droidcon android, open source & brands
DESCRIPTION
A presentation I gave looking at how brands should use mobile to engage with their users. Given at Droidcon and now with the wonderful font I used... ;-)TRANSCRIPT
Licensing & Open Source
Volker HirschCEOBlue Beck
Droidcon, Berlin - 4 Nov 2009
Who is this guy?Investment Opportunity: Little World Gifts(redefining digital gifts)OpportunityLittle World Gifts offers an appealing investment opportunity for investors seeking significant returns from early stage investment in
high growth markets. Little World Gifts is positioned to maximise returns through creating a new market for digital goods on mobile starting with the iPhone platform with deep web and social network
(Facebook) integration. The opportunity builds on the exciting landscape of the booming (yet still early and undeveloped) mobile
smartphone space, and the potentially enormous (and also early) digital goods space. With extremely low overheads and high margins, the company is set to turn over £2m in year 1, 50% of
which is profit. With a valuation of £2m (Year 1 profit x2), Little World Gifts is seeking £150,000 Angel investment ahead of launch in exchange for 10% equity in the business. This is an opportunity to get involved early in a
dynamic business at the very leading edge of both the digital goods, and the iPhone / mobile 2.0 sectors.
Enormous Market PotentialThe potential market for Little World Gifts is
large now, and growing rapidly. The Digital Goods Market will see exponential growth in
coming years, and whilst iPhone already has a strong customer base of content hungry consumers (70% of customers pay
on average $80/year) for content in the iTunes App Store), smart phone usage is set
to increase dramatically. Little World Gifts will be on 50% of smart phones by 2014.
Growth in Global Mobile Marketing SpendIn addition there is an increasing demand for mobile marketing
and for digital goods solutions (as a key part of a digital marketing strategy). Mobile will be more appealing and attract
increased marketing spend by brands. ($5.7bn in 2014).
Growth in Digital Goods MarketDigital Goods (and specifically gifts) have been popularised by services such as
QQ.com (China), Cyworld (South Korea), and Habbo Hotel and Facebook (Western Markets). The market is set to grow to
$6.5bn in 2013 and Little World Gifts is ideally placed to take advantage of the
interest in Digital Goods on mobile platforms.
2009 2010 2011 2012 2013 2014
$1.70bn$2.16bn
$5.70bn
$2.33B
$4.67B
$7B
2008 2009 2010 2011 2012 2013
USA Rest of World
Private & Confidential. Not for Distribution without Permission.© Copyright Kisky Netmedia Limited http://www.littleworldgifts.com
!
Corporate Strategy - Licensing - M&A / Corporate Finance
Why am I talking about Licensing?
Here it Comes
Q: Do brands care for open source?
A: No.
Brands are platform-agnostic.
Licensing rationale
Developer
License
$$$
How (on earth) do I get a license?
Common Solutions:
2.1.
The Average Licensing Model(Simplified Version of how it was, is and always has been)
• Licensor puts out RFPOR• Developer approaches licensor directly
• Developer manages to get Licensor’s attention
OR• Developer loses...
• The Parties negotiate hard and for weeks (or months) until they reach common ground (which Licensor think is shabby and leaves Developer wondering how to ever repay his debt...
• Developer prepares reply to RFPOR• Developer prepares offer outlining
creative concept and commercial case.
• Developer (or his banker) gets heart attack and pushes back with elaborate explanation on development effort needed.
• If successful, Licensor comes back with huge royalty (“50% minimum!!!”) and MG demands (including sizable up-front payments; “mid-6 figures”).
• In the latter case, go back to
• Developer gets formal design document under way and files for approval.
• Period of negotiations between expensive lawyers over every little term (“best efforts” vs “commercially reasonable efforts”, etc, etc, etc, etc)
• Deal is signed!
• Kick-off meeting between Licensor and Developer: will include creative teams, approval departments, etc. Look for introductions to other licensees as it helps with co-marketing
• Developer waits for approval.
• Licensor approves design.
• See the green star...
• Developer goes ahead. Finalises beta build and files for approval.
• See green star...
• Game is finished and filed for approval.
• Developer looks at roadmap and realises he needs another license
• Developer distributes through his channelsAND/OR• Developer finds publishers and/or aggregators
to distribute it through
• Go back to
Result
1. Lucky 2. Not so lucky
I am not saying that this is a bad game. But it IS a poor use of a brand.
This game delivered on brand value, execution and commercial success.
Not very compelling.
Show me the money...
It’s in your pocket...
Just ask the right question!
Catchy phrase inspired by Jonathan MacDonald
BRAND Licensing
Q: What do brands look for?
A: Users.
Users are also commonly known as “customers” or “consumers”
Sell or Else...
David Ogilvy
BRANDS...
• Sell Services & products.
• Promote their Image & Message.
• Open additional revenue streams...- Licensing!?
Licensing is NOT core!
Media vs Non-Media Brands
Non-media (e.g. VW, P&G, Carling): extend their brand and image.
Media (e.g. FT, Hasbro, Fox): (also) building additional verticals.
How can you help them?
The right question:
Here’s your Pitch:
Use Media to Extend Reach!
Digital media advantage vs analogue media:
interactive, i.e. multi-directional.
Use Mobile to Extend Reach!
Mobile is the most powerful digital medium to date.
Why?
1.It’s Big (numbers)2.It’s Personal (nature)3.It’s really personal
(Identification of needs)
1,500,000,000
4,600,000,000
1,700,000,000
2,250,000,000
Number of Internet users
Number of credit cards
Number of tooth brushes in use
Number of mobile phone subscriptions
480,000,000Daily global circulation of newspapers
The Nature of Mobile: It’s a 1st!
• Personal mass media• Always carried• Always on• Built-in billing system• Always present at the point of creative
impulse• Accurate audience identification
Tomi Ahonen, Mobile the 7th Mass Media, 2008;Alan Moore & Jonathan MacDonald, The Glittering
Allure of the Mobile Society, 2008
Significance of Mobile to Users...
• 91% of people have their mobile within arm’s reach 24/7.
• 64% of Americans are not willing to share their mobile with anyone. 60% of married people will not share their mobile with their spouse!
• I takes an average of 26 h for a user to report a lost wallet but only 68 minutes to report a lost mobile phone.
Morgan Stanley 2007
Unisys Survey
Wired Magazine 2006
• 8 out of 10 German men would rather lose their wife than their mobile phone.
Jonathan MacDonald; Survey of 10 German men at 1am in a bar...
... and how Brands use it...
• In 2008, Procter & Gamble spent 0.17% of their advertising budget on mobile.
• Volkswagen spent 1% of their DIGITAL budget on mobile (that was 2008...).
Informa/Acision/OgilvyOne
VW CRM Manager cited by Andrew Grill
BUT
Volkswagen also just announced that the ONLY campaign for the 2010 VW Golf GTI will be an iPhone Game (“Real Racing GTI”)... Quick learning!*
* This is autumn 2009
(c) gapingvoid
Change the Language...
Engagement!
• Engage, don’t lecture.• Be Sincere. Mean what you say.• Result: users become brand ambassadors.
No Fine Print+YOU!
Engagement!
• Games & apps are perfect for this!- Interaction.- Less intrusion.- Brand takes centre stage: shine!- Love it, recommend it.
74% of all purchases are made because of recommendations by friends!
Bain Consulting
Old World vs New World: It works now.
176x208 J2ME games Current-generation iPhone games
011001101011010011001001001001010011001001110010101010111001100110101101001100100100100
01100110101101001100100100100
01100110101101001100100100100
01100110101101001100100100100
01100110101101001100100100100
01100110101101001100100100100
01100110101101001100100100100
101001100100111001010101011101010011001001110010101010111010100110010011100101010101110
10100110010011100101010101110
10100110010011100101010101110
10100110010011100101010101110X
Brands’ and Users’ Perspective: Shine, not tech talk.
vs
Where’s Android?
Damn’ it! This all smells of iPhone!
(c) gapingvoid
It’s here:Well, it COULD be here (if the Open
Handset Alliance executes well).
Let’s ask again:
Q: Do brands care for open source?
A: Yes.
123,296,966,069,999,387,456
The Law of Big Numbers
This is why:
How Android apps compare (1)
Distimo, CTIA San Diego, 2009
APPS AVAILABLE
88,000
12,0002,900
Apple Android BlackBerry
FREE AND PAID
Apple App Store
Google Android Market
BlackBerry App World 76%
36%
77%
24%
64%
23%
Free Paid
Total # of apps Paid vs Free
How Android apps compare (2)
Flurry Analytics Blog, 6 Aug. 2009
Android is set to explode.Eric Schmidt, CEO Google
Inspiration!
$
t
Android’s Weapon
OPEN = Infinite scale!
Platforms
Vendors
The Equation:
Brands want users.+ Users want good stuff (and don’t care if it
is open/closed, widget/app, this/that... as long as it works)
+ Brands want big numbers.+ Android has (OK: will have) big numbers.+ Android can deliver kool-aid.
= Great Opportunity for Brands
(= $$$ for Everyone [incl. Developer])
Summing up:
• Engage, don’t lecture. • Treat licensing as a brand extension, not
as a (presumed) means to sell 0.x% more.• Forget tech-heavy preaching. Just deliver
compelling stuff to your users.• Deliver it in big numbers.
Got all that? You have a winner!
BTW: Winner means that the user wins! The rest (incl. $$$) comes then almost on its own...
Image & Video Creditshttp://www.explodingdog.com/drawing/ihavenoidea.jpghttp://1.bp.blogspot.com/_Vr8Xl0cbUZA/SVJzaekjMQI/AAAAAAAAFWU/gvOyNNzcdis/s400/Image+%3D+clueless+is+no+excuse.jpghttp://www.mtco.com/~rkblack/Open-Door_0032a.jpghttp://filmgordon.files.wordpress.com/2009/03/conneryaston.jpghttp://www.gapingvoidgallery.com/images/talkedjgif002.jpg http://www.iphoneincanada.ca/wp-content/uploads/2008/07/carling_ipint.pnghttp://www.mobileshop.com/blog/wp-content/uploads/2008/10/ipint-virtual-beer-under-fire.bmphttp://farm4.static.flickr.com/3250/3074199062_f434be862a_o.jpghttp://miraloqueveo.files.wordpress.com/2008/09/david-ogilvy.jpghttp://www.nationalserviceexpress.com/mogulus-user-uploads.s3.amazonaws.com/B6A8222A-4B39-2BD5-CF85-179823589EF8.jpghttp://gapingvoidgallery.com http://nexus404.com/Blog/2009/10/23/2010-volkswagen-gti-presented-in-iphone-game-play-firement-real-racing-and-win-a-2010-vw-gti-exclusively-on-the-iphone/http://www.toptenreviews.com/i/rev/misc/articles/old_blog/blog_963_1.jpghttp://www.iphonic.tv/assets_c/2009/07/barclaycard-waterslide-extreme-1-thumb-430x285-92255.pnghttp://www.oneighturbo.com/wp-content/uploads/2009/09/01-oneighturbo-sciroccoR-iphone-091509.jpghttp://media.photobucket.com/image/papa%20roach/crazyOAgirlFERlife/Papa_Roach.pnghttp://www.youtube.com/watch?v=dPYM-XTqcechttp://markhirschfeld.files.wordpress.com/2009/08/open-door1.jpghttp://www.freeverse.com/assets/games/9003/screenshots/456/174114905.jpghttp://www.firemint.com/realracing/screenshots.htmlhttp://i264.photobucket.com/albums/ii187/botvinya/worker_mechanic.jpg
Thank you!
@vhirsch
http://vhirsch.com/blog
+44 7843 599 678
http://bluebeck.co.uk