Viddy, part deux

I wrote a blog about a month ago suspecting that Viddy's numbers were a result of how Facebook was counting users and its viral implementation of their API. Looks like Business Insider has picked up on the drop both Viddy & Socialcam have experienced in a new article: http://www.businessinsider.com/socialcam-viddy-user-numbers-2012-11

It's just so critical to look at actual usage numbers (for example, how many users are generating video clips? how many are using Viddy's app on a daily basis? etc).

Japanese Manufacturers (nearly), bankrupt. Why?

I've been emailing with a close friend about the sorry state of Japanese electronics companies. Panasonic, Sony, Sharp, and even smaller companies like Olympus have all announced heavy re-structuring and huge losses. Based on several conversations I've had in the recent past with employees at these companies, I told my friend I wouldn't be surprised if a major Japanese electronics company ceased to exist by the end of 2013. 

How could these companies, some of the largest companies in the world, be crashing so hard? My hypothesis is that they've stuck to HW manufacturing with near complete ignorance on the services side of the equation. Electronics HW is just becoming a means to internet services. Japanese do internet services horribly, & Chinese manufacturing is approaching Japanese quality at a fraction of the cost. Voila. 

Don't claim to be expert in this field, but seems to me that HW manufacturing (and firmware) skills are the near opposite of services skills. One reason why UI and menus are so horrible in Japanese electronics. And why Apple stands out as an exception for its abilities to put UI/ease of use *and* HW into a complete user experience. 

This also holds true in the US. Remember those really amazingly well put together Startac(TM) phones from Motorola? Horrible menus, but the HW was awesome. Or even take Microsoft as an example with Windows. Engineering (backwards compatibility, unwillingness to change things so as not to upset manufacturing partners/parts suppliers, etc) takes over vs strong user experience. In Manufacturing, Engineers have the upper hand. And these aren't your SW engineers, these are the firmware/HW kind. This is the land of "cost, stability, and robustness", not ease of use. If it costs $0.20 more per TV, then forget it. It's all volume, cheapest possible. So the services guys get no say, and each division in the manufacturer (esp Sony!) builds their own, incompatible, on the cheap, UI. There is a strong belief that a slightly better screen is more important than a better UI. 

Finally, they seem to share a strong sense for not needing to play with others, which is anathema to building good services. Sony only built for Sony services, for example. Note how their Playstation is still essentially a closed ecosystem. Microsoft only recently opened up its Xbox platform to other video services, and its popularity is exploding internationally. This is indeed a cultural thing where Japanese manufacturers built integrated supply chains (as did the Koreans like LG & Samsung). They then applied this culture to UI/services. So Samsung TVs work with Samsung apps, Sony TV with Sony apps, etc all in virtual silos - no good. 

They have recognized this, and seen success with Android on mobile devices, of course. They make the phones, and Google develops the OS/UI. But then old habits die hard. They of course can't help themselves and create their own versions of Android, mostly just screwing up the UI and frustrating users. All the while, they fret that they are ceding power to Google/Android, which is partially true. Then Google goes and buys a competing manufacturer (Motorola) and these manufacturers worst (imagined) nightmares are realized. Now manufacturers are scrambling for new OS platforms, all the while their HW margins are grinding down to $0, or much much worse (try $billions of losses). 

If these manufacturers spent even a fraction as much on UI as they do on HW R&D, they'd quickly see the return. That is, assuming they even exist. 

Netflix losing marketshare to Amazon

Netflix remains the runaway alternative TV provider in the US, but Amazon is growing at a faster rate, according to new research...and check out the low approval ratings.

US-based 451 Research regularly surveys US consumers about the non-traditional TV services for which they are paying. Netflix remains the market leader by a large margin with 82% of respondents paying for the service. However, that is down on the 84% recorded in February and comes as Amazon records large gains.
Amazon’s share jumped from 17% to 22% across the February-September period. Apple’s iTunes increased its share from 15% to 16% and Hulu’s premium service Hulu Plus’ share was up from 6% to 8%. There was a marked increase in the number of consumers paying for Amazon Instant Video and Netflix. The proportion paying for both services jumped from 14% to 18% across the period.
“While Netflix still holds the largest share by far of the paid alternative TV market, consumers continue to shift towards Amazon’s Instant Video service,” said Andy Golub of 451 Research’s ChangeWave service. “As Amazon’s TV and movie content becomes more competitive with Netflix, its popularity is surging among consumers.”
In terms of customer satisfaction, iTunes was the clear leader with a 35% approval rating. Netflix recorded a 23% rating and Amazon and Hulu Plus 22% and 20% respectively. Apple’s iPad took over Blu-ray players as the device used most often to watch streamed content.

Viddy...how many users do they really have?

As someone who's tracked and run Internet video startups, the massive growth of Viddy earlier this year impressed me but also set off my "it doesn't seem right" gut instinct. Now that I'm no longer heads down running www.synctv.com, I had a little time to really dig into this.

So how did Viddy go from 15,000 uniques/month* (quantcast) in March to over 1M uniques/month in April, less than a month later? I've seen this happen many times before, but not in the "create a video and upload it" space Viddy, Tout, SocialCam, etc play in. As interesting, how did Viddy crash so hard only a couple months later? Was it a fad? Did something else affect their popularity?

Video is not like photos. A picture is fast to upload and fast to "consume". Video takes a lot longer to create (at least interesting videos!) and take a lot longer to consume. As anyone who's posted a video knows, it's not easy to create an engaging video your friends/family/social network will actually watch.
So back to my question: how did Viddy grow and then shrink so fast?

I looked at a number of factors, and the most likely scenario I've discovered is this. Viddy's growth happened at the same time as their integration with Facebook's open graph API and when Facebook wasn't restricting how many layers of friends would be exposed to the video. Even better (or worse, depending on who you are), the various user tracking companies (Alexa/Quancast/Compete) seemed to count every single person who got/clicked the video as a Viddy "user". In other words, I upload a Viddy clip I made to Facebook, and all of my friends see this instantly. Then, if they click on the video, my friends' friends could (depending on your settings)  also show up as Viddy "users". As you can imagine, this leads to massive virality.

But should someone who's not even signed up or using Viddy be counted as a user? I argue that the only true users are those who either create content using Viddy's service and/or regularly use the Viddy site to view videos. Someone who get's a video they know nothing about shouldn't be counted as a Viddy user, should they? At the very least, knowing how many users are really using the site vs users who just got the video because of Facebook's API implementation, is important to measure Viddy's true growth.

Now how about that steep drop off? Well, interestingly enough, it also coincides with Facebook's tightening of its API virality. Viddy videos will now no longer penetrate several layers of "friends of friends", and voila...Viddy is back to a steady state of 60,000 uniques/month for the past 3-4 months.

So hats off to Viddy for getting investors to plow money into them based on...um...creative user numbers. They have a lot of smart people there, and now have a large rainy day fund. I'm sure they'll reinvent themselves and get those numbers up again. I just hope that next time, the growth comes from actual users of their service, not these amped up numbers.


*Yes, I know, all of these tracking services are inaccurate, inconsistent, etc. However, used as a rough traffic guide, they do the job...somewhat.