Virtual Reality & Facebook
This has been a busy week for deals and flotations. Each of which has some significance for brands. The one with the most press is the Facebook acquisition of Virtual Reality headset maker Oculus. Shelling out $2bn – close after the WhatsApp deal – has unnerved some on Wall Street with the stock price now 18% off its high of 72 which was reached a few weeks ago.
“Mobile is the platform of today, and now we’re also getting ready for the platforms of tomorrow,” said Facebook founder and CEO, Mark Zuckerberg. “Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate.”
It’s clear that Virtual Reality has the potential to change how people play games and experience content but the time when Daft Punk style headsets will be commonplace is some time away. So we don’t see this as a really significant move – at least for brands – right now.
(Some other news was revealed on the Investor call about the Oculus deal – Facebook now has 1 billion mobile users – and Instagram has 200 million users.)
Disney & newTV
Disney bought Maker Studios for almost $1bn – so one of the oldest brands in TV has bought one of the youngest. Maker have around 55,000 different channels on YouTube and this is a good guess at why they have made the deal – talent, product promotion, new types of ad deals and preparing for Cord Cutters.
In London this week the Disney TV President Anne Sweeney talked eloquently about TV content becoming immersive more fully interactive and on demand via the internet – and says all these things are being worked on right now. Well worth watching the full video.
Doing some research around football and video, we looked at the key players on YouTube; Sky has 53K subscribers and ESPN has 12k. But the biggest YouTube channel focused on football, in terms of subscribers, is Copa90. One of the new channels to emerge with from producers partnering with YouTube Copa90 has 562k subscribers.
Add Chromecast the mix and, to paraphrase Disneys’ Sweeney, there is a Creative Transformation happening in newTV.
The other significant moves were in gaming. UK success story King IPOd giving the company a value of $7.6bn – although the share price dropped over the first days trading . This reflects concerns that the company is too dependent on Candy Crush – which accounts for nearly 80% of revenues
An interesting look at the numbers says;
So the question boils down to can King hold on to existing users and keep them spending. I would argue that other, similar games, like Clash of Clans from SuperCell, have proven that they can do this. It is getting very hard (and expensive) to launch a new title in mobile app stores. Consequently, the longevity of existing titles is improving somewhat. This speaks to the way in which the App Store model has some serious flaws, but does provide something of a moat protecting Candy Crush.
This is a really good look at the King story and what it can teach other British entrepreneurs from VC Christian Hernandez.
The other interesting deal is in Asia. Continuing our interest in BAT (Baidu, Alibaba, Tencent) we thought the Tencent purchase of a stake in Korean game company CJ Games was interesting. At $500m for 28% this is a big deal. It’s another layer in their Vertical Stacks but given that gaming can inspire so much loyalty can we expect GAFA to be more explicitly involved in games?
They are all making lots of money indirectly from games – largely through sales and advertising (see below for a look at Facebook and app installs)
We think that content will increasingly be used as a differentiator for platforms and devices, so could Google or Apple transplant the games that are big in Asia over to the West? Given how successful Flappy Bird was, it’s clear good games can work in different cultures. So could someone import a big game from Asia and make it only available on their platform? Or could a Samsung – or a Huawei – preload a hit game to help sell their devices? Or could a smart brand license an Asian game and introduce it in the West?
Intel made a big deal about wearables at CES this year and have followed through with the purchase of BASIS for $100m. The other big news in wearables was the deal that Google struck with Italian sunglasses giant Luxottica – the maker of Ray-Ban, Oakley and Persol. It is vital that Glasses avoid the Bluetooth Headset prejudice and getting this talent on board should help.
5 things you should do before thinking about VR.
The Oculus deal is interesting, but we think it’s going to be about gaming and home entertainment for the foreseeable future. And whilst your Agency’s Digital Prophet ( they all have one but few with haircuts this bad) may want to demo this in the Agency lab, there are probably better things that you could be focusing on.
Whether you subscribe to the McKinsey 80/20 rule for boosting the return on marketing investment or the 70/20/10 model Coke use to drive innovation, we believe there are lots of ways brands can unlock real value, right now.
* Make sure you are really FitforMobile – with mobile optimized sites for all your brands and a mobile approach on search, social and email
* Identify the top 5 YouTube channels covering the content areas your brand has an interest in and start a discussion about how you might collaborate. For example there are huge opportunities for smart product placement in these channels.
* Review how you are getting the most from GAFA – getting search and social right, understanding what Apple products you could experiment with (Passbook is on millions of peoples home screens) and looking at whether your brands could be sold through Amazon.
* Audit the integration between the different strands of your marketing- how could mobile add an extra dimension? Add Shazam to your TV and/or develop a Two screen search strategy. Test what happens if you use AR and QR codes cleverly in your press ads. Use responsive creative so your digital ads are perfectly optimized whatever screen they appear on.
If that sounds a little dull, look at what the smartest Brands are doing and saying. The partnerships that Start Ups that Mondelez have pioneered bring in companies across mobile and digital with solutions that can solve problem at scale, right now. The same with the Unilever Go Global programme.
All the companies chosen use digital as a tool rather than a toy.
Which, without being rude, is what Oculus is right now. Albeit a rather expensive toy aimed at geeks and gamers.
In the piece on King the author says it is getting very hard (and expensive) to launch a new title in mobile app stores. A big part of this is that the appstores just dont work. Discovery is huge problem. So advertising is the only solution
@ChetanSharma tweeted a comment from M&CSaatchi saying they were putting 50% of their mobile ad money on Facebook but it is getting expensive – and that the only thing that works on Facebook is App installs. He then retweeted someone else saying they put all their ad spend on Facebook app installs – but reach is decreasing and costs are skyrocketing.
More interesting thinking from Mondelez- one of their top marketers thinks the Agency of Record is an outdated concept
The video of the Larry Page interview we mentioned last week is now available. Well worth watching
Ex Googler Hugo Barra talks about Xiaomi in this new interview – their devices will be on sale globally within 2 years.
Some good thinking around Growth Hacking
If you look at every successful marketing story over the last 10 years–Airbnb, Lululemon, and work your way up or down or sideways–all of them are the same. They make something the market wants to talk about. Companies should let the market decide what they make, not the other way around.
More on Cards – the future of user experience
AOL have new tools that they hope will make them then one stop shop for buying digital media. We suspect Google may have something to say about that.
It’s been a while since we have seen a good infographic but this one on the Internet of Things is really good
Finally….We are looking forward to taking part in Adweek next week – speaking on a panel on mobile targeting and metrics, organised by Weve; I am 67% of Female – is that OK?
If you are there come and say hello.