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Everything you know is wrongNeil Young : Casual Connect 2016
“Forecasting the future is really hard, even understanding the present is difficult. So unless you have a lens to look at the market you might
make a mistake.”
Not as snappy…
“We always over estimate the change that will happen in the next two years
and under estimate the change that will occur in the next ten”
— Bill Gates
How humans think about the future
How humans think about the future
How technology impact develops
Over estimate
Under estimate
How humans think about the future
How technology impact develops
We are in an industry where new technologies are being introduced every ~5 years
Over estimate
Under estimate
How humans think about the future
How technology impact develops
Understanding where a given platform is on this curve is
essential
What drives this for games?
2 primary dimensions…
Less Atom Complexity
More Atom Complexity
(Smaller, Simpler, Inexpensive)
(Larger, Complex, Expensive)
Less Atom Complexity
More Atom Complexity
(Smaller, Simpler, Inexpensive)
Requires Little Change(Low Behavioral Friction)
Requires lots of Change(Low Behavioral Friction)
(Larger, Complex, Expensive)
Less Atom Complexity
More Atom Complexity
(Smaller, Simpler, Inexpensive)
Requires Little Change(Low Behavioral Friction)
Requires lots of Change(Low Behavioral Friction)
Fastest
Fast
Slow
Slowest
(Larger, Complex, Expensive)
What about the content?
Oh yes! Apply a force multiplier for breakthrough content
Less Atom Complexity
More Atom Complexity
(Smaller, Simpler, Inexpensive)
Requires Little Change(Low Behavioral Friction)
Requires lots of Change(Low Behavioral Friction)
Has Killer Apps
Has no Killer Apps
Less Atom Complexity
More Atom Complexity
(Smaller, Simpler, Inexpensive)
Requires Little Change(Low Behavioral Friction)
Requires lots of Change(Low Behavioral Friction)
Very Fast & Very Big
Very Slow & Very Small
Over estimate
Under estimate
How humans think about the future
How technology impact develops
As an industry, what are we over-estimating & what are we
under-estimating?
&
1. Why we over estimate VR’s near term impact.
Smart, successful
people want us to believe.
But…
Lots for Atoms
Requires behavioral change
This is never going to happen
More like this…
What to expect then?
Lots of Atoms = More Expensive = Slower
Requires Behavioral Change = Slower
Bonus: Divorce = Slower
Less Atom Complexity
More Atom Complexity
(Smaller, Simpler, Inexpensive)
Requires Little Change(Low Behavioral Friction)
Requires lots of Change(Low Behavioral Friction)
Slow
Slowest
Fastest
Fast
Less Atom Complexity
More Atom Complexity
(Smaller, Simpler, Inexpensive)
Requires Little Change(Low Behavioral Friction)
Requires lots of Change(Low Behavioral Friction)
Slow
Slowest
Fastest
Fast
But isn’t there a lot of VC money?
Seed / Incubator
Seed / Incubator
Strategic
Seed / AcceleratorStrategic
Strategic
Seed / Accelerator
“75% of all investments in VR & AR in 2015 were Seed or Series A”
— CB Insights Q1 2016
~$150m invested
Where’s the breakthrough content?
If you followed the money, AR > VR
If you looked at the VR investments, business verticals/industrial a bigger deal
than consumer.
In consumer, investments are in industry infrastructure (tools, distribution, ad/
marketing platforms)
Does this mean that I should not create, publish or invest in VR?
6 Strategies for winning in VR1. Wait
2. Work with someone for whom VR is strategic
5. Focus on a vertical where adoption is a given
4. Build essential market infrastructure
3. Do something that requires only Seed or Series A Capital
6. Make the breakthrough content
2. Why we have under estimated the size & impact of the mobile
games market.
In 2010….
In 2016….
Over estimateHow humans think about the future
How technology impact develops
When reality exceeds expectation, it always looks like you are at the top.
Over estimate
Under estimate
How humans think about the future
How technology impact develops
But… because we are beyond our expectationsit’s hard to know if you are actually at the top.
We often think we are here
When we are actually here
It takes new reference points to redefine where the top might be….
It takes new reference points to redefine where the top might be….
But even then we tend to use the prior reference
points to predict the new peak.
#1 has no relation to #2!
We’ve seen this before….
Japan
In 2011, these 2 games were each doing $25m+ / Month
Looked like the overall Market had
peaked.
Source: Macquarie Japan
Total Monthly Games Revenue / Total Mobile Subscribers
¥0 / Month
¥175 / Month
¥350 / Month
Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12
Total Monthly Games Revenue / Total Mobile Subscribers
It was impossible to imagine a radically
bigger market.
Source: Macquarie Japan
Total Monthly Games Revenue / Total Mobile Subscribers
¥0 / Month
¥175 / Month
¥350 / Month
Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12
Total Monthly Games Revenue / Total Mobile Subscribers
Released early 2012
By 2013, it generated $1bn+ annually in Japan alone
It wasn’t an incremental increase over Kaito &
Driland.
It was 4x
“It’s just a one off, a phenomenon that can’t be
repeated”
In August 2013, Mixi released Monster Strike.
In 2015, each game generated $1bn+ in Japan
alone.
¥0 / Month
¥175 / Month
¥350 / Month
¥525 / Month
¥700 / Month
Jun-10 Mar-11 Dec-11 Sep-12 Jun-13 Mar-14 Dec-14
Since P&D release, the entire market in Japan has doubled.
Source: Macquarie Japan
Total Monthly Games Revenue / Total Mobile Subscribers
¥0 / Month
¥175 / Month
¥350 / Month
¥525 / Month
¥700 / Month
Jun-10 Mar-11 Dec-11 Sep-12 Jun-13 Mar-14 Dec-14
..and about 5x the size of the comparable point of
device penetration & usage that we have today
in the US.
Source: Macquarie Japan
Total Monthly Games Revenue / Total Mobile Subscribers
Over estimate
Under estimate
How humans think about the future
How technology impact develops
All this leads me to the place that we are early in our underestimation!
…and we are wildly underestimating what a “hit” can look like.
In Mobile, the $10bn game…
…seems inevitable to me.
Less Atom Complexity
More Atom Complexity
(Smaller, Simpler, Inexpensive)
Requires Little Change(Low Behavioral Friction)
Requires lots of Change(Low Behavioral Friction)
Fastest
Fast
Slow
Slowest
Mobile has grown very fast…
Less Atom Complexity
More Atom Complexity
(Smaller, Simpler, Inexpensive)
Requires Little Change(Low Behavioral Friction)
Requires lots of Change(Low Behavioral Friction)
Very Fast & Very Big
…and very big powered by breakthrough content
This is the latest in a long line of breakthrough
content.
Why Pokemon Go!It’s built on a game that’s been tested for 3 years (Ingress)
It requires no new atoms to get a breakthrough experience.
It leverages & extends a behavior we do all the time.
It brings people together in the real world - Humans like that.
It’s Pokemon - 20 years old and known by everyone under 35.
Over estimate
Under estimate
How humans think about the future
How technology impact develops
I still don’t think we’re at the top - to get there….
Keep investing in Mobile
Keep creating breakthrough experiences
At N3TWORK we believe in this next stage of Mobile and we’re building a new type of
developer and publisher to meet the opportunity.
Thank you & if you want to learn more…
That’s what we’re doing…
[email protected]@ncyoung
http://n3twork.com