Monday, 22 December 2014

Zynga: is it a good investment?

In December 2013 I started a games studio with 3 co-founders.  I shut down the studio and gave the money back to the investors 7 months later.  There were many reasons for this but part of the reason was that there was little to no appetite for VC money going into games start-ups in the US.  Given Zynga's past few years and King's IPO it's understandable.  That said, investment in gaming companies in Asia continues to go from strength to strength.  Funplus was acquired this year for nearly $1billion by Zhongjii Holdings while companies like Nexon, Tencent and Netease continue to pump money into early stage gaming companies. Ironically, Funplus, started by Andy Zain in 2010 was profitable by 2011 and actually built it's business on the back of four games, one of which was strikingly similar to Zynga's Farmville.

I've been in gaming since 2005 and was part of Glu's (GLUU) European management team when the company went public in 2007.  Much has changed since then including the rise of iOS and Android and the decline of Nokia and Blackberry.  More importantly, the death of carrier distribution and the rise of platform app stores completely changed the distribution landscape and democratized distribution for thousands of game developers.  Now, instead of walking up the yellow brick road and begging the Wizard of Vodafone or Verizon to publish your games you simply upload your games to Google Play and the App Store and hit publish (with the exception of China where you need to work with multiple local app stores like Tencent, Baidu and others for Android).  Coupled with social media, offer walls, Facebook ads, an overwhelming number of tracking / analytics solutions and some smart PR you can build a decent business like never before.  Better yet, with the advent of in app billing which allows developers to make their games free and only charge users for micro transactions, game developers removed a major barrier to entry which was the carriers' insistence on fixed price points.

All this is good and bad news for developers.  It depends on which side of the fence you're on as a developer or as an investor.  But what does this mean if you're Zynga?

Well the good news is that games are not the risky investment it used to be.  Many say that games are like the movie business in that they are hits driven.  While that's certainly true for high budget console games like Destiny it's no longer completely the case for mobile.  Mobile games and mobile games development has become much like software development overall and has now become more like Games as a Service (GAS for those who like interesting acronyms).  GAS means that a games developer can develop a game, put it on one of the app stores and conduct extensive beta testing until they achieve or come close to achieving the monetization metrics they need to maximize the value of the game.  This means that Zynga can generate a fair amount of valuable consumer data by launching a game in a limited number markets, iterating on it and improving the games' features while holding back valuable marketing dollars until the game is fully tested and where it needs to be.  Even once a game is launched, its developer can continue to make tweaks and changes to the game over time while even introducing new levels, characters and items to keep retention rates high and reduce churn.  Zynga certainly benefits from this model and as long as the games they make aren't complete flops they can continue to iterate on them over time and improve their retention metrics even once the game is commercially live.

Zynga also benefits from its size and resources in several different ways. First, it's position as a top developer gives it clout with the app stores.  It's able to negotiate premium placement for its titles (much like Looney Tunes' featured visibility on Google play currently), get access to early API's from Apple and Google and even get included in some of Google and Apple's marketing.

Second, its financial and human resources allows it go much deeper into marketing then most smaller developers.  Why is this important?  Developers today have literally dozens if not hundreds of different sources of inventory to buy media from to promote their games.  Each of these needs to be integrated, tested, tracked and measured.  Larger companies like Zynga have entire User Acquisition (UA) teams dedicated to doing just this.  For the smaller developer, every new source of inventory means integrating a new software development kit, testing their game, launching, measuring and tracking that source.  Scaling to more then a dozen or so sources simply isn't achievable.  For Zynga it still is.  More importantly, Zynga has the marketing firepower to get its games noticed.  This is becoming more important given the overwhelming number of games available on both platforms.  With merchandising space being so limited, the only way to get noticed is to use marketing and acquire users (unless your game is highly viral in which case you can rely on consumers to push the game for you - which is rare).  The cost per install (CPI) to get users has also been rising as more developers compete for limited, high quality inventory to get users.  The effect here is to weed out smaller developers who have less resources and consolidate the power of larger developers like Zynga who have the firepower to acquire users over time.  This kind of marketing power actually becomes a self fulfilling prophecy since acquiring more users actually drives the game up the rankings which generates more visibility and users generating more downloads.

Finally, Zynga has the advantage of localization and distribution.  Gaming is a global business and in some markets consumers will not play games that are not adapted and/or localized for that market.  The most obvious cases are markets like China, Japan, Korea or Russia.  Zynga has both the resources to fully localize and adapt their titles if they wish and also the distribution agreements to guarantee widespread distribution in those markets (this is particularly key in China which has at least a dozen high profile Android app stores which compete for consumers' attention though Tencent, is by far, the largest).

So do all these advantages make Zynga a good investment?  Well, the answer is maybe ;) Though Zynga has many of the advantages listed above it still needs the essential ingredient which matters most:  a good product which monetizes well!

To this extent, last weeks release of the the Warner Brothers (WB) title Looney Tunes was a step in the right direction.  Was it enough to warrant a 13% rise in the stock? Sadly, no. While some analyst mentioned Looney Tunes' initial downloads, consumer reviews and rank in top free apps that doesn't tell the whole story.

I spent a few hours playing the game and found it polished, fun to play and ease to play.  Looney Tunes is a WB themed endless runner game where consumers can play a variety of different characters like Bugs Bunny that run along a continuous stretch of road to collect coins, carrots and other times with the goal of trying to reach the characters' home at the end of the road.  On the way they need to leap over various obstacles, avoid classic enemy characters and accumulate a minimum number of special items.  The games' graphics, controls and sound are all really smooth and the level design is well done and engaging.  Also as endless runner games go, they did a really good job at keeping new levels fresh with new characters, special items and fresh gameplay.

That said here are the problems I have with it.  First, endless runner games are a pretty competitive genre with the likes of titles like Temple Run, Despicable Me and Subway Surfers being pretty established in that category.  Though Looney Tunes gives them a fair run for their money and in many ways offers better gameplay and a stronger brand (with the exception of Despicable me) endless runner games suffer from another problem:  their gameplay and audience.  These games, like most of Zynga's historical franchises, target casual gamers and though they have mass appeal (read installs / users) they monetize only a small percentage of their base: typically 1-2% of users.  In addition, the average revenue per user (ARPU in industry terms) also tends to be fairly low.

Low monetization is the second issue I have with these particular types of games: the small percentage of consumers who pay implies a significant base of users are needed for the model to work.  Of the three games mentioned above for example, only Subway Surfers even appears in the top 100 grossing games (the chart that really matters) on Google play (#90 in the US).  That's despite it having amassed in the range of 100-500M installs which puts it as one of the most popular games among Android users.

The third issue I have with Zynga's choice of brand. Zynga chose to license Looney Tunes from Warner Brothers to develop the game. When I was part of the European launch committee at glu back in 2006-2008 we choose to avoid brands like this for Europe and EMEA because they didn't resonate well enough with international audiences.  While Looney Tunes might be a decent, if slightly old brand, in the US, the international audience will be far smaller compared to a much stronger, more culturally relevant brand like Despicable Me.  

In addition, since the title is licensed from WB, Zynga will likely be paying at least 15-20% of net revenues (after app store revenue share) to the the license holder.  Meaning that if Apple and Google take 30% Zynga has lost 50% of revenue right off the top (before factoring in marketing costs) before they see any money at all.  So essentially Zynga doesn't see margin benefits of having developed their own IP like a Subway Surfers but also will limit its reach by using a weaker brand with less relevant appeal.   

Don Mattrick's choice of licensed IP so far appears patchy at best.  My fear as an investor is that exactly the same thing will happen when they release Tiger Woods.  Golf is a niche sport particularly in video games which was one of the reasons EA discontinued the franchise on console (aside from how tarnished the Tiger Woods brand had become in recent years).  That said, I launched Tiger Woods golf on mobile back in 2005 while at i-play and the genre lends itself really well to mobile though monetization is still a question mark for me.  Can Zynga do better on  mobile with it?  I guess we'll have to see.

So where does that leave me in terms of Zynga?  The answer is cautiously optimistic.  Clearly they have many of the advantages I listed above and have the potential to make very good titles.  However, to consider this as a serious investment I would want to see three things:

First, a move to more hardcore games which involve higher, more sophisticated gameplay and development costs but also which require a far smaller, more engaged user base to monetize (since a higher % will monetize vs. casual titles).

Second, a focus on developing compelling own IP which can be built into stronger brands that are both more profitable but also have the potential for brand extensions over time and finally, a focus on developing games that will appeal to an international audience.  With mobile games growth slowing in the US but still on fire in Asia, Zynga continues to be too US focused in my opinion in terms of the games it's making for mobile.  Next year the Chinese games market will surpass the US in terms of size for mobile gaming and Japan is already 2x the size of the US market for Google play. Zynga needs to wake up to the reality that it operates in a global market place and either find / develop brands that are more international in nature or develop studio capacity to develop additional games targeting large, key international markets (in the way that rival Gameloft does).  It's currently Beta testing its Empires and Allies franchise for mobile.  Hopefully this title can address some of these issues and give Zynga shareholders a real reason to celebrate a 10% rise in the stock.

Mad Mork

Tuesday, 18 November 2014

Branding 101 for Start-ups

According to recent forecasts, advertising spend will exceed over $50billion in 2015 with the fastest growth coming from mobile.  With that marketers, particularly start-ups, face a daunting challenge:  how to reach users with a compelling message and cut through all the noise.

Today at the Yodlee Interactive bootcamp, I had a chance to share some learnings with aspiring fintech entrepreneurs and take them on a journey about branding.  What is branding?  Why is it important?  what kind of benefits can it bring my company? and more importantly:

How do I get started building a brand?  What's the process and who is involved?  Below is a short preso which attempts to answer some of these questions.  Make sure to download the file and check the slide notes which is where all the detail is.  I hope it helps you!

Download Here

stay Mad, stay foolish,

Mad Mork

Tuesday, 26 August 2014

Zynga and King's failure could be Nintendo's opportunity

As a long term Nintendo shareholder and fan, I nearly fell out of my chair the other day when I saw the movement of the share price.  Up more than 4% on 8.18 on the Tokyo stock exchange (though it's subsequently down a bit today as folks take some profit).

The reason: speculation that Nintendo will finally enter the booming mobile games market through its affiliate, The Pokemon Company, by launching a Pokemon game made for Apple's iPad. Though there is no exact date set yet articles appeared in both the WSJ (for those of you who still pay for news) and Bloomberg related to Nintendo's plans.   The Pokemon game in question, a trading card game (TCG), works perfectly for this franchise (since Pokemon is not only a hit TV show but also based on a real world collectable card game in its own right).  More importantly, the TCG mechanic has been tried and proven in Asia by many of Nintendo's would be competitors on mobile like Mobage (part of DeNA), who arguably pioneered the genre with Rage of Bahamut, Blood Brothers and Marvel: War of Heroes in 2012- 2013. Rage of Bahamut was a top selling iOS and Android game for much of 2013 and continues to be among the top 100 here in the United States while Marvel: War of Heroes is ranked #59th on the Apple store currently according to Distimo, an app analytics company, and ranked #21st on Google play.

Nintendo needs a hit and it desperately needs to be on mobile.  To put things in perspective, there were 200 million tablet sold globally last year alone according to IDC.  Compare that to the most successful console of all time: the Playstation 2 which had lifetime unit sales of around 150M units - over 6 years! More importantly, tablets have become gaming machines in their own right.  To gamers who scoff about a tablets capabilities look no farther than games like Infinity Blade, Racing Rivals, Nova 3 to get an idea of what these machines are capable of.  Are they up to the likes of top console games?  Not yet but given the demographics of how people use tablets (11 min average gaming sessions for example) consumers don't expect a console-like experience yet but still happily will spend money for mobile games.  More importantly, companies like Nvidia (NVDA) are now unleashing a new generation of processors (like the K-1) that are even more powerful and consume less power than the chips actually used in the Xbox One or PS4.

The size of the stake is huge and has never been hotter.  The mobile gaming industry is estimated to bring in some $21.7 bln USD in 2014 and could generate as much as $35 bln by 2017 according to figures published by AppLift and Newzoo.

That said, the market has never been more competitive.  Though games like Puzzles and Dragons or Machine Zone's Age of War may bring in several million dollars per day in revenue, development costs, marketing costs and the overall cost of doing business are all on the rise (see the post I did on this recently here and the opportunity it presents for Google).  However, this is where I believe a company like Nintendo has a massive advantage over say a Zynga or a  They have the brands.  

Pokemon, Zelda, and Mario are all household brands and games that people all over the world of all ages have played and enjoyed.  The impact of brand is essentially reduced marketing costs, pricing power and the ability to extend the brand far beyond its base of users.  For all their early successes, there is a reason Zynga is where it is: nobody would ever care to watch Farmville on Nickleodeon and my kids aren't interested in brushing their teeth with Words with Friends toothpaste.  Though is advertising Bubble Witch Saga heavily on TV, the stories, characters and themes of these games still feel superficial and shallow.  These are essentially casual games designed to reach a very broad user base quickly but with little depth.  The result is that they reach a large base but typically only 1-2% of users monetize and the ARPU (average revenue per user) is much lower compared to games that appeal to mid core or core gamers.  For example Candy Crush is estimated to generate a little over $1M / day from daily active users of more than 7M users which Clash of Clans does roughly the same revenue for 4M users.  

Nintendo is not breaking new ground here.  Activision, another successful gaming company that has been remarkably late to mobile, leveraged their World of Warcraft franchise recently and entered mobile gaming with there Hearthstone franchise.  The game, on iOS only, has done extremely well and is among the top 50 grossing games on the App store in the US.  Coincidentally, it is also a TCG which bodes well for Nintendo's efforts.  

So the three questions investors need to ask themselves when looking at Nintendo are:

1.  Can Nintendo learn mobile faster than Zynga, King and others learn how to build real brands / franchises?

2.  Can Nintendo develop a product roadmap of titles that complements rather than cannibalizes their existing hardware sales?

3.  Can mobile generate meaningful, profitable revenues?

The answer the first question isn't obvious.  For every company that has embraced mobile and succeeded many have not.  EA was successful after acquiring Jamdat, an early pioneer in mobile gaming back in 2006.  However, it still took EA quite a number of years to figure out and launch Free-2-play games (the dominant model of monetization on mobile today).  Like many large gaming companies, EA feared that giving away games for free would damage their franchises and devalue the brands that they stood for.  It wasn't until 2011 that EA embraced F2P in earnest with The Simsons: Tapped out, which proved to be enormously successful for them and still continues to do well in the charts.  Moving from paid games to F2P requires a culture change in most organizations that is often difficult to embrace.  Aside from monetization, there is the mobile form factor, user base and session length the consider.  Mobile screens are smaller and more limited which may explain why Nintendo is choosing to go on iPad first.  More importantly, gaming sessions are far shorter (11 minutes for a tablet session vs. north of 40 mins for a console gaming session).  This means consumers need to be able to "achieve" something that keeps them coming back for more.  Lastly, marketing on mobile is completely different than the traditional CPG model favored by console games publishers.  Acquiring users on mobile and retaining them is a science in itself and top game companies like Supercell, Zynga and others spend vast amounts of money and have large, dedicated teams whose sole purpose is to run and optimize campaigns across dozens of mobile advertising partners like Chartboost, Facebook (FB), Admob (GOOG), Fiksu and others. Running, optimizing and tracking mobile ad campaigns across 80+ different traffic sources requires unique skill sets and people which Nintendo would have to acquire/hire to fully leverage the mobile platform.  

The issue of a solid mobile roadmap seems less risky.  Given the form factor, user base and different consumption habits, I think Nintendo has enough resources and game design chops to come up with unique games that are made for mobile that provide a very different experience from what someone would experience on a DS or a Wii U.  Their experience making portable games for the DS here would be a tremendous asset though sessions on mobile devices are even shorter.  The key here is for them to hire and dedicate resources specifically for mobile.  The biggest problem traditional console game publishers face when moving to mobile is to simply "shoe-horn"  an existing console franchise onto the mobile platform.  A great example of how "not" to do this was Bioware's (a publishing division of EA) adaptation of Knights of the Old Republic (KOTOR) for iPad.  The games' size, controls, graphics and story were all simply copied or "ported" to iPad with little regard for the mobile user / experience.  The result was that though the game initially did nearly 60k in sales on it's first day, sales subsequently crashed once word got out among users that this was essentially an Xbox game from 2005 with little adaptation to mobile.  Other premium console franchises like Deus X and Final Fantasy committed similar mistakes as can be seen below.  

source: App Analytics firm owned by App Annie

Back in 2011, I wrote a piece entitled Could Nintendo Be the Next Nokia.  It doesn't have to be that way but clearly the company is at a crossroads.  It botched the launch of the 3DS (in terms of pricing, lack of titles and misjudging the amount of interest in 3D portable gaming) and subsequently botched the launch of the Wii U as well.  Though 3DS sales have recuperated, after sharp price reductions and the launch of new titlees, and the Wii U's slate of games shows signs of improvement (Super Mario Kart 8 has crossed 1M units sold) the company faces the strategic challenge of not being present on the PC nor on mobile; two key areas of growth (the former being particularly large in China).  Moving its beloved franchises to mobile without cannibalizing DS sales should be a priority.  Nintendo's rabid fan base would no doubt move en masse to mobile to play Zelda, Mario and Pokemon.  Now all Nintendo has to do is provide a great, made-for mobile experience.  

OK great.  But what about the numbers?  Well just bringing Pokemon to iPad won't turn Nintendo around.  Clash of Clans, one of the top grossing games on iOS globally, pulls in roughly $1.2M / day according to  from a daily user base of around 4M players and this revenue is both from iPhone and iPad users.  So if Nintendo were to launch on both devices and also add an Android version (assume the Android game would monetize around 80% of the rate the iOS game does which is consistent with other top games) you might see yearly revenues of roughly $780M.  Less Apple and Google's take you're looking at around $550M (30% distribution costs) less development costs and marketing.  For just one game.  If you also factor in that marketing costs will be far lower than normal given Nintendo's brand strength and that development of a high quality game will likely not exceed $10-15M you're looking at something far more profitable than console equivalents.  Now also keep in mind that mobile development is faster and allows developers to make changes "on-the-fly" and resubmit to Apple and Google.  This means Nintendo could potentially be launching yearly sequels of their major titles and be continuously updating existing games with fresh content (characters, missions, events).  The importance of this is that it essentially de-risks development by turning Nintendo's games business into a games-as-a-service business where games can be improved constantly and always have new content.  This is exactly the model top developers like Zynga, Tencent, CJ&EM (a top korean developer), EA and others use.  

So in conclusion, investors should rejoice regarding the news that the Japanese publisher is finally dipping its toes into the water.  Now lets just see if they can embrace mobile and bring the joy of Mario, Luigi, Zelda and others to the teeming masses of users who have been waiting so long.  Myself included. 

Tuesday, 29 July 2014

Google's Next Opportunity Could Spell Serious Competition for Facebook on Mobile

As I mulled over Google's (GOOG) Q2 earnings a few weeks ago I couldn't help but think that Google is still missing a huge opportunity:  helping more developers get discovered on the Google play store.

Ask any mobile app developer today what their biggest problem is and they will probably say two things:

1.  Make more money on Android
2.  Get their app discovered on the Play store

Apps have become big business for Google.  Android's +Sundar Pichai claimed that it had paid out over $5 billion to developers over the past 12 months.  Some back-of-the-envelope analysis coupled with folks I spoke with estimate that the play store will pull in between 3.5 - 4 billion dollars this year in topline revenue.  Not bad.

Impressive numbers but in reality - Google is still scratching the surface.

When it comes to discovery on Android the solution basically boils down to one thing: Facebook (FB). Every single developer I talk to, including those in our portfolio here at Signia Venture Partners, will tell you that Facebook is the biggest, most important and most expensive source of app installs they have.

The problem with Facebook ads though is that as Facebook's targeting and quality has improved, larger players like (KING), Supercell, Machine Zone, Zynga (ZNGA) and others have gobbled up inventory driving up the cost of installs to levels that simply exceed the Lifetime Value of Users (LTV) for most developers. While the cost per install on Facebook today is somewhere between $3-$4 per install, in September of last year, for example, one of our companies saw CPI go north of $5 which simply wasn't sustainable for their business model.  In fact, according to data released by Superdata, between 2012 to December 2013 the CPI has gone from $1.30 to $4.36; an increase of 288%!

(source: Superdata)

The solution: the industry needs more sources of quality inventory to help bring down prices.  But while some industry watchers think Twitter (TWTR) might have the solution it's actually Google that's sitting on a goldmine: the Play store itself.

Before I joined Google in 2011, I ran marketing for a venture-backed alternative app store called GetJar (acquired this year by Sungy Mobile: GOMO).  GetJar provided an alternative to then Android market by allowing developers to distribute apps to consumers via its mobile web store.  So how did it make money?  Through advertising on the app store itself.  GetJar has an ad-based solution where it allowed developers to bid for actual placement across the store.  Developers could bid for installs by OS, handset and country and a high enough bid coupled with the apps quality score would get them featured in one of several listings either on the home page or across one of the other pages in the store (these appeared in the store as a "sponsored" listings - see below).  If a consumer then clicked on the ad and installed the app, the developer would pay GetJar the value of its bid.

(Source: GetJar homepage on mobile)

The whole model functions much like say... Adwords actually.  So imagine if Google actually added an advertising solution to the play store itself allowing developers to bid for visibility and installs directly on the store front?  What could the economics look like on the revenue side?

For starters, at GetJar about 8% of our downloads were monetizable (back in 2011) - that is we were able to get paid for those installs.  Now GetJar didn't have Google play's scale so lets say Play is only able to sell 4% of their installs. If we assume play downloads are somewhere around 2.9 billion per month (45% more downloads than IOS which is roughly tracking at 2b / month according to Statista) then we're talking about 116M downloads per month.  If we take the median CPI for Android downloads globally according to +Chartboost of around $1.10 then we're talking a high margin ads business worth an additional $1.5B a year in revenue.  Better yet, the cost side of running this business would probably be small for Google.  The existing sales team and ad ops team that currently sells Admob and other mobile search inventory would probably manage this business and 100% of the traffic comes from the store itself (so no traffic acquisition cost (TAC).

More importantly, everybody gains from this.  Developers gain a new, lower cost traffic source for their installs.  Consumers win by discovering new apps / games and other content promoted by the content owners that they might not find otherwise and Google unlocks an additional high growth, high profit revenue stream.

The only possible losers - Facebook (FB), Twitter and nearly every other app install service / ad network out there.  So what is Google waiting for? Well there are a number of reasons why they haven't taken this on.  First, it's a question of focus.  Google has been scaling at an incredible rate and has also been very busy continuously launching new verticals internationally.  Books, Movies and Music continue to expand abroad and this is surely taking up a lot of their resources.  They are also constantly working on improving payments and stability for users which requires resources if they are going to keep users happy.  Second, their could be anti-competitive reasons.  It's well known that over 90% of their business is from games.  These same game developers acquire traffic from many different sources.  Launching an ads business might be good for developers and users but it would negatively affect folks like Chartboost, Fiksu, Twitter and even Facebook.  This could be seen badly by regulators and those affected would likely cry foul.  Finally, there is always going to be the user to keep in mind.  Users might react badly to ads being injected into the store front.  Likewise, they might think Google is using their data to promote certain apps to them which, though it might be welcome by some users, would have privacy zealots running to man the barricades.

So Google must have its reasons for not launching this type of a service to date.  However, given the natural consumer and developer need I think it's more a question of "when" not "if" Google plans to launch a service like this.  The opportunity is simply too obvious to be missed.

Friday, 25 July 2014

Start-up Founders Guide to Public Relations

I've often been amazed by how under-utilized PR is by companies in Silicon Valley.  Often, the vast majority of press you read is limited to simply funding announcements,  product launches and M&A. Since most companies can go quite some time without either of the above happening, many companies pop up onto our radar only to disappear just as quickly as they appeared.

In addition, the few times that companies have the opportunity to get on +Techcrunch, +Venturebeat or the +WallStreetJournal, they don't fully take advantage of the opportunity when they have unclear messaging, rambling product descriptions or miss the opportunity to tell us how their company truly differentiates in the market place.

Finally, when #startup entrepreneurs do get it right they get a brief 24 hour spot in the sunlight which is basically the only public presence that they have until their next press release 6 months later.  What kind of brand presence can you build and sustain over 6 months with two press releases?  Not much.

The reality is that if you're going to do PR seriously you need to need to be religious about it.   Like sales, customer retention, 30 DAU's etc you need to set yourself some goals, measure performance, iterate and improve.  Most importantly, you need to be on it constantly.

When I ran marketing at #GetJar several years ago we put out 2-3 press releases each month.  These were then measured and tracked using #Meltwater and we could go back to our board at the end of the month and tell them the exact dollar value of PR, where we achieved coverage, how much we had vs. competition and how much it cost us to get there.  Not only did we release the obvious like funding announcements, key hires and awards but we also heavily promoted our strategic partnerships with the likes of #ATT, #Yahoo! and others.  We leveraged our data to create blog posts giving people an idea of where the app industry was going (like the App Sizing report with +ChetanSharmaconsulting), which platforms were relevant, which apps most popular and what this meant for the industry as a whole.  We had an opinion and weren't shy about expressing it.  The results at the time spoke for themselves: coverage in every major tech blog on nearly a quarterly basis, winning over 1/2 awards over 2 years, being nominated as "One of The Companies that will change your Life" by #TIME magazine in 2011 and appearances on #CNBC, #BBC, and #Reuters to name a few.

But that's not really the point of this post.  The point is that anybody can significantly boast the visibility and even value of their company by understanding the basics of doing good PR.  Hiring the right agency, the basics of writing a press release, how to leverage social media like #Facebook, #Twitter, #Google+ and #Quibb to make your news go viral and how to evolve the structure of your PR efforts as your company scales.

So enough talk - to make it easier for you I've put together this short Intro to Public Relations deck as part of my work here at #SigniaVC.  It's only about 20 slides and should be short and simple reading.  I hope you enjoy it and feel free to post, tweet me #madmork or email me if you have comments or questions.

Good luck!

Madmorks' Intro to Public Relations

Thursday, 26 June 2014

The Smartphone Wars are Over: The War for Share of Time Has Begun

Watching the Google IO keynote today was a bit like watching a steamroller: the stats just kept coming and Android's unstoppable march continued.

While by some measure Android's global smartphone share is near or above 80% here were another set of jaw-dropping stats shared by Android / Chrome head +Sundar Pichai

1 billion 30 day active users on Android devices.  315M devices shipped running Android in Q4 2013 and 62% of tablets shipped in 2013 were running Android.

The last stat will surprise some who thought iPad still continued to have a safe lead in tablets (though they still do in terms of tablet-specific content).  When coupled with a surging number of OEM's embracing Android , the increase in computing power and the drop in customer retail prices Android saw a particular surge in developing countries in Asia where cheap Android tablets can now be had for under $60.  More importantly, Sundar shared that over $5 billion had been paid out to developers in the past 12 months - a 2.5x increase over 2012.

Some will argue Apple still wins where it counts: profit per device (or actually the fact that they are nearly the only OEM to be profitable save for Samsung) and the overall revenue of the App store and the fact that Apple's out payments to developers is probably x2 Android's.

So what?

Google isn't in the hardware business and -with the exception of Nexus / Chromebooks - never really has been.  Nexus were always considered reference devices.  A signpost to OEM partners of how to best implement Android on their devices and a showcase for Google's services.  Programs like Nexus were even eventually rolled out to other OEM's who developed limited edition stock Android versions of their flagship devices given how popular Nexus devices were among developers.  Today Android took another step forward with Android One, a Nexus like program to standardize the experience of Android to lower-end devices in the market.  A first OEM, Micromax, has already announced a sub $100 device using One targeting developing markets. As for Chromebooks, they continue to dominate online sales of laptops (as seen on Amazon) and as Google Docs now advance to allow for actual editing of Office docs on mobile devices (announced yesterday), they will make more inroads in schools and enterprises.

The truth is that the smartphone wars are over.  Google's strategy of providing an open and free OS and rallying the Open Handset Alliance to one standard (however fragmented at times) has worked beautifully.  Every subsequent generation of Android has not only been better then the last but also gained more share more quickly than it's predecessor.  Kit Kat (Android 4.4) now commands 13.6% share of Android devices according to Google while devices running Android 4.0 or higher now account for nearly 85% of all active Android devices globally.  It's important to caveat here that this data doesn't include data from China since Chinese Android devices typically don't carry Google's suite of services and don't check into their servers but still  - the reduction in fragmentation compared to two years ago has been enormous.

So where does Google go from here?  They take a page from the Cola wars of the 80's - 90's.  Back in the days when I worked at Pepsi, when Coke realized they weren't going to gain much more share of the Cola market globally what did they do?  They went for share of stomach.  They looked for ways they could provide more of their products to users as part of their overall diet not just in terms of their carbonated soda consumption.  So if you're Android / Google what's the strategy?

I call it Share of Time.

And Google IO scored a near perfect 10 on that note.  While Google announced a slew of improvements to Android including a preview of the new OS codenamed "L" the most interesting aspects of IO today for me were two things:

1.  Android's march beyond smartphones / tablets
2.  The accelerating integration of Google Services - especially between Chrome and Android

Keys to the first point were Androidwear, Android TV and Android Auto.  But it's not the fact that three of these initiatives were launched in one day that matters.  It's the way they were launched.  In the valley, one of the jokes among start-ups pitching VC's for money is to say: "Don't pitch a product, pitch a platform.  If it has the word 'platform' in it they're much more likely to invest." This is exactly what Google did yesterday. As opposed to Apple, Google's focus continues to be launching platforms at scale and all three of these initiatives reflected that.  Google's strategy for Wear, TV and Auto is essentially the same as it was for Android for smartphones: build an open, free platform for developers and form an Open Alliance of global partners to help drive the marketing of these services.  More importantly, since all these platforms run on Android, the development of applications and/or extending applications using API's to run from one environment to another is becoming increasingly easy.  Take for example Androidwear.  Google announced that if you have both a wearable and Android smartphone that when you download an app that has a wearable equivalent for your watch that this app will automatically be downloaded to your wearable device.  Better still, it will be automatically updated each time the app receives a new update from the developer.  

What really matters though is the fact you'll be using a whole lot more of Google then you did before.  How often have you had a text message only not to be able to make that call or send an email due to lack of battery?  Or how often have you avoided checking your smartphone in a meeting for fear of being rude?  Now you can use your watch (and be a bit less rude).  On the car side how many of us have hammered our steering wheel at the frustration of expensive but poorly designed in-car GPS systems (my hands remain bruised to this day)? How often have you wished you could just ask your car to play the same playlist that you have on your phone or computer? Or check what movies are playing at a nearby movie theater, buy tickets and navigate to the theatre?  With Android Auto you'll now be able to do just that.

Which brings me to my second point:  the acceleration of integration of Google services across Android.  Nowhere was this more apparent than with Google Now.  Nearly every demo yesterday showed a contextual use of Google Now across each of Google's platforms.  In the case of Android TV the user made a voice search looking for Oscar-nominated movies from 2002 to have a list pop up on the big screen with a list of movies available for purchase through Google play.  In the case of Android Auto the demo featured the user asking for the opening hours of a museum and then navigating to it. Google's strategy here is clear: Google Now is becoming the center of the user's universe to find the information they need while other Google services enable them to act on that search result.  In the meantime, as Google increases the number of touch points it has with us in our daily lives, it learns more about our needs and provides ever better search results and more refined targeting for advertisers based on context.

But Google's integration didn't end with Google Now.  As expected, Android TV will now integrate Chrome's "casting" technology so that users with an Android TV can seamlessly cast the content of their devices directly to their TV's without the need for an external dongle.  Nowhere will this be more interesting than for games.   As the demo showed yesterday, not only does your device become a portable console, but you can even play multi-player games with others across devices.  If you combine this with the sky-rocketing cost of console game development and the fact that the new generation of consoles is still nascent, Microsoft, Sony and Nintendo have cause to worry.

When I was at Google and +Sundar Pichai  took over as head of Android / Chrome one of the things I was most excited about was better integration and cooperation between the two teams.  We began to see the fruits of that collaboration in earnest yesterday.  In L for example, Google showed how open tabs on Android devices now appear more as "cards" along with open apps on the device so that users can more easily flip through their tabs without having to return to the Chrome browser each time.  More importantly, Sundar also showed a demo of Android apps now running on Chromebooks.  This was a natural progression that reflects the reality of app usage.  Users are spending more time on their phones than on their PC's (Chrome usage grew 10x in the past year to over 300M mobile monthly users) and even on phones app usage officially passed mobile web usage in terms of time spent earlier this year.

So in conclusion, Google is really after Share of Time.  They are leveraging their success and formula for Android to move beyond phones / desktops to the other areas of our lives where we spend a significant amount of time: our cars and our living rooms.  By tightly integrating multiple services across ever more daily touch points they are going to be able to understand more about us, provide us more contextual and immediate services while providing advertisers with more precise targeting data.  Even the most ardent critic would be hard pressed not to acknowledge what they pulled off yesterday.  They have the vision for how to use technology to make the world's information more universally accessible.  More importantly, they're executing on it.

Wednesday, 5 March 2014

X- Google play marketing boss, Patrick Mork teams up with former Activision & Kixeye heavyweights to weave Unspoken Tales



X- Google play marketing boss, Patrick Mork teams up with former Activision & Kixeye heavyweights to weave Unspoken Tales

San Mateo, California - Patrick Mork, the former global marketing director for Google play and controversial x-CMO of indie app store GetJar, today announced the formation of a new entertainment company, Unspoken Tales.   Unspoken Tales will develop the next generation of entertainment brands derived from action role-playing games on tablets.  

“Mad” Mork, as he’s affectionately known by former teammates, is teaming up with industry veterans Alessandro Tento (former VP of Art Development and founder / GM of Activision’s Shanghai studio), Danielle Deibler (former VP of engineering at Kixeye) and Scott Foe (former CCO of Big Head Mode and a pioneer of mobile social gaming).  “We also have an 18 year veteran game designer who worked on one of the top RPG franchises joining us but he’s in hiding at the moment” hints Mork.  

A gamer at heart, Mork has been in gaming since 2001 when he started a games company in Spain focused on Lan-based gaming.  He later spent 8 years at pioneering mobile games companies i-play and glu as VP of marketing for Europe.  In 2009 he joined GetJar as employee #6 and became notorious for snatching exclusive Android game launches away from Android market (including the server-crashing Angry Birds game).  In revenge, Google hired him in 2011 to lead the rebranding of Android Market to Google play, build the marketing team and support the launch of various Play products including Music, Movies and the Play games service.  Mork left Google in July last year to work with legendary games investor Rick Thompson at Signia Venture Partners as an EIR where he began to formulate his ideas for the company.

Alessandro Tento, Chief Creative Officer, is a former VP of Art Development for Activision where he made significant contributions to the Call of Duty, Guitar Hero and Skylanders franchises among others; built and managed Activision's’ Shanghai studio; lead the creation of Activision’s central art team and built relationships with key 3rd party art vendors in Asia.  Most recently, he was GM of studios at Lakshya Digital in Singapore.  An operation he helped set up and run.  With over 20 years experience in console gaming art development,  Alessandro has also worked for industry leaders Electronic Arts, Microsoft Games Studios, Square and Sony.  

Danielle Deibler, CTO, most recently was an EIR at Trinity Ventures where she supported various portfolio companies on technology related challenges.  Prior to that Danielle led the engineering and operations at KIXEYE, a leading developer of social games on Facebook.  The engineering team grew from 12 employees to several hundred during her tenure.  On the product side, Danielle’s team was responsible for shipping several key titles including War Commander, Backyard Monsters and Battle Pirates.  Prior to KIXEYE Danielle worked for Adobe Systems where she led engineering for several successful technology transfer projects around networking and VOIP for Flash player and AIR, as well as SaaS services surrounding mobile and web marketplace technology. Danielle has over 20 years in the Internet infrastructure, networking, voice, video and interactive technology space.
Scott Foe, Chief Product Officer, is a fifteen-year veteran of the games industry who began his career as a member of the team that developed and launched the Sega Dreamcast, the world's first online games console. Foe served as Chief Creative Officer for Big Head Mode, Inc., a San Francisco-based social/mobile games studio, which was sold to PlayFirst in 2013. Foe's Interactive Achievement Award-nominated game Reset Generation was listed by Pocket Gamer beside Angry Birds as "one of the-most important handheld games of all-time," and Giant Bomb called Foe's most-recent title, Douche Defender, "one of the most-important simulations of human drama ever played.”

About Unspoken Tales

Unspoken Tales is a next generation entertainment company focused on the development, distribution and commercialization of original content for mobile devices.  The company is located in Silicon Valley, California and plans to release its first title in late 2014.

For further inquiries please email:

Monday, 24 February 2014

An Entrepreneurs Guide on Positioning Your Product for the Right Audience

Segmenting, Targeting and Positioning:
Reaching the Right User

Background:  Segment-Target-Position (“STP”) is a framework that helps marketers understand their audience, identify which group of users will be receptive to their message and lastly, craft the right message to make that user group take a desired action (download, purchase, visit a website or make a phone call for example).

Why is it important?  As markets mature and consumers have more options and choices it becomes ever more important to give them a clear and differentiated reason to buy your product.  When competition intensifies and consumers become overwhelmed they will look for the easiest way to make a decision which is typically to stick with what they know works, what their friends recommend or what provides a perceived benefit that other products lack.  A product which targets the right audience with the right message has a much higher chance of getting the desired action than one that doesn’t.
In addition, the other thing that happens as markets mature is that not all of your customers will respond in the same way to the same message.  For example, say you’re providing some sort of SAS.  Initially, your clients respond well to the basic product message and offering.  “Try our SAS because it solves this problem and is easy to implement.”  However, as the industry matures some clients may become more concerned about security, customer service, cutting edge innovation.  In this case, not only do you have to have the right message but you also have to customize your message / marketing differently depending on which audience you’re targeting.  

When should I do this?  
  • Ideally before you build and launch your product.  A large part of your business plan should be predicated on this and most likely this kind of conversation will come up with investors.  
  • After launch if the market changes, becomes more competitive or you’re thinking of how to develop your product roadmap going forward

Who owns this?  Typically your head of marketing / communications owns this but for it to work STP has to have buy in across the entire senior team, PR team and should be sanity-checked with existing / potential customers as well.

How does it work?  STP is a step-by-step process whose ultimate goal is to provide a convincing call to action to specific user demographics or segments.

  1. Segmentation:  What am I trying to achieve here?
    1. To understand what currently matters to your users and what might matter to them
    2. To understand how your competitors are positioned vs. how you are
    3. To understand each segment of your market and how your competitors and you are talking to each segment
    4. To understand from the above if there is a segment whose needs are not met that you can target that will be receptive to your message
    5. To understand whether your offering can really differentiate compared to what’s out there from competitors

Say, for example, you’re developing racing car games. The market might currently be segmented on a) type of gameplay and b) variety of cars.  In this case you’re segmentation grid might end up looking something like this:

So the first thing to do here is to place each of your competitors in a quadrant.  Then place yourself in a quadrant.  Questions this exercise should answer once completed:

  1. Am I in the right category?
  2. How well am I addressing my category?
  3. How attractive (or not) is each category (size, revenue potential)?
  4. Does my messaging / advertising reflect which category I think I’m in?
  5. How crowded is each category?
  6. How well do my competitors compete in their categories?
  7. Do these categories really reflect what consumers care about?
  8. Is there an underserved category that competitors have missed?

  1. Target:  Once you’ve segmented your audience you then have to choose which segment to go after.  This becomes your target audience.  Your end goal is to try to come up with a positioning statement / marketing message that will get the attention of this particular segment with the aim of serving them better than your competitors.  When thinking of which audience you should target ask yourself the following questions (and be honest!):

    1. How well do I compete in my category?
    2. How crowded is my category?
    3. How crowded are the other categories?
    4. How well do my competitors compete in their categories?
    5. Do these categories really reflect what consumers care about?
    6. Do I have the core competence (in terms of resources and organization) to defend myself in my quadrant)?
    7. Can I own this category (and if so for how long)?

Can my target audience change? Yes, your target audience can change over time as the market changes or it can change if you decide to consciously change your product and go after a different audience.  Keep in mind,however, that actually getting any desired target audience to understand your message and how your product differentiates takes time.  When you change target you’re essentially often starting over and most likely will lose some if not all of the positioning that you have built over time with the previous audience.

Can I / should target multiple audiences?  Yes, but it really depends on your product and service.  Again, as markets mature you will likely have to target different audiences with slightly different messages in order to stay relevant and avoid other, smaller competitors from coming in and taking certain targets from you.

Take for example our racing game above.  Initially, maybe you broadly targeted Male / Female gamers 18-24 and you focused your messaging on variety of cars and realism.  While that approach may work initially, as the market matures there may be certain demographics that look for other things that might be more relevant to them then simply the variety of cars or the realism that you have.  For example, maybe the male 15-18 demographic is actually more interesting in crashing cars and blowing things up.  In this case adjusting the features of your game to include crashable models and maybe even adding an element of “car combat” might make sense and allow you to target those gamers with a more relevant message.  Alternatively, you might add multi-player racing to your game and target some users with the message that your game is “the most social racing game out there” and challenge users to test their skill against their friends.

Over time you may find that you actually are targeting multiple target audiences with slightly different messages with different value propositions.

3.  Positioning: Once you’ve identified who your target is than the final step is to come up with the most compelling positioning / value statement for that audience.    

The positioning statement is, in effect, the 1-2 reasons why the consumer should consider your product and try / buy it.  The key here is to sum up for the consumer in as short and concise a way as possible why they should consider your product over someone else’s.  More importantly, once you decide on a positioning statement you should always attempt to use it across as much of your marketing materials as possible and as consistently as possible.  Consider the following positioning statements:

Music, Movies, Books, Apps and more.  On Android and the Web
Brand: Google play
Product: App / content storefront
Logic:  The android team wanted to clearly communicate the users that you could find multiple types of content on Google play and that this content was both accessible and consumable not just on Android devices but on any device with web access

Make advertising rewarding
Brand: Ifeelgoods
Product: Rewards platform that provides digital content to brands / agencies as a reward for consumers clicking on / engaging with ads
Logic:  CTR’s on ads are low and consumers find ads uninteresting / boring. IFG solution is to provide context-driven digital rewards for any consumer who engages with a brand’s ad thereby making every ad more fun and rewarding

What makes for a strong positioning statement?

1.  It’s clear, short and concise
2.  It’s easy to understand
3.  It’s easy to remember
4.  It differentiates the product
5.  It’s ownable; not everyone else can claim it
6.  It’s directly linked to the company’s core competency / strengths


It not only does the above but also re-positions competitive products in a negative or inferior light.  Consider the following statement:

Volvo: The safest car in America

Not only does this statement clearly position Volvo as a safe car brand but it also potentially might cast doubt on the safety of other cars.  By doing this Volvo not only creates a clear space that they can own but can also potentially reposition some of its competitors if it so chooses.

OK, what do I do once I have a positioning statement?

Communicate it as often as possible and as consistently as possible in all your marketing communications:

  • Email / CRM
  • on your website
  • Advertising materials - video, digital / mobile banners, print, outdoor, TV…
  • Any press materials - press kits, press releases, company communications
  • Have your executives trained on it and always communicate it in public forums
  • Make sure it’s applied using the same language as consistently as possible
  • Walk your PR agency / top execs through it and make sure everyone understands the why of it and knows how to talk to it
  • Share it openly with your employees, partners and board and explain the logic behind it

-Mad Mork