Enduring Entertainment — A Mobile Opportunity is Brewing
There is a native mobile space that is becoming increasingly interesting… one where highly gamified utilities with social underpinnings and social games with user-generated content and people-driven outcomes yield perpetual value.
No, not social games like Zynga’s FarmVille, where you can send friends seeds for their crops, or King’s Candy Crush, where you can send friends extra moves.
I’m talking about experiences where people and the content they produce are the action, where the content is always fresh. And, if done properly, intended network effects and/or marketplace dynamics take hold and create strong barriers to entry.
And while apps like Foursquare’s Swarm, where the utility of place discovery is highly gamified, are interesting and were ahead of their time, they aren’t entertaining enough. Whether you come from the utility, social or gaming side, we believe the industry can go way deeper. We can create more entertaining experiences, and more importantly, provide both obvious and unexpected value that is truly enduring… even addictive.
Aside from longer lifespans, a second reason this area is compelling… higher average revenue per user (ARPU). While it’s widely known that gross revenues in entertainment-based categories like gaming and social are growing fast, with IAC/Match’s Tinder and Miniclips’ Agar.io raking in cash, revenue per head in these categories still has a long way to go, even in the more mature gaming category.
“We’re not anywhere close to peak mobile.” — Neil Young, EA/DeNA
Watch the full video where Neil talks about how ARPU has plenty of upside in the gaming category.
However, this is just a drop in the blue ocean. When blending entertainment and utility value, we’ll be in a place where in-app purchases that are increasingly subscription-based, intent data and lead generation revenues dwarf ad network and native ad revenue. Plus, not only do IBM Watson and other artificial intelligence (AI) machines need to eat data to get smarter, but so do data management platforms (DMPs). The blended utility + entertainment consumer experiences not only have the highest data throughput as a result of high user engagement, but they add context which is increasingly critical for AI processing and ultimately increases the value of that data.
When we effectively blend entertainment and utility value in new mobile experiences, we’ll see in-app purchases that are increasingly subscription-based and increasing revenues from intent data sales, affiliate and lead generation.
A final trend that makes this developing opportunity interesting… native consumer apps and games are no longer hot with VCs. A major complaint from VCs is that native distribution is hard. Wait, isn’t that a bad thing!?!? Nope. This results in less money sloshing around inflating install costs. Plus, add in more supply with the new App Store search and the ability to market through influencers, and cost per installs (CPIs) decrease.
There may be a multi-year window to capitalize on audience development at low costs before the macro movement of brand budgets to more performant media. And when those dollars move to performant media, they will move to the places where consumer intent is the highest, can be measured and that have the strongest engagement mechanisms… aka “enduring entertainment” or “utilities that are highly entertaining”.
See how developers, brands and publishers talk about the macro marketing change coming:
From a developer’s angle, watch Machine Zone’s CEO freak out a room of media people as he talks about the inefficiencies in performance marketing — from an interview at Code/Media 2016
Stratechery’s Ben Thompson does a nice job explaining the evolving phenomenon in the advertising space from a publisher’s and brand’s perspective.
A ton of good stuff from him, but start with his video on aggregation theory:
And his podcast #84 on A New World Order (thanks for the recommendation Dave Knox):
Bottom line… from a financial perspective, this “enduring entertainment” category is relatively untapped with higher retention, higher ARPU and decreasing acquisition costs. From an altruistic perspective, it’s an opportunity to create meaningful value. It’s now beyond obvious that mobile is massive, but what is less obvious is that lighter-weight experiences are the way into the hearts of a global population, and the utility that comes from well-crafted experiences will yield significant financial value for the industry and immense meaning for consumers.
How can we start solving problems in both an entertaining and enduring way…
- Help people meet each other in real-time in both an authentic and lighthearted way while building an enduring value/belief graph?
- Help people earn some extra cash while becoming more financially literate by picking stocks in companies that produce products and services that they love (see Peter Lynch’s classic ‘One Up on Wall Street’)?
- Help people find new movies to watch by instigating some competition and a natural connection between people with similar tastes?
Most importantly, if you’ve got a better name than “enduring entertainment” or “entertaining utilities” for this category, we are all ears.
- Dan Kurani, dan@foundermark.com
P.S. We have a few things brewing in this “enduring entertainment” space. We’re experimenting with a few internally-built products, like Fliko, Photodrop and Friended, and partnering on products like Vestly with forward-thinking companies that have extremely deep vertical expertise in areas like finance. Please try them and stop by Foundermark to let us know how to make them better.
