Generational Disruption in Media

Venture capitalists and entrepreneurs believe the greatest opportunities are those disruptive to the current state of the art/market. This disruption typically happens with a major technological change (e.g. the PC, the internet, the mobile phone, broadband) and sometimes by the rise of a new geographical market (e.g. new startups in China that take advantage of innovation started in other countries). 

There is another type of disruption i've noticed that happens in the consumer space and its "generational".  The services that appealed to one generation (e.g. those of us in our 30s like Yahoo, hotmail, etc) tend not to appeal to a new generation (e.g. those in the 20s or teens like MySpace, AIM, etc). A generation shift used to be separated 30-40 years but now it occurs much faster.  The rate of change from one age group to the next is so fierce that even a difference of 5 years could mean a whol new pattern of consumption.

This "generational disruption" creates new opportunities at a faster pace than waiting for the next big technological wave - especially in internet media.  An example of a disruptive shift that has occured is in my old hunting grounds - online photos.

Consumers in their 30s were early adopters of online photo services because provided a secure and private area to share photos with friends and family which appealed to this generation and their lifestyle (family oriented, concerned about privacy, etc).  They didn't really care about "user generated content" and were limited in their "self expression".  They valued prints and gifts and businesses like Snapfish and Shutterfly were built to satisfy their needs.  Our assumption was that this would be our core demographic of users but we would also appeal to younger users as well since they were adopting digital photography and had the same basic need to share photos.  We would provide features that appeal to both of these groups of users.

Over time, we found it's really hard to build your service to appeal to two different age groups - especially when there is a generational shift in usage.  Younger users wanted open and public areas to host their photos and they wanted the world to see them and comment on them.  They care little about prints and more about showing the world what they are up to and how important they are.  One is a commerce model and the other a media model.  We frankly couldn't create a service to cater to both groups.

Thus, the rise of Photobucket and social networking photo sites such as Facebook, Tagged, and Myspace Photos.  These sites are media models which thrive on reach and page views.  Snapfish and others are commerce models where page views aren't a core metric.  These sites have all done well against their metrics and although its not clear if a billion dollar media business will come out of online photos, there is definitely demand - manifested quite differently depending on the generation.

Other examples of generational disruption include:

Classmates --> Facebook

Yahoo --> Myspace

Hotmail --> AIM --> Twitter (?)

World of Warcraft --> Club Pengun 

There's bound to be more interesting, "generationally disruptive" opportunities in the future happening faster than ever before - and i'll keep my eyes open - this time as a VC vs entrepreneur ; )

Comments

[Jason Stoffer]

Great post. I look at the amazing uptake on Club Penguin and Webkinz and wonder what will happen as these kids grow up. I posted just today that these kids "will not be happy with MySpace and Facebook-type social networks as they stand today. They will want a more immersive web experience. Even when surfing the web, people will want immersive experiences - imagine going to toyota.com and having the site set up as a virtual world, with virtual car dealers, virtual test drives, etc."

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[Arturo]

Hey Raj,

Interesting post - there might be something here, especially in the fact that there is an acceleration in the rate that one technology can take over the next, but I don't think the examples are spot on.

For example, AIM has always been more popular than Yahoo. From my experience, having started with ICQ, the AIM client has been around way longer than Yahoo Messenger. And also, if you look at Yahoo statistics, they are still a very popular web site with young people - their Yahoo Answers for example, combined with their avatars, is full of young people - they are just not perceived as a great engineering company by the adults so Wall Street has them pinned down in a negative light.

I also don't quite understand how WoW can even be put together with Club Penguin. They were made for different demographics altogether and have entirely different purposes - I don't think previous or potential WoW fans chose Club Penguin over WoW...

It's not so much about age as it is about technology and good engineering. Facebook is beating Myspace, not because Myspace is less 'cool' with the kids, but because Facebook is cleaner and more robust (therefore, yes, cooler). Yahoo is losing here too because they are not integrated enough and everything is clunky and disjointed.

Ok, so to sum up, I think it's about clean engineering and robust technologies that provide a good experience and not simply a new technology naturally attracting the young demographic. At one point, if Yahoo catches up technologically, they can bring back their spark, just like AIM can make up a mobile interface that will allow them to beat Twitter.

So it's not about tailoring two different demographics but about unlocking the potential of technology and making sure to educate your old consumers along with the latest developments...I think Yahoo understood this when they closed photos.yahoo.com and offered to migrate users to Flickr
and/or other services...

Cheers!
Arturo

[Calvin]

Hi Raj !

Its been like 2 years since we last meet in Shanghai. Great post ! I truely agree with you on - the commerce model and the
media model. As we all see it every category have their groups and supporters certainly. It's not much about generational disruption tho' it play a role. And I would put WoW against FREE2Play MMO's as -->
Club Penguin vs Second Life but then again ... they both caters to different age groups and markets.

Calvin Ng
http://dragoncalvin.blogspot.com

[Shabbir Husain]

Hi Raj,
I am not sure I understand or the "generational disruption" just does not make sense.
Isn't it a clear case of market segmentation or aligning the attributes of your product/service to the market that has an application/need for it.

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