Konvoy Ventures is a thesis driven venture capital firm focused on the video gaming industry. We invest in infrastructure technology, tools, and platforms.
There may be an open door for a super-app to emerge from the gaming ecosystem that works for the West
Super-apps were one of the hottest discussion topics in 2021. The need for consolidation is clear - the average person has 40 apps installed on their phone but 89% of the time (4.8 hours a day) is split between just 18 apps (Simform). A single application where a user can utilize any digital service - most often provided by third-party developers and service providers - could solve problems for both the consumer and the platform owner.
The success of WeChat, Grab, Gojek, and Alipay in the East, combined with proposed legislation in Washington around how app stores must be operated, has spurred discussion around why a similar concept has not been adopted in the West. Most recently, Walmart announced their intent to build a financial super-app. If Walmart did this, their service would span across a wide array of their existing businesses (retail, healthcare, and financial services). However, we do not believe that super-apps, in general, are currently well positioned to succeed in the West.
This week we will look at the structural barriers for mass adoption of super-apps in the West and analyze the industry specializations that have been used as entry points to-date. After this deep dive, we believe that although there are strong headwinds, gaming has the potential to become the closest to a industry-focused super-app in the West.
When WeChat (then Weixin) started in 2011 as a simple messaging and photo-sharing app, they were entering a market landscape ripe with opportunity. We believe there were four primary factors that spurred the application’s explosive growth:
Prospective super-apps in the West today are not able to capture the same mobile and banking adoption tailwinds that WeChat benefited from in the East. Furthermore, there are market and consumer driven headwinds that must be overcome:
Most super-apps started as single apps with a specific purpose but have morphed over time into ecosystems of hundreds, if not thousands of mini-apps. The specialization of apps in financial services (PayPal), ecommerce (Walmart), and even transportation (Uber) have been in the news for their potential to become super-apps in the West. We feel that optimism is unfounded; financial services applications are used to facilitate an outcome - purchasing, sending cash to friends and family, financing - and usage of ecommerce and ridesharing applications are exclusively need-based. While these applications are part of a user’s day to day, they are not places where a consumer's idle or browsing time is spent, nor do they have strong social network effects. While financial services, ecommerce and transportation applications are essential features for a super-app, each alone cannot be the core that a super-app is built around.
We believe that social platforms could be the initial starting points for super-apps in the West, however, they have their own limitations. Due to the limited number of players in the space, it makes sense to focus on the largest players versus the category as a whole:
Today, people launch games to either 1) play a game and/or 2) be social with their community. No one is launching gaming applications with the intent to transfer funds, transact in ecommerce, or order an Uber (yet?). While this is not currently a reality today, we believe there is a (slight) chance that gaming could have the social bedrock of tomorrow’s super-apps in the West. Imagine opening up Steam or Fortnite to not only chat with your friends but also shop on Amazon while you catch up.
Here are 4 ideas on why we think a super-app in the West could emerge from the gaming ecosystem:
Takeaway: There are many institutional headwinds that obstruct the potential proliferation of a super-app in the West. Applications that got their start in financial services, ecommerce, and transportation are not well-positioned for product diversification due to their roles as a need-based applications and lack of social network effects. Gaming applications have proven that they are high engagement experiences where consumers spend an increasing amount of their online time and money. We believe that the social fabric of gaming alongside its thriving economic structure could allow for an expansion to non-gaming service offerings to consumers.
We saw WeChat thrive with messaging, ecommerce, and financial services. When we look at gaming economies; they already have messaging (voice / text), glimpses of ecommerce (virtual items, subscriptions), and the initial stages of financial services (transferable assets via digital wallets). Given the pressure that Apple and Google are under from proposed legislation, there may be an open door for a super-app to emerge from the gaming ecosystem that works for the West.
There may be an open door for a super-app to emerge from the gaming ecosystem that works for the West
Super-apps were one of the hottest discussion topics in 2021. The need for consolidation is clear - the average person has 40 apps installed on their phone but 89% of the time (4.8 hours a day) is split between just 18 apps (Simform). A single application where a user can utilize any digital service - most often provided by third-party developers and service providers - could solve problems for both the consumer and the platform owner.
The success of WeChat, Grab, Gojek, and Alipay in the East, combined with proposed legislation in Washington around how app stores must be operated, has spurred discussion around why a similar concept has not been adopted in the West. Most recently, Walmart announced their intent to build a financial super-app. If Walmart did this, their service would span across a wide array of their existing businesses (retail, healthcare, and financial services). However, we do not believe that super-apps, in general, are currently well positioned to succeed in the West.
This week we will look at the structural barriers for mass adoption of super-apps in the West and analyze the industry specializations that have been used as entry points to-date. After this deep dive, we believe that although there are strong headwinds, gaming has the potential to become the closest to a industry-focused super-app in the West.
When WeChat (then Weixin) started in 2011 as a simple messaging and photo-sharing app, they were entering a market landscape ripe with opportunity. We believe there were four primary factors that spurred the application’s explosive growth:
Prospective super-apps in the West today are not able to capture the same mobile and banking adoption tailwinds that WeChat benefited from in the East. Furthermore, there are market and consumer driven headwinds that must be overcome:
Most super-apps started as single apps with a specific purpose but have morphed over time into ecosystems of hundreds, if not thousands of mini-apps. The specialization of apps in financial services (PayPal), ecommerce (Walmart), and even transportation (Uber) have been in the news for their potential to become super-apps in the West. We feel that optimism is unfounded; financial services applications are used to facilitate an outcome - purchasing, sending cash to friends and family, financing - and usage of ecommerce and ridesharing applications are exclusively need-based. While these applications are part of a user’s day to day, they are not places where a consumer's idle or browsing time is spent, nor do they have strong social network effects. While financial services, ecommerce and transportation applications are essential features for a super-app, each alone cannot be the core that a super-app is built around.
We believe that social platforms could be the initial starting points for super-apps in the West, however, they have their own limitations. Due to the limited number of players in the space, it makes sense to focus on the largest players versus the category as a whole:
Today, people launch games to either 1) play a game and/or 2) be social with their community. No one is launching gaming applications with the intent to transfer funds, transact in ecommerce, or order an Uber (yet?). While this is not currently a reality today, we believe there is a (slight) chance that gaming could have the social bedrock of tomorrow’s super-apps in the West. Imagine opening up Steam or Fortnite to not only chat with your friends but also shop on Amazon while you catch up.
Here are 4 ideas on why we think a super-app in the West could emerge from the gaming ecosystem:
Takeaway: There are many institutional headwinds that obstruct the potential proliferation of a super-app in the West. Applications that got their start in financial services, ecommerce, and transportation are not well-positioned for product diversification due to their roles as a need-based applications and lack of social network effects. Gaming applications have proven that they are high engagement experiences where consumers spend an increasing amount of their online time and money. We believe that the social fabric of gaming alongside its thriving economic structure could allow for an expansion to non-gaming service offerings to consumers.
We saw WeChat thrive with messaging, ecommerce, and financial services. When we look at gaming economies; they already have messaging (voice / text), glimpses of ecommerce (virtual items, subscriptions), and the initial stages of financial services (transferable assets via digital wallets). Given the pressure that Apple and Google are under from proposed legislation, there may be an open door for a super-app to emerge from the gaming ecosystem that works for the West.
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