The deal could be announced within days. Combining two of the largest u. S. Brokerages not based in new york. Trying to stem the tide of new technology and collapsing margins. The ceo says cultural similarities will allow for smooth integration. The real estimate will maintain their differences and different businesses. Wherever people are looking for real estate information, we want to have lots of different brands on the shelf. Whether its the Google Play Store or iphone app store we want to have truly different voices and different brands. He hopes to bring down the error rates for zillow home prices. The fda allowing 23 to sell its genetic testing kit calls it an important first step in its bid to sell genetic testing kits. We have a special show today. We are calling it came on. A deep dive into the rapidly changing gaming industry. The ceo behind one of the most popular games out there, niccolo de masi of glu mobile. How to turn her on a struggling business and the crucial importance of whales. The eu finance ministers have gathered in brussels. A tense situation. The clock is ticking. Hans nichols joins me from brussels. We are already seeing headlines suggesting, you tell me. The headlines are confusing. One greek official here in brussels said they have a preliminary deal. They may have a deal. A few minutes after we heard from that first official, we heard from a second greek official saying the deal is not final yet. About 10 days ago the finance minister from greece thought he had a deal. He called up athens and he said he could not agree to the language and he had to pull the deal from the table. That was 10 days ago. We have a similar replay of that tonight . It took them two hours to actually get into the meeting. They were doing a lot of prep work. The deal is on the table and everyone is looking it over. I suspect if athens gets the goahead, we may have a deal tonight. Theres a lot of hedges. One final point earlier Alexis Tsipras said if there is not a deal, he wants to have a eurogroup leader all the president s back here in brussels on sunday. You have the weekend. They have this deal in front of them. In my right in reading that the greeks have the upper hand . No, because the greeks have traveled much more distance. The germans have not moved. They have met several counteroffers. The germans are saying you need to complete the current bailout program. Then we can talk about renegotiating the debt over the next six months. That is the bigger debate. We are having that preliminary, appetizer debate. The big one will be about what you do with the size about the size of greeces thdebt. Thinks a lot. We appreciate it. Apple appears to be wrapping up its plans to build an electric car. Apple could start production on a car as early as 2020. That is aggressive. Tesla and General Motors have the goal of making an electric car that can go more than 200 miles on a signal charge. What does this story look like . It is a battle about tesla. Over there, im sure it has a much different viewpoint. In terms of who apples car might compete with, tesla would be a prime target. Mitsubishi has an electric car General Motors has one. Bmw as well. Apple would be targeting anybody who already has apple products. These guys have hardcore fans. Apple people love their products. If that apple person is n is driving a mustang or some cheap compact car, they will look at this as in this comes out. Do the carmakers in detroit look at apple as a serious competitor . Probably morpheme you spent. Probably more bemusement. On one hand, tesla has made it but a handful of electrical car startups have failed. There is a whole boot hill of companies that try to get into this. On the other hand, tesla didnt make it. Did make it. They are watching this. Theyre wondering, ok, do they get this done . Maybe we should start worrying at that point. We had an author on the show talking about the battle to create a better battery. A fascinating book with a lot of drama. One of the takeaways is that Companies Like gm and ford and others are Real Technology companies that have spent a lot of time and money trying to invent better ways to make batteries. Can apple compete with the kind of r d that those guys have already gotten into . They probably can because they have the money to do it. They have gone to a bunch of battery suppliers. They certainly have that expertise. Its not their core competency to develop a better battery. They are very familiar with the space. The automakers rely on their suppliers. With the automakers having cooperative r d with the battery makers, apple already has that as well. Its a different kind of battery but they can do it. I dont think it would take long to catch up there given them amount of money apple has. This time frame is shocking. When detroit launches a new car fiveseven years, why does it take detroit 57 years to do that . I was surprised to see that figure. Did Work Companies can get a new car out in 34 sometimes 57 would be for somebody like apple the detroit car companys can get cars out and sometimes two years if they already have hardware with another model. 57 is a longtime. Five years for a company like apple who is simply studying this at this point, that is pretty aggressive. Thank you very much. Bloomberg west will be right back. This is bloomberg west. Here some world is. The federal government for refusing to cooperate with the Japanese Company has not fully complied. At least five deaths are blamed on airbag defects. Plunging, following the most against the euro since 2001. Falling the most against the euro since 2001. There is a playboy battle. It is not a pillow fight. This is over the domain name in london. Michael ross bought the name but an International Court in geneva ordered him to turn it over saying the name playboy was trademarked. Speaking of sexy, sysccisco hoping to capitalize on the dawn of the digital era. One that will quickly sort out winners and losers. Chambers existing cisco will not be one of those losers. Erik schatzker sat down with chambers. I have interviewed him many times. That was a great interview. Thank you very much. He is extremely bullish there have been periods in his career where he has been bullish and good reasons for it, including all of the 1990s. But chambers said cisco has an opportunity today that is almost exactly like what it had back at the dawn of the 1990s, what he calls the information age. What cisco accomplished during that decade is pretty remarkable and almost hard to believe. He says in this digital era, technology is transforming at a pace that will create a class of winners and cisco will be part of that group of winners that will divvy up 20 trillion in profits. Its what he attaches to the internet of things or the internet of everything. There will be a class of losers as well. Here is John Chambers on what he thinks it will take to survive in this digital era. Lets assume this is the digital era. In terms of how every company adjusts to that, it will require drastically faster movement. Those companies who dont move for get left behind. What does that mean . John chambers prodex 40 of the enterprise which he defines as companies with 1000 employees or more will not be here in a decade. 40 of americas Large Companies will go out of business because they have either been disrupted, they failed to catch the transformation failed to hit the wave and time in the space of a decade. What are the numbers . I did a search for Public Companies only. There are roughly 2000 bunkley traded companies in america publicly traded companies in america. 500 of those will be gone in the space of 10 years. If john is right. Hes a bullish guy. People look at the stock price and say nothing has happened in 10 years. I think you are right to point out the survival rate for this copy. No one is talking about 3com right now. That is very true. John chambers is mindful of this. We dont need to make reference to the nortels or 3coms. There were other Large Tech Companies that survived that are shadows of their former selves. Think of hewlettpackard. John chambers does not want to happen to cisco what happened to hewlettpackard. Hes absolutely determined to stay ahead of the activist movement. Here is John Chambers on activism. Many of the things that other companies would be criticized on we have already done ourselves. We will become the number one i. T. Company. We have a very good chance of doing that. Every ceo needs to be his own activist. It is hard to do. One thing you can say is that you cant look at cisco and say it is too large. Once upon a time, we thought companys of that size were too large and then carl icahn knocked on tim cooks door. It seems apple was responsive to the kinds of demands that carl icahn made. John chambers and says that will not happen to cisco because hes listening to his shareholders. More bloomberg west right after this. This is bloomberg west. To our special focus this hour the gaming industry. Digging deeper into one hit wonders. Niccolo de masi of glu mobile came all the way down the street to be my anchor buddy today. I want to talk about glu mobile. Its really interesting. You have gone from one hit too many hits. To many hits. We are starting a hollywood trend. Celebrities are trying to work directly with people like ourselves to reach their fans and cut out studios, labels other traditional intermediaries. Kim is the first of many. Weve also sign katy perry. 23 million in sales 223 million in sales. Talk to me about the game. My nineyearold is limited to an hour of screen time everyday. She launched the Kim Kardashian game and 20 minutes later she is still playing it. Talk to me about the gameplay and how you made that so good. Pioneering experience. We worked on the engine in 2012. It was a great experience without kim involved. With her involved we brought in storytelling where kim is telling this narrative about what she is doing every day through social media, friends come her tv show. We are a new media that is helping facilitate transmedia experience for people like kim. Gamers are finding the correct you started way before we knew the game was going to work. We did not know the phenomenon it would become. I had a sneaking suspicion it could be something rather special. How did you get in touch with her and get her involved . In 2012, i thought long and hard about the future of hollywood and the future of glu. I went to hollywood and did a couple of Innovative Partnership deals. We are doing a james bond movie game, terminator game and kim was one of these three deals we did. Her game launched last summer. We have two were three more games this year. Kim, we started working with an early 2013. We start discussing what the concept could be. I went through her agent, but she got the concepts immediately. I knew we were onto a good thing because she is an authentic presence with all of her social channels and i knew it would be even more authentic through a game. Kim builds a lot of value for twitter, facebook and so on indirectly. Her own game is something that is her brand. By spending time with glu she is building longterm equity for herself. Gaming as a service. What does that mean . We will talk more about it this morning. Games today on phones are not single download short scurve wonders like going to see a movie or downloading a dvd. We are Building Services that look more like annuities. Like a web portal. Yahoo has pretty consistent revenue. Same thing is happening with big game franchises. Glu games and our competitors have enough franchises that will go for many years. Wall street is underestimating how long these go. Stay with us. Niccolo will be with us for the rest of the show. Also here today, the former Electronic Arts ceo. You can catch us streaming on your phone, tablet bloomberg. Com, pretty much everywhere. Check it out. You are watching bloomberg west. Im cory johnson. We continue with our special focus on the gaming industry for the rest of the art. Niccolo de masi is the ceo of glu mobile. I want to talk about turnaround stories. We are happy to have John Riccitiello here, who did one of the biggest turnarounds ever in the gaming business. A lot of Corporate Executives get reputations for being turnaround experts. Im not sure there is such a thing. Turnaround is pretty tough. I think i know a thing or two. Why are they tougher in that industry. Hats off to niccolo. He executed one of the great turnarounds of gaming. What he got at glu was left for dead. I had to deal with a similar situation at Electronic Arts. When i arrived, things were a bit of a mess. When i left in 2007 the kind of thing i was hearing from my board was that our stock was worth maybe 15 and we had lots of problems. What was challenging was going through this process of cutting cost massively, cutting has massively while also investing in digital and next gen. The idea of cutting spending investors love that. The articles were written through the process, you cant spend and cut. With the huge contributions of andrew wilson, the current ceo there is a schism that goes on that is hard to get that. You have to put the investments in for the future while cutting the things used acquisitions to acquire some games to give yourself something to build upon. Its all about getting the realistic time horizons of what i call the end of the tunnels four glu that was free to p lay original ip. Its an important part of trying to accelerate growth if you are smart about it. Free to play is a hard model to go to when your finances are in the troubling state. You have to have a balancing sheet strengthening moment. Companies get into trouble because they have liquidity concerns. My turnarounds have had that. John is facing similar charges was facing similar challenges when he started. Cost cutting is usually part of the equation. You bet it all on the light at the end of the tunnel. You set up milestones you can be. Thats what gives you credibility in the investor base. You talk about the entertainment business. Technology for ea at that time was following the latest consul. You were looking beyond that. One of the reasons i mentioned technology is ea was going through something then similar to what zynga is going through now. It wasnt just getting ready for the next consul. We had to get ready for digital technology. We needed to get ready for the online Digital Business like mobile and free to play models. Changing the way we invest in properties. Zynga has had to go from social to mobile. There is so much difference there. Its interesting to see what i find interesting is, when im watching my friend go through what i did when i was at ea it is way too early to figure out if that company will get to where they want to go. If you go back to one year ago, people were expecting it to go out of business. Investors thought it was unfixable. There was no plan yet, people called for his head. He is an incredibly smart guy. He will probably make it work. Public markets, turnarounds, they are a hard mix. The timing doesnt always line up with external parties expectations. The rapid growth of mobile, does that laet are turnarounds easier or harder . Turnarounds in our space are about building new businesses. Glu had to build a new free to play mobile business. We ran off and old future phone business. Zynga is running off their facebook web business. Companies in the entertainment space, the turnarounds are a series of endless transitions new ways of thinking about the value chain. It changes quickly. Six months, you can go from zero to hero or hero to zero. If you have a strong Balance Sheet it increases the chances that they will find new businesses they can go strong and. Grow strong in. You put a Team Together on a one. Six months and, they will spend six months building a product. The 2014 a company lives with was planted in 2012. The mistake analysts can make is they can look at the moment now and say that is a result of what they did last quarter. It never works that way. Still, that is the illusion you get when you watch the Business News when they look at todays test yesterdays results in todays rumors. We will be right back. Im cory johnson and this is bloomberg west. We continue our special focus on the big business of gaming with niccolo de masi. Lets talk about whales the big spenders. I have stumbled on some statistics about whales. Zynga said revenue came from 2 of its users. That is happening throughout the industry. We think about our top vips as one of the most critical audiences we can have. The reason they are so critical is beyond spending a lot of money and having a primary form of entertainment and gaming they tend to play games for years at a time. Its about keeping a Loyal Customer base entertain for many years and growing that business from that. You have a lot of users and a few pairs the payers . It is so efficient because 95 percent of people dont spending time, but that 1 5 that does spend will play four years, they make it part of their daily routine. You do it every day as part of what makes for a great week. I read a story about a game company that had one player in japan that was spending 10,000 a month. They dedicated an employee to make sure that player was happy. The equivalent of vegas like someone in a private jet. Its just like the person who buys a luxury box at a 49ers game or someone who will pay for that front row concerts he theres top spenders in every form of entertainment in the gaming industry is no different. What is the skew in terms of the percentage of revenues from a small group of users . The whole market in the u. S. Last year is three dollars 3 billion spent on mobile alone. That is growing at over 30 . It is the fastestgrowing form of entertainment. Over 50 of the revenues is generated by a small number with mexico digits. Small number single digits. We think the top 1 is spending 500 1000 over a sixmonth period of time. Its amazing to me. I dont know if its also more sad. Awesome or sad. What do people do otherwise on the weekends . There are people barhopping. Far less healthy. Its fascinating about this business was that something you were aware of . I was aware of that we are in a power law business. Within the spenders, there is another power law. The top 1 of the 1 to spend our vips. The most engaged people, most enthused, they make it a habit to spend. Its a cinema ticket every hour. When you build a game, do you try to think about one strategy might be casting a wide net and you will eventually catch a whale. The you create games for the purpose of snagging those whales or do you hope you get them . We can cater to a very large population. Its a bit like sports. Tens of millions of people will watch the super bowl on tv come a small percentage of people i tickets buy tickets. And you have the small number of people paying tens of thousands of dollars for that luxury box at the super bowl. We can cater to many people playing a game, we have over 20 Million People playing our new game. A small number of them are paying the equivalent of that luxury box at the super bowl. Niccolo de masi will stay with us. Bloomberg west we have some world news headlines. Mexico, the economy zooming expanding at a faster pace in two years climbing a 2. 6 in gdp. There was an uptick in mexico construction and services. The world bank of scotland will take a right down on its u. S. Unit, citizen financial. Taking the charge next week delta boosting baggage fees trying to take advantage of currency fluctuations. They will pay 20 more to charge check their bags. Bottom line coming up at the top of the hour. Mark joins us from new york. There is word that euro areas finance ministers may have reached an agreement. Hans nichols reports live from brussels. U. S. Transportation secretary anthony foxx has wrapped up a five stop bus tour. The Obama Administration calling on congress to provide funding to help repair crumbling roads and bridges. Is a bipartisan solution possible and will it involved a Business Tax Reform proposal . He will join us in a few minutes. That is a good guest. Anthony foxx is a big jazz music fan. I have heard that. As are you as well. As are i, that is true. More bloomberg west next. Im cory johnson and this is bloomberg west. The faa finally proposing new rules for commercial drone use. Here are some key takeaways. Throws that weigh less than 55 pounds have to stay in line of sight of the operator. This may not be good news for amazon and google. One of those companies that develops drones for agriculture and real estate the ceo, great to see you. What do you think of these rules . There are already out there doing work with these drones. The rules are great news for everybody. The way you have to think about it this is just beginning of many durations of these rules. The iterations of these rules. One year ago, the messaging from the faa was very different from today. One year ago, the messages were a lot more stricter than today. The main driver is how many Big Companies, construction mining, getting involved in this new market. Using drones for r d purposes and operating purposes. Are the rules anymore liberal than Remote Control airplanes . I dont know if you are familiar with the exemption process we were granted exemption. Some Companies Working in hollywood as well. Under the same exception. You have to have a commercial pilot fly these drones. They are too hard to find. What theyre doing today is changing it so you can go to the dmv and get your drivers license from the equivalent of a drivers license. I know there are some Big Companies building Corporate Headquarters isnt the automation of that kind of thing where you say i want you to go around this building every day and its what can look at the progress, programming that, shouldnt that be the advantage that the rules prohibit . Huge progress from one year ago. One year from now, this will be completely different. We believe the faa is working closely with companies to allow these things to happen eventually. Our drones are fully anonymous. It flies out, lance, collect data without the need of human interaction. We will have another product called work mode that allows people to use their drone and turn it into a work tool and provide services for construction, mining. Do you think regulation will be more liberal in europe . Theres deliveries being allowed off islands in germany. A lot of these countries and cdf aa as the main guide see the faa as the main guide for their roles. Youve seen a lot of progress in this space. You can get certified, just like at the dmv. The faa has seen a lot of that progress outside of the u. S. And are making changes towards that. Some Tech Companies are having a hard time in europe. Others might be finding it easier. Im also concerned about thats one of the great businesses that could benefit from this is the examination of pipelines. They spend fortunes flying equipment to detect leaks. These rules will prohibit that kind of use as well. 55 pounds is pretty heavy. You can carry a really good camera. A big enough battery to last pretty long. You can make that work with the new regulations. Granted, things will change and it will evolve and get easier and better over time. You can operate and do a lot of this stuff today. Will these rules help you grow faster . We are growing fast already. A lot of these copies have started using drones. Companies have started using drones. It will just augment our growth. Will it be faster growth in asia . The growth we are seeing is exponential. Last year, a lot of these companies were in r d mode trying to test these things out. The amount of Companies Jumping into the space is gigantic. The amount of emails we are getting is hard to keep focus. Thats why we believe this is going to be a big industry. Sounds like a blast. Thank you very much. Its time for the bwest byte. Niccolo de masi has the byte. 400 million. The number we will exceed by the end of next year in terms of total social followers supporting glu celebrity games. We are at 240 million with katy perry and Kim Kardashian. You will see some new exciting announcements and james bond. Im not counting james bond. On talking about direct celebrities we will be working with over the next 18 months. We have a good track record of beating all the numbers weve given. We might have a few more in the back that we have not announced yet. The phenomenon of gaming is an amazing thing. A lot of fun. Niccolo de masi thank you very much. You can always get the latest headlines on your phone, tablet, bloomberg. Com and on bloomberg radio. We will see you next week. From bloomberg World Headquarters in new york, i am Mark Crumpton and this is bottom line the intersection of business and economics with a main street perspective. To our viewers here in the United States and those of you joining us from around the world, welcome. We have full coverage of the stocks and stories making headlines. Alix steel will have todays edition of off the charts. Peter cook here with me in new york for a live interview with the u. S. Transportation secretary. We begin with bloomberg