I didn’t get to attend the TIA conference but was able to catch up with lots of folks who were in town and went to a nice event by Sequoia.
Say what you will about our current times but Singapore is absolutely hopping right now and is the center of the startup universe for SEA region and India. Love it. So fortunate to be here at this time.
I have many Twitter friends that I sometimes get to meet and Josh would be one of those. We finally got to hang out and chat a bit.
As a writer, he of course decided to spring this on the Internet after we chatted.
Good stuff. As I always tell people – OTT in emerging markets is really just kicking off and has a long ways to go. I wouldn’t profess to know where it all might land, but it’s a crazy hot space regardless.
One comment – that last little quote by iFlix – we all know 1 million is just registered users. Paying subs will be some marginal single digit percentage point of that total number. As I always say – release real stats or none at all.
Good chatting with you Josh – I guess we will keep up the Twitter DM dialogue going till we meet again.
Update to the post::
I said as much in my list below – get ready for the VPN to stop working when it comes to gaming Netflix content libraries.
First, let me start off with a shameless plug for a podcast I was a guest of:
Now that we got that out of the way we can continue on. Also – my shameless plus is so we make this AA’s #1 podcast to ensure I get invited back. 😉
Let me disclose that I work at hooq.tv and used to work at spuul.com . I do have some sense of this world I am talking about. I don’t have a crystal ball and I also think that in the emerging markets it will take years to declare a winner. Years I say!
That being said I think it is important to note some things for the pedestrians:
– In many markets, say Taxis or car booking services, I can agree with the winner take all or winner take most, especially in the USA or China. FYI Om covered this topic well here :: http://www.newyorker.com/tech/elements/in-silicon-valley-now-its-almost-always-winner-takes-all. However in large regional area or emerging markets I am not sure if it is true and it also has to be that pricing almost equalizes. In the case of this specific subject if we are talking about Netflix dominating in India I struggle to see how a company that charges 3x its emerging markets brethren can own the market. Maybe it will own the high end but how would it own the market that does not pay that much for entertainment?
– Let no one kid you. None of these players are currently fighting over a paid customer base – we are all fighting to convert a pirate over to a paying subscriber. That will take years and there are plenty of pirates to share at this moment.
– Local content is a big deal and no one player owns it all nor can sell it all to one OTT player. Also many of the local content players are building or have built their own OTT services.
– There can never be just one service for all. Take me for example. I share my mom’s Netflix account but I buy my own HBO account. I value HBO way more than Netflix and nothing they did last week changed that equation for me.
– Payment models in the emerging markets are hard. For Netflix it very well could be that the only customer they care about has a credit card. That still lives 100’s of millions of customers for companies like HOOQ who think there are others way to take money from users.
– Not only are payment models hard but so are subscription types. Is a monthly recurring subscription going to work in the emerging markets? For some folks it might. For others maybe weekly subscriptions is better? Maybe a subscription tied to a data balance makes more sense. No one knows yet.
– Content rights are super hard. I love seeing all the people baffled as to why they log into Netflix Singapore and it doesn’t look like the USA catalog. Netflix didn’t buy all the rights for Singapore because they know it is a small market. It may not be worth it and chances are some of it is not available. Also, Netflix being a capitalist, sold some of their shows to services in Singapore already so they can’t just take it back. Over time as they grow they will fix this but again Netflix could never own everything you want to see.
– As OTT takes off some of the big players will try to work around Netflix and other services to go direct. One good read on this :: http://bgr.com/2015/11/05/netflix-streaming-time-warner/
– The all powerful VPN. Currently lots of folks are signing up for Netflix Singapore and then using a VPN or anonymous IP to get the USA catalog. All good but keep in mind they way content rights work. They are bought and sold for a region – they are not tied to what credit card you use. Lots of folks talk about Apple TV or iTunes as the model where I can use my use a credit card to buy a show. And I can watch it in Singapore but note I am paying US prices so the content guys don’t care. Apple is not a subscription service and notice it they planned on doing this with TV and backed down. Netflix is getting away with murder right now. Pay Singapore prices but watch a USA catalog. At some point the content owners may ask Netflix to enforce geo specific rule or to simply not support VPN usage. Most content owners ask companies like HOOQ to try to block VPN’s or similar tools. As global content streaming takes off, I expect this to be an ongoing discussion.
– To summarize I would like to say this is going to take time to all play out. As I like to remind my team regularly – it’s a marathon – not a sprint.
I’ll add to this is if I think I missed something.
So now I get it. Must say that the tech in Asia headline is quite misleading.
This article explains it better :: http://www.gmanetwork.com/news/story/435673/scitech/technology/smart-allows-purchases-from-apple-itunes-app-store-using-load
Th carrier is creating a virtual credit card via the user’s phone account. So apple sees a credit card still but user doesn’t have one.
Brilliant idea. More carriers should do this.
That being said – apple needs to step up their game. Biggest win for android is being able to modify the payment model.
My old post ::
This is the biggest news in tech if so!
Clearly Ben is on a roll. I don’t agree with all his monologues and tweets but I think this one is pretty good :: http://ben-evans.com/benedictevans/2014/12/9/mobile-platforms-and-technical-debt
People tend to get too religious about their phones, OS’s and all things associated with them. The fanboy thing starts to take over, Xiaomi as an example, but this stuff boils down to pure business. There are ONLY two mobile ecosystems right now. 2. Apple and Google. The China thing is another topic in that the rules are very different. However Apple seems to be doing better with their model in China than Google is. Enter Xiaomi though to see what can happen when one combines some of the essence of both players to make a go. It’s magic and it is working. However it remains to be seen if this is only going to be big in China. For the record it is only happening in China right now. I think Xiaomi will struggle outside of China.
Let’s talk about the impact more once they make bigger waves outside of China.
Microsoft is trying their hardest. Still doesn’t seem to be working. This still applies :: http://www.nokpis.com/2014/10/26/microsoft-is-only-missing-the-apps/
So Ben gets to the essence of all of this. Apple had a vision and Google had another. Take away the marketing, the religious arguments, the open versus closed jargon and what you are left with is two very similar platforms:
One way to look at this is that iOS and Android have been converging – they arrived with more or less the same capabilities despite starting from opposite ends. Apple has given up control where Google has taken it. And of course Google has had to add lots to Android just as Apple had to add lots to iOS (and they’ve generally ‘inspired’ each other on the way), and just as Apple has added cloud services Google has redesigned the user interface (twice, so far).
I am not purporting that the environments are the same or that they arrived at the same point using the same methods. It is just that if one looks closely at the model. Google started open and is starting to lock it down now. Apple started very locked down and is slowly opening. Both stances created some benefits and negatives in the early days and now the resultant evolution has created some benefits and negatives. Google is better at the old fragmentation issues and overall quality has improved. Tool wise I think Apple has a better product for developers though. Apple is making it easier to do some things but their software quality has slipped. That cannot be disputed. http://www.nokpis.com/2015/01/06/thanks-marco/
One could also discuss that Apple makes better hardware since they actually sell their own stuff. Google is still not really in the hardware business. However let’s not get into this.
The part I still find that NO ONE writes about is the difference in the view from the folks grinding out apps everyday and shipping them. How do we ship these apps? Via the App Store and the Play Store. This is where the huge differences are but there is also some evolution there. I would safely say, much to my dismay, that Google has evolved way more than Apple. Where Apple has made great strides for opening up iOS, there is literally no progress in the App Store when it comes to search, discovery or the App Store developer view. We still wait too long for app reviews, there are too many reviewer mistakes and too many features are tied to actually releases. We cannot modify pricing without releases or even update things like images or text without releases. So 3 years in with a stable app I still wait like everyone else to change some copy or update an image. Comical.
With Google a developer can update copy, bits, images and pricing at any point. Or just ship a new app whenever we want. Granted Google has issues with not policing apps enough or letting any app release (pirate or copy app) but they actually have improved some. I still think both Apple and Google should converge stances. Google needs approvals or review for first apps and Apple needs to let people update apps without approvals.
Where I think the big divide is though is around emerging markets. Apple is somewhat behind in that everything one must do around purchases is tied to Apple payments which need credit cards. I can’t use gift cards for subscriptions since everyone always mentions gift cards. I focus on India a lot and the big reason Apple is not as big as Android is about device cost but more importantly the payment problem. Google implements telco billing or at least does not stop us from putting in our own telco billing. With Apple I am stuck with Apple. This has to change for Apple to succeed. I personally think this is the biggest headwind Apple has in some regions – it just can’t function without a credit card backing. If Apple had some sort of regional telco billing I think the flood gates would open around the iOS ecosystem.
All that being said I think Ben ends on an interesting note that is also where emerging and non-emerging markets differ. Messaging:
But the underlying philosophies remain very different – for Apple the device is smart and the cloud is dumb storage, while for Google the cloud is smart and the device is dumb glass. Those assumptions and trade-offs remain very strongly entrenched. Meanwhile, the next phases of smartphones (messaging apps as platforms and watches as a dominant interface?) will test all the assumptions again.
Following up from my post yesterday :: http://www.nokpis.com/2015/01/06/thanks-marco/
Some people are acting like none of us can complain about Apple or that there is nothing wrong. So rather than harp on the sensationalist side of things I thought I would highlight where there is real commentary about the state of Apple from a real developer.
Gruber’s take on the Panic post :: http://daringfireball.net/linked/2015/01/07/panic-report
Look no further than Panic. I have been using their software for years and they are very open about the state of things.
Read their latest blog post first :: http://www.panic.com/blog/the-2014-panic-report/
If we could offer traditional discounted upgrades via the App Store, this paragraph wouldn’t exist. This is one area where the App Store feels like one of those novelty peanut cans with the snake inside.
This is so spot on. Hard to have the marketing and sales flexibility one desires when things like upgrades are not easily doable.
Coda was removed from the Mac App Store in mid-October, at the same time version 2.5 was released. Since new releases always generate a short-term sales spike and we wanted the numbers to be fairly representative of “typical sales”, we looked at one month on either side — September and November.
The results were interesting. We sold a couple hundred fewer units of Coda post-App Store removal, but revenue from it went up by about 44%.
I am guessing they are only leaving the Mac App Store due to technical and pricing flexibility but of course not having to share 30% must be nice. All in all there are still too many issues with the Mac App Store – it is definitely not working out the way Apple intended.
The last couple of months of 2014 got classically “exciting” as Transmit iOS was suddenly flagged by the App Review team for a violation — a well-documented situation, both on our blog, and sites like Daring Fireball and MacStories. Thanks almost exclusively to these articles, we very quickly got a very nice call from a contact at Apple, and the situation reversed almost immediately. Everything ended up just fine.
But I can’t comfortably say “the system worked”. It’s still an awful and nerve-wracking feeling to know that, at any minute, we could get thrown into a quagmire of e-mails, phone calls, code removal, and sadness, just by trying to ship something cool.
I have written about the issue with the review process more than a few times. It really is horribly broken. Reviewers don’t read review notes, they make a lot of mistakes and there is too much time in getting through the issue for each cycle. I really don’t understand why Apple can’t apply some code and thinking to the way the process works. Panic is huge and well known so they have it easy. Folks like us, the mere mortals, have to sit and endure shitty reviewing for each appeal and subsequent follow up reviews. This is why I actually like the Play Store better.
Low iOS Revenue
This is the biggest problem we’ve been grappling with all year: we simply don’t make enough money from our iOS apps. We’re building apps that are, if I may say so, world-class and desktop-quality. They are packed with features, they look stunning, we offer excellent support for them, and development is constant. I’m deeply proud of our iOS apps. But… they’re hard to justify working on.
This one is tough, I don’t blame Apple but it is sad that apps can’t make enough money. People just don’t want to pay. What Panic doesn’t talk about is that the situation on Android is far, far worse. Unfortunately it means one has to come up with other models to make money. I am always stunned when I get customer emails from people who use Spuul complaining about using our free product and having to endure ads. They think there should be no ads but they don’t make any connection to the fact that the ads are how we support a free service. Then you tell them they can upgrade to remove all the ads and they reply that they simply don’t want to pay anything. Okay. Not much I can even say to that. This mentality is all over the app ecosystem.
Panic is just a reminder though that Apple cannot succeed with out developers and their fans but increasingly with the draconian and outdated App Store and the slippage in software quality – Apple risks losing some momentum. It won’t be instant or even easily spotted but these are the canaries – like it or not.
Saving this for myself and others to read later