents and then the woman through her drink at the knee defended passenger. they made an emergency stop and kick them both off of the plane. >> when you get on a plane, you know you're going to be crushed. >> i am six foot five, sometimes i am on flights. sometimes they throw their seat

back quickly and they take the armrest. they steal the armrest. >> everyone steals my armrest. >> that is not right. >> the knee defender, it is fine, whatever. >> it led to a need for a drink defender. the faa says you cannot use it during takeoff and landing. i think it shows that united airlines is trying to cram too many people on flights if they feel this is necessary. >> some travelers i think need a little bit of extra pampering. >> you would not need to go back. no? you don't need to worry about these. >> oh, please.

thank you all for watching this edition of "bloomberg west," you can always watch is on your phone, on the radio, on your tablet, thanks for watching. ♪

>> the following is a paid row graham. -- program. >> these statements have not by the food and drug