3 data points on online distribution of media

Some additional data points on my post on the shift to online distribution of media. Activision Blizzard, the world's second largest games publisher, reported that more than 50 % of it sales during Q2 2010 came from online channels. Amazon executive Steve Kassel thinks that the company will sell more Kindle books than paperbacks in 2011. Netflix's cost for streaming content rights went from $31 million (first six months of 2009) to $116 million (first six months of 2010).

The Internet is not Western and White

Royal Pingdom has collected data on the top 20 countries in terms of Internet users, including how much potential growth each country (looking at the percentage of population using the Internet) has. The country that surprised me the most was Nigeria, which has 44 million Internet users (slightly less than France, but more than South Korea).

In addition to the raw number of Internet users, it is helpful to look at the number of broadband users, users with mobile Internet access and purchasing power to rank the commercial opportunities in different countries. The list also shine some light on why the investments done by Naspers into China, Brazil and Russia among other countries has been so canny.

Skype prepares for IPO

Skype, like Demand Media, is preparing for an IPO by filing an S1 with the SEC. Unlike Demand Media, Skype is not highly dependent on Google.

Booming ad sales for Facebook from massive user growth and time in market

Facebook's massive user growth in combination with the fact that its advertising sales teams have been in the market for another year or two, has led to a massive increase in spend by advertisers, according to Facebook's COO Sheryl Sandberg.

This is a central aspect when trying to understand the growth of an advertising-driven startup: it takes time to build an advertising sales businesses.

First the company needs to have a site with a fair number of visitors. The absolute number required depends on country, vertical and other factors.

Then the company needs to hire good salespeople, have them meet with advertisers (at the right time in the advertisers' planning/buying cycles), get some initial test orders, prove that the specific online media performs and get the first repeat orders. At the same time, the company needs to hire more salespeople to increase the number of agencies and clients it meets to get more test orders and start more customer relationships.

While the sales team is really getting up to speed, the site is hopefully growing and is still being considered hot among media buyers. When everything fall into place, massive growth a'la Facebook is possible.

Google acquires Slide, invests in Zynga, building game-oriented (?) Facebook challenger

Google has acquired Slide, maker of entertainment apps for Facebook and other social networks, for $182 million. TechCrunch breaks down how the money was split between founders and investors. It is worth to remember that Slide raised $50 million on a $500 million valuation in early 2008. Google's acquisition of Slide becomes a good example of how liquidation preferences make sure later stage investors get their money back when a company sells for less than the valuation at the time of a Series C or D investment.

The acquisition is said to be a part of a larger push by Google into social networking, likely with social games as a primary driver. Using games as the the killer app for a social network is smart, as games can have a single/few player mode that don't require millions of users to be fun. According to reports, Google has also invested more than $100 million in Zynga, maker of Farmville and many other of the most popular games on Facebook.

Demand Media takes first step towards an IPO

Demand Media, the search-driven publisher of eHow and other sites
and domain registrar, has filed a S1 to do an initial public offering. The company has revenues of about $250 million per year and is looking to raise up to $125 million on a $1-1.5 billion valuation.

Search Engine Land goes into some of Demand Media's Google-related risks (the article even mentions the Geosign debacle). The industry often talk about the Facebook platform, but for most online companies, including Demand Media, the Google ecosystem is still much more important as it provides both traffic and monetization.