Disney sells mobile game studio FoxNet Games to Scopely

Disney announced today it has sold the game studio FoxNet Games Los Angeles, the makers of “MARVEL Strike Force” and other titles, as well as Cold Iron Studios in San Jose, to the interactive entertainment and mobile game company, Scopely. The studios were acquired by Disney in 2019 as a part of its $71.3 billion deal for 21st Century Fox. Disney is not, however, divesting of Fox’s full gaming lineup. The company clarified that its separate portfolio of Fox IP licensed game titles were not a part of this deal and will continue to be a part of Disney’s licensed games business.

Aquisition terms were not disclosed.

FoxNet Games released its first title, “MARVEL Strike Force” in March 2018 and it brought in $150 million in its first year across iOS and Android. Another FoxNet title “Storyscape,” released in early 2019, offers choose-your-own-adventure tales taking place in the world of “The X-Files” or “Titanic.” More recently, the studio soft-launched “Avatar: Pandora Rising,” a massive real-time strategy and social game set in Pandora from the movie “Avatar.”

According to data from Sensor Tower “MARVEL Strike Force” has been downloaded over 26 million times to date. “Storyscape” has topped 1.7 million installs. The Avatar title isn’t broadly available, as it’s still in development. It only has 100,000 downloads at present.

FoxNet’s website also notes a game based on the movie franchise “Alien,” is coming soon. (This was acquired with FoxNet’s own deal for Cold Iron Studios back in 2018.)

“We have been hugely impressed with the incredible game the team at FoxNext Games has built with MARVEL Strike Force and can’t wait to see what more we can do together,” said Tim O’Brien, Chief Revenue Officer at Scopely, in a statement about the deal. “In addition to successfully growing our existing business, we have been bullish on further expanding our portfolio through M&A, and FoxNext Games’ player-first product approach aligns perfectly with our focus on delivering unforgettable game experiences. We are thrilled to combine forces with their world-class team and look forward to a big future together,” he added.

Scopely, which hit over a billion in lifetime revenue in summer 2019, had also acquired DIGIT Game Studios last year, home to the top-grossing MMO/strategy game “Star Trek Fleet Command” and strategy MMO “Kings of the Realm.”

Other Scopely top game titles include “Looney Tunes World of Mayhem,” “The Walking Dead: Road to Survival,” “Wheel of Fortune: Free Play,” “WWE Champions 2019,” “Yahtzee with Buddies Dice Game,” “Dice with ellen,” “Scrabble Go,” and many more.

With its latest acquisition, Scopely adds another top-grossing game to its lineup, expands its in-development pipeline, and gains the expertise of FoxNet team. When the transaction completes, FoxNet Games President Aaron Loeb will join Scopely in a newly created executive role and FoxNet Games SVP & GM Amir Rahimi will lead the FoxNext Games Los Angeles studio within Scopely as President, Games.

Disney sells mobile game studio FoxNet Games to Scopely

Disney announced today it has sold the game studio FoxNet Games Los Angeles, the makers of “MARVEL Strike Force” and other titles, as well as Cold Iron Studios in San Jose, to the interactive entertainment and mobile game company, Scopely. The studios were acquired by Disney in 2019 as a part of its $71.3 billion deal for 21st Century Fox. Disney is not, however, divesting of Fox’s full gaming lineup. The company clarified that its separate portfolio of Fox IP licensed game titles were not a part of this deal and will continue to be a part of Disney’s licensed games business.

Aquisition terms were not disclosed.

FoxNet Games released its first title, “MARVEL Strike Force” in March 2018 and it brought in $150 million in its first year across iOS and Android. Another FoxNet title “Storyscape,” released in early 2019, offers choose-your-own-adventure tales taking place in the world of “The X-Files” or “Titanic.” More recently, the studio soft-launched “Avatar: Pandora Rising,” a massive real-time strategy and social game set in Pandora from the movie “Avatar.”

According to data from Sensor Tower “MARVEL Strike Force” has been downloaded over 26 million times to date. “Storyscape” has topped 1.7 million installs. The Avatar title isn’t broadly available, as it’s still in development. It only has 100,000 downloads at present.

FoxNet’s website also notes a game based on the movie franchise “Alien,” is coming soon. (This was acquired with FoxNet’s own deal for Cold Iron Studios back in 2018.)

“We have been hugely impressed with the incredible game the team at FoxNext Games has built with MARVEL Strike Force and can’t wait to see what more we can do together,” said Tim O’Brien, Chief Revenue Officer at Scopely, in a statement about the deal. “In addition to successfully growing our existing business, we have been bullish on further expanding our portfolio through M&A, and FoxNext Games’ player-first product approach aligns perfectly with our focus on delivering unforgettable game experiences. We are thrilled to combine forces with their world-class team and look forward to a big future together,” he added.

Scopely, which hit over a billion in lifetime revenue in summer 2019, had also acquired DIGIT Game Studios last year, home to the top-grossing MMO/strategy game “Star Trek Fleet Command” and strategy MMO “Kings of the Realm.”

Other Scopely top game titles include “Looney Tunes World of Mayhem,” “The Walking Dead: Road to Survival,” “Wheel of Fortune: Free Play,” “WWE Champions 2019,” “Yahtzee with Buddies Dice Game,” “Dice with ellen,” “Scrabble Go,” and many more.

With its latest acquisition, Scopely adds another top-grossing game to its lineup, expands its in-development pipeline, and gains the expertise of FoxNet team. When the transaction completes, FoxNet Games President Aaron Loeb will join Scopely in a newly created executive role and FoxNet Games SVP & GM Amir Rahimi will lead the FoxNext Games Los Angeles studio within Scopely as President, Games.

Shadows’ Dylan Flinn and Kombo’s Kevin Gould on the business of ‘virtual influencers’

In films, TV shows and books — and even in video games where characters are designed to respond to user behavior — we don’t perceive characters as beings with whom we can establish two-way relationships. But that’s poised to change, at least in some use cases.

Interactive characters — fictional, virtual personas capable of personalized interactions — are defining new territory in entertainment. In my guide to the concept of “virtual beings,” I outlined two categories of these characters:

  • virtual influencers: fictional characters with real-world social media accounts who build and engage with a mass following of fans.
  • virtual companions: AIs oriented toward one-to-one relationships, much like the tech depicted in the films “Her” and “Ex Machina.” They are personalized enough to engage us in entertaining discussions and respond to our behavior (in the physical world or within games) like a human would.

Part 2 of 3: the business of virtual influencers

Today’s discussion focuses on virtual influencers: fictional characters that build and engage followings of real people over social media. To explore the topic, I spoke with two experienced entrepreneurs:

  • Dylan Flinn is CEO of Shadows, an LA-based animation studio that’s building a roster of interactive characters for social media audiences. Dylan started his career in VC, funding companies such as Robinhood, Patreon and Bustle, and also spent two years as an agent at CAA.
  • Kevin Gould is CEO of Kombo Ventures, a talent management and brand incubation firm that has guided the careers of top influencers like Jake Paul and SSSniperWolf. He is the co-founder of three direct-to-consumer brands — Insert Name Here, Wakeheart and Glamnetic — and is an angel investor in companies like Clutter, Beautycon and DraftKings.

Week in Review: Forget cord cutting, here comes the stream slashing

Hey everyone, welcome back to Week in Review where I dive deep into a bit of news from the week or just share some thoughts and go over some of the more interesting stories of the week.

If you’re reading this on the TechCrunch site, you can get this in your inbox here, and follow my tweets here.


The big story

“Cord cutting” might still be a major trend for those walking away from cable subscriptions in favor of online streaming services, but the world of online subscription TV is nearly saturated and as 2020 prepares to inundate us with more services, it’s likely growing time for consumers to stop adding services and start prioritizing.

NBCUniversal delivered some more details this week on its Peacock network and earlier this month we heard more about the mobile-only streaming network Quibi . These launches will come along in the spring, arriving just months after the high-profile launches on Apple TV+ and Disney+. Adding four high-spend streaming platforms in a short time frame could rattle the cages of consumers that have been bumbling along with only a couple streaming service subscriptions.

NBCUniversal’s Peacock seems to walk the line between both worlds, leveraging Comcast subscribers without seeming to invest heavily in original content for the service. Their strategy is pinned on the attractiveness of their existing content library which they’re promoting heavily on both free and paid plans. There could be something here, it feels like a marked return to the early Hulu playbook, which could very well be played out.

I still don’t know what to think of Quibi. They are dropping plenty of cash but spending your way into building a Gen Z network seems like a tall order. They’ve already nabbed a big partnership with T Mobile which seems promising when considering their broader industry adoption and yet it still seems like Snapchat Discover Prime. I’ll withhold judgment until launch but other mobile-first video networks have had less than stellar receptions.

Side note: At this point in the streaming video product life cycle, I would imagine cracking down on password-sharing is going to start being a more attractive option for streaming service operators.

We’ll see how this all shakes out, but it’s getting crowded.

Trends of the week

Here are a few big news items from big companies, with green links to all the sweet, sweet added context:

  • Visa buys Plaid for $5.2 billion
    The biggest acquisition of the week was the very bold purchase of Plaid by Visa. Visa paid up double the banking API startup’s last private valuation. Read more here.
  • Google acquires Pointy
    Google has announced a couple deals in the past few weeks. This week, we heard that they had acquired the Dublin startup Pointy, which builds hardware and software to help physical retailers track product inventory levels. Read more about it in our coverage.
  • Alphabet is a $1 trillion company
    In the current age of big tech, there’s an elite club for public companies worth more than $1 trillion in market cap. This week, Alphabet joined its ranks. Read more here.

Extra Crunch

Our premium subscription business had another great week of content. My colleague Darrell Etherington talked a bit about the next frontier of early-stage space investments.

Space Angels’ Chad Anderson on entering a new decade in the ‘entrepreneurial space age’

“Space as an investment target is trending upwards in the VC community, but specialist firm Space Angels has been focused on the sector longer than most. The network of angel investors just published its most recent quarterly overview of activity in the space startup industry, revealing that investors put nearly $6 billion in capital into space companies across 2019.…”

Sign up for more newsletters, including my colleague Darrell Etherington’s new space-focused newsletter Max Q, here.

In the shadow of Amazon and Microsoft, Seattle startups are having a moment

Venture capital investment exploded across a number of geographies in 2019 despite the constant threat of an economic downturn.

San Francisco, of course, remains the startup epicenter of the world, shutting out all other geographies when it comes to capital invested. Still, other regions continue to grow, raking in more capital this year than ever.

In Utah, a new hotbed for startups, companies like Weave, Divvy and MX Technology raised a collective $370 million from private market investors. In the Northeast, New York City experienced record-breaking deal volume with median deal sizes climbing steadily. Boston is closing out the decade with at least 10 deals larger than $100 million announced this year alone. And in the lovely Pacific Northwest, home to tech heavyweights Amazon and Microsoft, Seattle is experiencing an uptick in VC interest in what could be a sign the town is finally reaching its full potential.

Seattle startups raised a total of $3.5 billion in VC funding across roughly 375 deals this year, according to data collected by PitchBook. That’s up from $3 billion in 2018 across 346 deals and a meager $1.7 billion in 2017 across 348 deals. Much of Seattle’s recent growth can be attributed to a few fast-growing businesses.

Convoy, the digital freight network that connects truckers with shippers, closed a $400 million round last month bringing its valuation to $2.75 billion. The deal was remarkable for a number of reasons. Firstly, it was the largest venture round for a Seattle-based company in a decade, PitchBook claims. And it pushed Convoy to the top of the list of the most valuable companies in the city, surpassing OfferUp, which raised a sizable Series D in 2018 at a $1.4 billion valuation.

Convoy has managed to attract a slew of high-profile investors, including Amazon’s Jeff Bezos, Salesforce CEO Marc Benioff and even U2’s Bono and the Edge. Since it was founded in 2015, the business has raised a total of more than $668 million.

Remitly, another Seattle-headquartered business, has helped bolster Seattle’s startup ecosystem. The fintech company focused on international money transfer raised a $135 million Series E led by Generation Investment Management, and $85 million in debt from Barclays, Bridge Bank, Goldman Sachs and Silicon Valley Bank earlier this year. Owl Rock Capital, Princeville Global,  Prudential Financial, Schroder & Co Bank AG and Top Tier Capital Partners, and previous investors DN Capital, Naspers’ PayU and Stripes Group also participated in the equity round, which valued Remitly at nearly $1 billion.

Up-and-coming startups, including co-working space provider The Riveter, real estate business Modus and same-day delivery service Dolly, have recently attracted investment too.

A number of other factors have contributed to Seattle’s long-awaited rise in venture activity. Top-performing companies like Stripe, Airbnb and Dropbox have established engineering offices in Seattle, as has Uber, Twitter, Facebook, Disney and many others. This, of course, has attracted copious engineers, a key ingredient to building a successful tech hub. Plus, the pipeline of engineers provided by the nearby University of Washington (shout-out to my alma mater) means there’s no shortage of brainiacs.

There’s long been plenty of smart people in Seattle, mostly working at Microsoft and Amazon, however. The issue has been a shortage of entrepreneurs, or those willing to exit a well-paying gig in favor of a risky venture. Fortunately for Seattle venture capitalists, new efforts have been made to entice corporate workers to the startup universe. Pioneer Square Labs, which I profiled earlier this year, is a prime example of this movement. On a mission to champion Seattle’s unique entrepreneurial DNA, Pioneer Square Labs cropped up in 2015 to create, launch and fund technology companies headquartered in the Pacific Northwest.

Boundless CEO Xiao Wang at TechCrunch Disrupt 2017

Operating under the startup studio model, PSL’s team of former founders and venture capitalists, including Rover and Mighty AI founder Greg Gottesman, collaborate to craft and incubate startup ideas, then recruit a founding CEO from their network of entrepreneurs to lead the business. Seattle is home to two of the most valuable businesses in the world, but it has not created as many founders as anticipated. PSL hopes that by removing some of the risk, it can encourage prospective founders, like Boundless CEO Xiao Wang, a former senior product manager at Amazon, to build.

“The studio model lends itself really well to people who are 99% there, thinking ‘damn, I want to start a company,’ ” PSL co-founder Ben Gilbert said in March. “These are people that are incredible entrepreneurs but if not for the studio as a catalyst, they may not have [left].”

Boundless is one of several successful PSL spin-outs. The business, which helps families navigate the convoluted green card process, raised a $7.8 million Series A led by Foundry Group earlier this year, with participation from existing investors Trilogy Equity Partners, PSL, Two Sigma Ventures and Founders’ Co-Op.

Years-old institutional funds like Seattle’s Madrona Venture Group have done their part to bolster the Seattle startup community too. Madrona raised a $100 million Acceleration Fund earlier this year, and although it plans to look beyond its backyard for its newest deals, the firm continues to be one of the largest supporters of Pacific Northwest upstarts. Founded in 1995, Madrona’s portfolio includes Amazon, Mighty AI, UiPath, Branch and more.

Voyager Capital, another Seattle-based VC, also raised another $100 million this year to invest in the PNW. Maveron, a venture capital fund co-founded by Starbucks mastermind Howard Schultz, closed on another $180 million to invest in early-stage consumer startups in May. And new efforts like Flying Fish Partners have been busy deploying capital to promising local companies.

There’s a lot more to say about all this. Like the growing role of deep-pocketed angel investors in Seattle have in expanding the startup ecosystem, or the non-local investors, like Silicon Valley’s best, who’ve funneled cash into Seattle’s talent. In short, Seattle deal activity is finally climbing thanks to top talent, new accelerator models and several refueled venture funds. Now we wait to see how the Seattle startup community leverages this growth period and what startups emerge on top.

‘The Mandalorian’ returns for Season 2 on Disney+ in Fall 2020

The last episode of the first season of Disney’s ‘The Mandalorian’ is available to stream on Disney+ today, and showrunner Jon Favreau wasted very little time confirming when we can expect season 2 of the smash hit to land: Next fall.

Favreau tweeted the anticipated timeline for the sophomore series of ‘The Mandalorian’ on Friday, accompanied by an image of a statuette of a Gamorrean, a type of alien from the Star Wars universe with a distinctly hog-like appearance. The Gamorrean’s most noteworthy appearance in the Star Wars cinematic universe to date is probably in The Empire Strikes Back, when they served as guards for crime lord Jabba the Hutt on Tatootine.

We already knew ‘The Mandalorian’ would be returning for a second season, after Favreau revealed in November that he’d begun filming on the second instalment of episodes. But now we have a better idea of exactly how long we’ll have to wait to find out what happens next in the streaming original, which is arguably the best new Star Wars universe content since the original series of films (yes, I really believe that).

If you haven’t yet seen the show, all eight episodes are now available to stream on Disney+, and it’s definitely worth the price of admission for one month of the service just to binge the series alone.

Elon Musk says Tesla will add Disney+ to its vehicles “soon”

Elon Musk spent some time over this past holiday week answering questions posed by fans on Twitter, and one addressed the growing catalogue of entertainment options available in-car via the Tesla Theater software feature: Musk said that Disney+ will be “coming soon” to the list of available streaming services drivers can access in their cars. Tesla Theater was introduced in the V10 software update that went out in September via over-the-air-update, and added streaming media from Netflix and YouTube, as well as Tesla vehicle feature tutorials.

Tesla also issued a new software update that began rolling out just before Christmas, which included the addition of Twitch to Tesla Theater, as well as support for popular farming sim game Stardew Valley, the ability to set dashcam video clips to automatically save whenever you honk the horn, support for voice commands and much more.

Tesla has put a lot of effort into its continuous software updates for vehicles, which are available to all cars in the fleet regardless of generation and which really do add a lot of post-purchase value, especially when compared to the traditional automaker practice of gating new features and improvements to only current and recent model year releases.

Tesla Theater’s streaming media options are only available when the car is in park and not driving, but it’s a feature that is more valuable to Tesla owners than you might think – especially when you consider that Tesla cars require time to charge at charging stations, meaning even at a high-speed Supercharger you’ll likely be looking at a wait of half-an-hour or more depending on how much you’re looking to charge up.

Via Teslerati

Here’s a Mickey Mouse version of Amazon’s Echo Wall Clock

Amazon’s original Echo Wall Clock was mostly fine. Some consumers ran into connectivity issues with the device, but it was mostly okay. It’s one of the most passive members of the Echo family of devices, mostly doing its wall clock thing, until you need a time set.

The latest addition to the line has something its predecessor lacked, however: a giant Mickey Mouse. From the looks of it, things are mostly exactly the same here, with the important addition of a large, smiling rodent whose little mouse arms point out the hours and minutes.

There’s the standard 60 LED ring that serves both to designate minutes and lights up for timer countdowns. The clock pairs with Echo devices, responding to voice commands and automatically adjusting for daylight savings time. Also these handy features:

  • Echo Wall Clock – Disney Mickey Mouse Edition helps you stay organized and on time.

  • Easy-to-read analog clock with iconic design cover shows the time of day.

Which is to say, it’s a clock. Which is also to say that, even when it’s broken, it’s right twice a day. How many gadgets can say that? The Echo Wall Clock – Disney Mickey Mouse Edition is available now for those who still somehow have more room in their life for Disney, and should get to you before Christmas if you order now. It runs $50 — $20 more than the standard edition.

Kid-focused STEM device startup Kano sees layoffs as it puts Disney e-device on ice

London-based STEM device maker Kano has confirmed it’s cutting a number of jobs which it claims is part of a restructuring effort to shift focus to “educational computing”.

The job cuts — from 65 to 50 staff — were reported earlier by The Telegraph. Kano founder Alex Stein confirmed in a call with TechCrunch that Kano will have 50 staff going into next year. Although he said the kid-focused learn to code device business is also adding jobs in engineering and design, as well as eliminating other roles as it shifts focus.

He also suggested some of the cuts are seasonal and cyclical — related to getting through the holiday season.

Per Stein, jobs are being taking out as the company moves from building atop the Raspberry Pi platform — where it started, back in 2013, with its crowdfunded DIY computer — to a Windows-based learning platform.

Other factors he pointed to in relation to the layoffs include a new manufacturing setup in China, with a “simpler, larger contract manufacturer”; fewer physical retail outlets to support, with Kano leaning more on Amazon (which he said is “cheaper to support”); fewer dependencies on large partners and agencies, with Stein claiming 18% of US parents with kids aged 6-12 are now familiar with the brand, reducing its marketing overhead; and a desire to shrink the number of corporate managers vs makers on its books as “we’ve seen a stronger response to our first-party Kano products — Computer Kit, Pixel Kit, Motion Sensor Kit — than expected this year”.

“We have brought on some roles that are more focused on this new platform [Kano PC], and some roles that were focused on the Raspberry Pi are no longer with us,” he also told TechCrunch.

Kano unveiled its first Windows-based PC this fall. The 11.6-inch touch-enabled, Intel Atom-powered computer costs $300 — which puts it in the ballpark price-range of Google’s Chromebook.

The tech giant has maintained a steady focus on the educational computing market — putting a competitive squeeze on smaller players like Kano who are trying to carve out a business selling their own brand of STEM-focused hardware. Against the Google Goliath, Stein touts factors such as relative repairability and attention to computing performance for the Kano PC (which he claims is “on a par with the Surface Go”), in addition to having now thrown its lot in with rival giant, Microsoft.

“The more and more we got into school environments the more and more we were in conversations with major North American distributors to schools, the more we saw that people wanted that ‘DIY’… product design, they wanted the hackability and extensibility of the kit, they wanted the tools to be open source and manipulable but they also wanted to be able to run Photoshop and to run Class Dashboard and to run Microsoft Office. And so that was when we struck the partnership with Microsoft,” said Stein.

“The Windows computing is packed with content and curriculum for teachers and an integration with Microsoft Teams which requires a different sort of development capability,” he added.

“The roles we’re adding are around subscription, they’re around the computer, building new applications and tools for the computer and continuing to enrich the number of projects that are available for our members now — so we’re doing things like allowing people to connect the sensors in their wands to household IoT device. We’re introducing, over the Christmas period, a new collaborative drawing app.”

According to Stein, Kano is “already seeing demand for 60,000 units in this next calendar year” for its Windows-based PC — which he said is “well beyond what we expect… given the price-point.

Although he did not put a figure on exact sales to date of the Kano PC.

He also confirmed Kano will be dialling back the range of products it offers next year.

It recently emerged that an own-brand camera device, which Kano first trailed back in 2016, will not now be shipping. Stein also told us that another co-branded Disney product they’d been planning for 2020 is being “put back” — with no new date for release as yet.

Stein denied sales have been lacklustre — claiming the current Star Wars and Frozen e-products have “done enough for us”. (While a co-branded Harry Potter e-wand is selling faster than expected, per Stein, who said they had expected to have stock until March but are “selling out”.)

“The reorganization we’ve done has nothing to do with growth and users,” he told us. “We are on track to sell through more units as well as products at a higher average selling price this fiscal year. We’re selling out of Wands when we expected to have stock all the way to March. We have more pre-launch demand for the Kano PC than anything we’ve ever done.”

Of the additional co-branded Disney e-product which is being delayed — and may not now launch at all next year, Stein told us: “The fact is we’re in negotiations with Disney around this — and around the timing of it. Given that we’re not certain we’re going to be doing it in 2020 some of the contractor roles in particular that we brought on to do the licensing sign off pieces, to develop some of the content around those brands, some of the apparatus set up to manage those partnerships — we don’t need any more.”

“We introduced three new hardware SKUs this year. I don’t think we’ll do three new hardware SKUs next year,” he added, confirming the intention is to trim the number of device launches in 2020 to focus on the Kano PC.

One source we spoke to suggested Kano is considering sunsetting its partner strategy entirely. However Stein did not go that far in his comments to us.

“We’ve been riding a certain bear for a few years. We’re jumping to a new bear. That’s always going to create a bit of exhilaration. But I think this is a place of real promise,” was how he couched the pivot.

“I think what Kano does better than anyone else in the world is crafting an experience around technology that opens up its attributes to a wider audience,” Stein also said when asked whether hardware or software will be its main focus going forward. “The hardware element is crucial and beautiful and we make some of the world’s most interesting dynamic physical products. It’s an often told story that hardware’s very hard and is brutal — and yeah, because you get it right you change the fabric of society.

“It’s hard for me to draw a line between hardware and software for the business because we’ve always been asked that and seven years into the business we’ve found the greatest things that people do with the products… it’s always when there’s a combination of the two. So we’re proud that we’re good at combining the two and we’re going to continue to do it.”

The STEM device space has been going through bumpy times in recent years as early hype and investment has failed to translate into sustained revenues at every twist and turn.

The category is certainly filled with challenges — from low barrier to entry leading to plentiful (if varied quality) competition, to the demands of building safe, robust and appealing products for (fickle) kids that tightly and reliably integrate hardware and software, to checking all the relevant boxes and processes to win over teachers and support schools’ curriculum requirements that’s essential for selling direct to the education market.

Given so many demands on STEM device makers it’s not surprising this year has seen a number of these startups exiting to other players and/or larger electronics makers — such as Sphero picking up littleBits.

A couple of years ago Sphero went through its own pivot out of selling co-branded Disney ‘learn to code’ gizmos to zoom in on the education space.

While another UK-based STEM device maker — pi-top — has also been through several rounds of layoffs recently, apparently as part of its own pivot to the US edtech market.

More consolidation in the category seems highly likely. And given the new relationship between Kano and Microsoft joining Redmond via acquisition may be the obvious end point for the startup.

Per the Telegraph’s report, Kano is in the process of looking to raise more funding. However Stein did not comment when asked to confirm the company’s funding situation.

The startup last reported a raise just over two years ago — when it closed a $28M Series B round led by Thames Trust and Breyer Capital. Index Ventures, the Stanford Engineering Venture Fund, LocalGlobe, Marc Benioff, John Makinson, Collaborative Fund, Triple Point Capital, and Barclays also participated.

TechCrunch’s Ingrid Lunden contributed to this report 

How the founder of Pocketwatch sees the future of children’s entertainment

When Chris Williams founded entertainment platform Pocketwatch in 2017, he was certain that no one had yet found the right way to work with the generation of children’s talent finding its audience on platforms like YouTube.

Convinced that packaging creators under one umbrella and leveraging the expanding reach of even more media platforms could reshape the way children’s content was produced, the former Maker Studios and Disney executive launched his company to offer emerging social media talent more avenues to create entertainment that resonates with young audiences.

On the back of the breakout success of Ryan’s World, a YouTube channel which counted 33.6 billion views and more than 22 million subscribers as of early November, it appears that Williams was on the right track. As he looks out at the children’s media landscape today, Williams says he sees the same forces at work that compelled him to create the business in the first place. If anything, he says, the trends are only accelerating.

The first is the exodus of children from traditional linear viewing platforms to on-demand entertainment. The rise of subscription streaming services, including Disney+, HBO Max and Apple Plus — combined with the continued demand for new children’s programming on Netflix — is creating a bigger market for children’s programming.

“If you’re a subscription-based service, what kids’ content does for you is it prevents churn,” says Williams.

That’s drawing attention from new, ad-supported streaming providers like the Roku Channel, PlutoTV and SamsungTV Plus, which are also thirsty for children’s storytelling. Williams says he sees fertile ground for new programming among the ad-based, video-on-demand services. “Kids and family content tends to be the most highly engaging that creates consumption in homes. That creates a lot of opportunities for advertisers.”

The Roku Channel and Viacom’s PlutoTV service show that there’s still demand for ad-supported, on-demand alternatives that are more curated than just YouTube. It’s a potential opportunity for more startups, as well as an opportunity for studios looking to pitch their talent and programming.

“When we’ve launched a new 24-7 video channel and AVOD library and omni services… [we] know that content is surrounded by other premium content,” says Williams.

For all of the opportunities these new platforms bring, Williams says YouTube isn’t going anywhere as one of the dominant new forces in children’s entertainment,  despite its many, many woes. In fact, one of Williams’ new initiatives at Pocketwatch is predicated on changes that YouTube is seemingly making in terms of the programming that it promotes with its algorithms.