Mediatech and the success of micro transactions?
I attended the Mediatech event in London yesterday, hosted at the Russel Hotel and WAYN was fortunate to be part of the top 10 companies being featured at the event – a crowd made of quite a lot of VCs / Angels and a few internet startups – needless to say the tone was rather negative and most of panelists reiterated what many of us in the space have heard in the last month or so: Get back to basics and ensure you have at least 12 to 24 months of cash to go through the tough times (in Sequoia’s words: Get Real or Go Home) – those that are not capitalised will struggle and valuations expectations and time to completion for any deals will certainly be major barriers for most entrepreneurs…Happy days!
The company that impressed me the most was by far flirtomatic (www.flirtomatic.com)
Mark Curtis, CEO of the company delivered a very good pitch and has to me one of the most convincing models – one that brings cash over and above advertising revenues – they are very close to profits (from what I gathered from his presentation) and deliver over 100m impressions in the UK per month on the mobile alone! That’s a very impressive number. The site allows its users to search for a flirt and rate each other as well as sending virtual gifts – users just top up their accounts with credits that cost a very small fee – all of this being based on the main trait that most online communities get founded on: ego.
Users want to know who have rated them and pay for the priviledge to find out. Users want to send that Super Rate to express how much they like the other user or equally how much they dislike them (they have a Freak rate!! which users can pay for to remove – how clever!) . This is a model that others have adopted (faceparty) but not always in the dating model but purely the micro transactions side: this is not a new concept but one that seems to be florishing – Facebook in fact recently announced 2 days ago the launch of a credit system allowing users to top up their account to purchase virtual gifts.
It will certainly be interesting to see how such models evolve over time and whether these bring true revenue diversification – especially in an online advertising environment where many start feeling the pinch!
For those who didnt get the slide I presented (despite the initial technical glitch!), here it is: