I have huge admiration for the Slide guys how they are dominating the new industry of social apps, using deep skills in viral acquisition, metrics, and consumer psychology. So when their CEO makes a dramatic statement about the internet economy, it’s worth paying attention.
There was a recent quote in Valleywag about the impending recession and how Slide views it: Slide’s Max Levchin: It’s time to shift away from advertising.
Worried about an upcoming recession, PayPal cofounder Max Levchin told News.com that his company, Slide, is "trying to shift away from advertising partially" and go "direct to consumers" for its revenues. "It cuts out one more party from the equation," Levchin said.
Wow – "direct to consumers" – I wonder how long it’ll take before they announce a direct product in the social gaming space. After the recent funding events for Zynga, SGN, Friends for Sale, and others, it would be the next logical step.
I’ve written extensively on the topic of virtual goods for Web 2.0 web properties: Forget advertising – are virtual goods the killer revenue model for Web 2.0, What every Web 2.0 entrepreneur should know about virtual goods, and 5 things that make your social network monetize like crap.
To summarize these posts, the movement towards looking at virtual goods to monetize social sites comes from a combination of factors:
- Brand advertising on social networks is quite hard, and quite slow
- With the larger economy experiencing a downtown, brand advertising will take a big hit, making new ad unit types harder
- There’s widespread consumer familiarity with games and game mechanics
- Large-scale existence of virtual good economies exist (particularly in Asia)
- There continues to be a casual-ification of games, making them more social, less time-intensive, and more like social networks
It’ll be very interesting to see how this works out.