The state of digital on The Future, This Week

This week: part one of a special with Simon Kemp on the State of Digital. Sandra Peter (Sydney Business Insights) and Kai Riemer (Digital Disruption Research Group) meet once a week to put their own spin on news that is impacting the future of business in The Future, This Week.

Our guest: Simon Kemp, CEO of Kepios

The stories this week

The State of Digital: April 2019 report

Other stories we bring up

Simon’s articles on We Are Social

Wall Street Journal article on voice search in emerging markets


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This transcript is the product of an artificial intelligence - human collaboration. Any mistakes are the human's fault. (Just saying. Accurately yours, AI)

Disclaimer We'd like to advise that the following program may contain real news, occasional philosophy, and ideas that may offend some listeners.

Intro This is The Future, This Week on Sydney Business Insights. I'm Sandra Peter, and I'm Kai Riemer. Every week we get together and look at the news of the week. We discuss technology, the future of business, the weird and the wonderful, and things that change the world. Okay, let's start. Let's start!

Kai Today on The Future, This Week: part one of a special with Simon Kemp on the State of Digital.

Sandra I'm Sandra Peter, I'm the Director of Sydney Business Insights.

Kai I'm Kai Riemer, professor at the Business School and leader of the Digital Disruption Research Group. So Sandra, what happened in the future this week?

Sandra Well something special. I'm not here, I'm away this week. Well not this week, but the week that this is going to air.

Kai So we have a treat for you today.

Simon Hi I'm Simon Kemp. I am the CEO of Kepios, which is a marketing advisory service.

Sandra In a two-part special we have a closer look at the state of digital in 2019.

Kai So in part one we will look at ways the Internet is still growing. What role does video play in this, or translation, or voice recognition? We also look at games, gaming, esports and Tinder.

Sandra So I recently got the chance to sit down for an interview with Simon Kemp.

Simon Hello I'm Simon Kemp on the CEO of Capulet which is a marketing advisory service. Our reason for being as a company is helping companies, organizations around the world to make sense of what people do on the Internet. A big part of that is producing the Global Digital reports, which we publish in partnership with We Are Social and Hootsuite. Huge collection of data, thousands of charts, 247 different countries covering nine year’s worth of data so far, ongoing. Anything you want to know about how people use the Internet, social media, mobile and e-commerce, and pretty much every country in the world.

Sandra So Simon, welcome to The Future, This Week. You're a Scotsman in Singapore who has worked for Unilever, for Google, for Coca-Cola, now does his own thing with over 10 million people having read your books, having read your reports, and each year you produce the Global Digital overview which brings together tens of thousands of data points into over 500 charming slides that you're going to talk to us about today.

Simon Yeah I'm going to take you through every single one of those slides today.

Kai Well Simon's material is quite extensive so obviously we will not hear about every single bit that he has to offer, but we've used Simon's material on the podcast quite often, so he's really a treasure trove of information when it comes to all aspects of digital, the Internet, and what people do with mobile apps.

Sandra So first thing to know with Simon every year, and the first thing we're curious about every time, is what is the state of digital that year, and what are some of the more interesting things that come up every year. So first can you tell me a little bit about the state of digital in 2019.

Simon Yes. So I think no surprises here. It's pervasive. So we've got to the stage now two thirds of the world, from newborn babies to people over the age of 100, already have a phone. So that's the, sort of, the key driver that's going on here. 58 percent of the world's population connected to the Internet and almost half of the world's population using social media. So we've kind of got to the stage now where most people are using digital connectivity stuff in pretty much every aspect of everyday life. So this is no longer new media. We can probably park that expression forever. The Internet is just a straightforward part of everybody's life.

Sandra So you've been doing this report for quite a few years now. What have you learned this year where you went, that's actually really surprising.

Simon It's weird, the biggest finding this year came on one of the very first slides in the report the fact that the growth in Internet users around the world actually accelerated in 2018. This was a real surprise for me. Every year I'm slightly terrified that I'm going to produce the report, and collect all this data and then get to these sort of end of the collection period and go 'Oh there's nothing interesting to say this year'. But looking at the growth in Internet users is the very first thing that we check. And that growth accelerated, more people came online in 2018 than came online in 2017, for the first time. It just blows my mind. So there was more than a million people that came online for the first time every single day during 2018, on average. So just mind blowing stuff how quickly that's growing, especially with what happened last year. So you look at things like Cambridge Analytica, you look at all of the congressional hearings, and the privacy concerns that people have got. We were really expecting to see those numbers slow down. We were expecting to see some people step back from digital, but actually the opposite was true. People are spending as much time, if not more time, doing all of the various things that they were doing before. They're also starting to do new stuff, and there's more of them as well. So we're up to the stage now, the latest numbers that we've got 4.437 billion people around the world using the Internet. It's just incredible. So it's not slowing down, it's getting bigger. That was a surprise.

Sandra Why do we think this is, is it just economic development, more people having access to that technology, or is it maybe better reporting in certain parts of the world?

Simon Yeah, it's definitely both of those things. So I think the better access to data certainly one part of it. And we're seeing increasingly governments taking proactive steps to understand connectivity in their country, whether it's from economic empowerment, through to education. There's all sorts of reasons why it's important for governments to know how many people in the country are using the Internet, whereas previously I don't think that there was that level of interest perhaps, in collecting. And it is hard work, there's no single source of information for governments on how many people in their country use the Internet. So they need to go out and survey, they need to speak to telcos, they need to do all sorts of different stuff. But increasingly there's a very clear motive to do that. So I think you know, you're right, better reporting is definitely a part of it, but the financial element of this is critical and I think it's predominantly being driven by the market economies. So you're seeing cheaper devices, especially in the smartphone world, you can get a functioning smartphone for 25 dollars in some markets, admittedly it's not going to be the world's most powerful, but it does what it needs to, it connect to the Internet. You can now get data incredibly cheaply around the world, it's still not necessarily cheap from the perspective of the person in those countries that needs to buy it. So the example here: in India today it is possible to buy a gigabyte of mobile data for two cents. So if you think about that, 50 gigabytes for a dollar that's pretty good by most international standards. And yet, you know, from the day-to-day living standards of certain families in India that's still something that they need to consciously make decisions around. Is there a compromise between that versus doing something else? So it's not like you and I being able to afford data at that price, it's obviously priced for the market it's in. But nonetheless, that's considerably cheaper than it was even just a few months ago. So cheaper devices, cheaper data, and then I think another key driver that goes along with that is access to content. So one of the most interesting barriers if you like to increased adoption of the Internet around the world is finding content that you can make sense of as an individual. Whether it is a language that you can understand, or more importantly the vast majority of stuff on the Internet today is still text-based. And obviously there's a rise of YouTube and video and all these other things. But if you look at the Internet in its entirety, the worldwide web, are we still have to call it that? It feels very antiquated. But the vast majority of content on the Web is still text-based and most of that is in English as well. So you can see how automatically you start to shrink down the pool of people who can understand and make sense of that. Do they speak English? Do they have sufficient levels of literacy to be able to make sense of the written word? Increasingly, things like social media and user-generated content, you're finding that that spread, if you like, of reach is coming into new vernacular, languages, it's coming into new cultural contexts. we're looking at new formats of content that are more accessible to different kinds of people. So it's not just that it's more affordable, the content that people get when they get onto the Internet is now more accessible as well. Because previously, if you look at a lot of countries like India for example, where there's so many different languages, if you don't speak a language that's on the Internet then there's no real benefit to being on the Internet. What are you gonna do? You can't understand any of it. So yeah, I mean all of these things are coming together in the perfect storm, if you like. It's driving that growth, it's making it more appealing and it's more affordable at the same time.

Sandra I recently came back from Shanghai and I was chatting on WeChat to one of my colleagues, and they were writing in Chinese and I was responding in English and WeChat was translating, and you could translate in real time. So we were having a conversation without either of us knowing each other's languages.

Simon That kind of stuff I find absolutely amazing. So I just I studied languages at university, as well as studying marketing. So anything that involves a foreign language I've got a particular sort of love for, and I was recently up in Tokyo. So similar experience to yours. We're sitting in this tiny little bar in the middle of Tokyo speaking to this Sake guy. So he's like, he's behind the bar, he's 75, 76, speaks not a word of English, he speaks a dialect of Japanese. And we're using Google Translate, and we're speaking into it, he's speaking into it, and we're having a full-on conversation, admittedly after a couple of drinks it gets easier. But it's just the wonder of the Internet from my perspective, making suddenly the ability to find people with similar interests and to communicate with them wherever they are in the world. We talk a lot about the dangers of privacy and stuff, but I'm such an optimistic person when it comes to the Internet I see the amazing opportunities in there instead.

Kai So to me this is really interesting because in the West we have this experience of the Internet as a collection of websites, it's text-based. We read, we do e-commerce. But according to Simon that's not the experience that many other parts of the world have.

Sandra Yes, and indeed if you think about it in many other parts of the world people might not speak English, or might not even be literate, or it might be regions of the world where you have a number of different dialects, and people can't engage with dialects other than their own. And indeed where people interact differently with the content. And I was recently in Taipei, the driver had about five screens in his car, all of them playing various types of video content, and indeed a big iPad with a video, and he was changing videos on YouTube via voice.

Kai So that makes sense then that while in the West Internet growth is pretty much saturated, the rise of affordable mobile devices that we see around the world leads to easy recording and upload to video, which then in turn drives engagement and uptake of the Internet. And at the same time the advances in machine learning and deep learning that, you know, drives translation algorithms gives people really good access to English language content, even though they don't necessarily speak English or can read English.

Sandra So there's one more piece to this puzzle. There's actually one more thing that Simon told me about that actually the media quite often misses, and that is voice.

Simon One of the ones that frustrates me most at the moment is the way that voice control gets portrayed in the media, especially the marketing media. If you read anything about voice control at the moment there's this massive overfocus on Amazon's Alexa, or Apple Homepod, Google Home, all these great devices. Those are really interesting. There's definitely a massive opportunity within that, but that's not the be all and end all of voice. There is so much more to it than that. And the trouble is it's completely skewing the conversation and it's unfortunately distracting, especially business people, from the opportunities that are inherent within voice. So let me rewind, we're going to nerd out a bit on data here. Globally, the latest data we've got from GlobalWebIndex who do a massive study of Internet users around the world, so we're talking millions of people every quarter that they survey and the sample they have is representative of like 93, 94 percent of the Internet users around the world, so it's huge. Forty percent of the people they speak to already use voice every month today, but in Western countries that figure is a lot lower. And in developing markets, especially in India, Indonesia, if you want to call China a developing market (depends a little bit on your perspective), but those three countries China, India, Indonesia, already more than half of the Internet users in those countries using voice control on devices like their smartphones every month already. So voice is already a very big thing in those markets, and yet the weird thing is that's almost non-existent in terms of the media coverage of it, especially in the Western world. If you're a global marketer, if you're a global business, which increasingly we all are because even if you're a small mom and pop shop you can reach customers write them around the world using e-commerce, you kind of need to understand that the behaviours and the way that people access the Internet and use their devices is very different once you start using things like voice.

Sandra Can you give us a few examples of how people use voice in places like India or China?

Simon Yeah, so in the Wall Street Journal a few months back there was this fantastic article about a station porter in Delhi. So you know, he's actually at a train station, his main job is carrying cases for people that get off of trains. But obviously there's gaps between when the trains arrive, and he's got some downtime. So the journalist was speaking to this chap, and he said so just show me what you do on your phone. He takes his smartphone out. So you know, he's a station porter, fairly of average guy on the street. Takes his smartphone out, goes straight into YouTube, and then he speaks into the YouTube engine and says find me this following song. And he wants to watch a music video on his smartphone while he's waiting for his next customer. For you and I, that seems relatively straightforward. It's like something that we might do as well, perhaps without using the voice element of it. But what's really interesting about that situation is the chap that was being interviewed, this porter, he admitted himself that he wasn't particularly literate. So he hadn't finished school didn't really understand how to read and write most languages, the language that he spoke at home didn't even have a keypad that you could enter into characters on your smartphone. So, if you think about all the barriers to him actually being able to use the Internet, realistically he shouldn't be doing that. And yet he's found this brilliant way of, 'I'm going to use voice control to find this song', and sure enough YouTube being the magic that it is with its algorithm understands what he's asked in his local language, finds this piece of music, and then he's there, listening to his music within a matter of seconds. Now I think, you listen to the Western media talking about this and they're like 'oh Amazon, buy me batteries', and it's just like, yeah I can see why that is interesting, but woah, there's so much more here. The people that don't speak English that can now, I mean we talked about this earlier, the ability to translate these languages, now that's automatically opening up new stuff. Whether it is because I can't read and write because I've got sight problems, I might be blind, or I can't use a keypad because I've got arthritis, suddenly voice opens those worlds up to people as well. So this is so much more than just I'm going to shop on my nice little smart speaker device.

Sandra Voice is also quite big in China.

Simon Yeah. Slight understatement there. So various different aspects of voice in China, I think one of the interesting bits if you look at the way that the average user of WeChat uses it, they're recording snippets of audio, I'm recording a little voice message for you and I'm sending it, and you're sending it back. It's almost like a phone conversation but there's gaps, because you know, you read it in the same way you'd read a text message on WhatsApp, for example. So that already was a very obvious demonstration of the fact the voice was not just shopping. But why did that happen specifically on WeChat, what was the motivation? If you look at the way that the Chinese language works, Chinese as a spoken language is actually relatively straightforward. You've got some different tonal structure in the way you say certain syllables. But actually it's a relatively straightforward language to learn to speak. But to type that language you need a minimum of a thousand different characters to get through everyday life. The standard set that you get taught in school in China is more than 8000 characters.

Sandra That's a pretty big keyboard.

Simon Right, exactly, and obviously they've developed ways of doing this where you sort of type in different syllables and that helps you define the character you're looking for, but God it's a faff. The average Chinese person, you're not going to spend six days crafting this perfect sort of thing. Why not just record exactly what you wanted to say, which takes way less time? So Chinese people went straight into that whole ‘this is a much more efficient and effective way of communicating with people’. And as a result of that they're very happy speaking into the device, so when it comes along that they can search on Baidu using voice as well, obviously because it's exactly the same benefit. So you look at different languages, whether it's because the keypad doesn't exist, so a language like Burmese for example, it's really difficult to get a decent functioning keypad on most phones, you've got to download it separately when you buy the device because it doesn't come as standard. Then you've got places like China where the keypad exists but it's just not very easy to use. So all sorts of places, especially in Africa and Asia where the languages are not standardized in terms of the alphabets, if you like, that they use, voice becomes a much bigger deal because it just helps overcome so many of the different barriers. So yeah this isn't just a sort of fancy new piece of technology and let's use it because it's cool, for most people this is addressing an awful lot of the big barriers that stop them getting full value from the Internet, and that's why it's accelerating.

Sandra So do you think there'll be an uptake of voice in the West?

Simon Oh totally, yeah, yeah.

Sandra We spoke a lot about why it's prevalent in the East. We spoke about the fact that we've got things like Amazon and Alexa, and yes they'll be there but they're there for a limited set of 'turn on the TV and tell me what the weather is like', which in Australia is it's going to be nice except for, you know, the day the Scottish guy comes to do a talk.

Simon Yes. So it's a really good challenge actually. I completely forgot to dig into that part. Why is it important to people in the West? So increasingly, like I've mentioned, you've got India, China Indonesia, already half of the populations there using the Internet, or using voice today. As that overall body of voice users grows around the world, and the latest data that we've got from GlobalWebIndex suggests that by this time next year, so the middle of 2020, most Internet users will use voice every month. So you've passed the majority, that's the tipping point, here we are. The reason that's important from a Western perspective is because of the economies of scale associated with developing the technologies and the services that are powered by these interfaces. So let's take Amazon, Google, Facebook as our examples. As you get to the stage where more than half of the world's Internet users use voice as their default choice, you've then got a choice as the developer of those apps. Do I still have the keyboard and prioritize that, or do I use the voice interface and prioritize that? And the reality is that most people in the West can type and they can use voice, whereas most people that are coming online today where they've got challenges whether it's linguistic or literary or whatever else, they can only use voice. So because we can do both, guess what? The easy option is to use voice as a priority. If I only want to build one interface, that's the one I'm going to focus on because it reaches the greatest audience. If you load the Google app up on your smartphone today you're presented with that little sort of search box, right, you know that you type into it. Suppose that tomorrow you open that up and it just has a little microphone symbol and you had to press it. Like you'd look at it the first time and go 'what's this?' And you'd press it and you'd say 'Ok Google find me...' whatever it is you're looking to.

Sandra I'd go 'okay Siri'.

Simon Right, or whatever it may be. The first couple of times that you use that, you might be a little bit like 'ooh this is a little bit uncomfortable', but if it's the first option that you're given and you've got to click through a few different layers to get back to the original search box, sooner or later you just train yourself to use the microphone.

Kai Sandra, isn't that exactly what you said when you came back from Taipei just recently?

Sandra Yes, I had a very interesting experience in a taxi. We were going from the city centre, from Taipei 101, to a lovely park and halfway through it started to rain and the taxi driver just enabled the Google Translate interface on his iPad, which he had up next to him and told us 'well it seems it's raining, would you not rather go to the museum instead?'. Obviously translated immediately into, and spoken in, English to us, and gave us another phone to talk back to him. And for the next 10 minutes on the drive we had a coherent conversation where he said 'oh you know the palace is one of our best attractions, you might want to see this and this there', we said 'no we'll still try the park'. We had a fluent conversation. But I was surprised not just by how easily he used it, but how easily we took up and use the interface. It seemed perfectly natural, I have no idea why we haven't done this before.

Kai So Simon is very bullish about the role of voice, and obviously he thinks that it's not just Siri, Alexa in these kinds of smart speakers, which is how we discuss voice interfaces in the West, but actually on the mobile. And you can see why it's a big deal in Asian countries. Most mobile interfaces are based on the Latin characters that we use, so you know for Westerners it's easy to just type a text message. But for example with Chinese characters it's much harder to type so it's much easier to just use the voice interface to either send each other voice messages, and then use translate on top of that, or indeed to just ask Google or YouTube a question and then request the search results with your voice rather than, you know, typing.

Sandra So to recap, the surprising things for us in the state of digital where voice translation and video that came together in very interesting ways and with some very novel insights for us especially in the West.

Kai So these are the converging trends that are driving growth on the Internet,.

Sandra And then the next question is what do people do on the Internet, given this growth? What do people actually spend their time on?

Simon A lot of stuff surprising enough. So yeah, social media continues to be one of the biggest sort of drivers of the time we spend online, and it's definitely one of the most appealing things that we do as well. But there's a huge amount more stuff. Let's start with the websites. I think we should talk about apps later as well. But if you look at the websites, so worldwide, as of the date that we published in April, the number one most visited website, surprise surprise is Google. Then it's YouTube and Facebook. And then we get into a few other ones. So really interesting stuff in the top ranking. So the biggest surprise from my perspective, coming in at number six is Yahoo. Right, so most people...

Sandra Number six?

Simon Number six worldwide most visited website, Yahoo. Craziness. Yahoo is still very popular in terms of older folks that have an email address at yahoo.com, remember those? Ah, it's still very popular for...

Sandra Yahoo.com.au.

Simon Said with absolute majesty. People still use it for the weather, they still go and check stock valuations, it still does an awful lot of news stuff. So much as it's not sexy to talk about Yahoo anymore, and most of the marketing communities completely discounted it, in reality, in terms of the total traffic that it gets on the Internet, number six worldwide. Just behind Wikipedia, would you believe? Coming in at number seven, another massive surprise is Twitter.com, especially important considering that most people that use Twitter use it through the app. So the really interesting insight from the Twitter perspective here is that an awful lot of people are going to Twitter, not signing in, just so that they can read the rants of random politicians around the world, or keep up to date with relatively influential people, whether it's journalists, celebrities whatever else it may be. They're not interested in participating in the conversation, they just want to know what's being said. And the funny thing is, Twitter doesn't stop you from reading that if you've not signed in. In fact, right now, so as of the latest data that we've got, there are twice as many people using Twitter, as there are people logging in to use Twitter. So the data that we've got, roughly 330 million people signing into Twitter each month, that includes business accounts as well as individuals. But there are close to 700 million unique visitors to twitter.com every month.

Sandra Is this because of the orange gentleman, or has this been a, has this been a trend for...?

Simon Respect to our listeners in the United States, I shall refrain from making any political assessments of this, but yeah exactly. I think there is the, the impact of politicians using this, whether it’s, you know, Trump says an awful lot of stuff on Twitter before he says it even to his own team half the time. It's just fascinating the role that this platform has taken in popular culture. But I think the really important distinction here is Twitter is no longer a social medium. It has a social element to it, but it's a news platform. The first motivation for most users to go to Twitter is to find out what's going on. Weirdly, Twitter itself acknowledges this. It's where you go to find out what's happening right now, it's part of their marketing pitch. And yet for some bizarre reason they still talk about themselves as a social platform, no this is a news platform that allows commenting.

Sandra Isn't Twitter an advertising company?

Simon Oh, it's all sorts of confused. I wish that Twitter would sort its business model out, because it's one of my favourite platforms, it's how I've built various numbers of businesses and I've found a lot of joy through it, but they're very confused internally. If anybody at Twitter wants to have a chat about their business model, I'd love to have that conversation. So please, you'll find my contact details in the shownotes, right? So number six Yahoo, number seven Twitter, do you want to have a guess at what's number eight?

Sandra We've already had Wikipedia at 5, didn’t we?

Simon Guess, come on, it's the Internet, what are people doing online?

Sandra Ah, it's not cats.

Simon It's not, it's worse than cats, it's porn. So, are we allowed to go there on this show? Can we talk about adult content?

Sandra Yes.

Simon Absolutely.

Sandra We've had smart condoms on the, um...

Simon On the microphones?

Sandra On the microphones.

Simon I'll move slightly away at this point. So yeah, Pornhub coming in at number eight. That is the world's most visited. I'm not here to advertise these individual companies, but here's another really interesting surprise. Remember this is on the web, this is websites. Instagram.com comes in at number nine, which is weird because again like Twitter most people use that within the app. The rest of the top 20 is a sort of mishmash of portals and shopping sites. So you've got things like Amazon, obviously, you've got a lot of the local dominant sites, so you've got VK, which is the Russian sort of social platform, VKontakte. My pronunciation of that is probably terrible. So yeah, you've got a lot of different things, and the interesting thing, this is data from SimilarWeb, by the way. You've also got data from Alexa, which confusingly is also Amazon's data arm, it's not just the voice assistant that they use, but they also publish great data about top websites around the world. Their classification's slightly different. They don't seem to have a lot of the adult content in their top 20, I think they've cleansed that out, shall we say. So you know, this is depending on how you classify top 20, the result differ depending on which one of the slides in our report you look at. That's the website stuff. When you start looking at top apps though this is where stuff gets really, really interesting. So the amount of downloads. Let's start with that, we'll talk about time spent in just a minute. If you look at downloads, by far the biggest category is games, that maybe isn't a surprise. But the sheer volume, games are three times bigger than social networking downloads, which are the next, sort of, category after that. And that's consistent across both Android and iOS.

Sandra The big gaming companies are now Chinese companies, and that's amazing.

Simon You're absolutely right, the biggest manufacturers globally of games are often Chinese companies. Now the interesting thing is when you look at the companies behind a lot of these big games, a lot of them are partnerships between lots of different companies. So you'll have an American and a Chinese company collaborating on the big, big titles, and these games are huge and they're churning these things out every month. I just cannot get my head round the sheer level of commitment to developing these things at the speed that they're developing them at. And you look at the quality of the graphics on these things on your mobile device, it just blows my mind how far we've come. I can still remember playing pong.

Sandra Yeah.

Simon It's like, wow, you look at it now and it's like, yeah, these are apparently both video games and yet they're completely universes apart. So Tencent, one of the bigger companies, so obviously Tencent's behind WeChat as well. But it is also one of the companies behind PUBG, PUBG whatever you want to call it. I'll embarrass myself by getting that wrong. But yeah, the gaming ecosystem is one that once again marketers don't understand well enough. And that is embarrassing as an industry, considering just how important it is in our audiences lives. So, just to give you some context here, like I said already the app categories on both iPhone and Android games dominate massively the biggest category by a long way. If you look at the number of people watching other people playing games on the Internet, which is a massive thing, you've got things like Twitch, it's a platform where I can go and watch you playing a game.

Sandra Yep.

Simon A billion people every month around the world are watching other people playing games, that just give you a sense of the scale of this. There's only six social media apps in the world that have six billion total active users. And then all of a sudden you've got all these people watching other people playing games. It just blows my mind how important gaming is, this is a massive opportunity. Esports, 400 million people every month watching these tournaments of people playing, in the way at the moment that you've got sports like the World Cup for soccer, or whatever else it may be. Sure enough, three billion people tuned into the World Cup. But if you look at American sports, you've got Major League Baseball that reaches 200 million people. And yet you've got 400 million people watching an esports tournament.

Sandra StarCraft tournaments.

Simon Right! Random games that most of the people that are making these statements have never heard of. The amount of money that goes into Major League Baseball which is only relevant to three countries in the world, realistically, we're talking America, Japan, Korea. The rest of the world really does not care. And yet the amount of money that goes into that is incredible. Then you look at the gaming opportunity, and you realize that that touches people in every corner of the world, and a lot of these are relatively affluent consumers. You know, they may be younger but they spend a lot of money on this stuff. The opportunity is not just 'I'm going to sell you a new gaming mouse'. This is much bigger.

Sandra Also the prizes in these games if you look at what prizes are getting paid out for a tennis tournament where it's a couple of million dollars, and Fortnite is paying out 100 million dollars.

Simon So I think the business community in general hasn't got its head around gaming and I think It's been massively inflated in some instances because we've got these crazy valuations of specific elements of the industry. But step away from the business bit for a moment and look at the audience size of things. It's just so much opportunity to engage people around things that they care about. The opportunity here is not to advertise and interrupt, just so that we're clear. The opportunity here is to engage people on their terms, around things that they care about. But nonetheless, gaming, probably the biggest underappreciated opportunity on the Internet today.

Sandra Other than games, what do people download?

Simon Just about everything in life has an app, the Apple advertising of 'there's an app for that' was weirdly prophetic. It's actually come true. You've got apps now that track your sleep, it just blows my mind that I'm asleep and my app's doing stuff in the background. When you look at the top categories, the obvious contenders, so we talked about games, social media is obviously big, you've got photos and videos and all these great things. I think some of the ones that interest me most, things that track your health, and there's obviously a privacy concern issue around some of that, but when you start looking at apps that help people with conditions like diabetes, to track that condition and to live a healthier life. That is very clear how that's adding value. But when we, let, let's use value as a really interesting reference point. The app that generated the greatest amount of revenue, from an App Store perspective, in Q1, was Tinder, globally. Now previous to that it's always been Netflix, one of the reasons why Netflix is not the number one anymore is that Netflix has stopped offering subscriptions within the App Store. You have to do it directly with Netflix now, so obviously they're trying to protect...

Sandra That's that whole battle between Netflix and Apple about the...

Simon Yeah, and also the not losing 30 percent of the revenue to the App Store, but let's park that one. But the fact that Tinder, globally, has become such a big revenue generator, and almost all of that revenue is coming from SuperSwipes. I do not use Tinder, so I'm not an expert on this, but I've been reading up into this. So SuperSwipes.

Sandra Of course you don't.

Simon Of course not. The weirdness is that my wife and I work together we have to study this stuff together and both of us are sort of giving each other the side-eye when we talk about Tinder. But so Tinder allows you to buy a SuperSwipe for a dollar a day. So the way it normally works is if both of you swipe right separately on each other then you get notified. But suppose I swipe right on you, you will only know if I swipe right on you if you swipe right on me as well, if I buy a SuperSwipe, you know before that I've swiped on you. So you'll know in advance that I've swiped. You can buy these for a dollar a day, you can only do one a day, but you can do one every day. So 365 dollar opportunities every year for every user for Tinder right the way around the world. It seems like an awful lot of people are buying these, because if you're getting to the top of the revenue generated in the App Store, that's an awful lot of money, that is against all sorts of other very high value..

Sandra This could be the Western loneliness epidemic.

Kai So overall there's a few surprises here in what Simon has to say. I, for one, didn't know that Yahoo was still a thing, so that's interesting.

Sandra That makes two of us.

Kai Yeah, exactly. I mean we knew that gaming is a thing, and that it's big and it drives apps. But it is quite extraordinary the money that is now involved in esports. And while I remember an article that said it might not be as big as it's often discussed in terms of user number, Simon certainly has good data here, and it is certainly something that has grown very much outside of the eye of the mainstream media. And it is remarkable how some of these esports events attract more visitors than traditional sports events. And also the money involved is quite extraordinary.

Sandra And probably just as surprising is the size of Tinder, and the way in which they monetise Tinder, the fact that it's the number one app in the App Store, and that they have found a way to make money, actually very good money, out of people dating.

Kai By gamifying dating, pretty much. So there's a lot of insights that Simon finds in his data.

Sandra Which is why there's a part two to this, so stay tuned for next week.

Kai We're discussing the adult entertainment industry.

Sandra But that's all we have time for this week.

Kai See you soon.

Sandra On the Future..

Kai Next week.

Sandra This week?

Kai Yes, but next week.

Sandra On The Future This Week. Next week. Thanks for listening.

Kai Thanks for listening.

Outro This was The Future, This Week made possible by the Sydney Business Insights Team and members of the Digital Disruption Research Group. And every week, right here with us, our sound editor Megan Wedge who makes us sound good, and keeps us honest. Our theme music was composed and played live on a set of garden hoses by Linsey Pollak. You can subscribe to this podcast on iTunes, Stitcher, Spotify, YouTube, Soundcloud or wherever you got your podcasts. You can follow us online on Flipboard, Twitter, or sbi.sydney.edu.au. If you have any news that you want us to discuss, please send them to sbi.sydney.edu.au.

Kai Well, clearly there is something missing from the podcast.

Sandra We were hoping he was going to say it.

Kai Well he's a Scotsman.

Sandra Yes he used the f-word, but he didn't say shit.

Kai No no, he swears a lot but...

Sandra No bullshit.

Kai No, he did not say shit.

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