Sunday, November 24, 2019

Unemployment, LFPR and Double Whammy







India's unemployment rate (Urban: 9.3% Jan-March 2019) has been increasing in recent years. And I am sure that you must have come across this article and we will not try to debate on the same. But there is one interesting thing to notice about. 
So the methodology used for the report quoted here is called the "current weekly status" method which gives an average picture of unemployment in a period of 7 days preceding the survey period. A person is considered unemployed in a week if he did not work even for 1 hour during that week. Now the unemployment rate is determined by dividing the number of unemployed people with the people actively seeking a job. LFPR (Labor Force Participation Rate) may be taken as the proxy for the denominator which is the section of the working population in the age group of 16-64 in the economy currently employed or seeking employment.
But the irony is that the LFPR (64% in 2004-05; 49.8% in 2017-18) in itself is decreasing in India which is a grave matter of concern than the unemployment rate itself. Because that would mean that even when a lesser proportion of people are seeking a job, a higher proportion of them are not getting one. 
This is what has been termed as Double Whammy by Mahesh Vyas, CEO of CMIE.



References:

1.  Business Standard TUESDAY, 19 NOVEMBER 2019, Mumbai City Edition 

#SundayNewletter

Wednesday, November 20, 2019

Dungeon Dragons and Netflix.









Virtual economy is an emergent economy existing in a virtual world, usually exchanging virtual goods in the context of an Internet game. Now we are talking of an economy worth $160 Billion that does experience the dynamics of real economics. I mean, the prices of items do fluctuate as per the demand and supply convention, have an exchange rate, and even experience hyperinflation (Diablo III Auction House). We are talking about the items like a special sniper available for a price in games like Counter-Strike, skin, stickers, or surf boost that you may get while playing Subway surfer. People are buying these stuff with real money. Virtual markets for In-game goods for a 2018 estimate is roughly at $ 45-49 Billion while the Global box office collection for that year was worth $ 41.1 Billion(Just to put in perspective). Well, that’s how Pokemon Go made $795 million of revenue in 2018 even though you didn’t pay a cent for downloading it. (Freemium Model) 

Recently I came across a group that had two exciting opinions on Reddit: 
1. Disney Plus is not a competitor to Netflix. If a person wants to stream House of Cards, Stranger things, or something similar, he will go for Netflix. Period. It's more about the content than the platform. 
2. Twitch (Video live streaming service) is a real threat to Netflix. An average twitch user spends 95 minutes daily on the platform, keeping you hooked. That’s what is making these streaming platforms a kind of worried. (Twitch was acquired by Amazon in 2014 for $ 970 Mn)

Games are changing the landscape. Google Stadia got launched on November 19, 2019. The concept of playing heavy games right away from your chrome browser without downloading the actual content (size of GBs) irrespective of whether you have an i3 machine or i5 is very fascinating and a real deal. Google is also exploring further ways to reduce latency, using an idea called "negative latency," which involves prediction of user input through various means so that any apparent network lag between controller and game response is minimized. The service has received mixed reactions, but it will get improvised for sure, given that expertise that Google does have with their software arm. 

The gaming industry is already making a lot of waves in the contemporary world. China has announced a curfew on online gaming for minors to curb video game addiction. Under the new rules, gamers aged under 18 will be banned from paying online games between 10 p.m. and 8 a.m. On weekdays, minors can only play for 90 minutes, while they may play up to three hours per day on weekends and public holidays. A heavy blow to Tencent, perhaps. 

Though a lot of behavioral science goes in behind the scenes. Now we all know that you never purchase any kind of item with real cash. You buy virtual coins/gold bar at a certain exchange rate by paying real cash. And then with those coins/gold, you purchase the in-app goods. When you pay cash for something, you see it leave your hands, and you get a very immediate sense of depletion, but while paying for cards, that’s already saved in your google account, you tend to spend more in comparison to real cash for the same utility and item. Also, developers do analyze the data about the time stamp when the users closed the application or game. The developers try to answer these questions: Did the user quit because the level was difficult?  They are unable to kill the dragon or what? The pain points are analyzed, and developers then may incentivize you to keep on playing by offering that the entire level may be skipped by paying this amount, or you may unlock a special weapon at this stage. 

Some of the other facts are: 

a.    2018 DOTA 2 Int’l prize money was $ 25.2 Million, and that puts it ahead of Daytona, Tour de France, or even US Open (Golf) in comparison to prize money.
b.     Global e-sports audience is approaching 500 million by the end of FY202
c.      According to TwitchTracker, 560 billion minutes of Twitch was watched over 2018 – rising from 255 billion minutes in 2017 – an increase of 58%. And that’s too when the site is banned in China.

The bottom line is this simple line that Mr. Ben Gilbert used in his article on Business Insider. 

“I've been playing games on Google's ambitious new Netflix-like game service for the last week, and it's clear the service isn't ready for primetime.” 

So if a person got hooked, he would be less switching for media content. Right?  And if he got caught again, would he buy all those Predator, Razor, ROG series? 
And I would conclude by quoting,  “Are you getting it?”

References: 


Saturday, November 16, 2019

Tweets that Shook Fortune 500 Companies


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1. Tencent:
Daryl Morey (General Manager of Housten Rockets) on 04 October 19:
Tweet: “Fight for Freedom, Stand with HongKong” 
As Yao Ming from Shanghai, China was selected for Housten Rockets for the 2002 NBA, things changed forever for Basketball as a game in China. It Boosted the league’s popularity. The following data very explicitly do the talking: 
2015: Tencent acquired exclusive digital streaming rights for NBA games in a 5-year contract worth $500 million  ($100 million per year)
2019: The tech giant extended the rights to 2025; Contract worth $1.5 Billion ($ 300 million per year)
Viewership for NBA Games in China (650-750 million) is almost 5-6 times that of the US (90-110 million). Just for a comparative perspective, IPL Season 2019 had a viewership of 462 million, and the entire population of the US is 372.2 million. 
But the tweet didn’t auger well. Chinese Consulate in Housten responded by saying that they were ‘deeply shocked by the erroneous comments on HongKong’ 
For the damage control, Mr. Morey took down the tweet, players apologized and expressed their love for China and their fanbase. But perhaps it was too late. 
Smartphone Maker VIVO, broadcaster CCTV, and internet giant Tencent suspended all cooperation with the NBA or Housten Rockets itself. This had a significant impact on Tencent as a listed company. Alibaba ($ 435 Bn) and Tencent ($ 398 Bn) are just the 2 Non-US and Chinese companies that make into the US-dominated ‘List of public corporations by market capitalization.’ With the recent developments, the gap with Alibaba has widened much further. 

China has made it very clear that they don’t like others to meddle in their issues like HongKong or 3T (Taiwan, Tibet, and Tiananmen). There is a price that needs to be paid if done so, and now there lies a risk of importing Chinese Censorship along with profit that organizations look forward to reap because of the presence of 1.4 Billion people that China has and can really make a difference.


2. Tesla:
Elon Musk (Needs no introduction) on 07 August 2018: 
Tweet: ‘Am considering taking Tesla Private at $420. Funding secured’
His tweet “set off a trading frenzy,” and pushed Tesla’s stock price up more than 6 percent, forcing Nasdaq to halt Tesla trading for 90 minutes until the company gave an official response. The company’s stock price hit the intraday high of $387 before closing at $379.57 on the day of the tweet. It's currently trading at 350.43 (As of 7:37 pm GMT, 14th November 2019)
 The US Securities and Exchange Commission (SEC) sued Mr. Musk after his tweet. The SEC later claimed that the tweet was “false and misleading.” 

Outcome: Mr. Musk was directed to step down as chairman. Paid a fine of 40 million. Appointed 2 independent directors; Was directed to get his tweets reviewed before posting.
As the public face of Tesla, Musk had gained legions of fans for his bold approach to business and technology, and it can be expected that he is going to be around Tesla for many years to come. This is in the interest of the company also. In the recent Bloomberg survey, a question was asked to around 5000 Tesla owners. 
Question: Did the opinion of Elon Musk influence purchases? 55.4 percent responded affirmative (30.8 percent- strongly agree, 24.6% agree). 

3. Apple:
David Heinemeier Hansson (partner at Basecamp, a web-based software development firm on 07 November 2019 
Tweet:  “The @Applecard is such a f*****g sexist program. My wife and I filed joint tax returns, live in a community- property state, and have been married for a long time. Yet Apple’s black box algorithm thinks I deserve 20x the credit card limit she does. No appeal work.”
Steve Wozniak, too, responded on the same affirming that he and his wife also had experienced something similar. The tweet garnered much attention
 The apple credit card launched in partnership with Goldman Sachs earlier this year uses an algorithm to assign credit limits, and many online pointed out that it may favor men over women. The issue has been taken into, and has led to an investigation from New York’s Department of Financial Services over the issue of gender discrimination.  
An interesting thing happened when I was reading about Mr. David. He is a Le Mans Class-winning racing driver. And co-incidentally I  happen to be at Le Mans circuit currently as I am posting this on my blog. 

Mr. David can be reached @dhh on Twitter and is unavailable at other social media platforms. 

Note: 

a. The viewership data quoted are subject to  much of deviation depending on the methodology adopted and source choose. I have tried to get a median number for higher degree of accuracy. 
b. Mr David in his tweet had used the full 'f' work instead of using * symbols


References: 

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