The Fall of TV, Apple Pay, 6% Whales, and Facebook’s (latest) Fail

“More revolution will come from smartphones than from any previous computing product in history. It’s because of this that we will see a future with one billion more people online, a future only made possible because of mobile.” –@BenBajarin

TV: The King has Fallen

Last week we talked about the incredible growth mobile internet has and will experienced over the coming decades. But sometimes human statistics don’t express the true impact of mobile’s increasing dominance in our world. The World Wide Web was only made available to the public in 1991. 23 years later, the Web is de rigueur and it’s hard to imagine life without it.

Mobile apps are still comparatively new media (the first app was only released in 2008), and their impact in a mere six years can’t be overstated. But as amazing as it seems, mobile apps have now taken the place of television in the pantheon of our entertainment. “time spent on mobile devices grew in the US by 9.3% – from 2 hrs and 42 minutes to 2 hrs and 57 minutes – in the past nine months. That is almost 3 hrs per day spent on mobile devices by the average American consumer, while time spent on TV has remained flat at 2 hrs and 48 minutes daily, according to the US Bureau of Labor Statistics.” As Simon Khalaf succinctly put it, “Mobile and apps are gobbling up the web and consumer Internet, and that’s where the opportunity is.” With increasingly robust content available to mobile subscribers and larger, more sophisticated screens, we imagine this trend will continue exponentially over the coming years.

Cash, Credit, or Mobile? 

Mobile payment methods aren’t exactly a new idea. As early as 1997, Coca Cola was offering payment-via-text-message at vending machines, and any device capable of RFID has the potential to conduct contactless transactions. As the technology has matured, so have the capabilities, but nonetheless companies like Google (who released Google Wallet in 2011), PayPal, and AT&T have floundered in the world of mobile payments. It would seem, though, that with the introduction of the game-changing Apple Pay, Apple once again is leading the pack with others eager to follow. Research firm Forrester predicts that by 2019, mobile-based payments in the United States will reach $142 billion in volume. Tim Cook called Apple Pay the “card-killer”, and what may have sounded like just a PR soundbite is very, very quickly turning out to be true.

And though Near Field Communication is used in everything from gaming to bootstrapping WiFi, the rest of the world is about the know it best as the thing that helps them get through that Whole Foods line a lot more quickly. Meanwhile, freshman Bitcoin still waits on the bench.

We Are the 6%

Mobile games (especially free-to-play games) are staggeringly successful by any measure. And while makers aren’t exactly transparent with their profit margins, we do know that the wildly popular (and terribly addictive) Clash of Clans reported a 2013 revenue of $829 million. But, I’ve never spent any money on a mobile game, so where’s this coming from? Ok, maybe I have spend a few on free-to-play and I lie to myself and call it “research.” Nonetheless the statistics bear out that the vast majority of players aren’t giving in to the myriad enticements these games throw their way. Gamesindustry.biz reports that a mere 6% of players account for 51% of the profit of mobile games. That means that the heavy-spenders (“whales” in gaming parlance) are dropping an average of $293.70 per year on their habits. That might not seem like much, but multiply that by the 58% of Americans who play mobile games, and the numbers add up faster than the deaths you’ll rack up in Dead Trigger.

So while the money largely comes from the whales, it’s still clear that the formerly maligned “casual gamer” is of huge importance to mobile game marketers. That other 94% is increasing their daily game time year by year, making it more likely that those percentages will shift, and even the die-hards will give in. Eventually. So how do free-to-play games make us do it? We researched why, and here’s the scoop.

Wait. Facebook Isn’t Organic??

It’s hard to imagine that after the Facebook mood manipulation debacle people still trusted that Facebook was a totally organic social experience. The social network once prided itself on being a free space for awkward reconnections with high-school chums, a platform for discourse on everything from religion to cats, and a place for business to promote themselves. But now they’re hitting those businesses pretty hard. It used to be that Facebook sold businesses on the idea of trying to get page likes, ostensibly giving them more organic reach to their target customers. Facebook has promoted advertising products like pop-up ads and interstitial ads that appear in users’ news feeds, and in the third quarter of this year, Facebook reported an increase in advertising revenue to $2.96 billion.

But wait. Now that advertisers have spent time and money building their consumer communities, Facebook is changing the rules of the game. Starting in January, Facebook will change the rankings of sponsored posts, making them less visible in the news feeds of its 1.35 billion global users, reducing an ad’s reach to between 2-8% of its target audience, and essentially forcing businesses to purchase ads to keep up visibility. While this may not be the slap in the face to retailers that it seems (Facebook claims, and we’re inclined to believe them, that this is in the interest of giving users the news feeds they want rather than the newsfeeds companies pay for), it’s certainly going to lead to some angry advertisers and maybe more than a few dramatic break-up letters.