Hot Bostonites enjoying Aereo. (Photo: Facebook)

Aereo, the online service that lets users livestream local channels, announced today that it will be rolling out service to Boston, its second major metropolitan area. Starting May 15, customers in the Massachusetts area who have pre-registered for the free service will start receiving their invites to try it out. On May 30, membership will available to all 4.5 million people in the Boston area.

Nearly 30 channels will be available for streaming, including the city’s network affiliates, specialty channels (i.e. PBS Kids, The Country Network) and some Spanish-language networks. The Boston market extends beyond Massachusetts and includes parts of New Hampshire and Vermont. Aereo has been staffing up in Boston and has several engineering job openings listed on its Career page.

Aereo’s expansion further solidifies the company’s bullish plans, despite facing lawsuits from the networks it carries. Earlier this month, a Second Circuit appeals court ruled in favor of the company, which thwarted a request from broadcasters for a preliminary injunction and allows Aereo to continue operating. That decision riled up News Corp. COO Chase Carey who threatened to move Fox to pay cable if courts continue to rule in Aereo's favor.

Nope, not the guy. (Photo: Reddit)

In the aftermath of the Boston Marathon bombing, many Redditors stepped forward to help in the only way they knew how: Gathering up scraps of information from across the Internet and sitting in front of their computer screens sorting through the pile.

Unfortunately, the wisdom of the crowd turned up little beside the suggestion that a missing Brown student might be involved, an accusation that went viral. He wasn't, and now Reddit feels really, really bad.

General manager Erik Martin has posted an actual public apology for Reddit's part in the rumors. (Not the site's usual m.o., to say the least.) While "the vast majority" of Redditors' responses were positive, he said, some of the activity "fueled online witch hunts and dangerous speculation which spiraled into very negative consequences for innocent parties."

And so: "We want to take this opportunity to apologize publicly for the pain they have had to endure."

The apology then takes an interesting turn, though, as Mr. Martin reiterates the no-personal-information rule that caused so much drama during last fall's Predditors controversy:

"'Let’s find out who this is' events frequently result in witch hunts, often incorrectly identifying innocent suspects and disrupting or ruining their lives. We hoped that the crowdsourced search for new information would not spark exactly this type of witch hunt. We were wrong. The search for the bombers bore less resemblance to the types of vindictive internet witch hunts our no-personal-information rule was originally written for, but the outcome was no different."

"We hope that Boston will also be where reddit learns to be sensitive of its own power," he concluded. Meanwhile, /r/findbostonbombers is no longer accessible. A message on the landing page says that both suspects have been found, and offers a redirect back to the Reddit homepage.

Can a decentralized horde really develop a super ego, or at least a little poise? Guess we'll find out--and let's hope no one's reputation gets ruined in the meantime.

Scumbags. (Photo: Sophos)

The dirtbags who make malware are at it again. Sophos's Naked Security blog reports that scammers are already taking advantage of Monday's bombing at the Boston Marathon, because they have zero sense of decency.

Scammers are sending out emails with subject lines like, "2 Explosions at Boston Marathon," "Aftermath to explosion at Boston Marathon," and "Boston Explosion Caught on Video." Inside the emails is a link to a website with the promised YouTube videos--plus a Windows virus. "Clearly, there are no depths to which cybercriminals are not prepared to stoop in their hunt for victims," Sophos said.

As the Daily Dot points out, it's not the first attempt to capitalize on the horrible incident--see the fake Twitter account that popped up almost immediately, soliciting RTs for $1 donations--and it probably won't be the last. A little skepticism goes a long way. Sophos concludes acidly:

"Remember to be on your guard against such tactics. Maybe it's time to get your news from legitimate news websites rather than an unsolicited email which arrives in your inbox?"

Might want to pass that along to your great aunt that forwards all the chain letters.

Mr. Pincus (Photo: Wikipedia)

In response to questions about layoffs, Zynga emailed Betabeat an internal memo that CEO Marc Pincus sent out to staffers this afternoon. In the note, Mr. Pincus confirmed that the company cut approximately five percent of its full-time workforce today, including the shuttering of its Boston studio and mass layoffs at its Austin location.

Mr. Pincus also said that Zynga is proposing closures of its Japan and U.K. offices. In addition, the company will be sunsetting 13 of its games and reducing investment in TheVille, a Facebook game that's facing a lawsuit from EA for looking a whole lot like a Sims game.

In the memo, Mr. Pincus wrote that he believes the cost-cutting measures will "improve our profitability and allow us to reinvest in great games and our Zynga network on web and mobile."

The memo comes after a day of intense rumors about the flailing social gaming company filled the tech universe. Despite the fact that the news emerged during the attention-sapping Apple keynote, TechCrunch reported that the timing of the news had more to do with Zynga's impending earnings call, scheduled for tomorrow, than with the Apple presentation.

Earlier reports indicated that the Boston and Austin offices would be closing altogether; Austin, however, will remain open, though its staff was dramatically reduced.

Zynga has been on a downward spiral for the last few months, reporting an estimated net loss of $95 million to $105 million for its third quarter, which will be discussed on tomorrow's earnings call. Following that announcement earlier this month, its stock price immediately plummeted 19 percent. Currently, it's hovering around $2.20, after experiencing a 5.17 percent drop today.

SuperData Research analyzed some of Zynga's recent game statistics and concluded that player engagement reached an all-time low of 14 percent in September and that it has fewer monthly active users in simulation games now than it did two years ago. The hope for Zynga's salvation, SuperData's Sam Barberie (and others) have argued, is a pivot to social gambling, but current U.S. laws have tight control over the function of gambling games.

You can read the full text of Mr. Pincus' internal memo below.

Team,

Earlier today we initiated a number of changes to streamline our operations, focus our resources on our most strategic opportunities, and invest in our future. We waited to share this news with all of you until we had first spoken with the groups impacted.

As part of these changes, we’ve had to make some tough decisions around products, teams and people.  I want to fill you in on what's happened and address any concerns you may have.

Here are the most important details.

We are sunsetting 13 older games and we’re also significantly reducing our investment in The Ville.

We are closing the Zynga Boston studio and proposing closures of the Zynga Japan and UK studios.  Additionally, we are reducing staffing levels in our Austin studio.  All of these represent terrific entrepreneurial teams, which make this decision so difficult.

In addition to these studios, we are also making a small number of partner team reductions.

In all, we will unfortunately be parting ways with approximately 5% of our full time workforce.  We don’t take these decisions lightly as we recognize the impact to our colleagues and friends who have been on this journey with us.  We appreciate their amazing contributions and will miss them.

This is the most painful part of an overall cost reduction plan that also includes significant cuts in spending on data hosting, advertising and outside services, primarily contractors.

These reductions, along with our ongoing efforts to implement more stringent budget and resource allocation around new games and partner projects, will improve our profitability and allow us to reinvest in great games and our Zynga network on web and mobile.

Zynga made social gaming and play a worldwide phenomenon, and we remain the industry leader.  Our success has come from our dedication to a simple and powerful proposition – that play is not just something people do to pass time, it’s a core need for every person and culture.

We will all be discussing these difficult changes more with our teams and as a company.  Tomorrow, Dave and I will be hosting a post-earnings webcast (details to follow) and next week we will be discussing our broader vision and strategy during our quarterly all-hands meeting.  I’m confident this puts us on the right path to deliver on the promise of social gaming and make Zynga into an internet treasure.

If you have any immediate questions, I hope you will talk directly with your manager, Colleen, or me.

I look forward to talking with you tomorrow.

Mark

With reporting contributed by Nitasha Tiku.

(Photo: Insider Monkey)

Social gaming company Zynga has endured a rough couple of months. After its acquisition of the NYC-based company OMGPOP--producers of the fad-friendly game Draw Something--Zynga has experienced a downward spiral. Earlier this month, it reported an estimated net loss of $90 million to $105 million for its third quarter, sending its already-low stock price into a tailspin. Now, The Next Web reports that the company has laid off 100 staffers from its Austin headquarters, and may even be shuttering its Boston office altogether.

Writes The Next Web:

We’ve heard from a former employee at Zynga who tells us that the layoffs did happen in the company’s Austin office. Additionally, TheVille will be discontinued. More than 100 employees were let go and ordered to turn in their computers, phones, and badges — many of whom have been working at the company for more than two years.

Employees affected by this change were given two hours to vacate the office. It appears that those affected were from two different game divisions: theville and bingo.

Gamasutra reports that it has received first-hand confirmation that Zynga is shuttering the Austin office altogether. [Update: Gamasutra says they may have incorrectly reported the full closure of the Austin office. "We can confirm that over 100 people are out of work in Austin, but we can not confirm whether the studio is remaining open in some capacity, nor if Zynga's QA office in Austin has been affected."]

Gamasutra also reports it has heard unconfirmed rumors that Zynga also intends to shut down its Boston and Chicago offices. A Twitter user reported to Gamasutra that one of his friends was laid off from the Boston office, and posted the following to his Facebook: "Zynga Boston is no more. Shocking and not awesome."

A source confirmed to The Verge that there have been layoffs in Austin, Boston and Chicago today.

[Update 4:05 PM: Techcrunch reports that it has confirmed Zynga has shuttered its Boston office and laid off 2/3rds of its Austin employees. "One former employee said the Boston office was almost ready to release a product that Zynga management was enthusiastic about. But the need to trim the company through severe layoffs meant that product couldn’t be seen through to launch."]

Zynga also has a New York office and Betabeat is investigating whether or not employees there will also face layoffs. OMGPOP cofounder Dan Porter was announced as the VP and general manager of Zynga New York back in March. ”Maybe we can turn New York City into a hotbed of gaming activity as well,” Mr. Porter told us then.

As TechCrunch points out, TheVille--which is kind of like The Sims but lame?--has been hemorrhaging users, losing 33 percent of them in just one month.  In fact, in its third quarter results, Zynga blamed downgraded revenue forecasts on "reduced expectations" for games like The Ville. The company is also facing a lawsuit from EA games for violating copyright laws.

In keeping with its questionable ethics, employees appeared to have been notified of layoffs during Apple’s keynote event, when most tech outlets would be focused on Apple’s announcements.

UPDATE: As news of the layoffs continues to leak, anticipation for Zynga's third quarter earnings call scheduled for tomorrow afternoon is building. Like, oh, pretty much everyone, Sam Barberie, who has been crunching Zynga's daily active user numbers for Super Data Research, anticipates "bad news, especially with regard to their simulations games." Earlier this month, shortly after Zynga released its downgraded forecasts, Fortune's Dan Primack tweeted:

Zynga needs legalized online poker yesterday.

— danprimack (@danprimack) October 4, 2012

Mr. Barberie, who recently released a report on the company's future concurred, predicting a "definite move into the social casino games."

"Basically, that's sort of where the industry is heading as one of the remaining places to make money," he said. "They got rid of a bunch of people in the sim games and bingo to refocus on the real money games."

Poker games were mentioned during Zynga's last earnings call, with an expected release date next year. "[Zynga is] gaining users, but not maintaining them. If they're not maintaining their users, they're not going to turn those players in payers," via in-app purchases or advertising revenue, he said. "The thing about social casino is that it's gambling, which has a hook regardless of the medium that it's in."

Update 2:

A former Zynga employee told TechCrunch, "[CEO Mark] Pincus wants to be able to say that the company’s profitable but that’s harder as revenue goes down. They’re doing short-term things that don’t make any sense at all if you’re thinking about this being a stable company with $1.6 billion in cash in the bank."

Update 3:

A Zynga representative emailed Betabeat a copy of the internal memo from CEO Marc Pincus:

Team,

Earlier today we initiated a number of changes to streamline our operations, focus our resources on our most strategic opportunities, and invest in our future. We waited to share this news with all of you until we had first spoken with the groups impacted.

As part of these changes, we’ve had to make some tough decisions around products, teams and people.  I want to fill you in on what's happened and address any concerns you may have.

Here are the most important details.

We are sunsetting 13 older games and we’re also significantly reducing our investment in The Ville.

We are closing the Zynga Boston studio and proposing closures of the Zynga Japan and UK studios.  Additionally, we are reducing staffing levels in our Austin studio.  All of these represent terrific entrepreneurial teams, which make this decision so difficult.

In addition to these studios, we are also making a small number of partner team reductions.

In all, we will unfortunately be parting ways with approximately 5% of our full time workforce.  We don’t take these decisions lightly as we recognize the impact to our colleagues and friends who have been on this journey with us.  We appreciate their amazing contributions and will miss them.

This is the most painful part of an overall cost reduction plan that also includes significant cuts in spending on data hosting, advertising and outside services, primarily contractors.

These reductions, along with our ongoing efforts to implement more stringent budget and resource allocation around new games and partner projects, will improve our profitability and allow us to reinvest in great games and our Zynga network on web and mobile.
Zynga made social gaming and play a worldwide phenomenon, and we remain the industry leader.  Our success has come from our dedication to a simple and powerful proposition – that play is not just something people do to pass time, it’s a core need for every person and culture.

We will all be discussing these difficult changes more with our teams and as a company.  Tomorrow, Dave and I will be hosting a post-earnings webcast (details to follow) and next week we will be discussing our broader vision and strategy during our quarterly all-hands meeting.  I’m confident this puts us on the right path to deliver on the promise of social gaming and make Zynga into an internet treasure.

If you have any immediate questions, I hope you will talk directly with your manager, Colleen, or me.

I look forward to talking with you tomorrow.

Mark

If you have any information about the layoffs, please email tips@betabeat.com or drop us an anonymous tip from the top of our homepage.

"Fuck you, Boston's most successful startup is AMERICA, okay?" -- Paul Revere, probably.

This weekend, several outlets ran an AP story about New York's startup scene, hitting all the high points--CornellNYC, the river of VC money, the local outposts of national companies like Google and Facebook. BostInno, however, has a quibble: 

New York is seeing huge activity in Internet and Mobile by CB Insights’ categorization. In other words, in software + internet. Boston/Massachusetts has a much more balanced ecosystem, with huge strength in healthcare and, until recently, in energy. And of course we have a growing robotics cluster as well.

Of course, as a Boston news outfit, the site decidedly has a dog in this particular fight. But while the spirit of good-natured rivalry between our fair cities inspires a knee-jerk tendency to reply "consumer Internet rules, biotech drools," it's a fair point. Partially because it's so strong here and partially because they're the most obvious to us as consumers, it's easy to lapse into thinking that SoLoMo apps are the whole of technology, but it's just not true.

That said, the VC funding number crunchers over at CB Insights (who don't exactly shy away from pointing out New York's weakness on everything that isn't Internet and software) admitted in their most recent report that New York has been showing "signs of life" in healthcare and green energy. Witness, for example, the advent of the New York Genome Center, which aims to close the local biotech research gap. New York City has also lately been bolstering its robotics bona fides, and then there's all the excitement around MakerBot and Shapeways. Oh, and let's not forget how Armonk-based IBM wants to deploy Watson the AI to save your life.

All that, and we even have a good ten minutes more of daylight in the winter.

(Photo: YouTube)

There are many industries worthy of large-scale disruption, including dry cleaning and the line at Shake Shack. But one crucial industry that Betabeat forgot to mention in our list of things we wish techies would disrupt? Candy. How could we forget?

According to All Things D, a coterie of celebrities--including bus-riding Square cofounder Jack Dorsey, model Gisele Bundchen and full-time Boston tour guide Matt Damon--have teamed up to sing the praises of a new candy company. Unreal Candy purports to be a natural, non-corn-syrup alternative to the gross chemical-laden stuff that somehow still tempts you every time you enter a bodega.

Many of the people in the video--Tom Brady, Mr. Damon, a doctor--are just local Boston people who can always be counted on for doing local Boston things, which makes sense given that Unreal Candy is a Boston-based business. But why did Mr. Dorsey decide to take time out of his busy schedule to rep for Unreal? Apparently, he truly believes in the disruptive power of all-natural candy.

"It tastes just like you are four years old," exclaims Mr. Dorsey in the promo vid, who obviously did not grow up with parents who went to great lengths to convince him that fruit leather = candy.

Later, he proclaims, "Completely rethinking something we take for granted--those are the innovations I love seeing."

Really, dude? Unreal isn't a cancer-fighting research lab or a charity helping to bring clean drinking water to Africa. It's a for-profit candy company that just doesn't use corn syrup. And unfortunately, it's probably going to take more than a delicious candy endorsed by Jason Bourne to fix America's broken food system.

To be fair, we haven't tried Unreal Candy yet. Perhaps it will turn all of America's children into svelte geniuses. We shall wait and see.

Let's make a deal! (Courtesy CB Insights)

The latest CB Insights report on venture capital investment just dropped, and we've spent the morning digging into the data. Local entrepreneurs might want to sit down, because this is gonna sting a little.

Overall the quarter was a big one, with 812 deals adding up to $8.1 billion. The report points out that's the biggest single quarter since the dot com days. (And what with Digg and Yahoo dominating the headlines, you'd be forgiven for getting a little confused on the year.) Seed stage investments made up 22 percent of those deals, which fits with our anecdotal sense that startups are springing up like mushrooms after a rainstorm.

In terms of deal volume, New York held onto the number-two spot for the second quarter in a row. A big part of that is digital: The report calls California and New York a "two-headed monster on the internet front," and points out that "larger funding deals enable Florida and Washington to challenge Massachusetts for the #3 spot."

However, here comes the down side: Internet is pretty much the only thing New York does. The report goes so far as to call the city's venture capital sector a "one-trick pony," adding that that 70 percent of deals and 80 percent of funding go to Internet businesses.

Meanwhile, Massachusetts remained the runner-up in terms of overall funding. It's also worth noting that, if one digs into the details, New York and Massachusetts are awfully close in terms of deal volume, as well. Check out this chart:

(Graphic courtesy of CB Insights)

That's not exactly what we'd call a shut out.

California, to no one's surprise, is still number one, laying claim to 45 percent of the nation's total VC deals, and 58 percent of the money. Color us deeply unsurprised, nor do we expect that lead to suddenly evaporate any time soon.

Then again, Massachusetts and New York are pretty close in the grand scheme of things.  Hey Boston, wanna join forces?

Mr. Kellner

Last Friday, Democratic Assemblymember Micah Kellner proposed a new tax credit to incentive investing in local startups--an area of particular interest to Mr. Kellner, whose district includes Roosevelt Island, the future home of Cornell and Technion's applied sciences campus designed to unleash an army of developers and untold number of startups into the five boroughs.

The Angel Investor Tax Credit, which Mashable reports is currently under discussion in the New York State Assembly, would give 25 percent tax credit to investors who invest between $25,000 and $1 million in a New York City-based startup. In order to qualify, 60 percent of the startup's employees must be based in New York. According to Mr. Kellner, similar incentives in Connecticut and Wisconsin, have seen boosts in angel investments of up to 500 percent over five years.

“The last thing I want is the next Twitter or Facebook being developed in New York, only to be commercialized and have their company headquarters end up in Connecticut," Mr. Kellner told Mashable.

But over at BostInno, Walter Frick expressed a different perspective--warning of a potential downside. "While angels likely invest even closer to home than VCs, we know that Boston VCs invest significantly in New York and vice versa," writes Mr. Frick, arguing that geographic incentive could discourage angels outside New York from investing here.

Geographic handcuffs are a major cause of distortion in government-run venture capital efforts, and we should seek to avoid them in the tax code just as we do elsewhere. If every state were to copy this behavior — and each time another one does this there’s more pressure on the others — it would result in a distorted market where angels are actively discouraged from looking across state lines. If you value market efficiency, that should be a good reason to oppose this provision.

image via CB insights

Some fresh data out this morning from CB Insights shows New York slipped backed behind Beantown in terms of overall venture capital. But that is largely due to the deals in biotech and medical companies that Boston did. When it comes to tech, and more specifically the web companies Betabeat covers most, New York is still second only to Silicon Valley.

It's a trend that will likely continue, as CB notes, "California and NY account for 59% of internet VC deals and 66% of funding. Internet investments took over 1/3 of venture dollars in 2011 and Massachusetts fell to a five quarter low on internet deal share."

The total number of deals and capital invested reached its highest level in a decade, topping even the peaks of the pre-credit crisis 2007-2008. The folks from CB are prediciting a crunch at the series B and C stage, as an ever greater numbe of young companies vie for funding and the funnel narrows to those who can show serious traction. While seed stage reached new highs and series A saw an uptick, later rounds declined.

Fab, Outbrain and Knewton were the big deals in New York over the last quarter, with Imagen Biotech, which works on cures for blindness, rounded out the pack of top funding. Given that Fab has only been working its current company for seven months, it's astonishing to see the company it's keeping.

Another interesting note, while Manhattan had the most activity with 61 deals, Brooklyn nabbed five investments worth $7 million in total. Not suprisingly with the explosion of tablets and smartphones, the share of venture going into mobile deals rose compared to more traditional web companies.