Author: Rafat Ali

Mobile entertainment applications development firm Emotive Communications, founded by Anthony Stonefield (founder and CEO of Moviso), has been acquired by San Francisco-based mobile advertising firm Zad Mobile, for an undisclosed amount. Emotive, founded in 2007, has an application called Ringjam, which allows sharing of of licensed music and video clip. Its investors included Bertelsmann Digital Media Investments and Warner Music Group (NYSE: WMG). Stonefield will now join as EVP of Zad Mobile. More details in release.

Related

• Warner Music And Other Invest $7.7 Million In “Push Ringer” Firm Emotive
• Emotive Raises $6.25 Million In Second Round; Acquires Sennari Entertainment

That’s according to updated estimates from Doug Anmuth, analyst at Barclays Capital, in light of Amazon’s Q4 results and recent accounting change. Anmuth says he estimates 3.1 million Kindles will be sold this year (62 percent growth Y/Y) and Kindle-related revenue will be $1.6 billion, or 5 percent of AMZN’s total revenue. Some other points from him:
—Even if Kindle device market share losses are 10 to 15 points greater than we currently anticipate, the negative impact on Amazon’s overall revenue over the next three years would be less than 2%.
—Increased competition from the iPad, but Kindle is significantly cheaper & will continue to appeal to somewhat of a different market given the e-Ink screen, smaller form factor, better battery life, & lower weight.
—While the recent pricing dispute with Macmillan could signal a broader shift toward an agency model of eBook distribution, we believe higher margins will partially help offset the lower volume resulting from higher eBook prices.

If you think that the whole apps space is getting too crowded, and discovery mechanisms too limited, then online apps directories are here to help. And now some mini-consolidation in the space:  Appolicious, a new-ish iPhone and Android app directory, is acquiring AppVee, founded two years ago. Terms of the deal were not disclosed, but likely small cash and some equity. AppVee focuses reviews of apps on iTunes App Store, and also owns AndroidApps.com, for apps on Google’s Android mobile platform. Alan Warms, CEO of Appolicious, founded BuzzTracker and sold it to Yahoo (NSDQ: YHOO), and was also GM of Yahoo News before leaving a year ago. Last month Appolicious announced raising $1.5 million in funding from Apex Venture Partnersand James Crouthamel, the founder of Performics. My bet: how long before the company changes its name from the rather tongue twisting Appolicious?

Clarification: The company now says they are only looking to raise $12 million, with the potential to reach $13.8 million if an over-allotment of shares is exercised. The $64.3 million figure in SEC filing, it says, is “because it’s required under the rules, but there’s really not a scenario to implement that entire equation,” says a spokesperson.

Original post: Vringo, the video ringtone and sharing firm based in New York City, has filed for a $64.312 million IPO, according to its SEC document. About 10 days ago we mentioned in a tweet that the company had raised about $3 million in new debt financing in form a bridge note. Founded in 2006, the last previously reported round for the company was a $12 million round in 2007, led by PE firm Warburg Pincus. It has raised a total of $17.5 million since inception. Warburg owns about 31.9 percent of the company, and judging from the state of the business (see S-1 details below) looks like the PE firm forced its hand in pushing this through.

Vringo’s service is an application that needs to be downloaded onto compatible handsets (says more than 200). Users can create or take video, images and slideshows from library and Web, and make it into their call signature. Also, in a reverse of ringback tones, Vringo also has a more gimmicky tech called VringForward, that lets its users select which video ringtone their friends will see when they call.

Details from the S-1:

—The company will list on Nasdaq under VRNGU. It is proposing the stock and warrants trade under VRNG and VRNGW, respectively.
—Looking to sell at least 2.4 million units, consisting of one share of common stock and 5-year warrants to buy another two shares 10 percent above the IPO price.
—Upon the completion of this offering, founders and Warburg will beneficially own about 7.4 percent and 16.7 percent, respectively, of voting interest. Its officers and directors (excluding our founders) will beneficially own 1.9 percent of voting interest.
—The company has been offering these services for free till now (including its Android app), but in keeping with the times, it will move to a subscription offering working with carriers and directly as well. Users will pay a monthly fee for access to the service and additional fees for premium content (probably taking cues from social gaming and virtual good industry).
—Revenues: It has never had a profit. It didn’t have any revenues until first nine months of 2009(is that an accounting issue?). Even for the first nine month of 2009, it only had revenues of $36K, the filing says. It has lost about $18.04 million since it was launched, likely the full amount of its funding till now.
—It will net about $10.3 million proceeds on this offering, and used for: $750K for capital expenditures, $2.5 million for cost of revenue, $2 million for R&D, $2.2 million for sales and marketing and $2.85 million for general corporate purposes, including working capital and repayment of a portion of our loan facility, it says.
—“We expect our net losses and negative cash flow to continue for the foreseeable future, as we continue to develop our platform, launch our service with new mobile carriers and begin to develop additional products.”

Click on the image below for the full revenue picture:

Yes, good luck with this one. They need it.

Related

• Video Ringtone Firm Vringo Gets $12 Million Round

Only if you were flying transatlantic the whole day, could you have missed the brilliant lights of reality distortion field hovering over the privileged earth yesterday. Oh wait, I was. Someone who tried to avoid it while being on terra firma—an admirable task—was Douglas Anmuth, analyst at Barclays Capital. In a research note this morning on Amazon (NSDQ: AMZN), in light of Apple (NSDQ: AAPL) iPad launch, he puts it thusly: “The Kindle is still significantly cheaper & will continue to appeal to somewhat of a different market given advantages like E-Ink screen, smaller form factor, better battery life, & lower weight.”

His main points:

—Total cost of owning an iPad (assuming a $30 monthly data plan and 3 yr product life) is roughly 6x-7x the cost of Kindle 2 (priced at $269 and likely going lower). Also, with an E-Ink screen, smaller form factor, lower weight, and better battery life, the Kindle may appeal more to serious book readers

—While AMZN still dominates the e-book mkt & has an edge in selection, AAPL could emerge as AMZN’s first major e-book competitor as it sells more iPads and adds new publishers to its store.

—AAPL’s support of e-pub could further increase the pressure on AMZN to abandon its proprietary format putting at risk lucrative lock-in revenue.

At DLD yesterday in Munich, I interviewed Dennis Crowley, CEO and co-founder of the currently hot location-based service Foursquare. He touched on a lot of topics in the short 20-minute allotted time, including genesis of Foursquare, adoption of the still-nascent service, and revenue models. The text coverage of the interview, here. Some highlights, also from DLD’s official coverage:
—Foursquare could be tied into all kinds of services. Through location awareness you could hook Foursquare up not just to restaurants, but also deliver content based on context.
—Check-in will become a commodity, every service will have check-in functionality.
—Aggregation could be interesting. And whats the magic that can happen after you checked in?
—Foursquare is lining up interesting partnerships, expect some announcement over the next few months.

The full video, embedded below:

Now that in-flight wi-fi is finally taking off in U.S., at least among early adopters doing the coast-to-coast travels—nevermind the restrictions due to terror threats—the main brand in the space is getting a sky-high round of funding (sorry that’s a bad pun): Aircell, parent of GoGo inflight wireless service, has raised $176 million in a huge new round of funding. No word on who the investors were, but it says was a mix of news and old investors. The money will be used to expand the network, it said. It says it is now installed on 700 commercial aircrafts and has commitments from nine airlines. Glenn Fleishman has a more critical look at the funding and the company’s economics, here.

A shocker but a move five years too late: Rob Glaser, the founder and CEO of RealNetworks (NSDQ: RNWK), is stepping down as the leader of the company after 16 years. The pioneering online video company has appointed Robert Kimball, who till now was the corp EVP, as president and acting CEO; he has also been appointed to the board. A formal search for a new CEO will start now, and Kimball will be a candidate as well, a RealNetworks’ spokesperson tells me. Glaser will remain as the chairman of the board; he is also the single largest shareholder of the company.

The company said Glaser will step away from day-to-day activities, and focus on spending time with family, and his various philanthropic and political interests. He is a big democratic supporter and one of the founders of Air America, among others. I would not be surprised to see him running for some public office someday soon.

Staci adds: When I last saw Glaser Friday evening, he was pulling an overnight bag through The Palazzo in Las Vegas, headed first to a party and then home to his wife, who is expecting their third child, and his young twins. He was exhausted and exhilarated at the same time, ticking off all the meetings he’d accomplished during a quick couple of days. Not even a glimmer of a sign that he was ready to stop the day-to-day drill (which I find hard to believe is possible) or that he was even considering it. Strictly business as usual.

So did he jump or was he pushed? Over at All Things D, John Paczkowski citing unidentified sources says, yes, the board told Glaser it was time to go and he finally agreed. I’m getting calls suggesting the same.  It wouldn’t be the first time a board has had to tell an entrepreneur he’s not the best one to run his company. Maybe more boards should do just that. Real insists this is Glaser’s choice.

It’s the second senior executive change for Real in as many days. The company announced Tuesday that COO John Giamatteo is leaving effective April 2, but says the two moves are unrelated. (The decision on whether to replace him is pending.) Not everyone is convinced. I’ve heard from multiple people who believe that was the last straw in some way.
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SEATTLE – January 13, 2010   Digital entertainment services company RealNetworks, Inc., (Nasdaq: RNWK) announced today that founder Rob Glaser has stepped down as CEO.  He will remain chairman of the board of directors of RealNetworks.  The company also announced that its board of directors has appointed Robert Kimball president and acting chief executive officer.  The board also appointed Mr. Kimball to the board of directors. 

“After nearly 16 years, I’ve decided it’s time for me to step away from day-to-day operations,” said Glaser.  “I’m grateful to all of our stakeholders – customers, partners, shareholders, and most of all, employees – for the support and commitment they’ve given to RealNetworks.  I remain committed to the company and look forward to continuing to serve in my capacity as board chairman.”

In February 1994, Mr. Glaser founded what was then known as Progressive Networks, a pioneer in the field of digital audio and video technology for the Internet.  Under his leadership, Real has grown into a multinational company, providing digital entertainment products and services to hundreds of millions of consumers around the world.

“Few people have changed an industry and created a unique experience for billions of people,” said Jonathan Klein, a board member of RealNetworks and the co-founder and CEO of Getty Images (NYSE: GYI).  “Rob has changed the face of digital entertainment with RealNetworks’ streaming media products.  At the same time Rob has had a profound impact on politics and philanthropy.  I’m sure he will continue to do this extraordinary work as well as spending time with his wife and young children.  We are grateful for all he has done for the company, the industry and employees, and are pleased that he will continue to serve on the board.”

Bob Kimball joined the company in 1999 and has been a member of the senior executive team since 2003. He most recently served as general counsel and executive vice president of corporate development at Real. “In the decade he’s been at Real, Bob has proven to be an outstanding business executive and leader, and under his leadership the company won’t skip a beat,” said Mr. Glaser. “Our board has great confidence in Bob, and he will be a candidate for the permanent CEO position as part of a formal search process that will begin soon.”

“I look forward to the opportunity ahead,” said Mr. Kimball.  “Real has a great team in place, a strong financial position, close customer relationships and fantastic products.  We plan to transform Real into a more focused and more profitable company that delivers value to our shareholders.”

Related

• RealNetworks’ Management Change: Memo From Rob Glaser
• RealNetworks’ Management Change: Memo From Acting CEO

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