Avatars as well as virtual (game) items were quite popular as a media topic back in the late 90s. To be honest, I myself even worked as the “manager” of a “star avatar” called E-Cyas in 1999. This included giving TV and press interviews in his name, answering fan mails and representing his alter ego in online chat rooms. Yes it was a crazy time! The most prominent star avatar that comes to one’s mind might be Lara Croft.  But the concept of online avatars and virtual items dates back to the mid-80s.  After nearly 30 years and after two major dot-com bubble bursts this business has come to a mature state. The popularity of social networks and high speed networks as well as the revolution of the mobile internet helped to turn it into serious business. In Asia this can be seen even stronger than in the rest of the world. There over $ 18 billion have been generated through the sales of virtual items and the use of virtual currencies. (Compared to around $2 billion in the US) We covered this phenomenon in the chapter about “Mobile Businessmodels” in our book.

Looking at Japan

Let’s take a brief look at Japan: Here the biggest social networks (mixi, mobage, GREE) are mainly accessed via mobile devices. A trend we can also see happening in the West right now, as more and more people are moving towards data-flatrate plans.  Mobage and GREE –one of Japans biggest social networks- are centered around avatars and social games.  GREE was launched back in 2004 and mobage in 2006.  Each has around 24 Million members. On these platform users can play free games with others, buy/win in-game items and also purchase or be rewarded with new items, clothes and accessories for their personalized avatar or decoration items for their virtual rooms. And this strategy seems to pay off: Over 85% of GREES $1.5 billion revenue was generated by the sale of virtual avatar goods and in-game items.  Interestingly the heavy users of these platforms and the most avid virtual item and accessories collectors are not teens but mostly females in their mid-20s to mid-30s. All virtual goods purchase is handled through virtual currencies. In mobages case it is called mobage gold. Users can also receive mobage gold coins by clicking on ads or by making an online purchase through a partner store.

Brands becoming active

Also brands could see this growing trend and started to embrace these platforms quickly. Coca Cola Japan for example has partnered with Mobage back in 2006 to offer Coca-Cola branded limited edition avatar clothes and accessories. Other brands like Pizza-La and SevenEleven followed soon after with their own limited edition items and accessories.  Fashion brands even went a step further and launched their new collections within these social networks by providing virtual versions of their new line-ups for the users avatar. Aeon department stores teamed up with mobage recently to have users vote on their favorite Aeon clothes and participants would receive the virtual version of the selected clothes for their avatar.

Ameba Pigg is another good example. This very cute avatar platform that launched in 2009 already has around 15 million users. The service cashed in around 1 million US$ on virtual item sales during last year’s new year’s season. Beyond this it is used heavily by brands as an engagement platform. In late 2011 fashion brand Gucci even took it one step further by opening a virtual shop in Ameba Pigg and selling virtual Gucci items for real money. A virtual Gucci bag sells for around 28$.

The West is catching up

But also in the West it has become more and more popular for brands to offer virtual items for example in Facebook games like Farmville. McDonald partnered with Zyngas in 2011 to offer special FarmVille in-game items like a hot air balloon.  Bing and SevenEleven also have tried similar partnerships. IMVU, a Western avatar chat platform with over 50 million registered users is another good example. They have the largest virtual goods catalogues and brands are already strong involved in providing branded items. Also Japanese platforms are expanding into the West: Both mobage and GREE recently made major global acquisitions and are already offering English versions of their platforms.  Ameba also launched a global PC & mobile version of Ameba Pigg recently. Global game companies are also more and more shifting towards the “item-sale” monetization model. A good recent example is “Smurf’s Village” by Capcom.  Given all that is does not come to a surprise that DeNA, the company behind mobage teamed up with game maker Bandai-Namco this year to start a new global gaming enterprise.

The Takeaway

What we see here is just the beginning of a bigger trend. And it is a good time to start engaging existing and potential customers through these new possibilities.

For outside players like brands or telcos to dip their toes into this field, here are some possible benefits:

-potential tool to reward existing customers (with virtual branded items/goods)

-stronger, more direct brand engagement

-attract potential new targets in a very “playful” way

-more meaningful and personal from the users point of view

-users become brand ambassadors (avatars wear the virtual accessory and by talking about it)

-possibility to collect valuable consumer insights (virtual sampling)

You can also expect to see many more platforms and opportunities evolving mostly on the mobile platform.

The announcement of Apples in-app subscription has created an uproar amongst content creators and received a lot of coverage in the press. To summarize it, Apple generally wants 30% of all the revenues generated in and through applications in its online store. This now also includes iOS subscription services to magazines, newspapers, movie rentals and other content offers.

What might seem as a surprising move is just a logic step towards an even more closed ecosystem. Very much like what we have seen here in Japan over 10 years ago. Apple is and has been an avid learner. It is safe to say that already a long time ago Apple (and in a sense Google too) took a lot of inspirations from the i-modes business model: The iPod and its integration into iTunes, providing a vital ecosystem for developers and content owners, controlling the hardware and the service, one-stop payments, etc.

Lessons learned from Japan

Interestingly withy the start of i-mode in Japan, all paid applications in the official menu were only available as subscription services. This means that even for just downloading a game the user had to subscribe to the game service and pay a monthly fee ranging from around 100 – 500 Yen. For content providers this made it possible to have a constant stream of revenues right fro the start. And as users are often reluctant (or lets call it too lazy) to cancel subscriptions that monthly revenue tends to last for quite a while

So looking back at Japans past, Apples in-app subscription approach is nothing new. It has been one of the cornerstones of success of the mobile ecosystem.

The introduction of the iPhone and other smart phones in Japan recently started to threaten this subscription based business model as suddenly application fees only needed to be paid once and even upgrades came for free. Not to mention the new freedom for independent developers allowing them to be part of the mobile revenue game even just as a “one-man-show”. It brought a new fresh open wind to the Japanese mobile business world. But how things look right now, Apples business model is more and more turning into what i-mode was all about right from the start: a tightly vertically integrated and controlled solution, expanding into new hardware platforms with a shared content and business platform, relying heavily on subscription based content offers.

Don’t be greedy

There is only one important difference: NTT has always been less greedy. Apples demands quite a big share when it comes to splitting revenues. 30% is a lot if we compare it to  i-mode. NTT only asked for 9% of the revenues.  And this was one of the main reasons that i-mode became an attractive platform for content owners and developers. So right from the start there was enough interesting content to drive users to the platform. In the end what makes a platform successful depends very much on these developers and content providers. They turn a technical gadget into a joyful experience. Content sells.

While this seemed to have turned out fine for Apple in the past now things start to shake up. Already application developers and content announced they might not give in to Apple this time.

30% is a lot to ask for. If you have something like  “mobile ecosystem monopoly” this might work out for a while but in the end it bites the hand that feeds you: content providers.

Our advice on this: Never be too greedy. Be willing to share. That is what it is all about. Keep you partners and customers happy and you keep everybody happy.

IFRA Tokyo Mobile Tour, Tokyo, May 26th, 2010

The IFRA tour of Tokyo was back at the end of May, and we presented our Six Laws in a more interactive, face-to-face session.

The main focus was the impact that the Six Laws can have on individual companies within the European publishing industry, through an interactive Q&A session.

Mobile Media Day, IFRA, Amsterdam, May 18th, 2010

At the Mobile Media Day, held in Amsterdam, The Netherlands, we presented our views related to how the publishing industry can embrace the mobile platform for success.

Using case studies and insights from the Japanese mobile market, each of the Six Laws was discussed and analyzed within the context of Publishing.

American Chamber of Commerce Japan, Tokyo, May 14th, 2010

The Six Laws authors presented a roadmap for the future of wireless services looking first at the most important lessons learned from the Japanese mobile market. After the presentation we had a lively discussion about the future of mobile handset makers  and carrier in Japan. Thank you everybody for your comments and your hospitality.

Book Break, Foreign Correspondents Club of Japan, Tokyo, April 12th, 2010

We presented the The Six Laws at the Foreign Correspondents Club of Japan for their evening book break.  We explored the many hidden secrets of success for the world’s mobile industry and ended up in interesting discussions about the Japanese mobile economy and the overall future of mobile technology and services.

Kindle eBook reader

eBook readers or at least the concept has been around for quite some time. Already back in the early 90s some early adopters started to read novels on their Newton Messagepads.

Since then things have come a long way with many early players like the Rocket Reader left behind in oblivion. 2010 marks the boom year of the eBook reader. Over a dozen of reader devices are already in the market and dozens of new devices had been announced during CES and MWC in the past months.

The poster child of the new eBook revolution is Amazons Kindle with an estimated 1 million devices sold so far.

Lets look a bit at what makes the device interesting:

Smart & Simplex Delivery
The way books/magazines/newspapers are delivered is smart and “simplex” by utilizing the mobile networks for delivery. From the users side there is no need to sign up for a data plan from a mobile carrier. Amazon is taking care of that for free, even on a global scale. (there are some global roaming charges). Buying books becomes a seamless experience for users no matter where they are.

Publishing Ecosystem
Even the agreements Amazon struck with the big publishing houses is a topic of hot debates, the Kindle offers a special production and distribution tools for independent authors to bring their works to the Kindle platform including a (rather) fair revenue-share business model. The author keeps 70% of the revenues while Amazon is taking care of the listing, distribution and procurement. An interesting approach to attract a new market of independent writers. As a next step Amazon also launched an application development ecosystem similar to Apples App Store.

One System, Many Access Devices
The Kindle reader application is available for smartphones (iPhones) as well as for PCs (Mac & PC). This allows users to continue reading across several devices and in different usage scenarios, be it stationary or mobile. The Amazon server takes care of the synching between the devices including bookmarks and current reading position.

While the Kindle can be seen in a way as a revolutionary reading device there is still room for improvement to make the concept of eBook readers more meaningful for users:

Price Versus Functions
Of course there are early adopters, technology fans as well as niche users who would definitely buy the device at its current price but this is not a mass market. From a normal users perspective it does not make sense to pay around 250 dollar for a device which just serves as a replacement for something a user already has: a device for reading books. (Not to mention the 480 dollars they would need to pay for the Kindle DX). Cost is an issue for most readers out there today. They range from 250 dollars up to 2,000 dollars.

How to overcome the price issue?

The straight forward approach: subsidize
One way would be to subsidize devices through subscription models to drive down the upfront cost of the device for users. Similar to mobile phones in the past the device could be free combined with a 12-24 month content subscription package.

The more sustainable approach: “killer content”
A more sustainable but also more ambitious approach would be to offer content to users that is appealing enough to make them purchase the device at the given price. Through exclusive deals with authors to publish their work either first or only on the specific platform or to offer hard to find or out of print book available nowhere else.  Special editions with exclusive extra content or attractive content bundle offers could also be a way to increase the perceived “need” for such an eBook reader.

But to make these devices really appealing there is more to consider. Here are just some thoughts:

Beyond Books
Create new usage scenarios for the device that would go beyond books/newspapers/magazines. In that case users would not purely buy the device as an eBook reader but also for other purposed which would help to justify the purchase costs from the consumers side. The Kindle application store is trying to drive the device towards these new usage scenarios. This would of course only work if the offered benefits are tangible enough in the minds of consumers. Adding for example access to Wikipedia (like the Kindle does) suddenly turns an eBook reader into a portable dictionary. Some extra usage scenarios could be: map services, location based information services, TV guides, Social Network access, personal blog service, shopping guides.

The power of Social
One part which most eBook readers lack are social tools. But this is the most powerful part actually! Even the Kindle has a built-in keyboard, there is not much use to it apart from searching or taking notes. Still users are seen as pure consumers of content. ebook readers have to become social devices. Users need to be able to comment on books they are reading or have been rea    ding, write letters to the editors of newspapers or magazines they subscribed to on their device or join community forums to talk about different reading related topics online. The (connected) technology is all there in the hands of the user embedded into one single device. Readers should be able to share their reading experiences with other users, write about it on their personal blog, Twitt about it, have their favorite book on their social network profile. As a next step readers could also become producers. They could write down their own personal stories, poems, experiences on the device and contribute this content back into the content distribution ecosystem. Their contributions could be downloaded by others for free or for a small fee and this revenue could be shared between the distributor and the creator: A new way of user generated content monetization.

Conclusion
eBook readers (like the Kindle) can be one of the drivers of a new device revolution (like the iPad) if the right ingredients are used to make the user experience “meaningful” enough to start using it. Content needs to be compelling. Access to content should be made easy by utilizing intelligent network solutions. Furthermore they need to have an intuitive, simple user interface all at a price level that is affordable for the average user. But just books might not be enough. The device needs to offer real added value services and also it needs services that make use of the mobile platform and the technology of the device. The device should be part of a bigger, connected structure. Most of all they also should embrace social and communication elements allowing a new shared experience to users. Of course there also needs to be an attractive ecosystem behind the device, to attract content developers. Otherwise these devices will face the fate of many high-tech novelties: they might end up in a niche and worst case die in there.

And in the end we should not forget one fundamental paradigm: The average user does not care so much about the device itself but about what the device enables him to do. The simplex, the better!

Picture source: http://www.flickr.com/photos/bike/ / CC BY 2.0

Apple iPad picture (C) mattbuchanan

When Apple introduced the iPad this January this event got covered in most of the media around the globe. Reading through the responses of experts, consumers and Apple fans produced mixes results. Some saw it as a true revolution others uttered their disappointment by calling it “nothing more than a big iPhone/iPod Touch” or even defying it as the next epic failure after the Newton.

So where is the truth? Maybe for now somewhere in between. But there is more to it:

A big step towards  Simplexity

We see the iPad as a next steps towards Simplexity. The iPad is not a netbook or a PC but it has the potential to replace some of these devices, or open up the world of “connected mobile media” to a new user group who would not want or even do not have a PC in their private “ecosystem”.

If we look at what the average user does on a PC then in most cases this narrows down to writing emails, surfing the web, watching videos, playing games and working on documents. Despite the possibility of a PC to do “much more” the majority of mainstream users just do not have the need for this. For them the iPad is a possible alternative to existing netbooks and portable PCs including an improved user experiences.

There is also another group who so far only had very limited experiences with a PC. They see the machine as an intimidating, over-complex device and often refrain from using it. The iPad can offer a new, less complex user experience to them, reducing the learning curve necessary to be able to “handle” the machine. Another feature is that the user can take the device to his or her preferred location instead of having to sit in front of a fixed “altar” devoted to the complex machine. In this way the iPad embraces the users environment by becoming an extended part of it. (Very similar to
what mobile phones have achieved in the past.)

The metaphor

While many keep talking and also wondering about the future of the iPad we see it more as a metaphor rather than the next best seller product. Beyond the wonders of modern engineering we should ask ourselves constantly how we can create products and services that help to empower people. Why do we use a PC? Because we like to sit in front of the screen most of the time? Surely no. Because we like to type? Also surely no. We use PCs to accomplish something. If these accomplishments can be achieved through a different device in an easier, simpler more intelligent and empowering way why should
we use a PC for this? Unfortunately the weakness of many engineering departments is they tend to build better trains instead of airplanes. (This is not always the engineers fault but also stems from the way a company is managed and steered.) In this sense the iPad opens up the “mental box” and offers a new, more user centered and more flexible way of thinking about technology and computers.

Conclusion

At this point in time it is difficult to judge about the future success of the iPad. It might take several more iterations before the product can be called “perfect”. Yet it is an important step into the right direction towards Simplexity. Competitors for sure will use this as an inspiration for their current and future products.

Combined with a balanced ecosystem and smart business models this would be a win-win situation for users, content creators, distributors and manufacturers.

Picture source: http://www.flickr.com/photos/mattbuchanan/ / CC BY 2.0

Tokyo 2.0 & Mobile Monday, Mobile Web Convergence Event, Tokyo, Feb 8th, 2010
Marco presented to the Tokyo mobile crowd at Super Deluxe in February on the first joint Tokyo 2.0 and Mobile Monday event.

Different from other presentations we did so far, this time we looked beyond the current mobile developments into the mobile future. Will mobile replace the PC by 2013 as the main access device as Gartner predicted recently? What has “mobile” to offer in the long term?

We named the presentation “keep it vibration”, which was one of the first working titles for our book.

Thank you everybody for attending and it was a real interesting evening.

International Computer Association, Special Event, Tokyo, Jan. 19, 2010
Marco presented the book as well as the concept of Simplexity at a special ICA evening event in Tokyo on January 19th focusing on case studies and successful business models and practices for the present and future mobile Internet featured in the book. For us authors this was the first time to present the book in Japan.