Académique Documents
Professionnel Documents
Culture Documents
Yujin Chung
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Agenda
Executive Summary / Thoughts on Investment & Acquisition Historical Analysis (2000-2009) Mobile Applications Industry Analysis Social Media Industry Analysis
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Executive Summary
Media conglomerate shareholder performance has largely underperformed due to poor acquisitions and inability to adapt to open distribution model of the internet Most acquisitions driven by desire to acquire audience but not having expertise to retain or monetize audience Inability to innovate traditional content products leads to price erosion and declining sales windows
Continued call for consumer payment via subscription (e.g. Hulu, paywalls for WSJ.com, etc.) are unlikely to be successful
Recently announced magazine consortium represents new approach at preventing intermediary (e.g. YouTube) from usurping audience
Unclear if publishers have technical expertise to develop digital product to drive consumer willingness to pay
New models of content aggregation, search optimization, and publishing by Demand Media and AOL may prove profitable, but will likely litter the web with crap content
Question remains of creating premium product / service for traditional content closest proxy has been iTunes digital albums
Mobile apps show great promise despite inherent structural challenges Ecosystem has recently evolved toward setting foundation for real, possibly sustainable growth:
Monetization: emerging mobile advertising (Admob), micropayments (storefront) Feature-rich platforms (iTunes / Android / WebOS) on robust device hardware Data plans whose focus is away from carrier walled gardens
Still no transparent scorecard for best developers; closed ecosystem for dominant app distributor (iTunes); bandwidth issues; and extremely low barriers to entry Investment framework can be based around native phone features, cloud computing infrastructure, and in-app purchases Apples purchase of lala may introduce robust cloud platform development AND improved social functionality for content and applications
Certain categories within social gaming are attractive for investment Emergent demand for less time-intensive, lower engagement, and gaming-as-a-service models
High DAU/MAU or stickyness factor above ~15% appears to represents sustainable audience for monetization
Microtransactions and early advertising efforts (cost per installation) have proven successful for Zynga and other players Large opportunities remain as games evolve in sophistication and users become more open toward offering greater access to profile data
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Winning on ALL platforms, not just A platform Mobile, online, AND offline
Becoming a part of your life, not just thrown away Tailored experience based on device, but synched via internet connection New business models e.g. purchase options mixed w/ localized advertising optimized against social data
Mobile
Social Gaming
Mobile / online payments may be open to growth equity investment as business models mature given need to acquire carrier and distribution partners Somewhat validated by Bokus acquisitions of Paymo and other small mobile payment players Looming giant Paypal presents market risk but also exit thesis Bootstrapped developers interested in liquidity and expansion e.g. Playdom Proven successes on social platform but future growth from cross platform (e.g. mobile, independent URL) and cross-promotion of genre titles
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Agenda
Executive Summary / Investment Frameworks Historical Analysis (2000-2009) Mobile Applications Industry Analysis Social Media Industry Analysis
6
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
The modern media conglomerate is typified by scale and centralized ownership via the Mogul
Controlling Mogul / CEO
Sumner Redstone / Les Moonves Rupert Murdoch / Rupert Murdoch / Jeffrey Bewkes Sumner Redstone / Philippe Dauman Roberts Family / Brian Roberts / Jean-Bernard Lvy
Revenue by Conglomerate
Weighted Average Revenue CAGR Across Conglomerate (2000-2008): 9.7%
/ Robert Iger
Billions
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: Curse of the Mogul, Jonathan Knee; Boldface represents broadly held public companies; Vivendi values converted to dollars using historical exchange rate; 2000 value for Viacom actually 2002; 2000 value for CBS actually 2003; substitutions made due to data availability
Their ownership expansion has been impressive, with properties ranging from content to distribution
Distribution
Cable System Satellite Radio TV BroadBroadBroadcasting casting casting Cable Channel TV Network Newspapers Online Content / Mag. e-Comm. Social Publish. Network Video Games Business Book Info Publish. Music Sports
Content
Movie / TV Studio
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Note: Conglomerate average calculated as straight average of stock price performance Source: Yahoo Finance; prices adjusted for dividends and stock splits;
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Both the Mogul Effect and the Internet contribute to this underperformance
Mogul Effect (Internal)
Content
Creative data production
Internet (External)
Packaging
Aggregation Marketing / Promotion Wholesale distribution
Retail
Delivery to final customer
Lowered barriers to entry given continued launches of improving online ventures Fast growth incentivizes new entrants to attack incumbents
Pricing power is weakened in a digital world Release windows are shortened online as well
Mergers / Acquisitions
Overpaying for acquisitions Overestimation of synergies Acquisition for growth, not strategic rationale
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Market share volatility implies conglomerates are more lucky than skilled in picking winners
Content Packaging Distribution Poor M&A across the value chain
Share Change
Share Change
0.9
2.7 4.7
4.6
9.7
5.6
5.8
Average:
5.2
Average:
4.5
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: www.the-numbers.com; absolute market share defined as normalized market share of top studio / music labels; absolute share change < 4 implies share instability
Most conglomerate shareholders would have been better off without big mergers / acquisitions
Content Packaging Distribution
Mergers / Acquisitions
Source: Hey Big Media: The Jig is Up on Big Media Mergers, Bank of America Securities, Douglas Shapiro, July 7, 2004
Assumptions behind analysis: 1) legacy businesses growing only at average secular growth rates over the period; 2) assumed that all free cash flow that would have been thrown off by these theoretical companies would have been used only to pay down debt or accrued as cash 3) increased the share base of each by 4% per year to account for options issuance, a much more rapid rate of options dilution than actually occurred (under the rationale that these hypothetical companies would have experienced better stock performance over the period); and 4) to arrive at the current price of the hypothetical company, only the current multiple 12 of each company is applied, even though a better capital allocation track record over the last few years would have arguably resulted in a higher multiple. This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
though they did help grow the empire, these deals generally hurt the share price
Content Packaging Distribution Mergers / Acquisitions
Acquisitions
Why they worked for the mogul Revenue impact from deals EBITDA impact from deals Why they didnt work for share holders +475% +320% Cable network cashflow would have been used more effectively to pay down debt or simply accrued as cash +159% +162% While ABC / Fox Family performance suffered, ESPN performed much better than expected +138% +153% AOL-Time Warner synergies greatly overestimated +239% +233% Decline of cable public market values (versus cash paid for asset) Additional capital deployed (not included in purchase price) to pay for upgrade +4% (150%) (27%) 13
(121%)
Source: Hey Big Media: The Jig is Up on Big Media Mergers, Bank of America Securities, Douglas Shapiro, July 7, 2004
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Deals
Bebo Overpaid for asset ($850M) relative to revenue ($20M) and EBITDA ($5M) at time of acquisition Now being actively sold off Outcome
IGN Overpaid for asset ($650M) CEO (then COO of Fox Interactive Media) left soon after acquisition
CNET Overpaid for asset in sole bidder situation ($1.8B) Executives admit having overpaid for asset Last.fm Overpaid for asset ($280M) Apparent competition with existing CBS online radio asset Inability to monetize effectively
MySpace Google search deals, while initially lucrative, will not be renewed Lost social network war to Facebook Repositioning site as music portal
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
The Internet has allowed the proliferation of open distribution and socialization of content
Content Packaging Distribution Poor M&A across the value chain
Web 1.0
Web 2.0
Web 3.0?
Streaming
???
Downloads
???
File-sharing
???
Social Networks
???
Ease of content sharing leading to loss of willingness to pay Lower barriers of entry over time
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: RIAA; BlackArrow; Fordham University, Marketing Department; MPAA 2007 Industry Report
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: National Association of Theater Owners (NATO); Soundscan * Heat Period defined as length of time album sales stay above 20% of initial peak volume
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Packaging
Aggregation Marketing / Promotion Wholesale distribution
Retail
Delivery to final customer
Focus on areas with potential product extensions less sensitive to erosion Products with merchandise extensions
Leverage viewer base, e.g. hybrid professional, for low cost content Search optimize, and eventually social optimize, content for discovery
Deeply integrate with Social Network Platforms Facebook Connect, Twitter API, Friend Connect
Mergers / Acquisitions
Streamline business (not corporate) development process Accelerate dealflow and deal signing Goals are new partners AND new learning Accelerate rights expansion and terms with content makers Engage in experimental deals with innovative but unproven players
Source: Framework provided by Curse of the Mogul, Jonathan Knee
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Demand Media: Next Gen Media Conglomerate? Generates revenue by focusing on search and volume
Content
Valuation Algorithm Determines what articles to produce Estimates search terms Lifetime Value
User
+
Knowledge Engine Generates title ideas by combing through search queries that have included that term Reviews term and converts to real title Freelance writer spots title and writes article
Packaging
Upload Copyeditor reads article, makes fixes, and uploads back to Demand Studios
Discover y / Analytics
Publishing / Distribution
Publishing Article appears on Demand Media's network of sites and partners Verticalized distribution based on audience interest Monetization Ad clicks result in revenue generation for Demand Media and Google
Source: Wired
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Discovery / Analytics
Packaging
Verticalized Distribution
Search / Discovery
Verticalized Retail
Source: Betaworks site
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
The next generation of the web is becoming more Social, Mobile, & Real-Time
Internet Era
Search (Google)
Active User generated Search-driven
Discovery
Social ads Targeted via social relevance Contextual on relationship Virtual goods Microtransactions Real-time Uniques Retweet Relevance
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Agenda
Executive Summary / Thoughts on Investment & Acquisition Historical Analysis (2000-2009) Mobile Applications Industry Analysis Social Media Industry Analysis
22
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Apples release of the iPhone and iTouch have been met with groundbreaking growth
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: Mary Meeker, Economy and Internet Trends Oct 20, 2009
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AT&T DataTraffic has surged, implying underlying demand for bandwidth consumptive applications
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: Mary Meeker, Economy and Internet Trends Oct 20, 2009
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: Mary Meeker, Economy and Internet Trends Oct 20, 2009
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: Mary Meeker, Economy and Internet Trends Oct 20, 2009
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
iTunes App Store has become a fast growing ecosystem, with over 83,000 applications
100,000+ 83,438 75,069 65,173 55,047 44,869 37,366
29,743
22,820 17,422
Source: 148apps.com
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Pricing spans a variety of points, though nearly half of all App Store applications priced at $0.99
iTunes App Store Pricing
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Sports
Business
News Medical
Books
Social Networking
Utilities
Finance
Weather
Travel
Entertainment
Games
Music
Education
Productivity
Lifestyle
Navigation
30 Day Retention
Source: 148apps.com; as of Sept 09; size of bubble denotes # of apps offered
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Books News
Weather Navigation
Education
Productivity
Business
30 Day Retention
Reference
Health Care / Fitness
Social Travel Networking
Music
Utilities
Entertainment
Lifestyle
Developers should focus on creating sustainable process around frequent app release
Cross-sell apps aggressively
Avg Price
Source: 148apps.com; Flurry.com; as of Sept 09; Medical category excluded (avg price: $7.90, retention: 43%)
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Gaming apps are fragmented and hit driven, with high turnover among the top ten lists
iPhone Paid App Rankings (Apps in April - June)
Fragmentation
Source: Distimo
Apps do not sustain ranked placement for more than three months
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Texting
Remote access, broadband home management Unclear, though founders have strong gaming and software development experience Robust, high end gaming Traditionally high price points but recently released in-app purchases for virtual goods and microtransactions Rapid release model User engagement through everyday celebration
Gaming
Music ID service
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Cloud data / processing + native iphone features + inapp purchases = Preliminary Investment Thesis
Cloud Computing Native Features
Photo Video
In-app purchases
Compass
+
(Heavy Data / Processing Requirements)
Music
Location awareness
Voice recognition
Touchscreen
Txt/MMS Voice
Accelerometer
Structure brainstorming identifies virtual tag, real-time translation, and micro-windowed mobile coupons as having potential
Native Features Location / Compass x x x x x x x x x x x Cloud Features
Vertical
Games Travel Education Utilities Utilities Utilities
Multimedia
x
Touchscreen
Voice
Possible Concepts
Virtual tag / virtual easter egg hunt Local, interactive maps for malls, parks, etc. Digital flipcards Visual authentication Visual transcription Remote control webcam and monitoring
Music
Sports Productivity Productivity Business Healthcare & Fitness News Social Networking Finance Medical
x
x x x x x
X x
Real-time language translator Voice / language transcription Real-time, micro-windowed mobile coupons Augmented reality workouts Real-time, hyperlocal news Location-based social networking (Foursquare) Digital payment and authentication
x
x x x x x x x x
x
x x
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Agenda
Executive Summary / Thoughts on Investment & Acquisition Historical Analysis (2000-2009) Mobile Applications Industry Analysis Social Media Industry Analysis
36
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
37
with social gaming becoming an emerging sub-industry for Facebook app developers
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
38
In only two years, the social gaming Market is estimated to grow to $2.2B; the virtual goods market is estimated to grow to $2.0B
2012: $2.2B
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
with room to grow as users shift their time and advertisers shift their spend to internet applications
Lag driven by: Challenges in managing spend and performance in a variety of mediums (vs. lump sum payment to a mass aggregator like a TV station) Low costs of social media distribution and tracking Still relatively new (even considered experimental), spend not yet formalized as line item in CMO budgets
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
40
The Social Gaming Ecosystem is robust with roughly 300 firms and $1.5B invested across multiple categories
Social Gaming Firms N=308 Venture Capital Dollars ($MM) Total: $1.5B* invested
Source: Social Gaming Summit 2009, Crunchbase, Company Websites, Press Releases, LinkedIn profiles of founders *Over past three years
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
While many categories have been funded, entrepreneurs continue to start firms
Total Number of Firms
61
20
15
10
Total Firms
Funded Firms
Unfunded Firms
Source: Social Gaming Summit 2009, Crunchbase, Company Websites, Press Releases, LinkedIn profiles of founders
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
More funding does not necessarily translate into bigger user bases (1 of 2)
Firm
Playdom
Funding Investors
$43M NEA, Lightspeed, Norwest
Description
Playdom is game developer with a focus on social, online games. The company has a number of popular titles on the iPhone, Myspace, and Facebook. Zynga is a network of gaming applications built off of classic games like Poker, Battleship, and Attack!. The games are found on social networks like Facebook and Bebo. In addition to making their own games, the company has created a network which allows third party developers to become part of the Zynga network.
CEO
John Pleasants
MAU
14,416,661
Zynga
$39.0 Reid Hoffman, Avalon Ventures, Clarium Capital, Foundry Group, Pilot Group, Union Square Ventures, Peter Thiel, Bob Pittman, Andy Russell, Brad Feld, Kleiner Perkins,
Mark Pincus
185,624,645
53,399,185
28.8%
playfirst
$26.5 Mayfield, Trinity Ventures, PlayFirst is a casual gaming startup, based out of San Francisco. is focused Rustic Canyon Partners, DCM on creating shared casual game experiences around lasting original brands that includes game play rich in story and character. PlayFirst titles include Wedding Dash, Chocolatier, and Dream Chronicles. $21.0 Accel Partners, Index Ventures
John Welch
3,185
174
5.5%
Playfish
Playfish is a creator of social games for friends to play together over social Kristian platforms such as Facebook, MySpace, Bebo, Google, iPhone and Android. Segerstrale Each of the companys seven games has been a top 10 hit on Facebook, including Pet Society, which is the platforms most popular game and enjoyed by more than 11 million people every month. Challenge Games creates online social games that are fun and easy to play whether youre a serious or casual gamer. Tapping the capabilities of social networks, Challenge Games helps people play with and against friends. Citizen Sports offers a number of web applications that allow for interaction between fans. They also are the creators of Protrade.com, where users can buy, sell, and trade their favorite sports figures as they try to win money. SuperSecret.com is an online social game for tweens who are ready to move on from Club Penguin or Webkinz, but are too young for World of Warcraft or Facebook. The company actively involves tweens in product design to create an engaging experience available online, and its proprietary World Builder platform allows SuperSecret to quickly and easily expand game content to keep up with the imagination and skills of its tween audience. RotoHog.com is the provider and developer of fantasy sports with current partners like NBA.com, Turner Digital, Pro Football Weekly, LG Electronics and Grupo RBS in Brazil. RotoHog is a product of Sports Composite DE, is privately held, and based in Los Angeles, CA. Andrew Busey Mike Kerns
60,212,645
13,381,393
22.2%
1,983
159
8.0%
1,159,016
98,937
8.5%
Ted Barnett
NA
NA
RotoHog.com
$8.0 Allen & Co., DFJ Dragonfund, Mission Ventures, SCP Worldwide, Jeff Fluhr
Kelly Perdew
443
1.8%
43
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: Social Gaming Summit 2009, Crunchbase, Company Websites, Press Releases, LinkedIn profiles of founders; MAU: Monthly Avg Users; DAU: Daily Avg Users
More funding does not necessarily translate into bigger user bases (2 of 2)
Firm
WonderHill
Funding Investors
$7.0 Charles River Ventures, Shasta Ventures $4.5 Polaris Venture Partners, Ron Conway $4.3 Redpoint Ventures, Prism VentureWorks
Description
WonderHill is a casual gaming company looking to build games that anyone can play, and are likely to be popular with the 30+ demographic. LOLapps is a provider of distributed social applications. The companies first products are two Facebook applications, a white label gift maker (Gift Creator) and a survey tool.
CEO
Stan Chudnovsky
MAU
50,016
DAU
4,123
DAU / MAU
8.2%
LOLapps
Kavin Stewart
9,691
331
3.4%
Sparkplay Media
SparkPlay Media is a developer of browser-based MMO games, Matt Mihaly the first of which will be released in 2008 and titled Earth Eternal. SparkPlay is also developing a platform for developers to work with to lower the barriers to entry for MMOG creators. eRepublik is a massive online social strategy game. The browser Alexis Bonte based game allows users to interact with each other and act as politicians, entrepreneurs, soldiers, journalists, etc. Users help develop their countries economies in the New World. Serious Business is a social game development studio. Three Rings is an internet games development company based in San Francisco. Puzzle Pirates is their hit game. In an era of profound change in the media landscape, XPD Media was established to build innovative enterprises based on Internet and mobile platforms PhoneBook is a smart photo dialer that *automatically* sorts your top contacts. Dial your best friends faster than ever- no more scrolling through that lengthy contact list. Virgance is a for-profit, web 2.0 company that takes new activism ideas and uses the power of online social networks to scale each idea into a large-scale, citizen-powered global campaign in order to improve the world. Three Melons is a game studio that develops online games on free-to-play business models, both with original IP and wellestablished third party properties, designed for Advertising and Entertainment. GameLayers Inc is a small game design company making what it calls passively multiplayer online games. Hive7 creates massively multiplayer web games for social networks such as MySpace and Facebook. Siqi Chen Daniel James Robin Chan
9,691
0.0%
eRepublik
NA
NA
$4.0 Lightspeed $3.5 True Ventures, Chance Technologies $2.0 True Ventures, Pilot House
NA
NA
NA
NA
Three Melons
Mariano Battan
NA
NA
GameLayers Hive7
$0.5 O'Reilly AlphaTech, Joi Ito, Richard Wolpert $0.1 Dhillon Capital
46,527 394,336
1,862 31,404
4.0% 8.0%
44
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: Social Gaming Summit 2009, Crunchbase, Company Websites, Press Releases, LinkedIn profiles of founders; MAU: Monthly Avg Users; DAU: Daily Avg Users
5,303,408 5,165,050
412,967 198,600
7.8% 3.8%
Keith Schacht
992,299 773,625
54,680 44,351
5.5% 5.7%
SuperFan is also a social game where fans use a virtual currency to compete to become the SuperFan of their Rick Marini top Faves. As the SuperFan, the user gains control over certain aspects of the Fave profile such as the color palette, wallpaper, profile picture and can add a personal quote about their Fave. SuperFan works like a video game where Fans earn Points for contributing to the site and climb higher Reputation Levels. Fans can also earn or buy Credits (virtual currency) to be used to compete to become the SuperFan, send a virtual gift, post a sitewide Shout-Out or customize the Fan profile. Offbeat Creations, Inc. is a premier developer and publisher of entertainment software on social media platforms. Chia Chin Lee Backstage creates casual games for social networks, and is the only company developing for the Facebook Platform that provides charities and non-profits with fundraising and awareness opportunities through the creation of branded content that seamlessly blends into their applications. Focusing on engaging multiplayer games, Player Axis believes in involving their users as soon as possible to tune and shape the development of their games. Their games are currently available on Facebook and will soon be on MySpace and other Popular Social Networks. Most Eligible singles, pillow fight, funniest people Focused on development and distribution of games for social networks, the IPhone, and game consoles including Xbox 360, PlayStation 3, and Nintendo Wii.; experienced team Russell Ovans
751,658 503,156
77,355 175,823
10.3% 34.9%
Player Axis
Chad Boyda
174,291
18,823
10.8%
27,155 22,528
898 1,667
3.3% 7.4%
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: Social Gaming Summit 2009, Crunchbase, Company Websites, Press Releases, LinkedIn profiles of founders; MAU: Monthly Avg Users; DAU: Daily Avg Users
Mobile Payment Firms have experienced some consolidation with Boku purchasing Paymostart of larger trend?
Firm Allopass daopay Funding Investors NA Subsidiary of Hi-Media NA Unfunded Description Allopass is an Internet Payment Service Provider,that specializes in pay-per-phone and pay-per-SMS (text message). Worldwide Payments, charged to the Phone Bill. daopay enables web sites to receive payments from anyone with a telephone in over 200 countries. What makes daopay unique is that buyers dont need to sign up or set up an account. daopay works with any landline or mobile phone, even with prepaid / to go plans. Customers just dial a service number and without ever giving away any personal or financial information, they hold the line for a minute or two until the product price has been charged to their bill; or they send an SMS text message instead to confirm their payment. CEO Cyril Zimmermann Peter Krapfl
PaymentPin
NA Unfunded
PaymentPins online micro-payment service leverages both phone line and mobile Malik Yacoubi billing platforms allowing Internet users to transact without a credit card by adding the charges to their phone. Obopay lets consumers and businesses purchase, pay, and transfer money through any mobile phone using Obopays mobile application, text message, mobile Web, or Obopay.com. Obopay works on any mobile phone and any carrier in the U.S. Obopays prepaid MasterCard works with any merchant that accepts MasterCard debit cards. Obopay has partnerships with Citi, Fidelity Information Services, MasterCard MoneySend, Bancorp, Verizon Wireless, AT&T and RIM. BOKU is a mobile online payments company. Carol Realini
Obopay
$ 126.0 Qualcomm, AllianceBernstein, Citigroup, Redpoint, Societe Generale, Richmond Mgmt, Essar Communications, Onset, Olayan, Promethean, Nokia $ 13.0 Benchmark, Khosla, Index $ 12.5 Newbury Ventures, Advent Venture Partners
Mark Britto
Noted for its frictionless user experience, Zong converts shoppers into buyers at David Marcus rates up to 10 times greater than traditional payment methods, like credit cards. Zong leverages direct connections with leading mobile network operators around the world to provide unrivaled connectivity and service quality. Zong is featured in hundreds of top applications on popular social networks like Facebook and MySpace as well as leading virtual worlds and other online gaming sites, such as Gaia Online, IMVU and Outspark. When users surf merchant sites and wish to buy goods online, they select BilltoMobile as their payment option when they check out. They then input their mobile phone number and their own personal identification number (either their voicemail password or last-4 digits of social security number). A six-digit number is sent to their cell phones via text as a One Time Password. They enter this authentication code online, and see the charges in the next months wireless bill. Jim Greenwell
BilltoMobile
Paymo
5.0 Seed
Paymo is a mobile payments network that allows consumers anywhere in the world to Paul McGuire buy online and pay with their mobile phone.
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: Social Gaming Summit 2009, Crunchbase, Company Websites, Press Releases, LinkedIn profiles of founders; MAU: Monthly Avg Users; DAU: Daily Avg Users
Virtual Goods (funded) players may face disintermediation from FB native currency exchange
Firm Funding Investors Description CEO
PlaySpan
28.3 Easton Capital, Menlo Ventures, Novel TMT Ventures, STIC International,
PlaySpan provides monetization solutions for online games, virtual worlds, and social networks. Social network payment solutions are available through Spare Change. Featured on over 700 applications, across Facebook, MySpace and Bebo, Spare Change empowers developers to successfully monetize their applications through micro payments.
Live Gamer is a marketplace solution for player-to-player trading of virtual assets. Specifically, Live Gamer provides a fully publisher-supported virtual trading marketplace. Users are able to access Live Gamer from within the game itself, and can then conduct secure transactions. Traded goods become available in real time for uninterrupted game play
Karl Mehta
Live Gamer
Mitch Davis
Twofish
9.5 Venrock, Rusic Canyon, TriplePoint Capital 6 Hit Forge, Charles River, Bay Partners, Madrona Venture Group
Twofish is an economic engine for managing micro-transactions within gaming Lisa Rutherford environments. The platform provides game developers with easy-to-use tools that provide account management, cataloging, and analytics services. Jambool provides SocialGold, a virtual currency and virtual economy platform for application and game developers. SocialGold is a platform for developers to create in-app payments and currency systems. Jambool is a also leader in the social networking application space with dozens of applications live on multiple platforms, reaching several million users world wide. Vikas Gupta
Viximo
Viximo provides a platform for the creation, distribution, and monetization of Rob Frasca virtual goods and art for social networks and mobile applications. Viximo provides a link between digital good creators and the market for the distribution of the goods. AdNectar is the complete solution for agencies and brands fielding campaigns on social networks. We turn customers into brand advocates through the simple act of giving branded virtual gifts. Nir Eyal
AdNectar
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: Social Gaming Summit 2009, Crunchbase, Company Websites, Press Releases, LinkedIn profiles of founders;
Virtual Goods (unfunded) these players also face disintermediation risk from FB native exchanges
Firm
Firecue gwallet Kwedit Tapjoy Virtual Greats
Description
Give users the opportunity to earn virtual currency by completing free surveys and exclusive advertising offers - turning non-paying users into new revenue A comprehensive system for all social gaming developers optimized for Facebook, OpenSocial platforms (MySpace, Hi5, Tagged, etc), virtual worlds or websites utilizing virtual offer-based currency. Payment system for virtual goods and digital content Mobile advertising and virtual goods Virtual Greats is the worlds leading virtual goods sales and distribution system, connecting celebrities, artists, IP holders, consumer brands and content creators with a new generation of fans through the online trade of likenesses, fashion, catchphrases, and other virtual representations of real-world brands. Zeevex is an Open Virtual Currency for online Video Games. Its the Gamer -friendly way to pay for virtual items and subscriptions in your favorite online Game. And Zeevex works for any amount from 5 to $100, even if you dont have a credit card, bank account, or Paypal account. Got Cash? Got Coins? then Rixty is for you! Rixty is a new way to use your cash and coins for online spending. Don't have a credit card or bank account? With Rixty, you don't need one! Rixty lets you take control of your entertainment spending giving you access to the online world of multiplayer & downloadable games, virtual worlds, social networks, mp3 downloads and mobile games & ringtones.
CEO
Jason Rodriguez Gurbaksh Chahal Danny Shader Lee Linden Dan Jansen
Zeevex
Ron Williams
Rixty
Ted Sorom
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: Social Gaming Summit 2009, Crunchbase, Company Websites, Press Releases, LinkedIn profiles of founders; MAU: Monthly Avg Users; DAU: Daily Avg Users
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
But social gaming has just scratched the surface given that they do not utilize all available user data
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Appendix
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Content
The Developer
Packaging
Platform Mobile Advertising
Retail
iTunes Mobile Payment
Currently incredibly fragmented with low barriers to entry Extremely hit driven
Dominated by iTunes though Google has renewed momentum through Droid / Verizon / Motorola
iTunes has recently announced in-app purchase, potentially limiting piracy and allowing more service-type functionality
Will there be compatibility across appstores? Can mobile payment be centralized across stores? Can digital goods / currency be centralized across stores? How can discovery / marketing be improved beyond the storefront?
Will iTunes / Android share data with developers to improve innovation and monetization efforts?
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
The Social Media Ecosystem is designed to help the user find and consume content
Discovery / Analytics
Robust data collection Targeting / recommendation
Content
The User
Packaging
Platform Optimization / Relevance
Distribution
Multiple endpoints Monetized through keywords
Altered and optimized for SEO / SEM on search platform (Google) Altered and optimized for SEO / SEM on social platforms (Facebook / Twitter)
Will traditionally low rates of payment be sustained in the longterm? How will we deal with content overload?
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
While developers are the most funded category, there is strong investment in peripheral areas like virtual goods and mobile payment
Total Number of Funded Firms
Funding ($MM)
16.0
5.0
6.0
83.3
50.0
43.0
29.5
21.0
13.8
6.1
5.0
0.9
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: Social Gaming Summit 2009, Crunchbase, Company Websites, Press Releases, LinkedIn profiles of founders
Funding Investors
NA Acquired by AOL 35 Mohr Davidow, Hercules Technology Growth Capital
Description
Bebo is officially the largest social networking site in the UK, Ireland, and New Zealand, and is the third largest social networking site in the US behind only MySpace and Facebook. Social network focused on gaming
CEO
Michael Birch Ramu Yalamanchi Richard Kimber
Friendster Inc.
30 Benchmark, DAG Founded in 2002, Friendster is one of the webs older social networking services. Adults, 16 and up can join and connect Ventures, Kleiner with friends, family, school, groups, activities and interests. The site currently has over 50 million users. Perkins, Reid Hoffman, IDG Ventures 17.1 Norwest, US Ventures, First Round
myYearbook
myYearbook is a social network for teenagers. It was founded by Catherine and Dave Cook who were 15 and 16 when they Geoff Cook launched the site. The site features various widgets including Owned (to buy and sell your friends), Battles (to battle over photos and videos), Match (to create secret admirers), and Pimp (to decorate and design profiles). Greg Tseng
Tagged
13.5 Reid Hoffman, Mayfield In October 2006 the site made a drastic change and went from being under-18 only, to allowing users of any age to join. Fund, Horizon This change has helped user registration skyrocket. Technology, Finance Management, Leader Ventures 9 Grelock, Reid Hoffman, Kongregate is a casual gaming social network where gamers can gain ranking and earn awards. The site allows Richard Wolpert, Bezos developers to upload their games and share in revenues (25-50%) from the ads displayed around the games. Kongregate Expeditions, Joi Ito promotes developers to upload new games by having game of the week contests. Kongregate pays skilled developers between $20,000-80,000 to create premium games to provide their community with quality games. Each premium game comes with a free version that can be upgraded to paid premium version.
Kongregate
Jim Greer
Conduit Labs
8.5 Charles River Ventures, Loudcrowd is an online music community focused on music gaming and virtual goods. Loudcrowd users listen to a constant Daniel Prism VentureWorks stream of new music while playing an evolving and connected series of music-themed games with friends. By playing, O'Brien users earn a variety of virtual goods for use within the site including music tracks that can be collected to customize group playlists. 2.06 Tim Draper Phonezoo is a ringtone service that lets you make your own ringtones, download them to your phone and share them with your friends. The site smartly gets around copyright issues by having users create ringtones using songs that they upload. Winster.com is a social community where friends help friends solve puzzles to win real prizes. You pick the prize you want to win, then play engaging, fun games until you win your prize. Our games are specifically designed to foster a sense of community and promote positive interaction. Players cooperate to help each other win prizes, rather than compete. At Winster.com, players play with each other, never against each other. Vostu is a social network for Spanish speakers to have a global, online environment and create a community of social spheres that brings you closer to the people, interests, and ideas you care about the most. Online network for dog owners Ram Ramkumar Jerry Kaplan
Phonezoo
Winster
This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Division of Gabo Media Girl Ambition is a division of Gabo Media. Gabo Media is the first technology company to develop a suite of tween-centric, Hilary COPPA and CAN-SPAM compliant social tools and services. Gabo Media's first vertical product is "Girl Ambition," an DeCesare online social community specifically designed to meet the needs of the modern tween girl demographic, ages 8 to 13. The 55 second product from Gabo Media will be "GabX," a COPPA compliant, boy-targeted online site. Source: Social Gaming Summit 2009, Crunchbase, Company Websites, Press Releases, LinkedIn profiles of founders; MAU: Monthly Avg Users; DAU: Daily Avg Users
OneDegree Stereofame
Tuenti VOO!
Tuenti is a Madrid-based, invitation-only private social networking website that has been referred to as the Spanish Facebook. At its juicy core, VOO! is all about flow. It's the messiness and unpredictability of the creative urge. It's the smearing together of people and their ideas to create a giant colored quilt. It's the "worldy" aspect of social mingling with a unique slant that's less about what people are doing and more about what people are thinking, creating and playing.
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.
Source: Social Gaming Summit 2009, Crunchbase, Company Websites, Press Releases, LinkedIn profiles of founders; MAU: Monthly Avg Users; DAU: Daily Avg Users
What to look for TEAM Experience in mobile software and marketing Proven management of low cost software development Experience with Apple / iTunes licensing / business development Innovative software development process and ability to generate new apps cheaply and in volume Date, but dont marry a platform Focus on verticals and developing competitive advantage
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This information is confidential and was prepared by Yujin Chung for an independent study project sponsored by Professor Hosanagar. It is not to be referenced, published, or presented without Mr. Chungs prior written consent.