The New Mobile App Reality Unprecedented Value Creation Opportunity

Transcription

1 INDEPENDENT TECHNOLOGY RESEARCH MOBILE APP ECOSYSTEM JULY 2014 The New Mobile App Reality Unprecedented Value Creation Opportunity ALI DAGLI San Francisco: ALEC DAFFERNER San Francisco: OKAN INALTAY San Francisco:

2 SCREEN OF HORROR WE CAN NO LONGER LIVE WITHOUT OUR SMARTPHONES AND MOBILE APPS 2

3 TABLE OF CONTENTS» How the mobile app phenomenon started» Its appeal and what has changed» The three pillars of success for developers» What consumers do most on mobile devices» The challenges» Unprecedented value creation opportunity 3

4 THE NEW MOBILE APP REALITY Based on the study Bicycle for the Mind Initiated by Apple Accelerated by Google The study measured efficiency of locomotion for various species. Cast Includes: Humans came a third of the way down the list. 10k+ Ecosystem partners However, when given a bicycle, humans came in on top. 1m+ Mobile App Developers 1.75Bn Mobile users 25+ years ago, this study made Steve Jobs realize that it was man s skill as a toolmaker that categorically amplified his inherent abilities. Driving Jobs to invent his evolutionary bicycle for the mind: the iphone"--inaugurating today s ubiquitous mobile app ecosystem 4

5 IPHONE LAUNCH VS NOW JUNE 2007 IPHONE LAUNCH IN NEW YORK MAY 2014 ORDINARY DAY IN SAN FRANCISCO IN 2007, EVERYONE S LOOKING AHEAD TO THEIR PURCHASE IN 2014, EVERYONE S LOOKING DOWN AT THEIR PHONES 5

6 THE IRRESISTIBLE APPEAL OF MOBILE» Powerful personal computers with us at all times» Two-way connectivity between individuals and the world» Innumerable apps already installed and millions available instantly» Each app curated for its purpose customized for and by each user» Seamless app store and instant-purchasing back-end» Dynamic real-time data integration (e.g. social, location, motion) 6

7 CHANGE IS SHIFT FROM PACKAGED PRODUCT TO SERVICES MODEL FROM TRADITIONAL ONE-WAY PACKAGED PRODUCT MODEL» Inefficient/indirect Third-party Development Tools Content Creator Publisher Distribution Partners / Carriers Retail + Platform Passive Consumer» One-way» Few options» Control to sell» Low margins TO IP-BASED TWO-WAY SERVICES MODEL Service Provider IP-Based Platforms Mobile-First Empowered Consumers» Efficient/Direct» Two-way Distribution Partner Web Social Networks IP-Based TV Consoles + Steam?» Many options» Engage to keep» High margins 7

8 THREE PILLARS OF SUCCESS FOR MOBILE SERVICE PROVIDERS 1. BEING AND STAYING RELEVANT 2. CULTIVATING LARGE ACTIVE USER BASE 3. CONVERTING STRONG USER RELATIONSHIPS INTO MONEY 8

9 (1) BEING AND STAYING RELEVANT Social Networks Messaging/Calls Games Mobile Music Dating Apps BE RELEVANT STAY RELEVANT Mobile Video WANTS SATISFY/LISTEN NEEDS RE-ENGAGE/BALANCE EMOTIONS CONTINUE TO INNOVATE Mobile Content On-demand Services Reservations Productivity RELEVANCY IS PROXY FOR REPEAT USAGE/RETENTION 9

10 (2) CULTIVATING LARGE ACTIVE USER BASE #1 in 2004 Users on Mobile (In Millions) (95M MAUs) Mobile Platforms Mobile Gateways Mobile Services» Google Android» Apple ios» Browsers» Messaging Apps» Horizontal Social Networks» Games» Dating Apps» Vertical Social Networks» Media» Music» Video» Utilities» Productivity Apps» Online/Offline LARGE ACTIVE USER BASE IS PROXY FOR POWER/PATH TO MONETIZATION Source: Company filings, industry news and market research, GP Bullhound. 10

11 (3) CONVERTING STRONG USER RELATIONSHIPS INTO MONEY A. DIRECTLY MONETIZE USERS THROUGH APP STORE AND DIRECT PAYMENTS 1. Bank on strong engagement (IN-APP) 2. Bank on perceived monetary value (PAID) 3. Direct to owned products with 1 & 2 B. INDIRECTLY MONETIZE USERS THROUGH ADVERTISING/REV-SHARE/LICENSING 4. Sell user impressions (CPM ADVERTISING) 5. Sell user intentions (CPC ADVERTISING) 6. Sell user installs/actions (CPI/CPA ADVERTISING) 7. Direct to 3 rd party products with 1 & 2 (REV-SHARE/LICENSING) C. MAKE IT FREE, NO ADS; GO FOR ULTIMATE USER GROWTH AND EVENTUAL EXIT 8. Sell the company ($1bn) ($19bn) (?) 11

12 WHERE WHAT DO CONSUMERS WE SPENT MOST DO MOST OF OUR ON TIME MOBILE ON DEVICES MOBILE PLAY GAMES SLOTS/CASINO/POKER STRATEGY/CARD BATTLE/RPG/SIM MGMT/SOCIAL CASUAL ARCADE/TURN/PUZZLE ACTION/ADV/SHOOTER/RACING BRAIN/QUIZ/WORDS SPACETIME Krasnov Games Zakeh Poptacular COMMUNICATE AND SOCIALIZE GO ON A DATE MAKE CALLS BE IN TOUCH (ONE TO ONE/ONE TO FEW) BE IN TOUCH (MANY TO MANY/SOCIAL NETWORKS) BROWSE THE WEB CONSUME MEDIA LOOK FOR INFORMATION GET NEWS LONGER READING GET EDUCATION/LEARN PLAY MUSIC PLAY VIDEOS Bagatrix MoboTap TRIGGER OFFLINE ACTIONS/EVENTS BUY OFFLINE GOODS MAKE RESERVATION ORDER ON-DEMAND SERVICE MANAGE MONEY GET HEALTHY FitNow GET THROUGH THE WEEK MANAGE /CALENDAR ORGANIZE/CREATE DOCS/NOTES GET STUFF DONE NAVIGATE EDIT PHOTOS/VIDEOS Alminder Cogitap Software USE UTILITIES/TOOLS Ad Hoc Labs Good.iWare 12

13 MONETIZATION WHERE DO WE CHARACTERISTICS SPENT MOST OF OUR OF EACH TIME ON CATEGORY MOBILE PLAY GAMES SLOTS/CASINO/POKER STRATEGY/CARD BATTLE/RPG/SIM MGMT/SOCIAL CASUAL ARCADE/TURN/PUZZLE ACTION/ADV/SHOOTER/RACING BRAIN/QUIZ/WORDS HIGHLY ENGAGING MOBILE SERVICES (INSTANT GRATIFICATION) HIGH APP STORE & DIRECT PAYMENTS (IN-APP/PAID) MONETIZATION POTENTIAL COMMUNICATE AND SOCIALIZE GO ON A DATE MAKE CALLS BE IN TOUCH (ONE TO ONE/ONE TO FEW) BE IN TOUCH (MANY TO MANY/SOCIAL NETWORKS) FREQUENTLY-USED MOBILE GETAWAYS/SOCIAL NETWORKS HIGH INDIRECT MONETIZATION POTENTIAL CONSUME MEDIA BROWSE THE WEB LOOK FOR INFORMATION GET NEWS LONGER READING GET EDUCATION/LEARN PLAY MUSIC PLAY VIDEOS MOBILE PRODUCTS W/ HIGH PERCEIVED VALUE HIGH PAID AND INDIRECT MONETIZATION POTENTIAL TRIGGER OFFLINE ACTIONS/EVENTS BUY OFFLINE GOODS MAKE RESERVATION ORDER ON-DEMAND SERVICE MANAGE MONEY GET HEALTHY GET THROUGH THE WEEK MANAGE /CALENDAR ORGANIZE/CREATE DOCS/NOTES GET STUFF DONE NAVIGATE EDIT PHOTOS/VIDEOS USE UTILITIES/TOOLS FREQUENTLY-USED MOBILE PRODUCTS W/ RELATIVELY LOWER ENGAGEMENT PAID OR INDIRECT MONETIZATION POTENTIAL 13

14 MOBILE APP ECOSYSTEM CHALLENGES» Big and established players outbidding competition/owning a territory» User retention engaging/retaining users in a highly dynamic marketplace» User monetization Free-to-play monetization; lower CPM rates on ads» User acquisition crowded space and high user acquisition costs» Privacy and safety concerns related to personal data» Device, platform and app store fragmentation (e.g. Android, China)» Localization, culturization, or being foreign to a large market (e.g. China) 14

15 UNPRECEDENTED VALUE CREATION OPPORTUNITY ON MOBILE NON-GAMING DEVELOPERS COMPANY VALUATION TIME GAMING DEVELOPERS COMPANY VALUATION TIME Instagram $1 billion (Sale to Facebook) 18 months Crime City & Modern War $210 million (Sale to Gree) 10 months Snapchat $4 billion (Rumoured Google Offer) 26 months Clash of Clans & Hay Day $3 billion (51% Sale to GungHo) 15 months Whatsapp $19 billion (Sale to Facebook) 4 years Candy Crush Saga $5 billion (IPO) 18 months Twitter $24 billion (IPO) 6 years Puzzle & Dragons $7.2 billion (Market Cap Appreciation) 18 months USER BASE REVENUES PROFITABILITY TYPICAL VALUE CREATION USER BASE REVENUES PROFITABILITY TYPICAL VALUE CREATION Strategic Strategic, Financial 15

16 GP BULLHOUND SNAPSHOT» Long track record of success SELECTED RECENTLY ANNOUNCED TRANSACTIONS Founded in 1999, completed over 160 transactions Closed 24 transactions in deals closed in 2014 H1» A premier corporate finance advisory firm SOLD TO UNDISCLOSED ASIAN INVESTORS, LIBRATONE MANAGEMENT MERGED WITH SOLD TO SOLD TO Mergers & Acquisitions Capital Raising and Secondary Placements Strategic Advisory SOLD TO PRIVATE PLACEMENT SOLD TO PRIVATE PLACEMENT» Deep domain expertise across the Technology sector Mobile & Gaming Internet & Digital Media Software & Big Data/Analytics Consumer Technologies SOLD TO SECONDARY SHARE SALE INVESTMENT SECONDARY SHARE SALE» Focus on top-tier emerging growth companies» Strong cross-border capabilities Offices in San Francisco, London, Stockholm, Berlin and Manchester CASUAL DATING BUSINESS SOLD TO SOLD TO SOLD TO INVESTMENT Deep, broad relationship network GRENDALL INVESTMENT 16

17 THE GP BULLHOUND TEAM HUGH CAMPBELL Managing Partner MANISH MADHVANI Managing Partner PER ROMAN Managing Partner CHRISTIAN LAGERLING Co-Founder & Senior Advisor PETER READ Board Director SIR MARTIN SMITH GRAEME BAYLEY GUILLAUME BONNETON ALEC DAFFERNER LORD CLIVE HOLLICK Chairman Partner Partner Partner Partner SIMON NICHOLLS JULIAN RIEDLBAUER ANDRE SHORTELL CLAUDIO ALVAREZ CARL BERGHOLTZ Partner Partner Partner Director Director ALI DAGLI CECILIA ROMAN ALEXIS SCORER ANTONY NORTHROP MATT ROGERS Director Director Director Senior Adviser Senior Adviser MARK KLIMMEK Vice President PER LINDTORP Vice President ADAM RUDD Vice President CARL WESSBERG Vice President ALESSANDRO CASARTELLI Senior Associate STIRLING ADELHELM Associate RAVI GHEDIA Associate MALCOLM HORNER Associate OANA CHIMINA Analyst MATTHEW FINEGOLD Analyst PHILIP FROSSLING Analyst PHILIPPE GREMILLET Analyst OKAN INALTAY Analyst OLOF RUSTNER Analyst WILL SHELDON Analyst 17

18 KNOWLEDGE-BASED BANKING BUILT ON TRUST GLOBAL REPRESENTATION SECTOR RESEARCH GP BULLHOUND S INDUSTRY EVENTS & SPEAKING ENGAGEMENTS AWARD WINNING INVESTMENT BANK 2013 DEALMAKER OF THE YEAR 40 UNDER 40 AWARD 2013 LEADING ADVISERS OF THE YEAR 2013 BOUTIQUE INVESTMENT BANK OF THE YEAR - UK 2010 CORPORATE FINANCE BOUTIQUE OF THE YEAR 2010 DEAL OF THE YEAR & RUNNER-UP DEAL OF THE YEAR 2010 M&A BOUTIQUE INVESTMENT BANK OF THE YEAR & GREEN ENERGY DEAL OF THE YEAR 18

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