Yahoo! – Game on

An encouraging move by Yahoo! to fix its ecosystem.

• Yahoo! looks at last to be beginning to do something about grouping its collection of assets into a cohesive ecosystem.
• One of the most important of these assets is gaming as users spend 32% of their time on smartphones playing games.
• This makes it one of the most important segments of the Digital Life pie.
• To that end Yahoo! has launched a back-end platform that allows developers to deliver games across the Yahoo! network but critically across the web, Android and iOS devices. (see here)
• The platform is also a multiplayer platform and players will be able to play against each other whatever device they are currently using.
• This gives Yahoo! the opportunity to collect all the data with regards to what players are playing, what they like and what they are discussing.
• This is the bread and butter from which Yahoo! can start to generate some advertising revenues from mobile devices.
• The original Yahoo! games such as Poker and Pool will make it onto the new platform but the real drive is to get developers to write new games.
• Here, I suspect that Yahoo! will have to prime the pump somewhat by incentivising developers to support its platform but it should not last too long.
• Despite questionable public user figures, Yahoo! easily has over 200m proper users and this is exactly what I have been looking for to give me confidence regarding the viability of this ecosystem.
• Yahoo!’s two biggest problems are:
  • Almost all of its usage is in the fixed Internet.
  • Its assets remain fairly disparate and not well set up for mobile.
• The Yahoo Games Network is exactly the right way to begin addressing these problems as:
  • Those that love Yahoo! games in the fixed line will now be able to play them on their mobiles.
  • It is a step towards pulling the assets together into a coherent Digital Life offering.
• There remains a long way to go and success will be determined by how well Yahoo! manages to execute this strategy, but it gives me hope that there may be signs of life.
• Yahoo! has spent the last 18 months assembling a collection of assets that give it great coverage of Digital Life but painful little progress has been made in developing them into an ecosystem.
• This gives me hope but I am still very far from declaring Yahoo! as one of the majors.
• Yahoo! continues to trade in the shadow of Alibaba meaning that the core assets are still ignored.
• These assets are what will drive a further rally in the share price and while they remain ignored, there is opportunity to get in early.