It isn’t just apps. China’s cinemas broke records during Lunar New Year

China celebrated Lunar New Year last week as hundreds of millions of people travelled to their hometowns. While many had longed to see their separated loved ones, others dreaded the weeklong holiday as relatives awkwardly caught up with them with questions like: “Why are you not married? How much do you earn?”

Luckily, there are ways to survive the festive time in this digital age. Smartphone usage during this period has historically surged. Short video app TikTok’s China version Douyin noticeably took off by acquiring 42 million new users over the first week of last year’s holiday, a report from data analytics firm QuestMobile shows. Tencent’s mobile game blockbuster Honor of Kings similarly gained 76 percent DAUs during that time, according to another QuestMobile report.

People also hid away by immersing themselves in the cinema during the Lunar New Year, a movie-going period akin to the American holiday season. This year, China wrapped up the first six days of the New Year with a record-breaking 5.8 billion ($860 million) yuan box office, according to data collected by Maoyan, Alibaba’s movie ticketing service slated for an initial public offering.

The new benchmark, however, did not reflect an expanding viewership. Rather, it came from price hikes in movie tickets, market research firm EntGroup suggests. On the first day of Year of the Pig, tickets were sold at an average of 45 yuan ($6.65), up from 39 yuan last year. That certainly put some price-sensitive audience off — though not by a huge margin as there wasn’t much to do otherwise. (Shops were closed. Fireworks and firecrackers, which are traditionally set off during the New Year to drive bad spirits away, are also banned in most Chinese cities for safety concerns.) Cinemas across China sold 31.69 million tickets on the first day, a slight decline from last year’s 32.63 million.

Dawn of Chinese sci-fi

wandering earth 2

Image source: The Wandering Earth via Weibo

Many Chinese companies don’t return to work until this Thursday, so the box office results are still being announced. Investment bank Nomura put the estimated total at 6.2 billion yuan. What’s also noticeable about this year’s film-inspired holiday peak is the fervor that sci-fi The Wandering Earth whipped up.

American audiences may find in the Chinese film elements of Interstellar’s space adventures, but The Wandering Earth will likely resonate better with the Chinese audience. Adapted from the novel of Hugo Award-winning Chinese author Liu Cixin, the film tells the story of the human race seeking a new home as the aging sun is about to devour the earth. A group of Chinese astronauts, scientists and soldiers eventually work out a plan to postpone the apocalypse — a plot deemed to have stoke Chinese viewers’ sense of pride, though the rescue also involves participation from other nations.

The film, featuring convincing special effects, is also widely heralded as the dawn of Chinese-made sci-fi films. The sensation gave rise to a wave of patriotic online reviews like “If you are Chinese, go watch The Wandering Earth” though it’s unclear whether the discourse was genuine or have been manipulated.

Alibaba’s movie powerhouse

This record-smashing holiday has also been a big win for Alibaba, the Chinese internet outfit best known for ecommerce and increasingly cloud computing. Its content production segment Alibaba Pictures has backed five of the movies screened during the holiday, one of which being the blockbuster The Wandering Earth that also counts Tencent as an investor.

Tech giants with online streaming services are on course to upend China’s film and entertainment industry, a sector traditionally controlled by old-school production houses. In its most recent quarter, Alibaba increased its stake to take majority control in Alibaba Pictures, the film production business it acquired in 2014. Tencent and Baidu have also spent big bucks on content creation. While Tencent zooms in on video games and anime, Baidu’s Netflix-style video site iQiyi has received wide acclaim for house-produced dramas like Yanxi Palace, a smash hit drama about backstabbing concubines that was streamed over 15 billion times.

Seeing all the entertainment options on the table, the Chinese government made a pre-emptive move against the private players by introducing a news app designed for propaganda purposes in the weeks leading to the vacation.

“The timing of the publishing of this app might be linked to the upcoming Chinese New Year Festival, which the Chinese Communist Party sees as an opportunity and a necessity to spread their ideology,” Kristin Shi-Kupfer, director of the research area on public policy and society of German think tank MERICS, told TechCrunch earlier. “[It] may be hoping that people would use the holiday season to take a closer look, but probably also knowing that most people would rather choose other sources to relax, consume and travel.”

The article has been updated to correct Kristin Shi-Kupfer’s title.

Casio adds modern tech to the classic G-Shock watch

Casio released the first G-Shock watch in 1983. The original set the bar for tough watches with incredible shock resistance to protect the quartz module. It’s a classic and still available for purchase in several forms in 2018.

Recently, Casio released an all-metal version of the watch that features the iconic design but with modern technology like Bluetooth connectivity. This isn’t a smartwatch, but simply a watch that’s a bit smarter than most.

The Bluetooth function is simple and worth a look. It gives owners an easy way to access settings. Instead of navigating through the menus on the watch, owners can use a smartphone app to sync the watch to the phone’s time, adjust settings and set alarms and reminders. It takes just one button press on the watch and for the owner to launch the app. The watch does not have to be connected through the phone’s Bluetooth menu; the app takes care of it all.

I found the experience a refreshing update. I don’t need a smartwatch all the time but there are advantages to connecting a watch to a phone. If this is a glimpse at the future of timekeeping, I’m all in. I enjoy a complicated complication as much as the next guy, but sometimes it’s overwhelming to set the primary timezone let alone the alarm. I don’t mind when an app can do it for me.

Chinese investment into computer vision technology and AR surges as U.S. funding dries up

Last year 30 leading venture investors told us about a fundamental shift from early stage North American VR investment to later stage Chinese computer vision/AR investment — but they didn’t anticipate its ferocity.

Digi-Capital’s AR/VR/XR Analytics Platform showed Chinese investments into computer vision and augmented reality technologies surging to $3.9 billion in the last 12 months, while North American augmented and virtual reality investment fell from nearly $1.5 billion in the fourth quarter of 2017 to less than $120 million in the third quarter of 2018. At the same time, VC sentiment on virtual reality softened significantly.

What a difference a year makes.

Dealflow (dollars)

What VCs said a year ago

When we spoke to venture capitalists least year, they had some pretty strong opinions.

Mobile augmented reality and Computer Vision/Machine Learning (“CV/ML”) are at opposite ends of the spectrum — one delivering new user experiences and user interfaces and the other powering a broad range of new applications (not just mobile augmented reality).

The market for mobile AR is very early stage, and could see $50 to $100 million exits in 2018/2019. Dominant companies will take time to emerge, and it will also take time for developers to learn what works and for consumers and businesses to adopt mobile AR at scale (note: Digi-Capital’s base case is mobile AR revenue won’t really take off until 2019, despite 900 million installed base by Q4 2018). Tech investors are most interested in native mobile AR with critical use cases, not ports from other platforms.

Computer vision and visual machine learning is more advanced than mobile AR, and could see dominant companies in the near-term. Here, investors love  startups with real-world solutions that are challenging established industries and business practices, not research projects. Firms are investing in more than 20 different mobile augmented reality and computer vision and visual machine learning sectors, but there is the potential for overfunding during the earliest stages of the market.

What VCs did in the last 12 months

Perhaps the most crucial observation is the declining deal volumes over the last year.

Deal Volume (number of deals by category)

(Source: Digi-Capital AR/VR/XR Analytics Platform)

Deal volume (the number of deals) declined steadily by 10% per quarter over the last 12 months, and was around two-thirds the level in Q3 2018 that it was in Q4 2017. Most of the decline happened in the US and Europe, where VCs increasingly stayed on the sidelines by looking for short-term traction as a sign of long-term growth. (Note: data normalized excluding HTC ViveX accelerator Q4 2017, which skews the data)

Deal Volume (number of deals by stage)

The biggest casualties of this short-termist approach have been early stage startups raising seed (deal volume down by more than half) and some series A (deal volume down by a quarter) rounds. This trend has been strongest in North America and Europe, but even Asia has not been entirely immune from some early stage deal volume decline.

Deal Value (dollars)

(Source: Digi-Capital AR/VR/XR Analytics Platform)

While deal volume is a great indicator of early-stage investment market trends, deal value (dollars invested) gives a clearer picture of where the big money has been going over the last 12 months. (Note: investment means new VC money into startups, not internal corporate investment – which is a cost). Global investment hit its previous quarterly record over $2 billion in Q4 2017, driven by a few very large deals. It then dropped back to around $1 billion in the first quarter of this year. Since then deal value has steadily climbed quarter-on-quarter, to reach a new record high well over $2 billion in Q3 2018.

Over $4 billion of the total $7.2 billion in the last 12 months was invested in computer vision/AR tech, with well over $1 billion going into smartglasses (the bulk of that into Magic Leap) . The next largest sectors were games around $400 million and advertising/marketing at a quarter of a billion dollars. The remaining 22 industry sectors raised in the low hundreds of millions of dollars down to single digit millions in the last 12 months.

A tale of two markets

Deals by Country and Category (dollars)

American and Chinese investment had an inverse relationship in the last 12 months. American investors increasingly chose to stay on the sidelines, while Chinese investor confidence grew to back up clear vision with long-term investments. The differences in the data couldn’t be more stark.

North American Deals (dollars)

North American investment was almost triple Asian investment in Q4 2017, with a record high of nearly $1.5 billion dollars for the quarter. Despite 2018 being a transitional year for the market (Digi-Capital forecast that market revenue was unlikely to accelerate until 2019), North American quarterly investment fell over 90% to less than $120 million in Q3 2018. American VCs appear to have taken a long-term solution to a short-term problem.

China Deals (dollars)

Meanwhile, Chinese VCs have been focused on the long-term potential of the intersection between computer vision and augmented reality, with later-stage Series C and Series D rounds raising hundreds of millions of dollars a time. This trend increased dramatically in the last 12 months, with SenseTime Group raising over $2 billion in multiple rounds and Megvii close behind at over $1 billion (also multiple rounds).

Smaller investments (by Chinese standards) in the hundreds of millions have gone into companies Westerners might not know, including Beijing Moviebook Technology, Kujiale and more. All this saw Chinese quarterly investment grow 3x in the last 12 months. (Note: some recent Western opinions about market investment trends were based on incomplete data)

Where to from here?

With our team’s investment banking background, experience shows that forecasting venture capital investment is a fool’s errand. Yet it is equally foolish to ignore hard data, and ongoing discussions with leading investors along Sand Hill Road and China indicate some trends to watch.

American tech investors might continue to wait for market traction before providing the fuel needed for that traction (even if that seems counterintuitive). While this could pose an existential threat to some early stage startups in North America, it’s also an opportunity for smart money with longer time horizons.

Conversely, Chinese VCs continue to back domestic companies which could dominate the future of computer vision/augmented reality. The next 6 months will determine if this is a long-term trend, but it is the current mental model.

If mobile AR revenue accelerates in 2019 as critical use cases and apps emerge (as in Digi-Capital’s base case), this could become a catalyst for renewed investment by American VCs. The big unknown is whether Apple enters the smartphone tethered smartglasses market in late 2020 (as Digi-Capital has forecast for the last few years). This could be the tipping point for the market as a whole (not just investment). However, Apple timing is hard to predict (because Apple), with any potential launch date known only to Tim Cook and his immediate circle.

Steve Jobs said, “You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something – your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”

Chinese investors embraced a Jobsian approach over the last 12 months, with Western VCs increasingly dot-connecting (or not). It will be interesting to see how this plays out for computer vision/AR investment over the next 12 months, so watch this space.

Siilo injects $5.1M to try to transplant WhatsApp use in hospitals

Consumer messaging apps like WhatsApp are not only insanely popular for chatting with friends but have pushed deep into the workplace too, thanks to the speed and convenience they offer. They have even crept into hospitals, as time-strapped doctors reach for a quick and easy way to collaborate over patient cases on the ward.

Yet WhatsApp is not specifically designed with the safe sharing of highly sensitive medical information in mind. This is where Dutch startup Siilo has been carving a niche for itself for the past 2.5 years — via a free-at-the-point-of-use encrypted messaging app that’s intended for medical professions to securely collaborate on patient care, such as via in-app discussion groups and being able to securely store and share patient notes.

A business goal that could be buoyed by tighter EU regulations around handling personal data, say if hospital managers decide they need to address compliance risks around staff use of consumer messaging apps.

The app’s WhatsApp-style messaging interface will be instantly familiar to any smartphone user. But Siilo bakes in additional features for its target healthcare professional users, such as keeping photos, videos and files sent via the app siloed in an encrypted vault that’s entirely separate from any personal media also stored on the device.

Messages sent via Siilo are also automatically deleted after 30 days unless the user specifies a particular message should be retained. And the app does not make automated back-ups of users’ conversations.

Other doctor-friendly features include the ability to blur images (for patient privacy purposes); augment images with arrows for emphasis; and export threaded conversations to electronic health records.

There’s also mandatory security for accessing the app — with a requirement for either a PIN-code, fingerprint or facial recognition biometric to be used. While a remote wipe functionality to nix any locally stored data is baked into Siilo in the event of a device being lost or stolen.

Like WhatsApp, Siilo also uses end-to-end encryption — though in its case it says this is based on the opensource NaCl library

It also specifies that user messaging data is stored encrypted on European ISO-27001 certified servers — and deleted “as soon as we can”.

It also says it’s “possible” for its encryption code to be open to review on request.

Another addition is a user vetting layer to manually verify the medical professional users of its app are who they say they are.

Siilo says every user gets vetted. Though not prior to being able to use the messaging functions. But users that have passed verification unlock greater functionality — such as being able to search among other (verified) users to find peers or specialists to expand their professional network. Siilo says verification status is displayed on profiles.

“At Siilo, we coin this phenomenon ‘network medicine’, which is in contrast to the current old-­fashioned, siloed medicine,” says CEO and co-founder Joost Bruggeman in a statement. “The goal is to improve patient care overall, and patients have a network of doctors providing input into their treatment.”

While Bruggeman brings the all-important medical background to the startup, another co-founder, Onno Bakker, has been in the mobile messaging game for a long time — having been one of the entrepreneurs behind the veteran web and mobile messaging platform, eBuddy.

A third co-founder, CFO Arvind Rao, tells us Siilo transplanted eBuddy’s messaging dev team — couching this ported in-house expertise as an advantage over some of the smaller rivals also chasing the healthcare messaging opportunity.

It is also of course having to compete technically with the very well-resourced and smoothly operating WhatsApp behemoth.

“Our main competitor is always WhatsApp,” Rao tells TechCrunch. “Obviously there are also other players trying to move in this space. TigerText is the largest in the US. In the UK we come across local players like Hospify and Forward.

“A major difference we have very experienced in-house dev team… The experience of this team has helped to build a messenger that really can compete in usability with WhatsApp that is reflected in our rapid adoption and usage numbers.”

“Having worked in the trenches as a surgery resident, I’ve experienced the challenges that healthcare professionals face firsthand,” adds Bruggeman. “With Siilo, we’re connecting all healthcare professionals to make them more efficient, enable them to share patient information securely and continue learning and share their knowledge. The directory of vetted healthcare professionals helps ensure they’re successful team­players within a wider healthcare network that takes care of the same patient.”

Siilo launched its app in May 2016 and has since grown to ~100,000 users, with more than 7.5 million messages currently being processed monthly and 6,000+ clinical chat groups active monthly.

“We haven’t come across any other secure messenger for healthcare in Europe with these figures in the App Store/Google Play rankings and therefore believe we are the largest in Europe,” adds Rao. “We have multiple large institutions across Western-Europe where doctors are using Siilo.”

On the security front, as well flagging the ISO 27001 certification the company has gained, he notes that it obtained “the highest NHS IG Toolkit level 3” — aka the now replaced system for organizations to self-assess their compliance with the UK’s National Health Service’s information governance processes, claiming “we haven’t seen [that] with any other messaging company”.

Siilo’s toolkit assessment was finalized at the end of Febuary 2018, and is valid for a year — so will be up for re-assessment under the replacement system (which was introduced this April) in Q1 2019. (Rao confirms they will be doing this “new (re-)assessment” at the end of the year.)

As well as being in active use in European hospitals such as St. George’s Hospital, London, and Charité Berlin, Germany, Siilo says its app has had some organic adoption by medical pros further afield — including among smaller home healthcare teams in California, and “entire transplantation teams” from Astana, Kazakhstan.

It also cites British Medical Journal research that found that of the 98.9% of U.K. hospital clinicians who now have smartphones, around a third are using consumer messaging apps in the clinical workplace. Persuading those healthcare workers to ditch WhatsApp at work is Siilo’s mission and challenge.

The team has just announced a €4.5 million (~$5.1M) seed to help it get onto the radar of more doctors. The round is led by EQT Ventures, with participation from existing investors. It says it will be using the funding to scale­ up its user base across Europe, with a particular focus on the UK and Germany.

Commenting on the funding in a statement, EQT Ventures’ Ashley Lundström, a venture lead and investment advisor at the VC firm, said: “The team was impressed with Siilo’s vision of creating a secure global network of healthcare professionals and the organic traction it has already achieved thanks to the team’s focus on building a product that’s easy to use. The healthcare industry has long been stuck using jurassic technologies and Siilo’s real­time messaging app can significantly improve efficiency
and patient care without putting patients’ data at risk.”

While the messaging app itself is free for healthcare professions to use, Siilo also offers a subscription service to monetize the freemium product.

This service, called Siilo Connect offers organisations and professional associations what it bills as “extensive management, administration, networking and software integration tools”, or just data regulation compliance services if they want the basic flavor of the paid tier.

Arm wants to power your next laptop

Arm, the company that designs the chips that power virtually every smartphone and IoT device, published its roadmap for the next two years today. That’s the first time Arm has done so and the reason for this move, it seems, is that the company wants to highlight its ambitions to get its chips into laptops.

So far, Arm-based laptops are far and in-between, though Microsoft recently made a major move in this direction thanks to its push for always connected Windows laptops. While that sounds great in theory, with laptops that only need a single charge to run all day, there’s still a performance penalty to pay compared to using an x86 chip. Arm says that gap is closing quickly, though, while offering a better performance/battery life balance.

Indeed, Ian Smythe, Arm’s senior director of its marketing programs, doesn’t shy away from comparing the next generations of its architectures with Intel’s mid-tier Core i5 processors.

“I think it’s clear that we’re on a transformative path,” Smythe said during a press conference ahead of today’s announcement. “It’s a compute journey that is changing the way that computers are able to be delivered in large screen form factor devices. And our vision is very much around how we’re going to be driving laptop performance from that mobile innovation base and how we’re going to be working with foundry partners to deliver that performance in today’s and tomorrow’s leading processes.”

So what does Arm’s roadmap look like? The details are still quite sparse, but this year, the company will deliver its Cortex-A76 architecture that its partners will likely build using both 10nm and 7nm processes. Next year, it’ll launch its Deimos CPUs, which will most likely all be built using 7nm processes. Come 2020, it’ll launch its Hercules processors for both 7nm and 5nm processes.

In terms of raw compute performance, the A76 can compete with some Intel i5 chips and Arm promises less than 5W TDP. Raw compute power based on a single benchmark isn’t all there is to making a computer run smoothly, of course, but this signals Arm’s ambitions (and those of its partners) in competing for the laptop market — while at the same time making smartphones far more powerful, too.

Can Arm-based processors really make a dent in the laptop market, though? Smythe surely thinks so. ‘I think with every disruption we created an opportunity,” he said. “That toehold [in the laptop market] can grow when you can demonstrate the benefits. I think that with the first Windows on Arm devices we’re sharing that capability and as we move towards Cortex A76-based devices and beyond, I think that capability and disruption offers opportunity beyond where we are today.”