BACK TO ANALOG: NICHE NOSTALGIA OR THE NEXT VENTURE SUCCESS STORY?

“Sooner or later, everything old is new again,” wrote Stephen King. His simple view of the cyclical nature of trends, tastes, and even technology typifies the current resurgence of decidedly un-digital pastimes and pursuits, which together represent a trend that we, here at Beringea, are tracking closely.

Over the past few years, there have been countless analog icons that have experienced a popular renaissance. Film cameras, vinyl, board games, typewriters and bound books have all been remarkably successful as consumers around the world ditch digital and embrace analog.

There are several reasons why people have shifted back towards these nostalgic products and experiences. Many are frustrated with the feeling that technology has pervaded every corner of our lives — the idea of a digital detox has become commonplace, and hobbies that enable us to break out from behind the screen can provide a welcome respite.

However, I would argue that the primary driver of this ‘back to analog’ trend is a basic urge for people to touch and to feel. We have arguably been robbed of these tactile experiences by the rise of digital technology — the tap of a touch screen is simply never going to replace the click of a camera lens or the clack of a typewriter.

Credit: Instagram.com/Pokk2824/

The vinyl revival is one of the most prominent examples of the widespread renaissance of apparently outdated and outmoded technologies. Vinyl is so popular that The Recording Industry Association of America estimates that during the first half of 2018 for every $1 of Vinyl albums sold, only $1.2 of CD albums were sold, and $1.3 of digital albums were downloaded.[1]

Clearly, we are consuming more music online than ever before — the total number of music streaming subscription in the US rose by 42.4 percent in the same year. However, this shift back to an analog format is worthy of attention from entrepreneurs and investors alike. It is evident that a backlash against digital technology and a desire for tactile experiences is fueling a global consumer trend across a range of verticals.

Board games is another analog, social and tactile pastime that has seen a huge revival, evident with the recent acquisition of Asmodee, maker of Settlers of Catan, Ticket to Ride and Takenoko, a strangely popular game that involves feeding a Panda, for over $1bn.

Photography has similarly long been an industry marked by a digital transformation. You only have to look back to 2012 to find the collapse of Kodak, brought down by one of its own inventions: the digital camera invented by Kodak engineer Steven J. Sasson in 1975. And yet, analog film is rising once again as a phoenix from the flames.

Credit: Instagram.com/MPBCOM

I recently took an entirely unscientific survey of the photography enthusiasts at MPB.com , one of our portfolio companies and a leading marketplace for camera and video equipment. Among the substantial number of photographers in the company, more than half shoot primarily with film. While certainly not conclusive evidence that film is back for good, it was clear that many camera hobbyists preferred the tactile experience of old-school film.

As for music production, analog synthesizers made in the early 80s are now often worth many thousands of dollars as enthusiasts search for the warm and nostalgic sound associated with synth-based tracks — check out the Jupiter 8, Prophet 10 and Deadmau5’s track Polaris for a prime example.

For anyone looking to get their hands on a synth, it doesn’t get more tactile than at London Modular, a Hackney Wick shop, specialising in modular synthesizers.

Credit: http://synthmuseum.com/ppg/ppg30001.html image courtesy of Georg Müller, instrument owned by Rüdiger Lorenz

These are increasingly back in fashion, gathering an increased following, with emerging and existing companies producing and innovating in this almost forgotten patch of music history. There is something inherently satisfying in the immediate tactile feedback you get from these instruments, which is hard to recreate on a computer.

Further evidence comes in the form of the rebirth of instant photography. Polaroid, the original icon of instant that went through such turbulence in the 2000’s, is today back selling a growing range of instant cameras, while Fujifilm has had remarkable success with its instax cameras, selling an exceptional 8.5m in the first nine months of 2018 alone.

Paper has similarly shown its ability to fight back against the supposedly inexorable rise of digital. Whether in books or handicrafts, the physical allure of paper objects has been at the heart of a number of exceptional growth stories in recent years.

Papier, a London-based online stationery and card company, has redefined the experience of buying and enjoying personalised, luxury print products. It allows customers around the world to send personalised thank you notes, order personalised stationery, and enable customers to enjoy a warm, personal, and physical touch for the instant messaging age.

A passion for paper has also played its part in the incredible turnaround and revival of companies such as Moleskin and Waterstones. The latter, a bookshop chain on the brink of collapse was facing up to the steady decline of physical books fuelled by the rise of Kindles and e-books. And yet, a diligent and considered focus on the experience of each individual bookshop has brought consumers back in their droves, seeking out the delights of genuine page-turners and culminated in an acquisition by Elliott, the US fund manager.

Making music, crafting stationery, and shooting pictures remind us that, when it comes to creativity, less can very much be more. In Zen and the Art of Motorcycle Maintenance, a student is struggling with her creativity: she cannot write an essay about her town and she cannot write an essay about her street. It is only when her teacher recommends that she focuses on a single brick in a building that she can unlock her creativity and write.

Digital tools give us endless possibilities, but the constraints of analog can in fact unlock creativity. Just check out the YouTube channels of Look Mum No Computer or Red Means Recording to get an idea of how imposing limits on ourselves, for example by not using a computer to make electronic music, can result is some wildly creative results.

Each of these examples demonstrates a yearning for the tactile and the sensory experiences of analog. However, it is worth noting that these are premium products tailored for people with hobbies and passions — digital has certainly won the mass-market battle, but there is plenty of room for creative entrepreneurs and investors to tap into the analog revival. This is certainly no overnight nostalgia — analog is here to stay.

Eyal Malinger, Investment Director, Beringea, a transatlantic venture capital firm

[1] Source: https://www.riaa.com/wp-content/uploads/2018/09/RIAA-Mid-Year-2018-Revenue-Report.pdf