Awesome stats on social game purchasing September 23, 2009Posted by jeremyliew in virtual goods.
1 comment so far
Andrew Chen has a guest post from Gambit that breaks down who is buying virtual goods and how much they are buying.
The summary is that while teens spend substantially less per capita than people older than 20, they more than make up for it in volume. Read the whole thing and see the pretty charts here.
Notes from my keynote at Engage Expo Virtual Goods conference today September 23, 2009Posted by jeremyliew in games 2.0, virtual goods.
1 comment so far
Virtual World News has some notes from my keynote today at the Engage Expo Virtual Goods conference
You know it’s a recession when porn sales are down September 14, 2009Posted by jeremyliew in porn, recession.
The Economist notes that the pornography industry is going through hard times:
Most of the industry consists of small private production companies whose numbers are secret, but Mark Kernes, an editor at Adult Video News, a trade magazine, estimates that the American industry had some $6 billion in revenues in 2007, before the recession, mostly in DVD sales and rentals and some in internet subscriptions. Diane Duke, the director of the Free Speech Coalition, the adult industry’s trade group, thinks that revenues have fallen 30-50% during the past year. “One producer told me his revenue was down 80%,” she says.
It’s not just the recession though. Pornography is going through the same structural shifts that are putting music, video print and other content companies under pressure:
Piracy is the main problem. And the internet, with its copious free clips, is an increasingly viable alternative to the paid stuff. Pornography in general has become “like potato chips, everywhere and cheap, to be consumed and tossed,” says Ms Hartley. It’s not the same as in the golden age when she joined. “The industry will shrink and stay shrunken,” she reckons.
Not to mention the threat of user generated content…
Simplicity is always a disruptive innovation September 10, 2009Posted by jeremyliew in economics, games, startups.
Disruptive technology and disruptive innovation are terms used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically by being lower priced or designed for a different set of consumers.
Disruptive innovations can be broadly classified into low-end and new-market disruptive innovations. A new-market disruptive innovation is often aimed at non-consumption (i.e., consumers who would not have used the products already on the market), whereas a lower-end disruptive innovation is aimed at mainstream customers for whom price is more important than quality.
Disruptive technologies are particularly threatening to the leaders of an existing market, because they are competition coming from an unexpected direction. A disruptive technology can come to dominate an existing market by either filling a role in a new market that the older technology could not fill (as cheaper, lower capacity but smaller-sized flash memory is doing for personal data storage in the 2000s) or by successively moving up-market through performance improvements until finally displacing the market incumbents (as digital photography has largely replaced film photography).
I was recently talking to Trip Hawkins, CEO of Digital Chocolate, and he made the claim that simplicity and ease of use aimed at non-consumption is always a disruptive innovation that threatens incumbents. I think he is right. Some examples include the Flip, which disrupted consumer video cameras, and blogging which disrupted content management systems. Trip was talking about the rise of social and iphone gaming as the equivalent disruptive innovation that was causing non gamers to play games. Definitely something that incumbents need to watch.
One of the most exciting trends in e-commerce over the last couple of years has been the trend towards “shopping as entertainment”. Traditionally e-commerce has been a chore type activity. Customers know what they are looking for (a digital camera, a new laptop) and are looking for the best product and best price with a very “research” based mindset.
This is quite unlike the real world, where a customer might walk around a mall without any particular purchases in mind, and perhaps opportunistically buy something that caught their eye in their wanderings. There is no real “intent to buy” in a trip to the mall. It is more like entertainment time which may, or may not, lead to a purchase.
We’re starting to see this sort of behavior online as well. Swoopo and Gilt are two companies that are enticing consumers to come and check out “deals” without any particular intent to buy. They are injecting the entertainment factor into e-commerce. The Economist discusses the success of Gilt, Rue-La-La and HauteLook in particular:
THE racks of expensive gowns and shoes sit, serene and mostly untouched, on the floors of Saks Fifth Avenue, Bergdorf Goodman, Bloomingdale’s and almost every fancy department store. In a sign of how consumers’ newfound thrift has hurt luxury retailers, Saks Incorporated, the parent company of Saks Fifth Avenue, recently announced losses of more than $50m in the three months to July. Sales are down more than 20%. The recession, it seems, has spelt an end to Americans’ appetite for luxury—at department-store prices, at any rate.
Yet luxury e-tailers, which sell designer goods online at discounted prices, are flourishing. The slowdown has actually helped them, simultaneously producing seemingly endless supplies of unsold inventory and forcing consumers to tighten their belts. That has let American e-tailers such as Gilt Groupe, HauteLook and Rue La La, and their French rival Vente-privee.com, sell last season’s designer apparel for as much as 80% off the original price.
But low prices are not the websites’ only allure. Their sites are open only to those who have received an e-mail inviting them to join from another member. This lends them an air of exclusivity and creates the sort of buzz marketers crave, says Adam Bernhard, the boss of HauteLook. The sites also put new items on sale at the same time every day for a limited period, usually no more than 24 hours. That makes shopping an urgent and competitive daily activity for many members. (Cleverly, the sites do not say how many items of each size and colour they have, so customers feel even more pressure to buy right away, lest they miss out on the last pair of size 37 hazel Jimmy Choo pumps.)
Designers, for their part, can use the sites to get rid of stock quickly and discreetly, sparing them the disgrace of seeing their heavily discounted products lingering on sale racks in full public view. Most consumers do not even know which designers are available through luxury e-tailers until they become members. The sites shield themselves from search engines, so they do not pop up in response to online searches for the brands they offer. That has encouraged grand firms like Cartier to sell their wares through them.
The Economist notes that RueLaLa started in 2008 and expects revenues this year of around $130m, and that Gilt started in 2007 and expects $400m in revenue next year. That is remarkable growth. Compare this to Zappos which was started in 1999 and took 6-7 years to reach those gross sales levels:
These companies are rapidly growing beyond the US and beyond women’s apparel. The Economist again notes:
Rue La La recently launched an iPhone application to make it easy for members to make purchases while on the move. It has also started selling wine, spa services and travel packages in addition to clothes. Vente-privee.com has even sold yachts and apartments…
E-tailers are also looking to expand geographically. Vente-privee.com has operations in Germany, Britain and Spain as well as France. Gilt recently launched a site in Japan that has over 200,000 members.
This opportunity is not lost on other companies in the value chain. Retailers like Neiman Marcus, financial institutions like American Express and even fashion magazines are all offering limited time deep discount sales to their members and customers now. Companies like Shopittome are re-aggregating sales for consumers.
I’m very interested in watching how this space develops. Do readers know of other interesting trends in entertainment shopping?
Are there more Facebook status updates or Twitter tweets? September 4, 2009Posted by jeremyliew in facebook, twitter.
Facebook says that more than 30m people update their status at least once per day. So there are at least 30m status updates a day, and likely some multiple of that – perhaps in the order of 45-60m status updates.
Tweespeed suggests that there are around 1m tweets per hour on average over the last week, so that is around 24m tweets per day. This is roughly in line with the 210 tweets per second that twitpocalypse is estimating in their countdown, which comes out to about 18m tweets per day. But note that these rates are accelerating fast.
Facebook still leads by 2-3x.
But there is a difference in the velocity of posting (tweeting or updating status) between the two user bases. A recent Harvard Business Review post notes that the mean number of tweets per day per user is 0.37.
This includes inactive users in the denominator so the ratio of tweets per active user is going to be higher. Facebook notes 250m active users and 30m people who update their status at least once per day. Assuming 45-60m status updates in total, that is a ratio of roughly 0.18-0.24 posts per active user. Twitter users show a higher rate of posting. So the number of tweets may surpass the number of status updates over the next 12 months if Twitter continues to grow at its historical rate.
Note that Facebook’s feed is full of events other than status updates, so Facebook will likely continue to have many more feed events than there are tweets for a long time to come.
[Thanks to the guys at Adthrow for sharing this analysis with me]