check please…mobile electronic payments are the missing plumbing we need

(eyeball time: 2.2 minutes unless you fast-scrub the video)

the dea skinny on what’s happening:

www.google.com/wallet

by now you know we are not anybody’s lapdog (we tastefully forgo using the rap music alternative submissive relationship adjective here so please note our class).

look, you have lots of stuff to track and worry about out. so we bring this to your attention because it is one of the most non-glamourous but important things you need to track so pls listen up:  it’s how you get paid. we have discussed micro-payments and all the other plumbing needed to power games and all other forms of digital entertainment. but let’s get real. digital entertainment isn’t a big enough tail to wag an electronic commerce payment solution dog. even with facebook credits. but retail business-to-consumer sure as hell is…but you already knew that. besides amazon’s, apple’s, ebays’s and paypal’s legendary contributions in the digital payment space, google now makes it possible to purchase stuff on a mobile basis in physical retail outlets with their initial wallet offering.

google, with mastercard, is blazing a trail here with no help from our friends at the telcos. verizon just delayed allowing google’s electronic wallet solution on the samsung galaxy phones. we won’t waste your time or your pixels on a deep dive on this, the la times already did a brilliant job so check this if you need more.

the stakes:

think of it this way. basic trans-platform digital currency. digital currency which works the same in ALL worlds…on all devices and all services the same way: game worlds, movie worlds, tv worlds, music worlds, real world restaurants, stores and any point of sale. the same consolidated financial transaction records and interconnected devices. beyond paypal, ebay, second life world lindens or game coins, frequent flyer points,  way beyond amex, visa or mastercard or even square up. the ancient long-gone roman empire sorta pioneered this concept with the “coin of the realm” idea. the euro, which ain’t so hot these days, is a build on it since charlemagne.  the stakes are so huge it would be an insult to even try and convince you because you are already there.

we believe telcos are in a unique position to move the mobile payment world forward, despite the vision-impaired executives at verizon (who would now go work in the netflix marketing department where they belong). players like sprint already are leading as a small mighty mouse as usual in this area,  but asia, as with most things, is way ahead of the u.s.a. on this. so we don’t see them doing it in the u.s.a. we believe all new digital payment innovation will come from asia, driven by a.) smart innovators, b.) a mobile computing-based population of 4 billion people, c.) lots of great mobile device manufacturers who work well with infrastructure players like telcos.

the dea takeaway:

if your are a creative industry content creator or publisher, get educated fast in this area and built these digital payment solutions into everything you build at the service layer. bet on multiple tables and allow your customers multiple payments options. don’t worry about accepting diners club though. we think that is over. (as they say in japan, “we just told a joke to you [now laugh or I lose face]”

if you are a telco executive, try and forget that fact, “think differently” to quote our patron saint steve jobs, and do something your industry never does: innovate. no more excuses about massive capital deployments, security, etc. that is just too lame a set of luddite excuses. all cell phones now have security built in and players like google have baked it in already. wake up and answer the phone! hellooooo! you guys need to lead. you finally woke up to the net at the turn of the century, after pushing stupid failed isdn concepts for decades, don’t make us wait on this for pete’s sake! this is huge! what are we missing here? and revise your tariffs now to make it work and don’t be so greedy like you have been with sms fees which are so high they have completely stifled innovation.

if you are a credit card player like mastercard, visa, amex, etc. continue to make the smart moves you are making with micropayment and mobile payment companies. if you don’t, risk adjustment notwithstanding, you will lose. but the good news is that you guys get it. sorta. keep pushing and spending. this is the future and you know it.

if you are a retailer, check out new alternatives in the payment space. small businesses are loving square up despite some of its severe limitations. monitor google and the phone companies if the later ever start elephant-lumbering forward soon.

micro-payments can make you rich… (when advertising is not enough and you are creative and greedy…)

(eyeball time: 2.5 minutes but you might read faster…)

the dea skinny on what’s happening:

asian game companies like nexon have known how to mint money with micro-payments with “free-to-play” games for years. it is their core business model with hundreds of millions of users worldwide.  but there is a wider opportunity for social networking, net tv and gaming companies, digital advertisers, content, technology and infrastructure companies to leverage micro-payments for enhanced revenues. advertising revenues can’t pay for everything in the universe. even product placement has limits – last year only $25B us was spent on them. thinking creatively about micro-payment strategies on a much wider basis across content types, applications, technologies and infrastructure could pave a road to riches for many, if everyone can just shed their very provincial and limited thinking on the matter all can get rich. maybe, if you read this.

the stakes:

billions of dollars (or second life lindens if you prefer). free-to-play gaming companies have made millions using micro-payments. we are thinking of games like nexon’s dungeon fighter, maple story, zynga’s farmville on facebook, lord of the rings online, and even small linden lab’s second life. while they have pioneered the field (although porno probably leads in this area with video chat and “dating and mating” services), there is a huge opportunity for many companies to enhance revenues by using micro-payments. it is very simple. think of anything you can sell in small amounts, say $1 to $50. in games it typically objects players need like cars, guns or clothes. but in social network, gaming  and net tv environments it could be anything you can think of…say…an old yearbook picture, an object related to an organization like a t-shirt, any object you want to gift a friend from a book to a song or food, a coupon, a promotion, household or pet products…just about anything you can sell on the net. and all within the context of specific content or context situation while another activity is underway (e.g, a game, a social network conversation, a net tv viewing experience, a document, email, etc.).

the processes. well, you need to be able to do a number of things: users & subscription management, inventory, offer and store management, offer presentation & discovery, auctioning (optional), transaction management, wallet, payment, delivery, clearing settlement invoicing, and reputation management. those are just a few areas you should be thinking about.

the plumbing. while you can build and roll-your-own micro-payment environment on your own with the usual suspects (i.e., credit card companies, paypal, banks, etc.) there are several global full service providers who can help as well and this is a very partial listing at best from the gaming world but plumbing is plumbing. [nb: we don’t have a dog in this fight or any interests in any of these companies. we are independent.] but these companies have figured out how to integrate micro-payments in context of an another simultaneous interaction which is going on with the purchase/payment transaction. they all do different things but check them out to get going. in europe, check out digital river’s fatfoogo, zaypay international, and dialxs. in asia, try ppay .and in the usa/canada, check out usemyservices, instapayment, live gamer, mochi media, livegamer, gamersafe. we don’t vouch for any of them but that a start for you. you want more info., hey, call us.

the dea takeaway:

most usa gaming companies with some minor major exceptions, have their heads in their heads in the sand on this. as usual, asia leads on the and most americans don’t get out very much and don’t understand they don’t lead here. asians get it big time. many usa game companies say they have studied the mirco-payment opportunity casually but have convinced themselves that the audience will feel exploited and that “hard core gamers” will feel ripped off; “it’s for casual gamers only” they tell themselves. they have also convinced themselves they can’t make money on mobile phone platforms with high SMS payouts. although many are open to the idea, they not attacking it aggressively or creatively. message to game companies: wake up and smell the coffee! it’s ready!

for social networking companies, there is a huge opportunity that goes way beyond anything facebook has done with zynga and the farmville-style franchise. there are a million things that could be turned into micro-payment revenue sources. as yoda says in starwars “do or do not, there is no try.”

for content, context, service, application, technology and infrastructure players, think about how you can build the relevant features into your offerings. get moving now.

ditto for net tv and digital advertisers. it turns out that when a customer is provided a micro-payment offer, it increases interactivity, “stickiness,”, “dwell time,” and “virality.” customers don’t see this as a “rip-off”. if they did nobody would be using gmail with its ads or any other site on the net with any kind of promotion. throw away your old assumptions and explore this space.

for more information, please contact us at 512.825.6866 to discuss the issues more fully and the specific impact & implications to your business. it’s free!