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Advergames: Cross Technologists and Story-tellers

Posted on Monday, Jun 13th 2005

Brand engagement takes on a whole new form, as Advertisers begin leveraging technology and computer gaming.

From the current Economist: Gaming: As young people spend less time watching television and more time online and playing games, advertisers have devised a new way to reach them. CROSS the popularity of a new medium with the demands of advertisers, and the result can be a whole new genre of entertainment. In the 1930s, the sponsorship of radio serials by makers of household-cleaning products led to the soap opera. Listeners were enthralled by episodic, melodramatic storylines, and advertisers were guaranteed a big audience. Today, the same thing is happening with another new medium. Video games have been crossed with advertising to produce a new genre: the advergame.

Adverfilms are already starting to show up in movie theaters, a Stella Artois sponsored series of short films being shown at the Landmark theaters being a good example. Advergames is a similarly powerful phenomenon that will draw budgets away from traditional print or television advertising, and focus it in on brand engagement mechanisms with orders of magnitude higher returns.

“Richard Schlasberg, a Coca-Cola marketing manager based in Hellerup, Denmark, says the beverage-maker, long a fervent believer in television advertising, is now siphoning funds from its TV budget to maintain a regularly updated suite of games. A 30-second prime-time slot on American television can cost half a million dollars, whereas an advergame rarely costs more than $50,000 to develop and can be posted on the internet for months or years. Mr Schlasberg notes that, with television, potential drinkers just stare, briefly, at Coca-Cola. With advergames, consumers are “actually playing you”, he says, and they then associate the brand with fun.”

$500,000 versus $50,000 – simple equation. More sophisticated Advergames may cost upto $500,000, since the other piece of the value equation still is a huge win: 30-seconds versus months / years.

Those who stand to gain from this phenomenon, like in Adverfilms and Edutainment, are still the most creative content producers. Opportunities also exist for business model innovations, whereby the content producer takes a fee for every click-through.

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Einstein’s Mother

Posted on Sunday, Jun 12th 2005

“When I was a child, my mother said to me, ‘If you become a soldier, you will become a general. If you become a monk, then you will end up as Pope.’ Instead, I became a painter, and wound up as Picasso.” Famous quote from Pablo Picasso. What did Einstein’s mother say to him?

Recently, I found a yellowed volume of Jawaharlal Nehru’s (First Prime Minister of independent India) letters to his daughter, Indira Priyadarshini, at the Fort Mason used bookstore in San Francisco. These letters were written from prison, and as you read them, you would feel a father preparing his beloved daughter for becoming a world leader. Indira Gandhi, of course, went on to also become a Prime Minister of India.

I have always been intrigued by the question: What is the model for raising a high-performance child?

Some of Howard Gardner’s (development psychologist at Harvard) books Creating Minds and Leading Minds throw some light on the factors that influenced many twentieth century world figures: Picasso, Einstein, Martha Graham, Alfred P. Sloan, Thatcher, Gorbachev, and Gandhi. However, he only traces the event histories, less the role of education or parenting.

I am trying to test the following hypothesis: If someone meaningful enough to the child (parent, teacher, other role model) believes in his/her potential, and instills that belief in the child, is that the first step in reaching for Greatness or for world class achievement?

And then, if the hypothesis is true, how can this be worked into the educational system, products, and services to give a much larger set of youngsters enough confidence to believe that they can, indeed, have a world class destiny?

Affluenza

Posted on Monday, May 30th 2005

America in general and Silicon Valley in particular used to be on the ball. It used to operate at Silicon speed, work really hard, and produce extremely interesting innovations. A hungry, driven work-ethic permeated the culture.

Today, along with outsourcing and off-shoring, that superb work-ethic has also been shipped off to India and China. America suffers from Affluenza, while the Asian giants ride their enormous growth cycles and develop at a frantic pace.

The Internet era of the nineties gave us a fundamental discontinuity around which America organized itself. All the youthful optimism, risk-taking, willingness to work hard kicked in gear. For about six years (1994-1999) the world ate out of America’s hands, until in 2000 the Internet bubble was punctured. 2000-2005 were years ridden with terrorism and war, and an atmosphere of caution, fear, retrenching, pessimism and anger set in. The political firmament of the world saw George Bush’s closed world-view replacing Bill Clinton’s charismatic, inviting and open world-view. The economic impact of technology made globalization pick up pace, and created new markets, took jobs away from America, and created a vacuum in America’s long-standng innovation-driven hegemony.

In 2005, what then is the state of innovation? Is there a chance to recover from the lull?

I believe, the same Affluenza that is plaguing America’s work-ethic – can be tapped into, to find the next generation consumer markets.

The teenage kids of high-achieving wealthy parents (many of whom were first-generation immigrants) are chronic spenders. These are the HAVEs of America. Many of these kids have acute Affluenza and they neither work hard, nor aspire to achieve much in life. They HAVE everything. That resources in the world are finite – is a foreign concept to these kids. They all have Attention Deficit Disorder (ADD), and hence have to be constantly entertained which creates new opportunities for marketeers to sell them new things. The iPod is a classic success story that has done a fantastic job of tapping into this segment, and its desire for the next “cool” thing.

My challenge to today’s innovators is to come up with “Edutainment” products that this segment can consume in abundance, and make you rich. But in the process, I submit, you can impart some sorely needed education to these chronic consumers. Marketeers: convince the parents of your products’ educational value, and convince the kids of the coolness value. Parents will surely open their wallets, if you can engage this perpetually distracted segment, and give them something that will serve them well in preparing for life!

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Book Publishing moves West?

Posted on Wednesday, May 25th 2005

New York Times reported a few weeks back: “Judith Regan, whose ReganBooks imprint has produced string of celebrity-driven and highly profitable best sellers, says she is moving her publishing and media group to Los Angeles by end of year to spend more time on television and film projects; ReganBooks, part of HarperCollins, would be one of few major book imprints to be based outside Manhattan and one of first to leave New York for West Coast; move could shake up industry that has long operated in parochial, Manhattan-centric fashion, even as technology has made location of company less important; Regan was first publisher to seize potential of popular radio personalities like Rush Limbaugh and Howard Stern, professional wrestlers like Mick Foley, and interest in pornographic film stars like Jenna Jameson; all their books were big best sellers; she says she intends to continue publishing 100 books a year, while expanding her television and film efforts.”

Looks like there is more stir in the Book Publishing world, besides my earlier article on Peter Redford’s Browse experiment. Check out vidlit which Barb Rybka tipped me on – yet another experiment on how people foresee the evolution of books into some sort of a democratic new media publishing. There is a little flash clip about freedom from the power of the editors in mainstream media.

It also looks like there is an ensuing marriage of technology and content creation in which the wild west of the United States will need to tie a knot with the old-school New York-centric power structure and challenge its authority!

P-A-L-M to the boonies?

Posted on Tuesday, May 24th 2005

Wall Street Journal reports that the two Palms are showing signs of wanting to getting back together.

“PalmOne Inc. said it is acquiring full rights to the “Palm” brand name and will change its name to Palm Inc. later this year. Milpitas, Calif.-based PalmOne also said Tuesday that it has renewed its license of the Palm operating system through 2009. Under the terms of the agreement, palmOne said it will pay PalmSource Inc. minimum royalty payments of $148.5 million, subject to meeting certain milestones.”

Widely reported in the media in the last few days is also PalmSource CEO David Nagel’s departure, which makes one wonder if a reintegration is in the works.

Now, if the combined Palms would then head to the boonies in the developing world, it could be a good win-win for both parties. For more, read yesterday’s post: Boonies may be the next big opportunity!

Boonies may be the next big opportunity

Posted on Monday, May 23rd 2005

Om Malik wrote a few months back: Indian Telcos head to the Boonies:

“Sunil Bharti Mittal, chairman of India’s second-biggest mobile-phone network, says fishermen on the nation’s southern coast are using their cell phones while at sea to call traders and find out who’s paying the most for lobsters. He’s planning to stop that. Instead, Bharti Tele-Ventures Ltd will offer the fishermen a wireless Internet service that would provide up-to-date prices for their catch and even allow them to book orders from their boats. Doing that, the fishermen ‘will significantly increase their earnings’, he says. Fishermen aren’t the only ones on Mr Mittal’s radar screen. In the next 12 to 24 months, he plans to introduce technology that will enable farmers to monitor weather conditions in real time on their mobile phones.”

SME. SME. SME. Those Farms and Fisheries in India are mostly SMEs. How big are these segments? Large enough to tip the market share war in Wireless OS that today is dominated by the Symbian OS, with its largescale support from Nokia, in favor of some lesser players like Microsoft and PalmSource? Could these grassroots applications for the bottom of the pyramid become killer apps in the quest for seducing the next billion computer / telecom users?

Well done, Microsoft!

Posted on Saturday, May 21st 2005

Brilliant article on a brilliantly conceived and executed product strategy in Time Magazine about Microsoft’s Xbox which starts its journey as a gaming console and will conceivably evolve, over time, to become the ultimate digital entertainment convergence device : Out of the Xbox. Here is an excerpt from the article discussing what Bill Gates has recently learnt from Steve Jobs:

[“Baby Bill” J. ] Allard’s solution was a good example of un-Microsoft thinking. “Guess how you get great design?” he asks. “You don’t try to do it with computer scientists from M.I.T. You don’t try to do it the conventional way one would think about from a Microsoft point of view.” Instead, Allard hired a sculptor from the Rhode Island School of Design and gave him a long leash. The sculptor turned around and hired a dozen extremely expensive boutique design firms to each come up with a design for the new Xbox. He then picked two winners, one from San Francisco and one from Osaka, Japan, and made them work together to build something cool yet approachable–“inviting” was the key concept.

And they have hit the nail on the head this time, it seems – at least on the hardware side.

On the killer app side, the thinking seems to also be evolving in the right direction, to go after a broader set of segments, and away from the original focus on hard-core gamers:

But there’s still a significant demographic that for some reason doesn’t consider wiggling a joystick to pretend they’re shooting somebody a major priority in their lives. To woo this wider group, video games will have to get easier, more approachable, and they will have to expand into genres that don’t yet exist. Most video games are action movies. Where are the romantic comedies? And the dramatic weepies? “We’re not gonna get so everybody in the family loves this thing just with sports and shooters and racers,” Gates admits. “We’re gonna have to fund, both internally and externally, some high-risk genres and see if those can stick. We can’t just stay with the tried and true.” But maybe the new Xbox doesn’t need fancy-dancy games or new, risky genres. Maybe it doesn’t need games at all.

Finally, the more ambitious strategic thinking behind it all:

Let’s not miss what’s happening here. Microsoft, a company known primarily for making highly profitable business software, has put a box in your living room. It entered your house under the humble pretense of being a game machine, a toy for the kids, but it just ate your CD player and your DVD player, and it’s looking hungrily at your telephone. It’s all up in your media cabinet. It’s talking to your iPod, your digital camera, your TV, your stereo, your PC, your credit card and the Internet. It has created a miniature electronic ecosystem inside your home, with itself at the center.

This is why, Microsoft is still an impressive company … they don’t get it, they don’t get it, they don’t get it … and then, one day, they get it. And they get it right. Remember the browser war of the mid-nineties?

Netflix, look elsewhere!

Posted on Thursday, May 19th 2005

Netflix and Walmart have decided to partner, turning over all of 100,000 Walmart DVD rental customers to Netflix. Not bad, but probably, also, not great!

This is a good block and tackle strategy for Netflix, and it IS good news that at least one of the competitors becomes an ally. But the threats of the other reach-intensive commodity players like Amazon and Blockbuster still loom large over Netflix. My instinct would be to move OUT of the commodity positioning, and find the niche in Independent films, Festival films, Foreign Films, Special Interest categories, and create ethnically / psychographically segmented “groups” of user populations that come to Netflix because what they find at Netflix cannot be found at Blockbuster and Amazon.

It is quite critical for Netflix to be able to preserve the $17.99 / month price-point for 3 DVDs, or else a business model already plagued by low operating margins will trend further down, and may even start losing money. Differentiation is essential.

Netflix needs to think about other revenue streams that brand them better, as well as have higher margins. Such opportunities exist. Netflix, however, doesn’t seem to be finding them. Could it be, that the nerdy DNA comes on the way? Netflix also needs to mix online and offline experiences to create this superior brand experience, but the answer, and here’s a clue, is NOT brick-n-mortar stores!