Author Archives: Connor Matthews

IBM Expands Partnerships

Thesis: While IBM is effectively reorganizing itself around cloud computing and taking full advantage of their new big data analytics brand Watson, the firm needs to rebrand their image entirely to maximize the potential of their new initiatives in the evolving tech marketplace.

Life is tough for firms in the new age of technological evolution and innovation, even for tech giants such as IBM who has been in the industry for 104 years. A company that thrived on business hardware like cheese slicers and card punchers in its earliest days and moved to mainframe computers and microchips in more recent years, the need for hardware has declined greatly. The process of reinventing a historical giant can be quite daunting, but by not adapting and staying ahead of the innovation curve you can end up like record companies did in the 1990’s when Apple came in with iTunes. Even though IBM is late to the party, as their hardware sales continue to decline they announced that they will shift $4 billion in 2015 spending towards their “strategic imperatives” of cloud, analytics, mobile, social and security technologies. While IBM is effectively reorganizing itself around cloud computing and taking full advantage of their new big data analytics brand Watson, the firm needs to rebrand their image entirely to maximize the potential of their new initiatives in the evolving tech marketplace.

Stemming from one of their most advanced inventions, IBM Watson has brought upon the crucial innovation for their strategic partnerships. After the artificially intelligent computer system capable of answering questions posed in natural language won jeopardy in 2011, IBM decided to create an entire business unit around it early last year. Since then IBM has announced several major partnerships with Apple, Twitter, The Weather Channel, and most recently through their Watson Health initiative: Johnson & Johnson, Medtronic PLC. With Watson Health, IBM will pool and distribute healthcare data and analysis, but being announced just last month it is unclear whether or not this will be profitable. FBR & Co. Analyst Daniel Ives stated, corporate buyers are “moving away from traditional services and traditional hardware toward some of these next generation areas of spending, and that’s a headway for some of these traditional stalwarts such as IBM.” These new cloud partnerships and strategic initiatives are on track to become a $3.8 billion business this year, compared to being on track to be a $2.3 billion business in the first quarter of 2014 (Business Insider). They still have a lot of catching up to do as they are behind Amazon who is projected to come in around $6 or $7 billion for their cloud services. IBM is innovating and attempting to catch up to their competitors, rebalancing their revenue streams and being forward-looking enough to be left in the dust of cloud, analytics, mobile, social and security technologies. However, in order to keep up with their younger competitors known for innovation and performance, IBM needs to invest more in re-branding their image to give a competitive advantage in the ever-changing market beyond that of their historical presence and reliability.

Virtual Reality Causes Hollywood Scramble

Thesis: The concept is very appealing and the market has major potential, but Hollywood needs to invest heavily before it sends Virtual Reality to the back burner like it did with 3-D technology. 

If you remember playing with a ViewMaster as a kid, peering into a plastic viewer and experiencing 3D locales of far away places, you have an early sense of what’s to come over the next year. Similar in concept, the new technology will allow you to experience these 3D interactive landscapes. Something that seems to have been “coming soon” for a long period of time is gaining major traction, with Facebook purchasing the startup Oculus VR for $2 billion last year – largely due to the evolution in the technology. Now the only thing standing between the consumer and virtual reality is as simple as a smartphone, a few apps, and special viewers starting at just $25. There will be two main technologies for VR viewers, the first being a handheld device similar to the ViewMaster and the second being similar to ski goggles with a strap made for longer exploration. While the resolution wont be fully realistic and current content includes sitting courtside at an NBA practice, taking a tour of the arctic between Canada and Greenland, and simple games like flying a jet, serious efforts are now being made to prepare immersive content for Christmas releases of the goggles. The concept is very appealing and the market has major potential, but Hollywood needs to invest heavily before it sends Virtual Reality to the back burner like it did with 3-D technology.

The difficulty with emerging markets like these is getting consumers to adopt the technology, which stems directly from the available content upon release. The video game market for example would have failed miserably if the content and games were not meeting the expectations of consumers. Chris Edwards, chief executive of the LA-based firm Virtual Reality Co. says, “The gauntlet has been thrown” as they have been quietly working on immersive entertainment offerings. Started by four Hollywood players, VRC is working with directors such as Steven Spielberg and Scott Rudin to make sure this technology doesn’t phase out. Some of the current projects include 10-15 minute immersive segments where they can investigate near-future crime scenes, a documentary following NFL running back Jerome Bettis, and a theatrical feature. These are just a few of the many to come, but Hollywood has plenty of room for development and expansion in content as the technology evolves. The opportunities and plans are expansive, including: “virtual courtside seats at a Los Angeles Lakers game, re-creations of the State of the Union address from inside the U.S. Capitol, tornado-chasing across the Plains and front-row seats as Mick Jagger sings “Satisfaction.”” The technology could even be utilized in non-traditional settings using them for school lessons on geography by taking students to the landscape they are learning about, business trainings by simulating experiences or situations, and as long as the content is there initially – consumers will adopt the technology. However the major players fear this ghost of 3-D within the virtual reality market. After Avatar’s release of 3-D, there was an oversaturation of movies with higher ticket prices and subpar quality – phasing the concept out over time. The concept itself has massive potential and as long as the production of content matches the demand for the devices, virtual reality will be the next big hit for the long haul.

MLB On a Mission

Thesis: In order to connect with a younger fan base and improve ratings the MLB needs to make a further push into their collaborations with startups and develop their national storylines to expand local markets. 

With declining fandom, ratings, and fans aging, the MLB is on a mission to turn things around and bring the game of baseball back to its foundations. For a number of reasons kids and younger audiences are more invested in other sports or readily available entertainment. As a first step, the MLB realized there is a direct correlation between game length and TV ratings – even in the playoffs. An average of 13.8 million viewers watched the seven-game World Series between the Kansas City Royals and the San Francisco Giants last year, 16% less than the last seven-game World Series in 2011, and 44% less than the seven-game series in 1997 (WSJ).

 

AR-AJ313A_PLAYB_9U_20150402140911

 

A major cause of these declining ratings stems from the fact that kids are choosing alternative entertainment and the average age of a post-season MLB viewer is 55 years old (40 for the NBA). To aid these declining ratings, the league has altered its long-established rules slightly to increase its pace with shorter time between innings, pitches, and forcing players to keep a toe in the batters box. While this is a strong start to appealing to a younger audience and solidifying its place as a major sport, the results of shortened games will be marginal. In order to connect with a younger fan base and improve ratings the MLB needs to make a further push into their collaborations with startups and develop their national storylines to expand local markets.

Just like every other industry and marketplace, the MLB is beginning to look into collaborating with startups focusing on sports technology. Again, the results will most likely be marginal as the Los Angeles Dodgers explore public fitness tracking for fan engagement – but it is a concept well worth exploring. A part of it will be for internal purposes but CFO Tucker Kain hopes it could be rolled out to the public. Kain stated, “We want to track health and diagnostics of the team to keep them healthy, but also we want to make sure there’s an ability to scale and bring that data to fans.” When looking at post-season attendance, even the worst NFL attendance in a week is higher than that of a world series MLB game. Although largely due to stadium size, Rob Manfred attributes a lot of post-season troubles with TV ratings to the inherent locality of markets. When your team doesn’t make it to the post-season, fans have no motivation to watch other teams play on the national stage. To fix this, the MLB has to work on their national storylines of players and teams to engage fans. At the end of the day, these two pushes by the MLB could help their struggles with young fans and the alterations to the game will help TV ratings, but there will always be a sure way to fix those issues: winning.

 

Conglomerates Satisfy the Cable-Cutters

Thesis: HBO’s recent diversification, their deal with Dish Network, and the consequential rising cable costs will drive an increasing number of customers to cut their cable in 2015 – causing an industry wide move towards online services largely provoked by the firms that hold 95% market share.

For the most part when conglomerates and cable companies are undergoing negotiations we don’t hear of it or even care – unless they have the potential to interfere with the last leg of March Madness or the season 5 premiere of Game of Thrones. Earlier this month, Time Warner chief executive Jeff Bewkes called Dish Network’s Chairman Charlie Ergen for the 4th time of the night as they raced to complete negotiations for the major Time Warner channels that we’re so used to. If they were unable to seal the deal regarding how much Dish Network pays to carry these channels, Dish’s roughly 14 million subscribers would have to live without their beloved channels like HBO, CNN, and TNT. Thankfully they reached a deal in time, but this means a great deal towards the larger picture as it signals a major move towards online cable presence and cord cutting. HBO’s recent diversification, their deal with Dish Network, and the consequential rising cable costs will drive an increasing number of customers to cut their cable in 2015 – causing an industry wide move towards online services largely provoked by the firms that hold 95% market share.

HBO announced this past fall for the first time in its history that they would be targeting cable cutters and people without pay-tv subscriptions. According to the WSJ:

The 13 largest pay-TV providers in the U.S., representing 95% of the market, lost about 125,000 video subscribers in 2014, marking the second consecutive year for pay-TV losses, according to the Leichtman Research Group. In 2013, the loss was 95,000.

P1-BT398_BEWKES_9U_20150412163017

About time, HBO. As an effort to accommodate this growing number of consumers they have made several large moves including launching their HBONow service and their recent deal with Dish.

HBO Now is a stand-alone app that Time Warner is using to target consumers that still have broadband but have parted with their pay-TV subscriptions. The app will allow HBO to drive sales up for those who have left the video service – a move that was made carefully to make sure it doesn’t cannablize the rest of Time Warner’s business. A big opportunity to make that hedging bet in its various channels was making sure that this deal with Dish was just perfect. Dish Network has also recently expanded their online offerings through Sling TV, which is a package service consisting of about 20 channels. In their final negotiations, Bewkes and Ergen agreed to tackle cord-cutters together: Dish would offer HBO via Sling TV, its own new online-TV service targeting cord-cutters, while the companies hashed out details that would give Dish incentive to sell HBO more actively. These moves encompass the challenges of restructuring a traditional business model as the Internet remakes the television landscape. With HBO being an industry leader, their moves are viewed closely and its jump into streaming has sprung a movement followed by a handful of other networks.

Beyond the increasing number of appealing streaming options, there are cost pressures pushing from the other side at the worst time possible. Time Warner and other firms are making promises to investors that they will secure higher fees from cable providers, which is a major pressure on the industry. With higher fees and programming costs burdening the industry, cable costs are increasing – making cheaper online alternatives very appealing. While the final cost of these streaming packages and various services differ based on interests, companies like HBO and Dish Network are diversifying their online platforms and altering their business models – signaling the beginning of the end for pay-TV as we know it.

 

LinkedIn: One Stop Shop

Thesis:  Although LinkedIn just committed one-quarter of its cash to this acquisition, their smooth investor relations and their future plans to incorporate the online training services into their site will lead to profitable returns for their investors in the long term.

After four years of continuous growth since going public the professional social network LinkedIn marked down their first acquisition, which is quite a bit larger than a usual first step for a company. With quarterly revenue growth of 75% year over year, on average, and not missing Wall Street’s forecasts once, investor relations have been extremely positive since their IPO. LinkedIn is already the place to go to sharpen up your personal network and keep updated on your professional contacts so it seems rather fitting that they will soon be a driving force in helping you hone the skills to take advantage of these contacts. This past Thursday they announced that they will be buying Lynda.com, which provides online professional training services, for $1.5 billion with approximately 52% being paid in cash (WSJ). Although LinkedIn just committed one-quarter of its cash to this acquisition, their smooth investor relations and their future plans to incorporate the online training services into their site will lead to profitable returns for their investors in the long term.

With their constant returns and careful expansion, Linkedin has gone through careful planning to continue these reliable results for their investors by waiting for this perfect acquisition to be their first. Over the past two decades Lynda.com has worked with professional educators to build a collection of more than 6,300 courses and 267,000 videos, for which users pay $25 to $37.50 a month to access. According to the WSJ, it has grown into a profitable business with about $150 million in revenue last year. About 1/3 of this revenue came from corporations providing training and 2/3 came from individual consumers, providing them with certifications upon completion. In terms of market volume, e-learning is estimated to hit $107 billion this year, according to Global Industry Analysts Inc. LinkedIn will benefit from Lynda.com’s assets and content in numerous ways. With their 347 million-member user base, they will be able to market one of the biggest online libraries of video tutorials to them – leading to a few major benefits that will improve their bottom line. First and foremost, with these online certification and learning opportunities users will increase the time spent on the site as well as giving them more of a reason to return consistently. Both increases in average time spent per user and the increased traffic will lead to opportunities for ad revenue. Second, this will be an opportunity for users to learn new technical skills and promote their certifications to recruiters. Whether or not employers will take these certifications is unclear, but over time those that wont be accepted will naturally phase out when attempting to competitively promote your profile. Lastly and most notably, this wil give LinkedIn an opportunity to capitalize on new corporate subscriptions and partnerships as well as individual premium subscriptions. They will be able to market this content to both corporate customers looking to train their staff as well as individual subscribers who pay for premium subscriptions and are looking for new skills. Overall, this acquisition will help capture a significant share of the e-learning market and will be a great business development move for a now multi-faceted professional development site.

Nestle’s New Investment

Thesis: Nestles push towards carbonated water may help capture significant market volume from bottled water industry, but they should hedge their investment by developing alternative methods of drinking water economically.

With health concerns pushing consumers toward water and away from carbonated beverages while pollution and social externalities are affecting the bottled water market, it seems like everyone is losing in a way. Bottled water is becoming increasingly controversial as consumers are now worried about environmental impact of the $15 billion industry – 38 million plastic bottles a year made with 1.5 million barrels of oil (ABC News). On the opposite side, U.S. carbonated beverage volume has declined 14% over the past 10 years and sales of bottled water are currently on track to overtake carbonated beverages by 2017. EM-BE385_H2ONES_16U_20150408074806

Of the two major concerns, Nestle seems to be less worried of the combination of the two and is taking advantage of the latter by expanding their water-based product lines. In a recent announcement Nestle revealed they will be investing approximately around $200 million to roll out these products and increase profitability of its global water business, according to WSJ. They will be launching more flavored versions of its sparkling waters through its brands of Perrier and Poland Spring as well as redesigning slimmer cans as an attempt to rebrand their image. Nestles push towards carbonated water may help capture significant market volume from bottled water industry, but they should hedge their investment by developing alternative methods of drinking water economically.

Despite the obvious and continuous issue with pollution, Nestle is facing another major publicity problem revolving around the current drought in California. An online petition, a segment on Last Week Tonight with John Oliver, and news outlets have all pointed fingers at Nestle for bottling California water and selling it for profit during their historic drought – specifically it’s Arrowhead and Purelife brands. Executive Director of CourageCampaign.org Eddy Kurtz stated, “We’re using this moment and Nestlé to organize opposition to certainly any sort of ground water in California being bottled for sale. [It] just doesn’t make any sense in this drought.” Although Nestle is among many major beverage companies that use California water including PepsiCo and Coca-Cola, Nestle is receiving the majority of this bad publicity. With all of these challenges facing them and now an increasing market space for water, carbonated water, and decreasing opportunity for soda, it is likely that Pepsi and Coca-Cola will begin to make similar investments to Nestle’s. Nestle will eventually lose the publicity as California’s drought comes to an end and hopefully within their rebranding they will reduce pollution to an extent/incorporate it into their marketing campaign, leading to a likely successful expansion in the water market. However, these all create another opportunity to invest and develop positive product lines, both environmentally and PR focused. Many bottled water rivals are currently pumping up tap-based alternatives including pitcher and faucet-mounted water filters, as well as refillables (often aluminum w/ environmentally friendly slogans). While these could take a toll on water sales as people transition away from plastic water bottles, this would be a long-term sustainable option that would not only benefit their image but would also provide additional revenue in case they do not achieve their target market share.

 

 

The Uneasy Smartwatch Market

Thesis: Apple has a solid plan for the launch of their smartwatch this year in the midst of Samsung’s break, but the market opportunity is not worth the risk of moving this early without a clear competitive advantage that will support reasonable success in a failing market.

As with any new technological movement or innovation, there are major effects/issues that spread beyond just the first-movers or competitors of the industry. Since Samsung released their first smartwatch in 2013, it has been relentless in putting their stamp on the market for wearable devices. The struggle with releasing an innovative market is that testing waters for new products can be difficult, leading to their release of over 6 smartwatches in the first year of their launch and most notably – sitting out a round this year to make sure they are working towards perfection. Timing is key with the release of a new product line, which is why Apple’s upcoming release of their smartwatch is beginning to stir not only the smartwatch market but also the entire watch market as a whole. As the WSJ states:

Apple wasn’t the first company to make a digital music player, nor was it the first smartphone manufacturer, but it helped to define those markets by bringing a new look and feel to the experience with the iPod and iPhone. Now it’s trying to repeat the feat with the Apple Watch.

The only issue is that even despite CEO Tim Cook calling it “the most personal device we ever created,” the device has no huge features to fully differentiate themselves from competitors. Apple has a solid plan for the launch of their smartwatch this year in the midst of Samsung’s break, but the market opportunity is not worth the risk of moving this early without a clear competitive advantage that will support reasonable success in a failing market.

Although the device’s claim to provide a quick way of handling brief interactions on a day to day basis could be rather appealing, Apple is making a move into a market where they lack the innovation they are known for. There are “thousands” of apps that have been developed for the watch including American Airlines, Instagram, Uber, and reminders. While the idea of grabbing an Uber from my watch sounds appealing, the watch still lacks innovation to the point where I will still need my smartphone – a major reason why the product is not worth the price point. Competitors in the market are in similar positions, but the difference is that Apple will ship 15 million units in 2015 accounting for 55% of the smartwatch market. Acquiring a large market share in a potentially large emerging market is important, but at the current time this market volume is rather low for the risk associated as well. Obviously given Apple’s size they have the resources to take on a risk like this and thrive, however by waiting until a clearly developed competitive advantage is found would only benefit their image and profitability in a struggling wearable market.

 

Drone Delivery

Thesis: Although the eventual loss of jobs and FAA rulings will assist in delaying implementation in the U.S., ultimately the convenience and efficiency of these drone programs will prevail – especially globally where regulations are less stringent. 

With the developments over recent years in drone usage and technologies, numerous industries have seen beneficial effects already. Filmmakers and photographers can use them to get a better vantage point as well as farmers to monitor their crops. Now, the next step forward that has been the focus in the media has to deal with drone delivery for the retail market. Led primarily by Amazon, the efforts focus primarily on delivery in close proximity (10 miles) from warehouses and have been tested for hour-delivery with these guidelines. For only $7.99 per order on top of an Amazon Prime membership, in select cities you could have thousands of products in your hands within the 60 minutes. These signal potentially more sustainable long-term fast delivery options than the Prime Now service launched in December throughout Manhattan and Brooklyn, which dispatches contracted bicycle messengers for immediate delivery. Although the eventual loss of jobs and FAA rulings will assist in delaying implementation in the U.S., ultimately the convenience and efficiency of these drone programs will prevail – especially globally where regulations are less stringent.

Not only is Amazon interested in developing their own drone program, but also other tech startups like Matternet Inc. are trying to establish their presence. Matternet is working to create networks of drones that will fly on fixed routes between base stations. According to the WSJ, The system can serve as a cheap and efficient infrastructure to transport crucial goods in the developing world, the company says, or a shipping pipeline for companies to move inventory between stores or to frequent large-scale customers. The main issues with both of these companies, among others, include the technical restraints such as battery life and package weight as well as FAA rulings. Eventually given a sustainable battery life and collision-avoidance technology, the technical aspects will allow for these delivery applications. In addition to operators passing a test through the FAA, the standards would limit flights to daytime, below 500 feet, less than 100 miles an hour, and within sight of the operator. While these regulations will limit the potential U.S. drone market, developing countries are a huge target and potential opportunity. In Bhutan, where mountainous terrain and poor infrastructure make truck deliveries difficult, Matternet worked with the World Health Organization to test distributing medicine to nearly 180 remote clinics (80% of which are within a 30 minute drone flight of a hospital). The implementation of these drone programs could cut jobs in the long run, but the sheer convenience, speed, and efficiency of fully developed drone deliveries will cause demand to skyrocket.

Summer Entertainment Extends

Thesis: Due to the heavy focus on these “tentpole” films, studios will be increasingly forced to finance their films by giving up partial rights to their biggest assets (successful franchises) and will lead to a continual decrease in original content.

For more than a decade, the first week of may has marked the best time of the year for big-budget action movies known as Hollywood’s summer. The obvious reason for this is that the beginning of May marks the beginning of schools being let out which correlates directly with weekday cinema attendance and total box-office sales. With higher attendance and box office numbers studios release their costly and highly anticipated sequels and spin-offs. Now that studios are facing profit pressures according to the WSJ, they are releasing more of these “tentpole” films and less on riskier films to the point where their summer exhibition blocks are getting very crowded. Over the next few years we will begin to see this summer block extending into early March. This Friday Universal is releasing Furious 7, which is expected to gross more than $100 million in the opening weekend. Next year Batman vs. Superman is slated for a March 25th release and in 2017 the Wolverine movie is slated for March 3rd showing the extension of summer releases. Due to the heavy focus on these “tentpole” films, studios will be increasingly forced to finance their films by giving up partial rights to their biggest assets (successful franchises) and will lead to a continual decrease in original content.

 

This summer (May-August) Hollywood will release 14 big-budget action, adventure, or family films – most of which are sequels, remakes, or spinoffs. The chief executive of AMC Entertainment Holdings Gerry Lopez stated, “People don’t necessarily want to wait for a three-month window to see a bunch of big, fun blockbuster movies all crammed together with no time to breathe.” Unfortunately we will not be getting as much of the original content, but this extension of higher production quality movies into dump months that were previously times to throw average films will be very financially beneficial for studios. The only thing to be seen is whether or not the box office numbers will be able to cover the lost profits from franchises given to entertainment companies through financing. For instance, to co-finance Furious 7 Universal worked with Media Rights Capital, a company that produces Netflix’s House of Cards. MRC covered 10% of the $190 million budget and will receive approximately that percentage of profits, but how did they get the opportunity to reap the benefits of such a huge franchise? Universal reached a deal with MRC so they would allow them to release another sequel Ted 2 (MRC has sequel rights). There are major changes to come as dump months are beginning to receive more blockbusters and studios pushing sequels and tentpole films harder than ever before. However, I think they will run into troubles financing the films, losing franchising rights, and eventually losing box-office numbers that could be better in convoluted summer months as it is.

Tidal Prepares for Relaunch

Thesis: By being financially backed and promoted by major artists, as well as sustaining their model through paid-subscriptions only, Tidal will host more desirable content and offer a high quality alternative for consumers.

Spotify and other major streaming sites will have to make room for a new competitor Tidal, which is getting ready to relaunch their service. Most of you have likely heard of it right now due to the #TIDALforALL campaign trending across all social media sites. Artist Jay-Z’s company Project Panther Bidco offered $56.1 million in cash for Aspiro (parent company of music streaming services WiMP and Tidal). Since the acquisition went through and the development of Tidal’s relaunch has gone smoothly, the streaming site has gained considerable support with artists including Rihanna, Nicki Minaj, Beyonce, Coldplay, Kanye West, and most notably Taylor Swift. Although Tidal will be entering a congested market primarily led by sites such as Spotify, Pandora, iHeartRadio, and soon to be Apple’s Beats, they have major competitive advantages for both the consumer and the artists. By being financially backed and promoted by major artists, as well as sustaining their model through paid-subscriptions only, Tidal will host more desirable content and offer a high quality alternative for consumers.

Tidal’s major competitive advantage is its ability to offer a service that musicians can get behind and the concept that because artists are taking a bigger role in its structure, the benefits for artists will outweigh those of other alternatives. Currently Spotify offers approximately 30 million tracks compared to Tidal’s 25 million songs and 75,000 high-definition music videos. With a very comparable selection of songs, the major argument between these two services (and others) is their subscription fee structure. Spotify offers a $9.99/month premium service as well as a free, ad-based option whereas Tidal will offer a $9.99/month standard quality option and a $19.99/month premium sound quality option. Many artists like Taylor Swift are skeptical in streaming their content on Spotify because users are then able to utilize the free service and gain minimal royalties while losing massive song/album sales. Global Head of Communications at Spotify Jonathon Prince makes the argument that users who want to find free options have the ability to on YouTube and PirateBay (a popular torrenting site), so they should allow Spotify to stream their music and benefit from royalties. However the issues with this statement are that YouTube monitors content barring many users from finding content close to release and many users don’t know how to use torrenting sites or are afraid of consequences, forcing many users to turn towards paid options. In the case of Tidal, regardless of the subscription level artists will be benefiting entirely from their royalties without incurring the costs of any free, ad-based options. In addition to this, by being backed financially and promoted by major artists around the world this site could become the new artist-friendly site and begin to pull music away from others to benefit the cause and their own careers. The effects of this new service Tidal will be seen shortly, but their slogan/mission to band together as artists for other artists will carry them farther than you think because in this market the content has the power, especially for the same monthly streaming price to take away from the risk of losing consumers.