The perfect customer

Broadly speaking, there are two major ways that entertainment experiences are monetized: Through payed content and through ad revenue. Game platforms like Microsoft XBox and SONY PlayStation generally rely on paid content — a very reliable and high quality form of income.

Aggregators like Google and Facebook rely mainly on ad revenue. This is a lower quality form of income, in that many users are needed to accumulate sufficient value to advertisers. Each user provides only a small amount of value by virtue of his or her ability to act as a target for ads. On the other hand, you can accumulate a lot more users if you give them stuff for “free”.

It’s already clear that the early tethered VR systems coming out in the next few months — SONY Morpheus, Facebook Oculus and Valve/HTC VIVE — are going to roll out with high quality content, and that will be paid content. But this is not a model that will generalize. Hard core gamers may expect to pay for their entertainment experience, but most people just want to get stuff for free.

So are we going to live in a world where most people are going to see ads popping up wherever they look? I don’t think so, because I think it’s going to be even weirder: The “free” wearables that will be provided by aggregators like Google will be able to detect exactly where you are looking, all the time. They will even be able to track your level of pupil dilation. They will therefore be able to aggregate your interests so well that they will no longer need to show you ads.

But the next time you go to buy anything, be it clothing, groceries, wallpaper, or just a stick of gum, you will see the choices that advertisers have personalized for you, based on everything they have learned about you.

You will love almost everything you see, and will want to buy it. You will be the perfect customer.

2 Responses to “The perfect customer”

  1. Domnic says:

    Nice blog Prof. Shows a closer look at the reality where social and business networks are dashing towards…esp.. “You will love almost everything you see, and will want to buy it”. I also ask myself.. how far will that be a differenciator on generating more revenue or business for these companies.. ?! And me as a person.. am stripped off from my privacy with all these bots analysing my clicks and capturing more of me. Is this model sustainable ?

  2. admin says:

    Thanks. Those are very thoughtful questions!

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