My colleague Thomas Husson and I put together our 2014 mobile predictions. (See Report) One of the key predictions is:
Mobile will sit at the epicenter of mind-blowing exit events. The kernels of activity we saw in 2013 around mobile transactions will explode in 2014.
Those media companies that can't build audiences fast enough to capture spend of the Global 1000 will also look to acquisitions (think $3 billion for Snapchat).
What is mind-blowing is that neither Snapchat nor Instagram had a revenue stream when the bid or acquisition was announced.
In 2014, mobile companies with real revenue streams will go public. King.com (Candy Crush Saga) filed for an IPO with an estimated valuation of $1 billion based
on generating a couple of million dollars a day in revenue. What does King.com do? It monetizes mobile moments by taking advantage of the consumer's addiction to competition.
Mobile is moving so fast that that number is already dated. King started trading publicly on the NYSE Wednesday and part of the release was $1.9B in reported revenue in 2013 - way more than reported 8 months ago.
What happened this week?
1) Intel completed its acquisition of Basis Science - a wearable device - for a reported $100M to $150M. (See TechCrunch, VentureBeat)
King had $1.9B in 2013 gross revenue with the majority coming from Candy Crush.
I first heard of Candy Crush about a year ago. I was on vacation in Germany with my husband. One of my friends – for context, she was a college roommate now a CTO at a Fortune 500 company in Silicon Valley – started chatting with me on Facebook. It dawned on me it was 2 am in California.
Turns out she had worked late and was up playing Candy Crush. I couldn’t get my head around what it was about this game that was keeping her from sleeping, but she explained, “It’s fun. It’s hard. The game keeps changing. It’s always challenging.”
I advised her to go back to sleep, but couldn’t stop thinking about the conversation. The analyst in me had to dig a bit further.
There are a number of publishers with big hits like Candy Crush. The business model for some lies in in-app revenue, which is why “free” downloads want your gender, age, mother’s maiden name and social security number. Others profit from a minority of users who make in-app purchases to do things like purchase more lives, buy weapons (other games), and send gifts to their friends and fellow players. What’s interesting?
1. It’s software on a connected device.
Users are able to continually update and expand the game. They can even personalize it to feed their particular addiction—keeping them coming back for more.
A journalist called and asked me today about the market size for wearables. I replied, “That’s not the big story.”
So what is? It's data, and what you can do with it.
First you have to collect the data and have the permission to do so. Most of these relationships are one-to-one. I have these relationships with Nike, Jawbone, Basis, RunKeeper, MyFitnessPal and a few others. I have an app for each on my phone that harvests the data and shows it to me in a way I can understand. Many of these devices have open APIs, so I can import my Fitbit or Jawbone data into MyFitnessPal, for example.
From the story on 9to5mac.com, it is clear that Apple (like with Passbook) is creating a single place for consumers to store a wide range of healthcare and fitness information. From the screenshots they have, it also appears that one can trend this information over time. The phone is capable of collecting some of this information, and is increasingly doing so with less battery burn due to efficiencies in how the sensor data is crunched, so to speak. Wearables – perhaps one from Apple – will collect more information. Other data will certainly come from third-party wearables - such as fitness wearables, patches, bandages, socks and shirt - and attachments, such as the Smartphone Physical. There will always be tradeoffs between the amount of information you collect and the form factor. While I don't want to wear a chubby, clunky device 24x7, it gets better every day.
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3. 70% of MAU use the service daily (Source: TechCrunch)
4. WhatsApp offers users in Europe, Brazil and other emerging markets (= net new audience) (Source: Gravity/Techcrunch)
5. Nearly 200 minutes of usage each week (Source: Mobidia)
6. Facebook gets how to monetize mobile through paid advertising without wrecking the user experience. (In Q4 2013 they crossed over from 49% of revenue from mobile to 53% from a base of 945M mobile monthly active users) Source: Facebook, TechCrunch
Why $16B to $19B? I am not a financial analyst, but here are a few thoughts:
- Facebook generated $1.37B in mobile revenue in Q4 2013 on a base of 945M users ... annualized that is $5.80/MAU (monthly active user)
- WhatsApp already generates $1/user for a chunk of their users through a subscription fee (less fee to app store?)
- If WhatsApp users can be monetized at the same value, that adds another 50% approximately in mobile ad revenue
- Facebook reported 914 minutes of use on mobile per month in 2013 (Source: allthingsd.com)
Finally - some sensible entrepreneurs. I love it. Viber draws a stark comparison to the owners of SnapChat that turned down $3B not long ago ... and they had far fewer users. With $900M for 300M subscribers, perhaps we are now seeing the market price. (Viber brings Rakuten 300M subscribers according to this Reuters article.)
Why did Rakuten want the platform? I'll offer a few ideas:
- Companies need to embrace the mobile mind shift and engage consumers where they are and how they want to be engaged. Today and increasingly so - consumers expect engagement on their mobile devices, whether they are shopping or seeking customer service. Companies need to be present in those moments when consumers reach for their phones.
- Viber isn't simply an app. It may have started as an app, but like so many others with aspirations ... it has transformed from an app to a platform. I may not need 200 apps on my phone. I may not want 50. Not every brand will earn a spot or be able to manufacture a mobile moment with me through an app on my phone. Brands are going to have to "borrow mobile moments" by engaging with consumers on third party platforms. Consumers need a messaging or communication app, a mapping app, and what else? The question is: how long will this list be.
- Audience size matters. Everyone says, "oh, we could just go build this ourselves." But it takes a special app to get several hundred million users. I can't even count the number of social media/messaging apps that I have downloaded, used 2-3 times and abandoned because the size of the community was too small. Consider also that these apps draw up to a couple of hundred minutes of usage a week.
I had the opportunity to talk to nearly 50 companies working on mHealth and mWellness services and technologies in 2013. With the perspective of 13 years as a mobile analyst behind me and a career in telecom that started in the late 80's, I say with confidence that this category within mobile is more exciting and has the potential to be more game-changing, than anything since the introduction of the iPhone. Most of you reading this blog are not in healthcare - that's why the report offers a WIM (what it means) for industries outside of health and wellness.
I started this research journey with a simple mission: "what mobile engagement tactics can and do change consumer behavior?" Or, in other words, what gets people up off the couch? Is it competition, community, feedback, encouragement or coaching, a poke, or what?
How did MyFitnessPal facilitate more than 100M pounds of weight loss?
How did RunKeeper get their users to move 783 million miles?
How did Strava motivate their users to move 1.4 billion kilometers?
Facebook will launch its new Paper product on February 3. The questions I have been asked are, "Why?" and "Should we be thinking about multiple apps rather than one large app?" Both good questions.
The first question -- I can only take a shot. Facebook, like many other media properties, depends heavily on advertising for revenue. To get advertising, you need eyeballs. More and more minutes per day are spent on mobile phones. Consumption of news, information, and media generally tops the list behind communication. Consumers also expect highly curated experiences on small screens that can be more challenging to navigate. At first glance, the Paper user interface and experience looks to be quite elegant.
It always makes me smile to see a product or app launched that takes a mobile first-approach. From the short video that was released, you can instantly tell that they didn't start with a web experience and think, "How can we strip this down and put it on a small screen?" They appeared to have done ethonographic research -- to watch and observe how people engage with their phones and consume information through the course of the day (e.g., the unfolding of the newspaper). This is one of the best practices in mobile design -- understand the needs of consumers on the go. Companies must ask, "What are those moments during the day when someone reaches for the phone to access information or a service?" Forrester calls them mobile moments. Companies must be ready to serve customers in those moments.
My colleague Thomas Husson (Marketing Leadership) and I teamed up again to identify the most impactful and new mobile trends for 2014. (See the full report here.)
You might ask, "how does one decide what are going to be the big trends?" Good question. For me, there are several points of input. In 2013, I had the opportunity to interview close to 200 companies in the course of doing research for Forrester's next book, The Mobile Mind Shift, as well as for my own research. I spoke to some of the best and brightest enterprises (e.g., retailers, hotels), technology companies (e.g., sensors), and vendors in the United States, Europe, China, Australia, India, Japan, Korea, Canada, and beyond. I had the opportunity to do field research in China and Korea - to walk the streets, visit stores, observe consumers and interview executives about one of the most exciting mobile markets in the world. More than 40 of the interviews were in the exciting space of mobile health and wellness. Thomas and I surveyed several hundred mobile executives. I also collaborated with Thomas who has incredible breadth and depth of knowledge of Europe.
We talk about the mobile mind shift at Forrester Research -
"The expectation that I can get what I want in my immediate context and moments of need."
Mobile gives us unprecented control over more things in our lives - our schedule, our commute, our thermostat, our finances, etc. Mobile also gives us confidence we need - whether it's knowing we'll be on time or that there is enough money in the bank to cover our next purchase.
I've been connecting stuff not only to get a sense of what works and what doesn't or what is a good experience and what is poor, but also to get a feeling for how much control I get, how I change my behavior, how much more confidence I feel in making decisions and so forth. I've been wearing fitness wearables for almost two years. I'm also collecting data to see what I use, how I use it, what is useful, etc. My dog now wears a pedometer. (More later on that). My husband has one. My friends do.
So - my latest experiment is putting a tracker on a plant - no, not to see where it goes, but to check its health and allow it to talk to me - tell me what it needs.
I'm not sure if the experiment will go much beyond this first week so I'll post some images now.
CES was this past week - look to my colleague's Frank Gillett, JP Gownder or Michele Pelino for more on wearable technology.