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Mobile Fix: Virtual reality and Facebook

Mobile Fix: Virtual reality and Facebook

From Facebook’s purchase of Oculus to Disney buying up Maker Studios, it has been a busy week for media deals – with some significant implications for brands, says Simon Andrews, founder of Addictive!.

The deal with the most press this week is Facebook’s acquisition of virtual reality headset-maker, Oculus. Shelling out $2 billion – close after the WhatsApp deal – has unnerved some on Wall Street with the stock price now 18% off its high of $72 which was reached a few weeks ago.

“Mobile is the platform of today, and now we’re also getting ready for the platforms of tomorrow,” said Facebook founder and CEO, Mark Zuckerberg. “Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate.”

It’s clear that virtual reality has the potential to change how people play games and experience content but the time when Daft Punk style headsets will be commonplace is some time away.

So we don’t see this as a really significant move – at least for brands – right now.

Disney and newTV

Disney bought Maker Studios for almost $1 billion – so one of the oldest brands in TV has bought one of the youngest. Maker have around 55,000 different channels on YouTube and this is a good guess at why they have made the deal – talent, product promotion, new types of ad deals and preparing for cord cutters.

In London this week the Disney TV president, Anne Sweeney, talked eloquently about TV content becoming immersive, more fully interactive and on-demand via the internet – and says all these things are being worked on right now. Well worth watching the full video.

Doing some research around football and video, we looked at the key players on YouTube; Sky has 53,000 subscribers and ESPN has 12,000. But the biggest YouTube channel focused on football, in terms of subscribers, is Copa90. One of the new channels to emerge with from producers partnering with YouTube Copa90 has 562,000 subscribers.

Add Chromecast the mix and, to paraphrase Disney’s Sweeney, there is a creative transformation happening in newTV.

Gaming

The other significant moves were in gaming. UK success story King IPOd giving the company a value of $7.6 billion – although the share price dropped over the first day’s trading. This reflects concerns that the company is too dependent on Candy Crush, which accounts for nearly 80% of revenues.

An interesting look at the numbers says;

So the question boils down to can King hold on to existing users and keep them spending. I would argue that other, similar games, like Clash of Clans from SuperCell, have proven that they can do this. It is getting very hard (and expensive) to launch a new title in mobile app stores.

Consequently, the longevity of existing titles is improving somewhat. This speaks to the way in which the App Store model has some serious flaws, but does provide something of a moat protecting Candy Crush.

This is a really good look at the King story and what it can teach other British entrepreneurs from VC Christian Hernandez.

The other interesting deal is in Asia. Continuing our interest in BAT (Baidu, Alibaba, Tencent) we thought the Tencent purchase of a stake in Korean game company CJ Games was interesting. At $500 million for 28% this is a big deal. It’s another layer in their vertical stacks but given that gaming can inspire so much loyalty can we expect GAFA to be more explicitly involved in games?

They are all making lots of money indirectly from games – largely through sales and advertising (see below for a look at Facebook and app installs).

We think that content will increasingly be used as a differentiator for platforms and devices, so could Google or Apple transplant the games that are big in Asia over to the West? Given how successful Flappy Bird was, it’s clear good games can work in different cultures.

So could someone import a big game from Asia and make it only available on their platform? Or would a Samsung – or a Huawei – pre-load a hit game to help sell their devices? Or should a smart brand license an Asian game and introduce it in the West?

Intel made a big deal about wearables at CES this year and have followed through with the purchase of BASIS for $100 million. The other big news in wearables was the deal that Google struck with Italian sunglasses giant Luxottica – the maker of Ray-Ban, Oakley and Persol. It is vital that Glasses avoid the Bluetooth Headset prejudice and getting this talent on board should help.

Five things you should do before thinking about VR

The Oculus deal is interesting, but we think it’s going to be about gaming and home entertainment for the foreseeable future. And whilst your agency’s Digital Prophet (they all have one but few with haircuts as bad as the AOL one) may want to demo this in the agency lab, there are probably better things that you could be focusing on.

Whether you subscribe to the McKinsey 80/20 rule for boosting the return on marketing investment or the 70/20/10 model Coke use to drive innovation, we believe there are lots of ways brands can unlock real value, right now.

– Make sure you are really fit for mobile – with mobile optimised sites for all your brands and a mobile approach on search, social and email

– Get your digital metrics right

– Identify the top five YouTube channels covering the content areas your brand has an interest in and start a discussion about how you might collaborate. For example, there are huge opportunities for smart product placement in these channels.

– Review how you are getting the most from GAFA – getting search and social right, understanding what Apple products you could experiment with (Passbook is on millions of peoples home screens) and looking at whether your brands could be sold through Amazon.

– Audit the integration between the different strands of your marketing – how could mobile add an extra dimension? Add Shazam to your TV and/or develop a Two screen search strategy. Test what happens if you use AR and QR codes cleverly in your press ads. Use responsive creative so your digital ads are perfectly optimized whatever screen they appear on.

If that sounds a little dull, look at what the smartest brands are doing and saying. The partnerships with start-ups that Mondelez has pioneered brings in companies across mobile and digital with solutions that can solve business problems at scale. The same with the Unilever Go Global programme.

All the companies chosen use digital as a tool rather than a toy.

Which, without being rude, is what Oculus is right now. Albeit a rather expensive toy aimed at geeks and gamers…

This is an edited and abridged version of Mobile Fix – click here to read the full article on Addictive!’s website

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