Facebook’s double buy of mobile-related companies raises a couple of interesting questions, obviously related to motive and future direction for the social-net giant. While the deal for mobile photo-app player Instagram caught everyone’s attention on price (a billion), it takes at two points to define a line, and to guess where the line might lead. The TagTile deal offers us that second point. From them we can draw a line from the framing issue to the driving issue for the deals.
The issue framing the deals is the simple fact that mobile broadband is the only thing that matters in social networking growth. You can’t have an always-on social life with a social portal you leave on your desk. Facebook has a good mobile following, obviously, but it was launched before smartphones had redefined the online social process.
So what, you ask? If Facebook is used on smartphones (where it’s in most markets the most frequently accessed app) then why are any steps necessary to lock in mobile success? This brings us to the driving issue, which is GOOGLE. Google has Android, the smartphone OS that leads in market share. Google has Plus, which it’s trying to make into a Facebook competitor. Google may have Glass, which could bring social-cool to every set of eyebrows on the planet. Facebook has to assume that Google is going to push forward toward a union of their Plus and Android lines, particularly when they’ve announced they’re planning mechanisms to defend founder control over the next couple years at least.
Lines go somewhere, of course, and we might now ask where this one is heading. I think the answer to that is FACEBOOK’S IPO. The company is going to be doing one of them this year, and they raised a literal ton of bucks at the VC well, which means they need a staggering offering just to buy out all that early capital. They also need to be sure that they don’t suffer from a post-IPO slump in share price, and that means they need a big revenue ramp. Mobile is the only way to get that because mobile devices go with you when you buy, and that means they’re a more direct conduit to the purchase decision. If Google locks a mobile/Plus thing that can somehow get Google into the buyer’s mind right before the buyer goes for the wallet, then Facebook has no future even if social networking does. Ad dollars go to influence and not to popularity.
There’s the other end of the line, of course. Nothing creates more excitement at first, and more angst later on, in a company’s developer community than the company starting to buy out developers to set up its own apps. For a brief shining moment this creates lottery-like fever, but eventually everyone sees that their chances of winning are similar to the lottery and they look for a place where developer investment can bring a less polarized business model than “be-bought-or-die”.
Another interpretation of Google’s non-voting stock move is that the founders are afraid they’ll be kicked out because they can’t keep up with the OTT market any more, and Sergey Brin might actually have given that view some credibility through a recent interview, where he suggested that Google could never have gotten started in a Facebook-dominated world. What he’s angry about is the closing of the information ecosystem; players like Facebook make their material non-searchable to keep people like Google from monetizing at the other’s expense. Google also rides traffic-charge-free on carrier networks. “Freedom” means the other guy pays and conforms to my business model? That doesn’t sound like a confident person. And might Google be far from realizing Glass, and be announcing it now only to generate buzz and take the pressure off?
Mobile markets are the most behaviorally linked of all online markets, and so they’re the fastest to adapt. That’s why Facebook is buying into mobile. That’s why Android is important to Google. But many of Google’s other projects, including Voice and Wave, could have fleshed out a new communication model that could have been incorporated into Plus. Might that have made Plus the new mobile social communication framework? Might Google be guilty of specific flaws of strategy more than Facebook or Apple is guilty of creating “walled gardens”? Behavior changes are what’s creating Google’s risk, and opportunity.
Behavior changes always create opportunities and risks, and not only in mobile. OTT video is an example; yes, it’s true that mobile video is growing, but my data is saying that the most important trend in OTT video isn’t mobile at all. It’s disgust with normal programming. By 2020, my numbers say that a whopping 31% of viewing time will be escaping the normal channelized programming, triple what it is today. This isn’t the soccer mom or dad at the game, it’s people sitting in their living rooms wanting to watch TV and finding nothing that doesn’t stir their gag reflex. These people are the mainstay of long-term channelized viewing, and it’s their habits that will decide how much the linear-delivery franchise of the various cable and telco players really means. Mobile will never break that model, but gagging might.
What Google and Apple are likely after in TV is the fruits of this shift, in no small part because both companies appeal to the younger elite who lead the “run-away-from-what’s-on” crowd. But the fact that there is still a check-what’s-on that precedes the streaming decision is why channel guide support and integration is so important. Every step needed to integrate streaming viewing with channel viewing is one step too many, for now. At some point, that may turn around.