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Teenagers Coveted

Posted on Monday, Oct 17th 2005

If you have wondered why Rupert Murdoch spent $580 Million to buy his way into New Media via the acquisition of MySpace, read this.

MySpace has 33 Million users, mostly teenagers. They don’t watch TV. They don’t listen to the Radio. They hardly read. But they hang out in Cyberspace, so to reach them, advertisers would need to meet them in Cyberspace. Ad dollars, hence, migrate online.

And if you are wondering who needs to advertise to teenagers, read this. Amongst others like iPod, fashion brands Juicy Couture & Bebe, marketeers of lipsticks & mascaras, there is this booming new gaming business that positions bang-center into the heart of this market.

With broadband ramping up, sites like MySpace and Facebook gain tremendous traction from the teenagers and young adults segment. A good percentage of GameTap’s (TimeWarner’s new gaming venture) $50 Million advertising budget needs to be channeled creatively into sites like MySpace and Facebook.

Investors worry: Is the MySpace/Facebook trend (self-expression, photo sharing, blogging, chat, making new friends, … online) going to last, or will it go from being a fad to a bomb?

My assessment is that these media properties themselves need to be very creative and create fads. In a quintessential Jobsesque way, rather than following the trends the teens create, marketeers of these sites need to lead their audience from fad to fad.

And if they fail, the next generation of teens will go elsewhere, sending Murdoch’s $580 Million investment down the drain.

Featured Videos

A Great Fund Strategy

Posted on Sunday, Oct 16th 2005

Oak Investment Partners has set up a $200 Million venture fund to focus on the retail boom in India. Veteran retail investor Jerry Gallagher visited India and was astounded by the revenue per square feet in the Malls and Stores. He came back and convinced his partners to commit capital.

Many of my VC friends have asked me about opportunities in the Indian Market. Unfortunately, these are tech investors, and they glaze over, when I tell them that the Indian market opportunity is elsewhere … in consumer brands, in ready-to-wear apparel and accessories, in restaurants and cafes, in movies, in prepared food …

“But software?” they ask. Well, India is not an enterprise software market, except with a few exceptions. There is some SME opportunity in software, but by and large, India’s technology absorption will come from consumer markets. Here are two technology-leveraged concept arbitrages that would work:

Netflix: There is hardly any good access to foreign films, but Indians love movies. Challenge will be the mail network which is not great.

Pixar: India has great stories to tell, and many that are very animation-friendly. A great animation studio with cutting edge technology, sophisticated story-telling and creative capabilities would do well. Challenge will be to take this outside of Bollywood sensitivities, and cut out the 7 songs per film that Bollywood typically injects.

As for Gallagher, his investment thesis is on the money!

Blunt Nilkeni

Posted on Saturday, Oct 15th 2005

Yao! Read this:

Is your job at risk? If it’s the type of work that can be done over a wire, then probably yes, says Nandan M. Nilekani, the chief executive of Infosys Technologies.

Q. Are you worried about the outcry over outsourcing in America?

A. What’s happening is pretty fundamental. If you go back to the 1830’s, India and China were 50 percent of the world’s G.D.P., and then they missed the entire revolution of industry. So if you take a long view of this game, it’s just part of the process.

Q. Does it feel odd to find yourself lecturing Americans on the joys of capitalism?

A. You guys told us for so many years to cut out this socialist rubbish and go to free markets. We came to free markets and now you’re telling us, “Stop, don’t come.”

I had an International Finance course in College, where we read about the Gold Standard that existed before all the currency innovations came into being. And guess what? Much of the world’s wealth – in form of Gold – was stacked away in India. Until, the British merchants discovered spices. They took control of India’s spice trade, and funneled the Gold (GDP) away from India, presumably treating India as a low-cost supplier, while the margins disappeared into Britain.

What Nilkeni says, is that he can now take the margins as well, not just be the low-cost supplier!

Video FAQs

It IS about the Story

Posted on Friday, Oct 14th 2005

Spielberg joins forces with Electronic Arts to create computer games …

Electronic Arts Inc. said it signed an agreement with director Steven Spielberg to collaborate on three original videogames, in a further sign of the game industry’s aspirations for more intricate storytelling in their products.

“What we’re trying to do is answer the question our company was founded on, which is, ‘Can a computer game make you cry?’ ” Mr. Young (Niel Young of EA) said. “One of the ways we’re going to get there is by partnering with great storytellers like Steven.”

Some of my previous articles on the subject:

Advergames and Adverfilms
Microsoft + Hollywood
Screenwriters and the Electronic Gaming Bubble

vPod, MousePod, PixPod

Posted on Thursday, Oct 13th 2005

So Apple’s vPod gets released amidst predictable hoopla.

Over the past three years, Apple Computer Inc. has shaken up the music business. Now, in a move that could lead to big changes in how entertainment is distributed and sold, it plans to do the same with television and other forms of video.

The Cupertino, Calif., company yesterday introduced a collection of hardware and Internet services that allow users to purchase video programming over the Internet and watch it on a new version of Apple’s hit iPod media player. In the most significant development, Apple said it has reached an agreement with Walt Disney Co. to sell each episode of five popular TV shows over the Internet for $1.99. The downloads include the current prime-time hits “Desperate Housewives” and “Lost.” (WSJ)

One question that has come to my mind: Why Desperate Housewives? iPod’s biggest appeal has been amongst teenagers, gadget geeks, commuters, etc. Desperate Housewives is entirely orthogonal to iPod’s core segment. Is it an effort, then, on Apple’s part, to broaden the appeal of the iPod, and take it out to a more mainstream market?

On the other hand, Disney’s biggest win would come from teenager focused programming that can be channeled through the iTunes store.

And for Pixar, this opens up a superb opportunity for clever micro-content programming with a tight control over distribution.


How long before Apple has a legitimate reason to buy Pixar for original content?

Hotzone is Hot

Posted on Tuesday, Oct 11th 2005

An email lands in my mailbox from Yahoo! News:

Yahoo! News is proud to present Kevin Sites in the Hot Zone as its first endeavor in original multimedia newsgathering. We believe Kevin will bring to Yahoo! News users a unique perspective as he travels to conflict areas around the globe and sends back stories, photos, video and audio reports focused on the human element.

GREAT first effort in producing original content from Yahoo! Beautiful writings, powerful photography, courageous journalism, and most importantly, a global perspective. None of the “10,000 people died in …. Fortunately, no American was killed …” style bias seen in the mainstream media. A poignant voice echoes through.

So far, no advertising, but I am sure that is about to change, shortly.

Check out Hotzone!

eBAY: Small Business Commerce Solutions

Posted on Tuesday, Oct 11th 2005

Verisign sold to eBay for $370 Million what they bought in 2001 for close to $800 Million: the online payment business acquired via Signio.

NY Times reports:

San Jose-based eBay will acquire VeriSign’s payment gateway business, which enables online merchants to process and manage electronic transactions. EBay plans to combine gateway with PayPal, its online payment service.

As part of the partnership between eBay and VeriSign, eBay will buy up to one million authentication tokens. The tokens display a six-digit code that computer users must type, along with passwords, to gain access to networks. The code, which changes every minute as determined by an algorithm, is unique to each token. They are designed to deter identity theft attacks.

The tokens will be given to eBay customers worldwide sometime next year, PayPal spokeswoman Amanda Pires said. She added that the company has not determined whether it will charge for the tokens.

Some numbers:

The acquisition of the VeriSign business, which processed more than $40-billion in payments in 2004, will add $100-million to eBay revenue in 2006, and add a customer base of 100,000 small and medium-sized businesses.

EBay acquired PayPal in October, 2002, to add transaction fees from PayPal’s nearly 79 million accounts. The addition of VeriSign customers will help PayPal expand its “off-eBay business”.

EBay accounts for between $40-billion and $50-billion of the estimated $330-billion in global e-commerce payments, spurring PayPal to seek processing revenue from transactions that don’t involve eBay.

This makes a great deal more sense than Skype. Expanding market share in a large and growing market where eBay is already a leader, is a perfectly legitimate strategy.

Other related areas that may be worth investigating are FICO’s credit management business, if eBay’s goal is to broaden its offering to a more comprehensive portfolio of small business commerce solutions, and further away from its C-to-C roots.

Disneyland on the Ganges

Posted on Sunday, Oct 9th 2005

The BBC Reports that Ramanand Sagar’s son is launching a new theme park called Gangadham on the banks of the Ganges, in Haridwar, one of the most important pilgrimage sites in India. In an enchanting concept arbitrage, Shiv Sagar is on his way to creating India’s own version of Disneyland, except with characters from the rich and colorful stories of Hindu mythology!

I have to say, I LOVE the idea.

During the 2-3 years before I left India in 1989, Sunday mornings in most Indian households were spent watching the television serials Ramayan and Mahabharat (the two Indian epics).
Ramanand Sagar had then masterminded Ramayan. Shiv Sagar is his son, so this is a good continuation on the theme of marketing Hindu mythology and epics.

I have often thought Disney should start thinking globally and embrace the stories from other cultures. Media companies looking at India should take a long and close look at India’s rich heritage, and grab the tremendous untapped potential that rests in its depths.

And, if Disney misses, perhaps, Yahoo won’t?

ps. We saw a really cool play called Baby Taj this afternoon, at the Mountain View Center for Performing Arts. Tania Shaffer does a great job of presenting some post-modern issues like single-motherhood-by-choice in the backdrop of the Taj Mahal, masterfully packaged in an exotic setting, interlaced with stories of the Mughal Imperial family, and woven in romance and quick wit. Well done!