A federal judge says he would not approve a provision in which hp will have to pay for shareholder lawyers and shift the focus to exautonomy executives. Hp is suing deloitte over the results now. In parts of napa, they are cleaning up after the strongest earthquake to hit Northern California in 25 years. The 6. 0 earthquakes damaged buildings and it hurt 170 people. We will see how scientists predict and prepare for earthquakes. Amazon is no stranger to opening up its wallet, today at least. Today, they announced its largest acquisition ever by buying twitch video. A platform where people watch other people play videogames. Amazon paying 970 million in cash. Toss in the earnouts, the price tag is 1. 1 billion giving amazon what . Amazon will get 55 million active users. That is how many people are watching people play video games every month. It will help amazon expand streaming offerings. It includes the fire tv set box and the fire phone as well. It comes as talks between google and switch broke down. For more, we have pj mcneely and stuart alsott. Stuart, let me ask you about this deal. Last i saw you, you wouldnt talk about it. Why is twitch so exciting to a company like amazon . You are right, the last time i saw you i refused to divulge any of the details. I will not talk about the actual transaction. Amazon is interested for multiple reasons. First of all, amazon has a big foray into media. They are producing its own television shows. They are establishing music and books. For that reason the thing that is underneath the cover here is that twitch has become a highperforming team that knows had to run systems in real time. They can deliver video regardless of what is in the video at lowest cost and highest quality of any vendor in the world. Recently, it was ranked as the number one video site. I think that is really the key to the future of television. I think that is really the reason that amazon is interested in acquiring the company. It is fairly interesting, pj. We have been talking about games for well over a decade. We have never seen anything like this where people are really tuning in to watch people other play games. Give a sense of how important twitch is in videogames. This is a scene where we are seeing more and more devices that can capture live video. It will be the next big theme. People will be posting live streams of events. In the video game space, twitch has been a godsend to the Video Game Community that really wants to learn more about games, follow people who know how to play well. It is no longer a niche thing. It is driving gaming on all platforms. Stuart, when you made the investment in twitch and looked it early on, did you see it as a videogame platform, entertainment platform or just a bunch of smart guys that understood how to send more stuff and using less of the internet than anyone else . I cannot say that we had a precise notion of how this would turn out seven years ago in 2007 when we first invested. It was called justintv and one of the four cofounders was running around with a video camera on his cap and a computer in his backpack so he can broadcasting his life for 24 hours. An associate of ours who was 19 at the time came running into our office and said this is the future of television. Maybe we were too old to see the future, but he got it pegged. I wonder, pj, is the magic of twitch not figuring out that people want to watch videogames, but figuring out how to take boatloads of information across the internet and using less data . I think it is as much about entertainment moreso than data. A lot of people who are watching twitch want to become better gamers or want to be entertained. A lot of this is entertainment content that is up there. You are watching somebody else play. It is more focused on entertainment rather than data. Go ahead, stuart. Pj is absolutely right. The videogame is now is the next Generation Media site. The size of the venture of videogames is now larger than the movie business and other forms of media. What we are doing is seeing videogames represent an opportunity to move into a new kind of media which is realtime, live transmission of entertainment. Stuart, on sunday nights i see cbs break into the broadcast of latest business headlines and box office. As if the box office is the most important. You are suggesting they should break in with videogames because that is a bigger number. How many people are watching twitch shows during peak hours . Those numbers are fairly amazing. Pj, when you talk about the twitch viewer and what theyre watching the number that knocked me out is not the 55 Million Viewers but the 15 billion 15 billion minutes of usage. That suggests people are watching this intently over a substantial period of time. There is a lot of user interaction time. We are seeing this with video game competitions. We are seeing live gaming events more. When they sold out the Staples Center last year, it was a big videogame event. There is a much broader interest in watching other people game. You are also seeing the number of streams that have been consumed on youtube that are all twitch feeds. The video on demand is huge as well. It has been a key point. Audiences want to consume video no matter where it is from. In this case, Youtube Channels growing courtesy of twitch. Twitch jumped out at me a few months ago when i was reading a report which i sent out on twitter. An interesting study of bandwidth usage on the back end and twitch has jumped up to number 15 overall in the middle of this year. 1. 35 of all internet traffic. Is that a function of the 4. 5 hours that every twitch user is watching twitch tv every month . There are two things going on here. One is the engagement of the average user. Last month, they had over 55 million unique visitors to their services. Those users are on an average of over an hour a day. Some users are on much longer. Part of it is the engagement. Part of it is this is a broadcasting model. You, cory, are broadcasting this across the internet as well as the traditional broadcast. What twitch has figured out is how to engage people in that process. They are interacting with a live broadcast. This is different than youtube which stores video and delivers it when you click on it. This is a realtime phenomenon. For twitch to have accomplished this, they are at the level where they are the dominant Live Streaming vendor of all entities that do Live Streaming on the internet to the point where theyre almost half of all the traffic that is live streamed. That is the second number that you have to Pay Attention to. I think when we look at what google saw with their youtube traffic was how important twitch was in emerging faster. Is there Something Else out there that has the same thing that we havent focused on . In terms of Live Streaming video . Yeah. I dont think so. Since the time that justintv transformed itself into twitch interactive, the growth has been so astonishingly fast that i think it will be difficult for somebody to come in and do the same. Right now, people are focused on twitch as a phenomenon all by itself. Stuart, a vaunted venture capitalist. Also, pj from Digital World research. Thank you. We will stay on this theme that video games may be the future, maybe the present. The most Important Media source of all. Madden football therefore perhaps the hottest title. The latest version to hit comes tomorrow. We will look behind the scenes at what makes this game like real football a little bit better. I am cory johnson. This is bloomberg west. Hewlettpackard was back in court today over its acquisition of a British Software company, autonomy. Three years and one week after the deal was announced and well after an 8. 8 billion writedown, a big plan to get out of this lawsuit by paying for the shareholders lawyers and shifting the blame to the autonomy executives themselves. That was tossed out by a judge. He called the provision potentially fatal saying it should not be a part of the management. They claim it botched the acquisition. Where do shareholders fair on this . We are joined by minor myers from new york city. This seems like a complicated story and it really isnt. I will turn it around a little bit and you can tell me if i am wrong. Let us say if i am arrested for a crime and facing 10 years in jail for stealing a car, i hire a lawyer, my lawyer goes before the judge and the Prosecutor Says you know what, we will give some money to my lawyer and my lawyers says all you have to do is the time and its all good. Is that what happened . Thats not exactly what happened. For you, you are there to monitor the lawyer. What happened here is an especially egregious scenario of what happens in most shareholder litigations. You have plaintiff attorneys who are pursuing the claims and defendants who want the claims to go away. It is not surprising that the settlement end up favoring the plaintiffs attorneys but dont do much for the shareholders because there are no shareholders to monitor what is going on. It is a fairly amazing thing. It seemed like it was like the judge would let it go. What happened today . That is the normal storyline. The plaintiffs attorney and the defendant show up arms locked and say your honor, we resolved the dispute. The really remarkable thing about what happened is that the judge was willing to say no. That kind of scrutiny is really unusual. He said he didnt like what the lawyers were getting paid here and he didnt like the terms in which shareholders are settling this which is for nothing. The shareholders are getting nothing. I was talking to a venture capitalist about this deal and he raised the question which seems obvious to people who follow this stuff. Fundamentally, when a company pays a settlement, it is coming out of the shareholders pocket anyway. Is there great value to shareholders and having shareholder lawsuits at all unless it is coming out of the pocket of the board. It depends. This type of suit is against the directors personally. The Company Maintains insurance policies to help them in the event that they have to pay on claims like that. If the claims were successful, they would recover money from people outside the company. Shareholders really would do well here if claims were successful. That doesnt seem to be what is happening. Should the shareholders be going after the board and demanding a new board or take it up in court . The court cannot resolve this. Nonmarket discipline here. Voting people out of office if youre unhappy, that is going to be the better route for some kind of remedy. The Board Members at hewlettpackard we will see what theyre about. Minor myers, thank you very much. Coming up, from the field to your tv screen, we will take you behind the scenes of the highlysuccessful madden football franchise. We will show you how data is making this hit game even more realistic. I am cory johnson and this is bloomberg west. Service has been restored to sonys Online GamingEntertainment Network after they were hit by hackers again. The networks which allow gamers to play against each other had a Service Attack as hackers try to flood them with high traffic. Sony doesnt believe any personal data was taken. They had a big problem with that about a year ago. A threat made against a plane carrying a Sony Entertainment unit was a false alarm, but sony has referred the matter to the fbi. Tomorrow, madden nfl 15, yes, the 15th version of that flagship sports franchise will blitz its way to a console near you. The authentic nfl jumbotrons, player montages, even pregame and halftime shows. That will all be happening as well as the Artificial Intelligence and animation. Matt miller was behind the scenes for how the game together for madden 15. Talking to the guy that decides just how good players in the nfl should be in the nfls premium videogame. See what he had to say. For the last two decades, madden nfl has consistently ranked among the top videogames in america bringing in 4 billion for electronic arts. One man has helped fuel that success and it is not john madden. This is where i literally will make a change. Every player has every rating. Meet donnie moore, the ratings czar. His rankings take nfl players from the field to the game. With the 32 nfl teams, 74 players per team, plus 250 free agents and 50 legends that is 2668 players which he designs a rating of up to 100 in 64 different categories. Scores he creates using data from game performance, team stats, and his own notes. I want the game to look like an nfl game. I dont want to put something in which you give a guy a one speed, he is out there inching along. Exploiting bad player ratings on eas old ncaa Football Games is how donnie got his job at madden. I had this move you can just spam the button. I can probably finetune the process so there is no accidently gameplay mistakes that makes someone better than they should be. Today, his ratings have helped ea make madden look so good, the franchise has sold over 100 million units. Sometimes players disagree. I have a problem with that. I know i have gotten better. The same rating . That is so disrespectful. Where do they get these numbers from . Active on twitter, he is willing to take feedback from fans, gamers, coaches, and especially players about his ratings. There is a reason these guys are nfl players. There is also a reason they are throwing 80 completion percentage and the reason why the texans went 214 despite having jj watt who is 99 overall. We have are trying to capture that. We cannot hand out lollipops to every player. Not even to the highestrated player in the game. I can see it now going to denver and Peyton Manning will come in. I will be super honored. He is a great guy. Peyton, sorry this year you have 86 throwing power. You are 38 years old. I wont be the guy that tells Peyton Manning that. While everybody else will be focused on hanging out with pro bowl quarterbacks and wide receivers, donnie only cares about making madden 15 a great videogame. That was bloombergs matt miller from orlando, florida where madden happens. Northern california hit with the biggest earthquake in 25 years over the weekend. What can technology do to help businesses prepare for the next big one . That story is next. You are watching bloomberg west where we focus on innovation, technology and the future of business. Earthquake technology is back in the forefront after Northern California was hit with its strongest quake in 25 years. Sunday mornings 6. 0 magnitude center centered just south of napa and injured more than 170 people, damaging dozens of homes. I spoke with richard allen, the director of berkeleys Seismological Laboratory and brad aggar of the u. S. Geological survey. I asked them what was unique about this earthquake. It is a 6. 0 earthquake on this secondary fault system west of napa which is near the west napa fault. We will have more information on whether it was on that fault or another. It has been 25 years since we had an earthquake this big. It is more of a surprise that it took that long to have an earthquake of this size. The shaking in the area affected is very typical for this earthquake. The most vulnerable structures were the ones that were affected by the strongest shaking. A lot of gas lines, water lines broken which is consistent with the level of shaking recorded. We are seeing some footage of the quake that took place 25 years ago which was not that far away. A lot of that damage done in the east bay. We are showing damage of the bay bridge and other places that were so notorious, where so many people were killed. Richard, you are in berkeley. It seems like a fantasy that we can have technology that will predict what could happen before it happens. What do your tools tell us and what do you know now about the tools you didnt know before yesterday . We are not predicting the earthquake, we are predicting the shaking. The Warning System we have been testing has performed very well. It detectes the very beginnings of the earthquake. It assesses the size of the earthquake and then it can put out an estimate. We can push out a few seconds. Best Case Scenario, it is a minute warning to warn people prior of shaking. Best Case Scenario is a minute warning. What did we get yesterday . Yesterday, the warning was pushed out about five seconds after the origin time of the earthquake. It is important to recognize that napa could not have had a warning. We are getting the necessary investments to build a fullblown public system. It will improve our instruments and then napa couldve had a warning. In berkley, we had a 10second warning. Oakland and San Francisco had even more warning. We are trying to roll this out and make this available to everybody. We have been testing it for a number of years, it is in really good shape. It is time to pull the trigger and provide warnings. Who is holding back on that spending . It sounds like it will be a good thing to know. 10 seconds, does that really help . Who can spend the money . The reason it helps is because if you get a few seconds of warning, you can move to a safe zone, move under a sturdy table, move away from hazardous places like the fronts of brick masonry buildings so you dont have these bricks falling on top of you. You can use it for automated response. For example, the bart train system here already gets the warnings from our demonstration earlyWarning System and they use them to automatically slow and stop the trains thereby reducing the risk of damage to the train and possible injuries. Surgeons can get the warning so that eye surgeons can step back with the scalpel a second before the shaking starts. There are many potential benefits to having an earlyWarning System. What is holding it up is funding. We have a legislation here in california now as of last year that mandates we should build a public earthquake earlyWarning System, but funding has not been identified. We need to encourage our legislators to put the necessary priority behind it. A state of emergency has been declared following the event yesterday. There was an emergency that we should actually implement the system so call your local senator and lets get the system built so we can have a warning before the next earthquake. Brad, let me ask you about the economics. The effect on business as we have the dramatic pictures out of wineries. We are lucky it was such a rural area. The grapes were probably most affected. What kind of economic damage are we looking at here and how different would that be if the quake was on the hayward fault . Napa is a community of about 80,000 people so it is not a completely rural area. It is home to some old structures so we saw some damage to unreinforced structures, primarily in the downtown area. It was these more vulnerable structures. Many have been retrofitted so we saw portions of walls fall down rather than entire walls and buildings. That was the good news. Moving forward in times of what would happen if we move the earthquake closer to a denser urban population we would have more ruptures of gas lines, sewer lines, water lines in the affected area. Our woodframe structures do very well in earthquakes. Another issue is that the earthquake occurred at 3 20 a. M. And most people were not were at home sleeping. Very few people out and about and that reduced the affect on injuries and so forth. Quick question. Improve the structures is the most important. My great concern is what is the impact on Technology Businesses in Silicon Valley . Less construction, less Industrial Production of say disk drives in Silicon Valley, but it is so much bigger of a business right now. What are the potential impacts of a san andreas or hayward fault earthquake on the Technology Industry . In Silicon Valley, a major damaging earthquake that really disrupted the business you are potentially losing your infrastructure in terms of people leaving the area. The more we can prepare earthquake so people can remain in the area, we wont suffer from a catastrophic event that we saw in katrina where people were forced to leave the area and you really lost the economic vitality. That was richard allen, the director of the berkeley Seismological Laboratory. And brad, a Research Geophysicist with the usgs. We will talk to a linkedin cofounder who thinks the next facebook or twitter could come from europe rather than Silicon Valley. You can watch us streaming on your tablet, phone and bloomberg. Com and apple tv. I am cory johnson. This is bloomberg west. The first day of burning man has gone up in smoke or gone out in smoke thanks to rain falling in nevada. The burning man festival attended by many tech moguls from Mark Zuckerberg to larry page will not start until midday tomorrow at the earliest due to standing water on the normally dry lake where it occurs. Cars are being turned back by law enforcement. A sad day. Will the next multibilliondollar company come out of europe . Linkedin cofounder Konstantin Guericke joined Earlybird Venture capitalist firm earlier this year to help bridge the gap between investments in europe and Silicon Valley. Earlybird has invested in a handful of companies, including a photo sharing app and onefootball which is about their football. That is focused on soccer. I asked him starting with a question of how he decided to focus on european startups. We are focused on continental europe. There are a number of companies that have spots in london. There is not a lot of capital on continental europe. There is a very healthy ecosystem of startups that have received funding. It is a good spot to be. There might be a Silicon Valley in phoenix or chicago or new york. There is this confluence of lawyers and multirounds of venture capitalists that can take a deal through a couple of rounds of investment and get a Company Ready to do an ipo and throught it. Does that exist in europe in the same way . The focus i look at is the entrepreneurs. What are the quality entrepreneurs, the advisors, the capital. The lawyers sort of sort themselves out. A lot of companies that make a Global Impact will probably be Israeli Companies who have people here and the ipo may be end up being here. You have fantastic Development Teams that have worked together before, who could make a lot with little. You have an environment where as an investor, you can get in where the competition is not like here where they are really good. I read a report that talked about the pace of venture capitalist growth in europe. While the business is smaller than in the u. S. 33 billion versus 7 billion the pace of growth in the last year has been enormously faster than it is in the u. S. What is going on and why is there such excitement there . For the last 10 years, it has been sort of like compared to the japanese Auto Industry which first copied cars and made it for the domestic market. After they got people in place, they started focusing on quality and creating things for the world. That is the transition we are going through in europe. A lot of companies have been doing that making a lot of money. There are a lot of ambitious entrepreneurs with teams ready to go. The european version of priceline, groupon. Groupon acquired at european version which makes it look like they were going faster than it really was. That is the ecosystem. A lot of people are saying am i going to do another thing like this . That is not truly innovation. A lot of entrepreneurs are very ambitious. That is not any Silicon Valley vcs. They stayed in london. It is a great place. You have people coming from all over. They all speak english because they have employees from eastern europe, southern europe, etc. It reminds me a lot of Silicon Valley with people coming there to be next to each other and be near the capital. You came from far away to work at linkedin. We met a long time ago. It is seen as a powerful company, but back when we met, it was a struggling thing in one room on the third floor of a little building in Silicon Valley. That is right. You were the first person on tv to actually cover us. You took a chance on it. My question is what did you learn at linkedin . What was there one lessen about Venture Investing that you learned that applies to your work looking at europe . The companies have been expecting that we can only get 10 million in financing so they are focusing early on profitability. It ends up being solid companies that dont go away, but dont create the breakout companies. Linkedin took in 100 million in vc money before it went public in many years. Having that longterm perspective we work at earlybird because we have a goodsized funded, but not huge so we syndicate with a lot of the u. S. Venture capitalists to enable our companies to have a longerterm perspective. I was building this quick model earlier. Here are my numbers. 1. 2 of the european deals were invested in Profitable Companies compared to. 4 of Companies Invested in the u. S. You are saying that its kind of a mistake that the vcs shouldnt be looking at profits . I think you can make money. Historically, it has been a nice business because you reduce the risk. You get the smaller to mediumsized outcomes. At the ecosystem where it is now, it is to do more the u. S. Model of innovation and taking more risk and looking for longer time. That is what we are focused on. That was Konstantin Guericke. Why are the emmys on a monday in august instead of september . We will look at the media decisions guiding the emmys, next. Welcome back to bloomberg west. I am cory johnson. Tvs biggest stars will be gathering in los angeles tonight for the 66th annual emmy awards. There is Something Different about this annual event. It is on monday night in august instead of the usual sunday night in september. It is also on nbc. What is changing the air date . We have tuna amobi joining us now with more on this. How big a deal is the moving of the date of the emmys . I think it is a fairly big deal to the extent that last time the emmys aired on monday which was more than 25 years ago. I think for nbc it came down to a scheduling issue and the economics of the nfl game that has a scheduling conflict. If you are an analyst, you have to look at what makes sense from the bottomline perspective. That is the main reason why you are seeing it change. We will wait and see to see how much impact it will have on ratings given this is a holiday week. We are still in the summer obviously. We will have to wait and see. What you are saying is that nbc faced with the problem of spending a lot of money on the emmys, spending a lot of money on the nfl the nfl stays where it is. The emmys can move. The nfl is rated on the entire television landscape. If you have a scheduling conflict with any nfl matchup given how much the rights were renewed for, i think it makes sense to look at the pros and cons. In this case, they will look to move the schedule around. This is something they have known for a while. It didnt just spring up. I wonder also what this means for the emmys themselves. We have this tremendous change going on in the business. Hbo came along and surprised the emmys years ago. Now, you got all of these new places where shows are going on that do not follow the traditional broadcast format. Netflix chief among them. What should we be looking for and what might it mean to a company like netflix to get big wins tonight . Netflix introduced a new paradigm on how to view the traditional definition of television. The idea of doubling nominations from last year and, especially with orange is the new black, the first year of eligibility garnering 12 nominations is nothing short of outstanding. We really have High Expectations for netflix. More than anything else, this is the most compelling valuation of Netflix Original programming strategy. The usual suspects hbo, showtime, the premium networks. Networks like amc, etc. I think what weve seen over the last several years is that the broadcast networks are still in the mix but with the advent of Online Networks like netflix and cable original programming has really changed the dynamics very significantly of the entire television landscape. You are an accounting expert, you can actually count beyond the number eight so you got me beat. When i look at the netflix deals theyve got for these content companies, they are not great. The deal for house of cards a wonderful show that has won a lot of awards, but they dont own that show in the out year. Does broadcasting house of cards for the first couple of years, winning a bunch of awards really translate to better cashflow for netflix . Between the rights of ownership and licensing, netflix has made a pretty strong case of the fact that house of cards was not kind of owned all the way from the beginning. They will use that to launch their original programming and validate the model as of the wall street community. Having said that, i think they have said going out, some of the newer shows theyre launching they will make more effort to own more and more. I dont expect that will be a stumbling block. If you think about it, some of the highestviewed shows they have launched really are they havent really made that emphasis on ownership. Orange is a new black, maybe the overunder on netflix. Thank you very much. Now to the bwest byte. We focus on one number that tells us a whole lot. Lesley pickard shows us with a special one today. The number is 93 . The byte, 93 the proportion of jawbone wearers who woke up instantly from the earthquake. What this tells us is the information power that jawbone has. It is the maker of those bracelets that people wear that tracks their sleep, their eating, their exercise. We see this is a company that has tremendous potential as an information company. We have seen that take place with other companies in the past. We have seen the tremendous information power that facebook has which has led to a higher valuation. These bracelets mine, in fact. I dont know if that chart showed me wake up. I woke up from that earthquake. I dont feel about jawbone congregating data and putting it out there, but it does show the impact of these devices and how they can be used to understand what is going on in the world. Absolutely. I didnt know it was tracking that data. Ive used the product myself, i know how it works, but i didnt know it was actually tracking the data. One thing that people were estimating is the potential for science. Thank you very much. Great to have you on the show. More bloomberg west later today