TIME Video Games

Watch the First Trailer for Halo: Nightfall

Microsoft released the first trailer for its upcoming live-action digital series Halo: Nightfall.

The series, which is being executive produced by Ridley Scott, will feature a new character named Jameson Locke, who is an agent for the secretive Office of Naval Intelligence. The series will be bundled with Halo: The Master Chief Collection, a compilation of past Halo games that launches this November.

MORE: The History of Video Game Consoles

TIME facebook

Here’s How Facebook Doubled Its IPO Price

Facebook Holds f8 Developers Conference
Facebook CEO Mark Zuckerberg delivers the opening kenote at the Facebook f8 conference on April 30, 2014 in San Francisco, California. Justin Sullivan—Getty Images

Facebook's stock doubled its IPO price by midday Thursday

Facebook suffered a cruel summer back in 2012. The social network raised its IPO price just before going public in May 2012, but technical glitches during early trading caused mass investor confusion. Nasdaq eventually paid a $10 million fine over the debacle, and Wall Street showed no mercy to the social network in the ensuing months. Facebook’s stock cratered, diving from $38 to below $18 before the following autumn.

Two years later, the sun’s shining bright on the tech giant. Facebook beat analysts’ expectations yet again in its latest quarterly earnings report, generating revenue of $2.9 billion and earnings per share of 42 cents. That sent the company’s stock soaring above $76 during midday trading Thursday, doubling its IPO price of $38. That’s also more than quadruple the social network’s all-time low close of $17.73.

Screen Shot 2014-07-24 at 1.25.08 PM

Facebook’s massive turnaround has everything to do with mobile. When the company went public, its revenue was almost completely tied to desktop ads–exactly the kind of business investors in the mobile era don’t like. With more than half a billion people already accessing Facebook on mobile, the company had to prove that it could successfully transition its business. CEO Mark Zuckerberg set a laser-like focus on mobile strategy, and he forced his executive clique to do the same.

The dedication has paid off. Facebook now generates more than two-thirds of its total ad revenue on mobile and has more than a billion mobile monthly active users. Overall ad prices jumped 123 percent year-over-year, partially because mobile ads placed directly in users’ News Feeds are more valuable than ads on the right rail of the site served to desktop users.

But what really has Wall Street salivating is the fact that Facebook has plenty of mobile monetization moves left to make. New auto-playing video ads in users’ News Feeds could help the company lure marketers from television. Instagram introduced ads last year that are being positioned as an attractive option for brand marketers. The company is also likely to figure out ways to make money off its messaging goliaths Messenger and recently-acquired WhatsApp.

Overall, it’s clear that Facebook has solved its mobile conundrum, and Wall Street is rewarding it handsomely. With its share of the overall mobile advertising market quickly increasing, the company may soon to be able to challenge Google to be at the top of the totem pole of mobile.

TIME

This Is the Secret Power at the End of the Internet

Imgur CEO Alan Schaaf Imgur

Tom Hanks is clutching a giant banana, and he looks a bit perplexed, annoyed even. It’s clear it wasn’t his idea to brandish this fruit in the middle of a bar and put a photo of the scene on the Internet. It must have been the guy with the broad grin right next to him, a Reddit user who goes by the name ASharkToof. “Explaining the banana to him was pretty awkward,” he explained in the caption for the photo, “but banana for scale.”

The odd image generated nearly 2,000 up votes on Reddit, the popular online message board, and helped popularize the nascent meme of using bananas as a makeshift measuring tool. But the photo’s story didn’t really begin on Reddit. It started on Imgur, the five-year-old photo-hosting site from which a huge proportion of visually viral things now come.

In the dial-up days of the Internet, people were punished if their online photos became too popular. A picture that was widely shared on websites and message boards was likely to exceed its bandwidth limit and be replaced with an ad for a photo-hosting site or a gross-out picture to deter people from sharing photos without permission. Alan Schaaf, an avid Reddit user (or “redditor”) who began writing computer code at age 14, saw this as an anachronism at odds with the increasingly viral nature of the Web.

So in 2009, while attending Ohio University, he launched a simple website where people could upload pictures and let them receive unlimited views for free. The site, called Imgur, was an instant hit with his Reddit brethren. “You weren’t locked down to one platform,” Schaaf says. “You could blast it all over the Internet and put it in your forum or online community.” In the same way that YouTube videos can be embedded and viewed across the Web, so too can Imgur pictures.

The memes and humor of Imgur (pronounced “Image-er”) quickly began to seep into other parts of the Web, from Tumblr blogs to Facebook posts to BuzzFeed listicles. Now Imgur says it has more than 120 million unique visitors globally and 1.5 billion page views per month. Third-party analytics firm comScore puts the company’s monthly unique visitors in the U.S. at 19 million, eclipsing Flickr and Photobucket. Imgur is one of the 50 most-trafficked sites in the world, above Craigslist, CNN and its progenitor Reddit, according to Alexa, a web analytics company. More than 1.5 million new images are uploaded to the site every day. “We are essentially like patient zero for viral images,” Schaaf says.

The site has helped usher in a new era of visual communication, where a GIF of Michael Cera collapsing in a heap can mean “I’m having a bad day” without explicitly saying it. “[Imgur] really kind of understood the ethos of what image-sharing was about,” says Ben Huh, CEO of the viral media company Cheezburger, which runs popular websites like Know Your Meme. “Imgur is what enabled Reddit to become this meme machine.”

For a site of its size, though, Imgur is still relatively unknown to many. Schaaf says the trouble is some people think of Imgur as a utility ”like electricity” rather than an entertainment destination all its own. The company is trying to change that perception this year by making its website more user-friendly. A new tagging feature unveiled last week allows users to easily organize and search for images in different categories. Users can also create custom galleries based on tags, and a new advanced search tool will make finding specific pictures easier. Combined with Imgur’s already massive user base, these changes could help cement the site as the “YouTube of images,” according to Schaaf.

That type of branding will help to lure in more advertisers, which generate the bulk of the company’s revenue. Schaff wouldn’t disclose much about sales but said that the company is profitable (he famously has only ever spent $7 of his own money on the company, in order to buy the original domain name). Brands such as Pepsi and video game developer Rockstar have paid for sponsored posts on the site aimed at getting the same viral traction as regular users’ images. Imgur also raised $40 million in its first-ever round of venture funding in April, so it has the funds to expand and experiment.

There will be challenges for the site as it tries to grow from dorm room side project to media company. Imgur’s liberal use of images gathered from all corners of the Internet brushes up against copyright law. The company says it regularly removes images that have been flagged as violating copyright. That issue, along with some of the crude content that sometimes crops up on the site—pornography, for example, is allowed—could spook brand advertisers. And because the site deals mostly in images of anonymous people posted by anonymous users, it has a less firm grip on users’ personal identities than data-rich companies like Facebook and Google. “Everybody is just so tied into their incumbent social networks and services that they’ve been using for years,” says Brian Blau, research director in consumer technologies at Gartner. “Those are very hard to unseed.”

Schaaf argues that Imgur’s community is thriving and, being heavily composed of young males, difficult for advertisers to reach elsewhere. Power users, who call themselves Imgurians, often have real-world meetups across the country. A pair of them have even gotten married. As long as these users keep posting pictures of cute pets and carefully measured bananas, Imgur’s clout will continue to rise. “We’re going to own the image, the meme and the animated GIF on the Internet,” Schaaf says. “That form of self-expression will be ours.”

TIME Earnings

Facebook Stock Hits All-Time High After Strong Earnings Report

Facebook CEO Mark Zuckerberg speaks during an event at Facebook headquarters on April 4, 2013 in Menlo Park, California
Facebook CEO Mark Zuckerberg speaks during an event at Facebook headquarters on April 4, 2013 in Menlo Park, California Justin Sullivan—Getty Images

Mobile ads made up 62% of Facebook's $2.7 billion in ad revenue

Updated July 23 at 5:53 p.m.

Facebook stock climbed to an all-time high as it once again sailed past Wall Street’s expectations in its second quarterly earnings report of the year. The social network pulled in $2.9 billion in revenue for the quarter, beating analysts’ estimates of $2.8 billion. The company generated a profit of $791 million. Earnings minus some line items were 42 cents per share, blowing past estimates of 32 cents per share. Facebook shares were priced above $74 in after-hours trading.

Facebook now has 1.32 billion monthly active users, an increase of about 40 million from the previous quarter. Mobile usage continues to grow, with the social network now having 1.07 billion monthly active users on mobile devices, up from 1.01 billion in the previous quarter.

With increased mobile usage, mobile advertising continues to make up a bigger share of Facebook’s revenue pie. Mobile ads accounted for 62 percent of the company’s $2.7 billion in ad revenue for the quarter, up from a 59 percent share in the previous quarter and a 41 percent share during the same period last year. It’s a stark turnaround from Facebook’s early days as a public company, when the social network’s stock tanked on fears that it couldn’t convert its growing desktop business to mobile.

During a conference call with investors, Facebook touted its popularity as a public platform. Chief Operating Officer Sheryl Sandberg said 350 million Facebook users made 3 billion interactions related to the World Cup during the event, and the World Cup Final was the most-talked-about Facebook event in Facebook history. Facebook also just launched a new app specifically for celebrities with public pages last week. “Public content will continue to be a growing focus for us over the coming months,” CEO Mark Zuckerberg said.

While Facebook’s revenue has been ramping up quickly, Zuckerberg again emphasized that investors shouldn’t expect significant monetization from newer apps and acquisitions such as Messenger, WhatsApp and Instagram in the near future. He compared their current businesses development to where Facebook was in 2006, two years after it launched.

It’s not yet clear whether Facebook’s latest controversy, in which the company experimented with people’s News Feeds without their knowledge to alter their moods for a scientific study, will have a substantial effect on usage of the social network. The mood study was only widely publicized at the very end of the fiscal quarter.

 

TIME Tablets

These 2 Charts Show Why Apple Should Worry About the iPad

Apple's iPad Air tablet on October 22, 2013 in San Francisco, California.
Apple's iPad Air tablet on October 22, 2013 in San Francisco, California. Glenn Chapman—AFP/Getty Images

Apple’s flagship product, the iPhone, is humming along nicely, according to the company’s latest quarterly earnings report, but its newest disruptive device has seen better days.

The iPad, which turned four years old in April, is suffering slowing sales on both a sequential and year-over-year basis. The product line sold 13.3 million units between April and June, down 9 percent from the same period last year. That’s bad news for a relatively new device that was supposed to be “better than a laptop” and eventually devour the PC market.

Here’s a breakdown of the product’s overall trajectory:

In the most recent quarter, the iPad saw its lowest sales since the first quarter of 2012, when it sold 11.8 million units. Many factors explain the slowdown: For one, new iPad rollouts don’t generate nearly the buzz of a new iPhone launch. Why not? The flagship device hasn’t changed dramatically since it launched in 2010—yes, it’s added a fancy retina display and gotten lighter, but those advances don’t compare to the new features that have accompanied launches of new iPhone models, like the App Store or the Siri personal assistant.

On top of that, people generally seem content to hold on to their iPads for longer than they keep their iPhones. According to mobile marketing firm Fiksu, which tracks the use of iOS on active Apple devices, the iPad 2 was still the most popular iPad in use as of April 2014, even though it had already been out for three years. For comparison, the iPhone 5, released in September 2012, is the most-used Apple smartphone.

That’s partially because iPhones are usually cheaper to purchase in the United States. Thanks to subsidies from wireless carriers, the expensive phones typically cost between $100 and $200 for U.S. customers eligible for an upgrade, while the sans-subsidy iPad starts at $399. Combine that price differential with the fact that Americans have been conditioned to seek out phone upgrades every two years when their contracts end, and it’s no wonder that the majority of iPads are now being sold to first-time tablet buyers, according to Apple.

“I don’t see the purchase cycle [for iPads] as fast as 20 to 24 months,” says Ben Arnold, an industry analyst at NPD.

Another problem for Apple is the iPad’s growing number of competitors. When the device launched in 2010, it became the first breakthrough success in the tablet category. Since then, both Amazon and Samsung have launched tablets with similar features and, in some cases, lower prices. Meanwhile, many laptops with functionality similar to an iPad are now cheaper than Apple’s tablet. Arnold attributes some of the iPad’s current woes not only to its direct competitors but also dirt-cheap netbooks like Google’s Chromebook, which is tailored for web browsing and video viewing.

On the other end of the spectrum, smartphones are slowly approaching the size of tablet — Apple itself is reportedly prepping a new iPhone with a 5.5-inch screen, just 2.4 inches off the iPad Mini. Those big phones, sometimes called “phablets,” are eating away at tablet sales across the board.

The convergent functionality of different device types means the tablet market as a whole may not have as much runway to grow as analysts previously thought. Global tablet shipments declined for the first time ever in the first quarter of 2014, according to NPD. The sales-tracking group cited the emergence of large-screen smartphones as one reason for faltering growth. NPD projects tablet shipments will rebound, but that the growth rate will be 14 percent in 2014, lower than in previous years. By 2017, the growth rate is expected to slip to single digits (NPD expects a growth rate of 13 percent for smartphones through 2017, by comparison).

smartphone sales

“The market is kind of settling into this mature phase,” Arnold says of tablets. “The second generation purchases are slower to come.”

So Apple has a product in sales decline in a rapidly maturing market that faces growing competition from every other type of mobile computing device. What’s the solution? Apple believes it’s enterprise. In his conference call with investors, Apple CEO Tim Cook stressed that the iPad would be a key element of the company’s just-announced partnership with IBM to sell Apple products and services to businesses. Currently just 20% of tablet owners use the devices for work-related activities, according to an April survey by JD Power. Apple believes it can change this by creating apps tailored to different industries like insurance, banking and retail.

The iPad certainly isn’t going anywhere, and at more than 225 million units sold, it’s an incredibly successful device. But it’s not the next iPhone, and that’s what investors have been craving since they catapulted Apple to become the most valuable company in the U.S. Cook, who acknowledged that iPad sales were below analysts’ expectations, tried to put his aspirations for the device in perspective: “Our theory that has been there honestly since the first time that we shipped iPad, that the tablet market would eventually pass the PC market. That theory is still intact.”

TIME

Apple Sees Surging iPhone Sales, but iPad Sluggish

Apple Unveils New Versions Of Popular iPad
An attendee looks at the new iPad Mini during an Apple announcement at the Yerba Buena Center for the Arts on October 22, 2013 in San Francisco, California. Justin Sullivan—Getty Images

As tablets face competition from big phones

Updated July 22 at 6:20 p.m. ET

Apple topped analysts’ projections in the third quarter of its fiscal year with profits of $7.7 billion, the company disclosed in its quarterly earnings report Tuesday. That figure amounted to earnings per share of $1.28, beating analysts’ projections of $1.23 per share. Apple’s revenue for the quarter was $37.4 billion, below analysts’ expectations of $38 billion.

Apple’s profits were again driven by the iPhone, which moved 35.2 million units during the quarter, up from 31.2 million during the same quarter in 2013. At $19.8 billion in sales, the iPhone comprised nearly 53 percent of Apple’s total revenue. iPhone sales were down compared to to the second quarter, when the device sold 43.7 million units. The period between April and June has historically been a weak time for iPhone sales as consumers anticipate the launch of the latest device in the line, which typically occurs in September.

While the iPhone’s business continues to grow, the iPad is showing signs of slowing. The tablet sold 13.3 million units in the quarter, down 9 percent year-over-year and down 19 percent from the period between January and March of this year. This was the second straight quarter the iPad slipped in year-over-year sales—in the second fiscal quarter the device line was down 16 percent. In fact, the entire tablet market was down in the U.S. early this year because of increased competition from large-screen smartphones.

In a conference call with investors, Apple CEO Tim Cook defended the iPad’s performance, saying that the device still has a promising future. “IPad sales met our expectations but we realize that they didn’t meet many of yours,” he said. “What’s most important to us is that customers are enjoying their iPads and using them heavily.”

Cook pointed to a recently-announced partnership with IBM to push Apple devices and services to enterprise customers as an avenue for iPad sales growth. Currently only about 20 percent of tablet owners use the devices for work-related activities, according to an April survey by JD Power. “I honestly believe the opportunity is huge,” Cook said. He also noted that the device’s sales are still growing quickly in less-developed markets such as China and the Middle East.

Though Apple had to defend the iPad, the company noted iTunes software as another area of strong growth. Revenue in the sector, which is comprised mostly of sales in the iTunes and App Stores, grew 12 percent year-over-year to $4.5 billion.

Apple’s line of Macintosh desktops and laptops grew 18 percent year-over-year to 4.4 million units in sales. The iPod line sold 2.9 million units in the quarter, down 36 percent from the same period last year.

Overall the earnings report did little to move Apple stock, which inched up less than 1 percent in after-hours trading. Both investors and Apple fans are currently awaiting the newest generation of iPhone, which will reportedly boast at least one model with a 5.5-inch screen and is expected to launch sometime this fall.

“iPhone 6 is clearly what people are pointing to,” says Bill Kreher, an Apple analyst at Edward Jones. “The company faces heightened execution risk as it increasingly relies on new products to boost growth.”

TIME Earnings

Comcast Pulls in $2 Billion in Profit in Q2

National Cable and Telecommunications Association Cable Show
The Comcast Corp. logo is seen as Brian Roberts, chairman and chief executive officer of Comcast Corp., right, speaks during a news conference at the National Cable and Telecommunications Association (NCTA) Cable Show in Washington, D.C., U.S., on Tuesday, June 11, 2013. Bloomberg—Bloomberg via Getty Images

Comcast is in the process of trying to merge with Time Warner Cable

Comcast’s cable and Internet business is generating more money as it prepares to try to merge with Time Warner Cable. The communications giant posted overall revenue of $16.8 billion, a 3.5 percent increase from second quarter of 2013 that slightly missed analysts’ projection of $16.95 billion.

The company had net income of $2 billion, up almost 15 percent from a year ago. Earnings per share were 76 cents, beating analysts’ expectations of 72 cents.

The company shed 144,000 video customers during the quarter, and now has 22.5 million. However, Comcast added 203,000 new Internet subscribers for a total of 21.3 million. Overall revenue from Comcast’s cable, Internet and voice business jumped 5.4 percent to $11 billion from the same quarter a year ago.

Revenue from the company’s NBCUniversal Division, which includes television networks, theme parks and movie studios, was essentially flat year-over-year at $6 billion, a 0.3 percent increase from last year.

Comcast is looking to massively increase its footprint in the cable market by merging with Time Warner Cable. If the merger is approved by federal regulators, the combined company will have about 30 million cable subscribers.

TIME Earnings

Netflix Crosses 50 Million Customer Streams

Updated July 21 at 5:38 p.m.

Netflix’s customer base has passed 50 million members, the company announced in its quarterly earnings report Monday. The streaming service added 1.69 million new members during its second quarter, bringing the total to 50.5 million customers and generating $1.1 billion in revenue, slightly missing analysts’ projections of about $1.2 billion.

The company had earnings of $1.15 per share, missing projections by a single penny. Overall, Netflix generated $71 million in profit, triple the figure from a year ago.

In a letter to shareholders, the company touted the success of its original programming, noting that Orange Is the New Black is now the most-watched series on the service in every territory. The next shows on the company’s production docket will be the final season of the cancelled AMC show The Killing and a new adult animated comedy called BoJack Horseman, both of which premiere in August.

Netflix is also planning an aggressive international expansion later this year. The streaming service, which already has almost 14 million customers abroad, will launch in Germany, France, Austria, Switzerland, Belgium and Luxembourg in September. Netflix is prepping some original shows aimed specifically at foreign audiences, such as a soccer comedy that it will air in Spanish.

The company reiterated that it does not want to pay interconnection fees to Internet Service Providers to get its video content delivered to customers, an issue it has tried several times to fold into the zeitgeist of the ongoing net neutrality debate. “In the cable industry, there’s been constant conflict between the networks and cable distributors,” CEO Reed Hastings said in a video call with analysts. “We would hate to see ISPs brownout or blackout certain Internet sites while they try to extract payments.”

Netflix has also formally opposed the proposed merger between ISP giants Time Warner Cable and Comcast, unless the two companies are specifically banned from charging interconnection fees.

 

TIME Startups

How YouTube Stars Can Actually Make a Living

Pedals Music Video—Conte

Patreon offers a new approach to crowdfunding

Being a YouTube star doesn’t actually pay all that well. Just ask Jack Conte, a singer and musician who has scored viral hits mashing up Pharrell songs and stripping down pop hits like Beyonce’s “Single Ladies” as one half of the indie rock duo Pomplamoose. Between the group and his solo work, Conte says his videos can rack up as many as four million views each month on the video sharing site. But all those eyeballs do little for Conte’s bottom line—in a good month, he collects $400 in advertising revenue from YouTube.

“There’s great ways for people to build an audience online right now,” he says. “There’s really no great way for people to make a living.”

After a particularly elaborate music video involving singing robots on a handmade replica of the Millennium Falcon earned him just a few hundred dollars, Conte realized that there had to be a better way to earn money online. He wanted what he calls a “quality driven Web,” or a space where artists could make money based on the passion of their fanbases rather than trying to lure millions of mildly interested passersby by “going viral.”

His solution was Patreon, a new crowdfunding platform that helps creators earn revenue from their most ardent fans on an ongoing basis. Unlike Kickstarter, where inventors and creative types solicit money from users in a month-long campaign frenzy, Patreon asks users to pay creators each time they produce a new work. That could be a music video, a web comic any other kind of creative project. As on Kickstarter, patrons are given varying prizes based on how much they donate.

The unusual funding model creates a new dynamic between creators and fans. It’s not as much about crafting one brilliant idea and marketing it well but rather building and sustaining an audience over the long term. The idea of individual fans supporting artists on such a granular basis might seem anachronistic in an age where YouTube has helped make media more accessible, but Conte believes people are still willing to pay for art. “Patronage is a very old phenomenon that’s occurred in people and in society for thousands of years,” he says. “It stems from an emotional response to someone’s art. It’s a feeling of responsibility and importance and a desire to be a part of what they’re making.”

Since launching in May 2013, Patreon has attracted 25,000 creators who are requesting funding for everything from science fiction short stories to Minecraft raps to video game reviews. So far patrons have paid more than $2 million for creative works on the site, with $1 million of that coming in just the last two months. The most popular creators can earn close to $10,000 per project on the site.

Molly Lewis, a ukulele player with a small but devout following on YouTube, believes Patreon could eventually become her primary revenue source as an artist. She’s currently convinced more than 400 fans to pledge $2,600 total for each new song she makes, more than double her original funding goal. To attract donations, she promises exclusives like videos of live shows and personalized limericks written for hardcore fans. “It’s kind of like a fan club,” she says. “The money they spend goes directly into my buying food and making more music. They can see their dollars at work in a way that you can’t really when you go to a Katy Perry show or something.”

This desire to get an inside track on the creation of a new project has already helped Kickstarter pull in more than $1 billion in pledges from people around the world. Experts believe the Patreon model can also reach massive scale since it’s appealing to both creators and their fans. ““Here you can evaluate the quality of output over time and then decide whether you want to continue subscribing or not,” says Anindya Ghose, a professor of information, operation and management sciences at New York University who also studies crowdfunding. “It’s a very positive self-reinforcing cycle where people give small amounts of money, which incentivizes artists to do a better job, which then leads people to give more money more frequently.”

Plenty of obstacles remain for the still-nascent startup. It’s not yet clear just how long people will be willing to continually support a single artist’s work—Ghose points out that a few popular creators pumping out subpar work simply to collect a check could sour new users on the platform. More worrying could be YouTube’s entrance into the donations space. The video giant launched a virtual tip jar of its own recently as a response to ongoing gripes that it’s hard to earn money directly on the site. For now, Conte contends that Patreon’s features differentiates it from YouTube’s less robust offering, while YouTube has expressed support for crowdfunding platforms like Patreon and Kickstarter.

Silicon Valley, at least, believes in Patreon’s future. The startup closed a $15 million round of venture funding in June which included leading venture capitalist Danny Rimer and Alexis Ohanian, one of the co-founders of Reddit. The money will allow the company to launch a mobile app and open an office in San Francisco instead of working out of the two-bedroom apartment where Conte and co-founder Sam Yam live.

As Patreon grows, Conte promises that it will remain focused on creators’ interests. The currently unprofitable company charges a 5% commission on all donations, and Conte vows the fee won’t increase in the future (Kickstarter and YouTube charge the same amount). Though he’s now a CEO, he’s still a creator at heart—Conte has 1,300 patrons of his own paying more than $5,000 for each new video he makes. He envisions a future where every creative person isn’t a starving artist or a pop megastar. There’s room in the middle for artists, too, and people will pay for their work because, as Conte says, “Everybody wants to be able to enjoy beautiful things.”

TIME Amazon

Amazon’s Kindle Unlimited Is Worth It If You Read This Many Books

Random House Publishing And Penguin Books Ahead Of Merger
The logo of the Penguin publishing house, part of Pearson Plc, is seen on a Kindle Fire HD e-reader at a bookstore in London, U.K., on Friday, April 5, 2013. Bloomberg/Getty Images

Amazon on Friday announced Kindle Unlimited, a new all-you-can read e-book service allows customers to read as many titles as they want for $9.99 per month. Kindle Unlimited has a library of over 600,000 books, including well-known titles like Harry Potter and Life of Pi. If you’re a voracious reader, the Unlimited program could be a good way to save money while feeding your reading habit. Let’s break down the math to see whether you plow through enough books regularly to justify the cost.

At $9.99 per month, Kindle Unlimited costs about $120 per year. E-books on Amazon can vary wildly in price, from $0.99 to hundreds of dollars. During 2013, e-books on the Digital Book World best-sellers’ list mostly sold for between $7 and $8 on average (the price in the most recent recorded week in 2014 was $7.52). If we say that the typical e-book best-seller costs $7.50, a customer would need to read more than 16 books per year to derive a greater value from Kindle Unlimited than buying the books individually.

This doesn’t necessarily mean avid readers should dive head-first into Kindle Unlimited. Customers lose access to Unlimited’s library of books if they end their subscription, whereas readers can typically hold on to purchased books forever. Also, books from major publishers such as Penguin Random House, HarperCollins, Simon & Schuster and Hachette so far don’t appear to be part of the service.

Think of Kindle Unlimited more like Netflix, which has a spotty selection of movies for its streaming library (especially during its early days) rather than Spotify, which typically gets new album releases the same day they go on sale in physical stores. Either way, Amazon is offering a 30-day free trial of Kindle Unlimited, so you can test your binge-reading capabilities before committing to pay for the service.

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