Why Entertainment Will Drive the Next Checkin Craze
In recent months, a crop of services have popped up that re-purpose the checkin concept, popularized by Foursquare, and connect it to media and entertainment, as opposed to location.
In theory, the idea of checking-in to cultural concepts (like media, music, etc.) and not places is one that doesn’t jive in the real-world. It would follow then that the apps that provide this service — GetGlue, Philo and Miso — are silly and far too extreme in ideology to attract anything more than a testbed tech audience.
In practice, this alternative checkin behavior is one that is more cultural and familiar than anything the location checkin offers. In fact, it emulates the way we experience entertainment in our everyday lives. The desire to share is unchanging — it’s how we share that will continue to evolve with the help of social media and entertainment checkin services.
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The Culture of Entertainment
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Television shows such as Mad Men may not be monster hits when it comes to traditional ratings measurements, but those who do watch tend to do so religiously and with a fervor nearing obsession.
Watching Mad Men is a shared experience, whether you’re at a viewing party or alone in your bedroom, simply because of the culture surrounding the show. There’s a connected feeling you get when you experience a new episode for the first time. That’s why passionate viewers, if they’re socially inclined, are the type of people who will no doubt run to Facebook() and Twitter() to share their anticipation and viewing experience with the world.
Philo, Miso and GetGlue all have mobile and web applications explicitly designed to support and enhance that very natural entertainment-driven social behavior. They’re all using the checkin model so that app users can check-in to content, though each has its own slightly unique approach.
Philo is hyper-focused on live television. Viewers use the iPhone() app or web to check-in to the live content they’re watching. Philo pulls TV listings directly from cable providers, so viewers can even see the content that’s trending locally and pinpoint where to watch it. App users earn show-specific awards based on their behaviors and work their way up a Hollywood-style ladder to earn “Director” and “Executive Producer” “credits” for shows.
Miso is also about creating a social television watching experience. The alpha service currently has iPhone, iPad and web apps that support TV show or movie checkins. It bills itself as “Foursquare() for TV” and has its own game mechanics and badges that are designed to hook viewers with the promise of unlocking additional content.
GetGlue’s iPhone app extends beyond just television content and supports checkins for books, wines, topics, celebrities and video games. Rewards come in the form of stickers earned from app activity. GetGlue has been around for years attempting to master social recommendation via the browser. With the move to mobile, the company can marry checkins to the social intelligence previously harvested.
When it comes to game mechanics, each service is employing its own variation on the badge and point model made popular by Foursquare. GetGlue has stickers. Miso has badges and fan clubs. Philo has awards and hierarchy. These digital rewards systems are nothing more than tokens — mere memorabilia — of our minor television achievements. And yet, each service is hoping that its game mechanics and rewards are more enticing than the competition’s.
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The Checkin Connection
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Foreign as it may sound, the act of checking-in to television shows or other entertainment entities creates a culture connection between media consumers with similar interests. Philo, Miso and GetGlue provide services that allow individuals to make social connections to culture, and that’s what sets them apart from the Twitters and Facebooks of the social networking world.
It’s this cultural relevance that will create digital bonding experiences and will propel this trend to television watchers outside of the web-tech bubble.
Consider that the checkin has been a place-oriented notion for most of its short life. In a just a few months time, however, all three services are showing exponential growth and repetitive engagement behaviors that television networks are salivating over.
GetGlue, for instance, saw 5 million ratings and checkins in the month of July alone. A single episode of True Blood accrued more than 3,000 checkins.
Miso CEO Somrat Niyogi believes that the shared television watching experience, powered by the simplicity of the checkin, will be a breakout hit for mainstream audiences because it mimics offline tendencies and caters to the second screen behaviors of television viewers who use the web while they watch TV.
In fact, a recent Nielsen study indicates that three out of four Americans use the web and TV simultaneously. That same study showed that just 7% are consuming online content related to the TV show they’re watching, but Niyogi is confident that Miso can capitalize on this dual screen trend and even stimulate a renewed interest in television.
Niyogi says the iPad will help to open this door, if only because one study showed that 98% of iPad users use the mobile device while watching TV at least once per day.
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Tweets are Temporary, Checkins are Forever
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On the surface it might seem that these destination checkin sites do nothing more than make the sharing experience more complex. The argument that you can just as easily tweet to the world that you’re watching The Real Housewives of New York is a fair one.
The problem is that these temporal updates have a limited association to the entertainment content being consumed and they’re ephemeral at best. A tweet will solve your immediate need to connect with other show fans and share the television experience, but that tweet has very little lasting value.
Enter the checkin. That explicit activity the user takes carries a lot of weight on any of these services. At any given time, staffers can pull data to measure popularity, television trends, engagement and a whole slew of other fascinating facts about user behaviors.
For the user, though, content is king, and their checkins will help Miso, GetGlue and Philo shape their entertainment experiences through intelligent behavioral analysis and social-based recommendations. None of the services are incredibly sophisticated just yet — GetGlue is probably the most advanced thanks to its recommendation engine — but that’s the direction things are headed.
Philo CCO Greg Goldman has 14 years of television production experience under this belt, and he’s already seeing this potential realized thanks to his service. He describes Philo as shaping his own television watching experiences every night, simply because he can see what’s popular with other viewers. For Goldman, Philo presents television viewers with a new opportunity for show discovery.
Niyogi sees a similar, albeit more complex, vision for Miso’s future. He’s anxiously anticipating “the day where you open up the app and it tells you what you should watch right now. And it’s perfectly accurate.”
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Industry Matters
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After talking with GetGlue, Miso and Philo, one thing is crystal clear — networks are clamoring to take part in the television show checkin trend. Each service has its own relationships — some are public like Miso’s TNT partnership, but most are still stealth. All speak to the mutually beneficial relationships that exist between social entertainment services and television networks.
AdaptiveBlue CEO Alex Iskold confidently reports that GetGlue is “working with over a dozen top entertainment brands including HBO, Showtime, PBS, Random House, Penguin, Universal, Warner Bros, and more.”
Networks not only see value in checkin data but opportunity in checkin behavior. Philo’s Goldman has the most industry experience and insider knowledge. He was formerly the Executive Director of Development at ABC and asserts that Philo is “talking to everyone.”
He points to his service’s ability to track engagement minute-by-minute as one of the key reasons why networks are pursuing relationships with them.
For instance, when it came to the season finale of The Bachelorette, Philo was able to pinpoint exactly when engagement levels spiked on the service and ascertain that audiences appreciated Ally’s decision to break with the formulaic nature of finale show.
Of course, networks are also interested because they see an opportunity to truly engage viewers and create a cycle that keeps audiences tuning in each week. The ultimate end game is to boost ratings, and these apps have the potential to help them do just that.
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Too Much of a Good Thing
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While each of the startups approach entertainment checkins in a provocative manner, there’s certainly no need for three services that essentially do the same thing.
It’s way too early to make predictions. We’re still on the cusp of an emerging trend, but eventually there will be one clear victor.
GetGlue has an advantage on the recommendation engine front. Philo’s live TV focus is inherently network-friendly. And Miso really gets why and how users will use its service.
A solid case could be made for each, and yet one will dominate, just as Twitter killed off its competition and Facebook finds itself leaps and bounds ahead of the rest. Right now, though, it’s still anybody’s game.
Monday, August 9, 2010
Wednesday, August 4, 2010
Why Two Names Are Better Than One
Why Two Names Are Better Than One
Marketers Lucky Enough to Have a Nickname Shouldn't Abuse It
by Al Ries
Published: August 03, 2010
Al Ries
The one-day flap over the "Chevy" name should never have happened.
General Motors made a mistake by telling its employees to never use the "Chevy" name again and to refer to the brand only as "Chevrolet."
A nickname is not a bad thing. It's a good thing. People who use a brand's nickname feel closer to the product than those who don't. As a matter of fact, nicknames are one of the most under-utilized aspects of marketing. If at all possible, every company and every brand should have a formal name as well as a nickname. Two names are better than one.
Ad Age versus Advertising Age?
Should Advertising Age change its name to Ad Age just because everybody in the industry uses the nickname? I think not. That would destroy some of the connections industry people feel toward the publication.
Formal names and nicknames are somewhat like "vous" and "tu" in the French language. When meeting someone for the first time, it's common in France to use "vous." After a friendship or working relationship is formed, it would be common for one party to suggest using "tu." When someone uses "Ad Age" instead of "Advertising Age," you know that person is in the ad business or is familiar with it.
Nicknames serve a communication function. They indicate an emotional connection with the brand. Or in the case of a formal name, the lack of one.
The Chevrolet owner who calls his or her car a "Chevy" is communicating some emotional connection with the brand. Hopefully positive from Chevrolet's point of view, but it could also be negative.
Chevrolet is fortunate it has two names. Most automobile brands have only one. Of the six leading automobile brands, only Chevrolet has a nickname. Try to figure out a nickname for the other five.
•Toyota -- Toy?
•Ford -- F?
•Honda -- Hon?
•Nissan -- Nis?
•Dodge -- D?
Nothing works except "Chevy." This is a valuable aspect of the Chevrolet brand.
The original title of a book Laura and I wrote was "The 23 Immutable Laws of Branding." The 23rd law was "the law of nicknames." But we dropped the 23rd law because everybody knows that nicknames are a valuable aspect of a brand.
Apparently not.
The nickname killers.
Many companies and many brands are hell-bent on killing their nicknames by substituting them for their formal names.
•Kentucky Fried Chicken is now KFC.
•British Petroleum is now BP.
•American Association of Retired Persons is now AARP.
•Computer Associates is now CA.
•Federal Express is now FedEx.
These are just some of the formal name changes. There are many other examples of informal name changes.
"National Public Radio," according to The New York Times, "sent a note to all its staff members asking everyone to refer to it as NPR." The YMCA is doing something similar. The organization wants to be known by one and all as the "Y." (Companies that want to follow the ultimate downsizing trend had better hurry. "W" is a hotel. "Y" is a gym. "G" is a sports drink. "O" is a magazine. "I" is on the verge of being taken by Apple. That leaves only 21 letters of the alphabet up for grabs.)
In the short term, of course, it makes no difference whether National Public Radio uses its formal name. Almost everybody knows what NPR stands for. But the long term is different. There are some 12,000 people born every day in America. As these infants grow up, how are they going to find out what those strange "NPR" initials stand for?
And there are some 6,500 people who die every day, taking their knowledge of the NPR brand with them.
Longer names seem more important.
When given a choice, most people believe a longer name is more impressive than a shorter one. In the 22 presidential elections between 1876 and 1960, for example, the candidate with more letters in his last name won the popular vote 20 times. In two cases, the winners of the popular vote lost in the electoral college. In one case, both candidates had the same number of letters in their names. The only time the longer-named candidate lost was in 1908 when Taft beat Bryan. But hey, Taft had only a one-letter handicap.
The situation changed starting in 1964 when Johnson (7 letters) beat Goldwater (9 letters.)
Why? In a word, TV. In the 1960s, the visual became more important than the verbal. One important visual aspect is a candidate's height. The taller, the better.
In the 13 presidential elections between 1960 and 2008, the taller candidate won the popular vote nine times. In one election, the taller candidate (Gore) won the popular vote but lost in the electoral college. In one election, the two candidates (Clinton and Bush) were equal in height. In only two elections did the shorter candidate win the popular vote. (Nixon in 1972. Carter in 1976.)
In other words, the taller candidate was more than four times as likely to win the popular vote than the shorter one.
In addition to its formal name, a brand should have 1) a relatively short nickname, 2) a word it owns in the mind and 3) a powerful visual. If you can accomplish all three, you have hit the marketing trifecta.
Take Coca-Cola, for example. 1) Coke. 2) The real thing. 3) The contour bottle. No wonder Coca-Cola is the world's most-valuable brand.
The problems of a shorter name.
It's hard to make a short name seem important. Take the Gap, a chain that has been having problems. Competitors like Abercrombie & Fitch and American Eagle Outfitters have names that make them seem more important and authentic.
Furthermore, what's the Gap's nickname? "G" is pretty much taken by Gatorade.
Then there's "Saks Fifth Avenue" often known by its nickname "Saks." Should the company call its stores "Saks"? That doesn't sound important.
Saks Fifth Avenue has a long, formal name that sounds important and a short nickname that's easy to say and easy to spell. An ideal combination.
Radio Shack is trying to use the same strategy with an advertising campaign focused on "The Shack." But you can't force consumers to use a nickname.
You can understand why Radio Shack is trying to do this. Names become obsolete. When was the last time you bought a radio? Or a part for a radio? Or an accessory for a radio? Radio Shack doesn't need a nick name. Radio Shack needs a new name.
Brands with nicknames have an advantage over the competition. Nicknames allow consumers to feel closer to the brand. You can show your friends you are cool if you use a brand's nickname instead of its formal name.
Let's go to Mickey D's.
How about a Jack & Coke?
Hop on my Harley and we'll go for a spin.
Let's take the Vette instead.
Two-buck Chuck and other examples.
Charles Shaw became one of the largest-selling wine brands in America even though it was sold initially in only one state by only one chain, Trader Joe's.
What made Charles Shaw wine such a big success? Its nickname: Two-buck Chuck.
Now what do you suppose the marketing gurus behind the rash of recent name changes would have suggested for Charles Shaw wine? Change the label to "Two-buck Chuck?"
And would they have suggested that "Macintosh" be changed to "Mac?" And Jaguar to "Jag?" And "Mercedes-Benz" to "Mercedes?" Or to "Merc?"
None of these name changes make sense. That's what makes marketing so difficult. Marketing often defies common sense.
One strategy is better than two strategies. Yet one name is not better than two names. The ideal strategy for every brand is to have a formal name and a more casual nickname.
Rules of thumb.
When should a company or brand use its formal name and when should it use its nickname?
In print advertising, a company or brand should probably use its formal name in the headline and the signature and its nickname in the body copy.
Chevrolet has often violated this rule, signing many of its ads "Chevy" instead of "Chevrolet." Here is a typical ad that uses "Chevy" in the headline and nothing in the signature except its "bow tie" trademark.
Recently, however, Chevrolet has been running this same ad with the "Chevy" in the headline replaced with "Chevrolet." So perhaps there was a good reason for the nickname memo. Chevrolet needed to spell out when to use which name.
In TV advertising, a company or brand should probably use its formal name in the first mention and in the closing signature. In between, the nickname might be appropriate. A good rule of thumb which publications almost always use is to use the full name in the first mention and then the nickname in the next mentions.
In an article, for example, a reporter might refer to a newspaper as "The Wall Street Journal." In the next mention, the reporter might say "The Journal." Should The Wall Street Journal change its name to The Journal? No, in the long run the publication would lose a lot of its identity.
When a company or brand has a well-known nickname, it shouldn't hesitate to use the nickname in the proper settings.
I'm surprised, for example, that McDonald's in its TV advertising seldom uses its "Mickey D's" nickname. It would seem to be an ideal complement to its verbal slogan "I'm lovin' it."
You really have to love the place to call it "Mickey D's."
Marketers Lucky Enough to Have a Nickname Shouldn't Abuse It
by Al Ries
Published: August 03, 2010
Al Ries
The one-day flap over the "Chevy" name should never have happened.
General Motors made a mistake by telling its employees to never use the "Chevy" name again and to refer to the brand only as "Chevrolet."
A nickname is not a bad thing. It's a good thing. People who use a brand's nickname feel closer to the product than those who don't. As a matter of fact, nicknames are one of the most under-utilized aspects of marketing. If at all possible, every company and every brand should have a formal name as well as a nickname. Two names are better than one.
Ad Age versus Advertising Age?
Should Advertising Age change its name to Ad Age just because everybody in the industry uses the nickname? I think not. That would destroy some of the connections industry people feel toward the publication.
Formal names and nicknames are somewhat like "vous" and "tu" in the French language. When meeting someone for the first time, it's common in France to use "vous." After a friendship or working relationship is formed, it would be common for one party to suggest using "tu." When someone uses "Ad Age" instead of "Advertising Age," you know that person is in the ad business or is familiar with it.
Nicknames serve a communication function. They indicate an emotional connection with the brand. Or in the case of a formal name, the lack of one.
The Chevrolet owner who calls his or her car a "Chevy" is communicating some emotional connection with the brand. Hopefully positive from Chevrolet's point of view, but it could also be negative.
Chevrolet is fortunate it has two names. Most automobile brands have only one. Of the six leading automobile brands, only Chevrolet has a nickname. Try to figure out a nickname for the other five.
•Toyota -- Toy?
•Ford -- F?
•Honda -- Hon?
•Nissan -- Nis?
•Dodge -- D?
Nothing works except "Chevy." This is a valuable aspect of the Chevrolet brand.
The original title of a book Laura and I wrote was "The 23 Immutable Laws of Branding." The 23rd law was "the law of nicknames." But we dropped the 23rd law because everybody knows that nicknames are a valuable aspect of a brand.
Apparently not.
The nickname killers.
Many companies and many brands are hell-bent on killing their nicknames by substituting them for their formal names.
•Kentucky Fried Chicken is now KFC.
•British Petroleum is now BP.
•American Association of Retired Persons is now AARP.
•Computer Associates is now CA.
•Federal Express is now FedEx.
These are just some of the formal name changes. There are many other examples of informal name changes.
"National Public Radio," according to The New York Times, "sent a note to all its staff members asking everyone to refer to it as NPR." The YMCA is doing something similar. The organization wants to be known by one and all as the "Y." (Companies that want to follow the ultimate downsizing trend had better hurry. "W" is a hotel. "Y" is a gym. "G" is a sports drink. "O" is a magazine. "I" is on the verge of being taken by Apple. That leaves only 21 letters of the alphabet up for grabs.)
In the short term, of course, it makes no difference whether National Public Radio uses its formal name. Almost everybody knows what NPR stands for. But the long term is different. There are some 12,000 people born every day in America. As these infants grow up, how are they going to find out what those strange "NPR" initials stand for?
And there are some 6,500 people who die every day, taking their knowledge of the NPR brand with them.
Longer names seem more important.
When given a choice, most people believe a longer name is more impressive than a shorter one. In the 22 presidential elections between 1876 and 1960, for example, the candidate with more letters in his last name won the popular vote 20 times. In two cases, the winners of the popular vote lost in the electoral college. In one case, both candidates had the same number of letters in their names. The only time the longer-named candidate lost was in 1908 when Taft beat Bryan. But hey, Taft had only a one-letter handicap.
The situation changed starting in 1964 when Johnson (7 letters) beat Goldwater (9 letters.)
Why? In a word, TV. In the 1960s, the visual became more important than the verbal. One important visual aspect is a candidate's height. The taller, the better.
In the 13 presidential elections between 1960 and 2008, the taller candidate won the popular vote nine times. In one election, the taller candidate (Gore) won the popular vote but lost in the electoral college. In one election, the two candidates (Clinton and Bush) were equal in height. In only two elections did the shorter candidate win the popular vote. (Nixon in 1972. Carter in 1976.)
In other words, the taller candidate was more than four times as likely to win the popular vote than the shorter one.
In addition to its formal name, a brand should have 1) a relatively short nickname, 2) a word it owns in the mind and 3) a powerful visual. If you can accomplish all three, you have hit the marketing trifecta.
Take Coca-Cola, for example. 1) Coke. 2) The real thing. 3) The contour bottle. No wonder Coca-Cola is the world's most-valuable brand.
The problems of a shorter name.
It's hard to make a short name seem important. Take the Gap, a chain that has been having problems. Competitors like Abercrombie & Fitch and American Eagle Outfitters have names that make them seem more important and authentic.
Furthermore, what's the Gap's nickname? "G" is pretty much taken by Gatorade.
Then there's "Saks Fifth Avenue" often known by its nickname "Saks." Should the company call its stores "Saks"? That doesn't sound important.
Saks Fifth Avenue has a long, formal name that sounds important and a short nickname that's easy to say and easy to spell. An ideal combination.
Radio Shack is trying to use the same strategy with an advertising campaign focused on "The Shack." But you can't force consumers to use a nickname.
You can understand why Radio Shack is trying to do this. Names become obsolete. When was the last time you bought a radio? Or a part for a radio? Or an accessory for a radio? Radio Shack doesn't need a nick name. Radio Shack needs a new name.
Brands with nicknames have an advantage over the competition. Nicknames allow consumers to feel closer to the brand. You can show your friends you are cool if you use a brand's nickname instead of its formal name.
Let's go to Mickey D's.
How about a Jack & Coke?
Hop on my Harley and we'll go for a spin.
Let's take the Vette instead.
Two-buck Chuck and other examples.
Charles Shaw became one of the largest-selling wine brands in America even though it was sold initially in only one state by only one chain, Trader Joe's.
What made Charles Shaw wine such a big success? Its nickname: Two-buck Chuck.
Now what do you suppose the marketing gurus behind the rash of recent name changes would have suggested for Charles Shaw wine? Change the label to "Two-buck Chuck?"
And would they have suggested that "Macintosh" be changed to "Mac?" And Jaguar to "Jag?" And "Mercedes-Benz" to "Mercedes?" Or to "Merc?"
None of these name changes make sense. That's what makes marketing so difficult. Marketing often defies common sense.
One strategy is better than two strategies. Yet one name is not better than two names. The ideal strategy for every brand is to have a formal name and a more casual nickname.
Rules of thumb.
When should a company or brand use its formal name and when should it use its nickname?
In print advertising, a company or brand should probably use its formal name in the headline and the signature and its nickname in the body copy.
Chevrolet has often violated this rule, signing many of its ads "Chevy" instead of "Chevrolet." Here is a typical ad that uses "Chevy" in the headline and nothing in the signature except its "bow tie" trademark.
Recently, however, Chevrolet has been running this same ad with the "Chevy" in the headline replaced with "Chevrolet." So perhaps there was a good reason for the nickname memo. Chevrolet needed to spell out when to use which name.
In TV advertising, a company or brand should probably use its formal name in the first mention and in the closing signature. In between, the nickname might be appropriate. A good rule of thumb which publications almost always use is to use the full name in the first mention and then the nickname in the next mentions.
In an article, for example, a reporter might refer to a newspaper as "The Wall Street Journal." In the next mention, the reporter might say "The Journal." Should The Wall Street Journal change its name to The Journal? No, in the long run the publication would lose a lot of its identity.
When a company or brand has a well-known nickname, it shouldn't hesitate to use the nickname in the proper settings.
I'm surprised, for example, that McDonald's in its TV advertising seldom uses its "Mickey D's" nickname. It would seem to be an ideal complement to its verbal slogan "I'm lovin' it."
You really have to love the place to call it "Mickey D's."
Monday, August 2, 2010
Behind Disney's Digital Shopping Spree
Behind Disney's Digital Shopping Spree
The purchase of game maker Playdom may help Disney's brands with the Facebook generation By Andy Fixmer and Ronald Grover
BW Magazine
The New Abnormal
Dome Sweet Dome
Why Robert Dudley's BP Could Be Even Riskier
Commentary: America Sits Out the Race
Inflation: The Great New Divide
This Issue
August 2, 2010
American Consumers Are Cutting Back. Except When They're Not
Previous IssueNext Issue Story Tools
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linkedin connections Four years ago, Bob Iger, the chief executive officer of Walt Disney (DIS), tried to build a cell-phone business. Disney created a family-oriented mobile service that included a global positioning system so parents could track their kids. Too few consumers signed up, and the company killed the operation after 15 months. Disney Interactive, the division that ran the ill-fated cell service, is still unprofitable. It lost $55 million last quarter.
Iger retains his enthusiasm for digital business and has switched strategies to buying rather than building. He wants to acquire social games and other online services that come with established customers and talented creators—and can help sell Disney's famous brands. "You don't get the kind of growth we want by building from the inside," he says.
Since paying $350 million for the kids' social network Club Penguin three years ago, Disney has purchased Wideload Games, whose founder helped create Microsoft's (MSFT) hit Halo franchise. Early last month, the entertainment giant acquired Tapulous, a publisher of music-related games for Apple's (AAPL) iPhone. On July 27, Disney made its biggest video game bet yet, agreeing to pay $563 million for privately held Playdom, the Mountain View (Calif.) maker of Sorority Life and Mobsters, which are played on Facebook, MySpace, and mobile phones. If Playdom meets performance targets over time, its founders and investors may receive an additional $200 million.
Sales Venue
Playdom specializes in games that sell virtual goods. In Mobsters, players try to build crime syndicates by buying—with real money—digital machine guns and henchmen. In Sorority Life, players buy clothing and
accessories as they climb a social ladder. Some 42 million people regularly play Playdom's games each month, according to Disney. Analyst Michael Pachter of Wedbush Morgan Securities says the purchase of Playdom will give Disney a potentially fast-growing venue to sell every Disney character and media brand from Mickey Mouse to Spider-Man to ESPN.
For example, when Disney releases the Pixar movie Cars 2 next June, it could promote the film by using its soundtrack in a Tapulous-made music game for mobile phones and weaving Cars 2 characters into Playdom games on Facebook. Disney plans to launch a virtual world based on Cars this month. That would be in addition to more traditional product tie-ins—plush-toy merchandise, games for Nintendo's Wii console, coverage on ABC and the Disney Channel, and theme park rides.
"I don't think they're looking for Playdom's revenues as much as they're looking for Playdom's knowhow" in working social games into the Disney mix, Pachter says. Playdom CEO John Pleasants is moving to Disney, where he will continue to oversee social game development and become an executive vice-president. He'll be working with Iger's point man for digital strategy, Steve Wadsworth, who has run Disney's Internet unit since 1999 and assumed video game oversight in 2008.
Iger says the buy-don't-build approach is what drove some earlier acquisitions. His $8.1 billion purchase of Pixar in 2006, for example, buttressed Disney's flagging animation division; the $4.2 billion acquisition of Marvel Entertainment last year gave the company iconic comic-book characters that appeal to boys. (Disney had been known more for cartoon princesses than superheroes.) Club Penguin was the company's first acquisition of a virtual world. The site's founders are busy running online worlds with monthly subscription fees and sales of virtual goods; they built the Cars site that will launch this month and are overseeing older ones like Pirates of the Caribbean Online.
Board Talent
Iger has some Internet talent on his board to lean on as he makes digital deals. Apple CEO Steve Jobs joined as a result of the Pixar acquisition and is Disney's largest shareholder. Disney was the first to sell TV shows and films on Apple's iTunes online media store. In March, Iger tapped Facebook Chief Operating Officer Sheryl Sandberg to become a director. Since then Disney has increased its presence on the social network and experimented with using it to sell tickets to the Pixar movie Toy Story 3.
It's been typical for big media companies to lose money online. News Corp.'s (NWS) digital media unit lost $150 million in the quarter ended in March. CBS (CBS) stopped breaking out results for interactive after that unit lost $41.3 million during the first nine months of 2009.
Could Disney's acquisitions put it on track to make some money online? "It's the right strategy for Disney to buy," says Gina Bianchini, a venture capitalist who co-founded the social network Ning.com with Marc Andreessen. "And they are looking at some very savvy acquisitions."
The bottom line: Disney's
The purchase of game maker Playdom may help Disney's brands with the Facebook generation By Andy Fixmer and Ronald Grover
BW Magazine
The New Abnormal
Dome Sweet Dome
Why Robert Dudley's BP Could Be Even Riskier
Commentary: America Sits Out the Race
Inflation: The Great New Divide
This Issue
August 2, 2010
American Consumers Are Cutting Back. Except When They're Not
Previous IssueNext Issue Story Tools
post a comment
e-mail this story
print this story
order a reprint
suggest a story
digg this
add to Business Exchange
linkedin connections Four years ago, Bob Iger, the chief executive officer of Walt Disney (DIS), tried to build a cell-phone business. Disney created a family-oriented mobile service that included a global positioning system so parents could track their kids. Too few consumers signed up, and the company killed the operation after 15 months. Disney Interactive, the division that ran the ill-fated cell service, is still unprofitable. It lost $55 million last quarter.
Iger retains his enthusiasm for digital business and has switched strategies to buying rather than building. He wants to acquire social games and other online services that come with established customers and talented creators—and can help sell Disney's famous brands. "You don't get the kind of growth we want by building from the inside," he says.
Since paying $350 million for the kids' social network Club Penguin three years ago, Disney has purchased Wideload Games, whose founder helped create Microsoft's (MSFT) hit Halo franchise. Early last month, the entertainment giant acquired Tapulous, a publisher of music-related games for Apple's (AAPL) iPhone. On July 27, Disney made its biggest video game bet yet, agreeing to pay $563 million for privately held Playdom, the Mountain View (Calif.) maker of Sorority Life and Mobsters, which are played on Facebook, MySpace, and mobile phones. If Playdom meets performance targets over time, its founders and investors may receive an additional $200 million.
Sales Venue
Playdom specializes in games that sell virtual goods. In Mobsters, players try to build crime syndicates by buying—with real money—digital machine guns and henchmen. In Sorority Life, players buy clothing and
accessories as they climb a social ladder. Some 42 million people regularly play Playdom's games each month, according to Disney. Analyst Michael Pachter of Wedbush Morgan Securities says the purchase of Playdom will give Disney a potentially fast-growing venue to sell every Disney character and media brand from Mickey Mouse to Spider-Man to ESPN.
For example, when Disney releases the Pixar movie Cars 2 next June, it could promote the film by using its soundtrack in a Tapulous-made music game for mobile phones and weaving Cars 2 characters into Playdom games on Facebook. Disney plans to launch a virtual world based on Cars this month. That would be in addition to more traditional product tie-ins—plush-toy merchandise, games for Nintendo's Wii console, coverage on ABC and the Disney Channel, and theme park rides.
"I don't think they're looking for Playdom's revenues as much as they're looking for Playdom's knowhow" in working social games into the Disney mix, Pachter says. Playdom CEO John Pleasants is moving to Disney, where he will continue to oversee social game development and become an executive vice-president. He'll be working with Iger's point man for digital strategy, Steve Wadsworth, who has run Disney's Internet unit since 1999 and assumed video game oversight in 2008.
Iger says the buy-don't-build approach is what drove some earlier acquisitions. His $8.1 billion purchase of Pixar in 2006, for example, buttressed Disney's flagging animation division; the $4.2 billion acquisition of Marvel Entertainment last year gave the company iconic comic-book characters that appeal to boys. (Disney had been known more for cartoon princesses than superheroes.) Club Penguin was the company's first acquisition of a virtual world. The site's founders are busy running online worlds with monthly subscription fees and sales of virtual goods; they built the Cars site that will launch this month and are overseeing older ones like Pirates of the Caribbean Online.
Board Talent
Iger has some Internet talent on his board to lean on as he makes digital deals. Apple CEO Steve Jobs joined as a result of the Pixar acquisition and is Disney's largest shareholder. Disney was the first to sell TV shows and films on Apple's iTunes online media store. In March, Iger tapped Facebook Chief Operating Officer Sheryl Sandberg to become a director. Since then Disney has increased its presence on the social network and experimented with using it to sell tickets to the Pixar movie Toy Story 3.
It's been typical for big media companies to lose money online. News Corp.'s (NWS) digital media unit lost $150 million in the quarter ended in March. CBS (CBS) stopped breaking out results for interactive after that unit lost $41.3 million during the first nine months of 2009.
Could Disney's acquisitions put it on track to make some money online? "It's the right strategy for Disney to buy," says Gina Bianchini, a venture capitalist who co-founded the social network Ning.com with Marc Andreessen. "And they are looking at some very savvy acquisitions."
The bottom line: Disney's
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