2015 Internet Trends Report

KPCB’s Mary Meeker presents the 2015 Internet Trends report, 20 years after the inaugural “The Internet Report” was first published in 1995. Since then, the number of Internet users has risen from 35 million in 1995 to more than 2.8 billion today. The 2015 report looks at key Internet trends globally – while still healthy Internet user and smartphone subscription growth continue to slow, Internet engagement continues to rise led by consumers spending more time on their mobile devices, where they can be connected 24/7. Mobile advertising still has headroom to expand and new innovations around ad formats and buy buttons should prove compelling for consumers and businesses.

We are re-imagining more and more aspects of our daily lives, as mobile users and entrepreneurs continue to push innovation and creative output across new online platforms. User-generated / curated / shared content continues to rise, ranging from pins on Pinterest to videos on Snapchat and Facebook. Business processes continue to be re-imagined, led by companies aiming to make data more useful and services more efficient. Demographic shifts are helping to accelerate technology changes. Millennials are now the largest generation in the workforce and their work / life expectations differ from previous generations. As connectivity and commerce continue to rise, we have witnessed broad impacts on consumer expectations, which in turn can alter work for many, to a form of work that can be flexible and supplemental. Looking internationally, Chinese Internet leaders continue to innovate, while India is on-track to become the second-largest Internet market in the world.

Published in: Internet, Technology

2015 Internet Trends Report from Kleiner Perkins Caufield & Byers

Transcript

1. INTERNET TRENDS 2015 – CODE CONFERENCE Mary Meeker May 27, 2015 kpcb.com/InternetTrends
2. 2 1) Internet – Two-Thirds of a Generation In... 2) Key Internet Trends 3) Re-Imagining Continues... 4) America’s Evolving Work Environment... 5) Big Internet Markets = China / India 6) Public / Private Company Data 7) One More Thing... 8) Ran Outta Time Thoughts / Appendix Outline
3. INTERNET TRENDS – TWO-THIRDS OF A GENERATION IN... TWO-THIRDS OF NEXT GENERATION OUT...
4. 4 Internet Users – 1995  2014... <1% to 39% Population Penetration Globally Source: Euromonitor, ITU, US Census. 10% 23% 28% 19% 21% USA China Asia (ex. China) Europe Rest of World 1995 35MM+ Internet Users 0.6% Population Penetration 2014 2.8B Internet Users 39% Population Penetration 61% 0% 12% 22% 5%
5. 5 Mobile Phone Users – 1995  2014... 1% to 73% Population Penetration Globally Source: Informa, World Cellular Information Service (WCIS). Assumes in 1995, one mobile phone subscription per unique user (no duplication). Note: In 2014, user base per KPCB estimates based on Morgan Stanley Research and ITU data. Smartphone users & mobile phone users represent unique individuals owning mobile devices; mobile subscribers based on number of connections & may therefore overstate number of mobile users. 40% 60% Smartphone Feature Phone 1995 80MM+ Mobile Phone Users 1% Population Penetration 2014 5.2B Mobile Phone Users 73% Population Penetration
6. 6 Public Internet Company Market Capitalizations – 1995  2015... Top 15 Companies by Market Capitalization = 1995 @ $17 Billion  2015 @ $2.4 Trillion Source: Morgan Stanley, Capital IQ, Bloomberg. Note: Market capitalizations are as of May 22, 2015 and December 31, 1995, respectively Global Public Internet Companies, Ranked by Market Capitalization As of December, 1995 As of May, 2015 Home Market Cap. Home Market Cap. Company Country ($MM) Company Country ($MM) 1 Netscape USA $5,415 1 Apple USA $763,567 2 Apple USA 3,918 2 Google USA 373,437 3 Axel Springer Germany 2,317 3 Alibaba China 232,755 4 RentPath USA 1,555 4 Facebook USA 226,009 5 Web.com USA 982 5 Amazon.com USA 199,139 6 PSINet USA 742 6 Tencent China 190,110 7 Netcom On-Line USA 399 7 eBay USA 72,549 8 IAC / Interactive USA 326 8 Baidu China 71,581 9 Copart USA 325 9 Priceline.com USA 62,645 10 Wavo Corporation USA 203 10 Salesforce.com USA 49,173 11 iStar Internet Canada 174 11 JD.com China 47,711 12 Firefox Communications USA 158 12 Yahoo! USA 40,808 13 Storage Computer Corp. USA 95 13 Netflix USA 37,700 14 Live Microsystems USA 86 14 LinkedIn USA 24,718 15 iLive USA 57 15 Twitter USA 23,965 Total Market Cap of Top 15 $16,752 Total Market Cap of Top 15 $2,415,867
7. 7 User Control of Content Up Significantly – 1995  2015 Evolution of Content Discovery, 1975 – 2015, per Nielsen Source: Nielson, 12/14.
8. 8 Impact of Internet Has Been Extraordinary & Broad... But – in Many Ways – It’s Just Beginning Note: Harvey Balls estimate degree to which Internet has changed behavior / outcomes in selected sectors of economy / society, 4/15. Sector of Economy / Society, USA Internet Impact, to Date Consumer Business Security / Safety / Warfare Education Healthcare Government / Regulation / Policy Thinking
9. KEY INTERNET TRENDS
10. 10 Global Internet User + Smartphone Subscription Growth = Good, But Growth Rate Continues to Slow* *Details on Internet Users & Smartphone Subscribers in Appendix. • Internet User Growth = Solid, But Slowing @ 2.8B, +8% in 2014 vs. +10% in 2013, +11% in 2012 Net New User Additions = ~Flat @ ~200MM in 2014 / 2013 / 2012 China Users = +7%, USA = +2%, India = +33%, Japan = Flat, Brazil = +4% • Smartphone Subscription Growth = Strong, But Slowing @ 2.1B, +23% in 2014 vs. +27% in 2013, +65% in 2012 Net New Sub Additions = ~Flat @ ~370MM+ in 2014 / 2013 China Subs = +21%, USA = +9%, India = +55%, Japan = +5%, Brazil = +28%
11. 11 Incremental Internet + Smartphone Users = Harder to Garner Owing to Phase in Adoption Cycles... Global Smartphone Subscriptions @ 76% Penetration of Internet Users 30% Penetration of Mobile Subscriptions Source: ITU, Informa. Details on Internet Users & Smartphone Subscribers in Appendix. 4.6 5.3 6.0 6.2 6.6 7.0 1.6 1.9 2.1 2.3 2.6 2.8 0.3 0.5 0.8 1.3 1.7 2.1 0 2 4 6 8 2010 20102 2011 2012 2013 2014 GlobalUsers/Subscriptions(B) Total Mobile Subscriptions Internet Users Smartphone Subscriptions
12. 12 ...Incremental Internet + Smartphone Users = Harder to Garner Owing to Dependence on Developing Markets Source: US Census, Informa. GDP per capita is adjusted for purchasing-power parity, from IMF. *These 16 countries encompass 3.1B mobile non-smartphone subscriptions, 52% of world’s smartphone subscriptions (27% ex. China), 62% of non-smartphone (feature phone) subscriptions. Developing Markets Tend to Have Lower GDP per Capita / Spending Power / Infrastructure $44K = Average GDP Per Capita... In 5 Countries with >50MM Population & ~ / >50% Smartphone Sub Penetration... USA / Japan / Germany / UK / France $13K = Average GDP Per Capita... In 16 Countries* with >50MM Population & ~ / < 50% Smartphone Sub Penetration... China / India / Brazil / Indonesia / Russia / Mexico / Philippines / Thailand / Italy / Turkey / Nigeria / Vietnam / Egypt / Iran / Pakistan / Myanmar
13. 13 Global Internet Usage (Data Traffic) Growth Strong = +21% Y/Y Aided by Mobile + Video Source: Cisco, 2015. Consumer Internet Traffic, Global = +21% in 2014 vs. +24% in 2013, +31% in 2012 Consumer Internet Video Traffic, Global = 64% of consumer traffic in 2014 vs. 62% in 2013, 57% in 2012 Mobile Data Traffic, Global = +69% in 2014 vs. +81% in 2013, +70% in 2012 Mobile Video Traffic, Global = 55% of mobile traffic vs. 52% in 2013, 50% in 2012
14. 14 Internet Usage (Engagement) Growth Solid +11% Y/Y = Mobile @ 3 Hours / Day per User vs. <1 Five Years Ago, USA Time Spent per Adult User per Day with Digital Media, USA, 2008 – 2015YTD Source: eMarketer 9/14 (2008-2010), eMarketer 4/15 (2011-2015). Note: Other connected devices include OTT and game consoles. Mobile includes smartphone and tablet. Usage includes both home and work. Ages 18+; time spent with each medium includes all time spent with that medium, regardless of multitasking. 0.2 0.3 0.4 0.3 0.3 0.3 0.3 0.4 2.2 2.3 2.4 2.6 2.5 2.3 2.4 2.4 0.3 0.3 0.4 0.8 1.6 2.3 2.6 2.8 2.7 3.0 3.2 3.7 4.3 4.9 5.3 5.6 0 1 2 3 4 5 6 2008 2009 2010 2011 2012 2013 2014 2015YTD HoursperDay Mobile Desktop / Laptop Other Connected Devices 42% of Total 7% of Total 51% of Total 80% of Total 9% of Total 12% of Total
15. 15 Advertising & Monetization = Mobile Remains Compelling... Growth Rates for Leaders Still High But Slowing
16. 16 Remain Optimistic About Mobile Ad Spend Growth... Print Remains Way Over-Indexed Relative to Time Spent % of Time Spent in Media vs. % of Advertising Spending, USA, 2014 Source: Advertising spend based on IAB data for full year 2014. Print includes newspaper and magazine. ~$25B+ opportunity calculated assuming Mobile ad spend share equal its respective time spent share. Time spent share data based on eMarketer 4/14 (adjusted to exclude outdoors / classified media spend). Arrows denote Y/Y shift in percent share. 4% 11% 37% 24% 24% 18% 11% 41% 23% 8% 0% 10% 20% 30% 40% 50% Print Radio TV Internet Mobile %ofTotalMediaConsumptionTime orAdvertisingSpending Time Spent Ad Spend ~$25B+ Opportunity in USA Total Internet Ad = $50B Of Which Mobile Ad = $13B
17. 17 ARPU (+ MAU) Growth Strong But Slowing for Internet Leaders Advertising ARPU, Annualized ($), MAUs Source: SEC Filings, Morgan Stanley Research. ARPU = Average Revenue per User, defined as annualized revenue per Monthly Active User (MAU). Ad ARPU Annualized ($) Q1:13 Q2:13 Q3:13 Q4:13 Q1:14 Q2:14 Q3:14 Q4:14 Q1:15 Facebook ($) $4.60 $5.65 $6.14 $7.76 $7.24 $8.26 $8.87 $10.47 $9.36 Y/Y Growth 15% 32% 39% 51% 57% 46% 44% 35% 29% MAU (MM) 1,110 1,155 1,189 1,228 1,276 1,317 1,350 1,393 1,441 Y/Y Growth 23% 21% 18% 16% 15% 14% 14% 13% 13% Twitter ($) $1.97 $2.22 $2.65 $3.65 $3.55 $4.09 $4.51 $6.00 $5.14 Y/Y Growth 52% 48% 61% 69% 80% 85% 70% 65% 45% MAU (MM) 204 218 232 241 255 271 284 288 302 Y/Y Growth 48% 44% 39% 30% 25% 24% 23% 20% 18%
18. 18 Internet Advertising = Mobile Growing Strongly (+34% Y/Y) = @ Just 14% of Total While Desktop Decelerating (+11%) Global Internet Advertising, 2009 – 2014 Source: PWC Global Entertainment & Media Outlook. $59 $70 $85 $100 $117 $133 0% 5% 10% 15% 20% 25% $0 $25 $50 $75 $100 $125 $150 2009 2010 2011 2012 2013 2014 Y/YGrowth GlobalInternetAdvertising($B) Desktop Advertising Mobile Advertising Y/Y Growth
19. 19 New Things Vendors / Brands / Consumers Should Be Excited About...
20. 20 ...Ad Formats = Optimized for Mobile... Often Fast / Interactive / Fun / Video... Image: Pinterest, Vessel, Facebook, Google. Pinterest Cinematic Pin Video Moves as User Scrolls Google Local Inventory Ad Shows Products Available In-Store Nearby Facebook Carousel Ad Scroll to Browse Multiple Images Vessel 5-Second Ad Short-Form Video
21. 21 ...Buy Buttons = Optimized for Mobile... Minimize Friction to Purchase @ Moment of Interest Images: Twitter, Facebook, Google. Twitter Facebook Google
22. 22 ...Something Funny Happened on the Way to the Small Screen...
23. 23 ...Small Screen Vertical Viewing Became Big Deal... Image: Samsung (left), Snapchat (right). Video = Then Video = Now?
24. 24 Time Spent on Screens by Orientation (Hours / Day), USA, 2010 – 2015 Source: eMarketer 4/15, Coatue analysis. Note: Other connected devices include OTT and game consoles. Mobile includes smartphone and tablet. Usage includes both home and work. Ages 18+; time spent with each medium includes all time spent with that medium, regardless of multitasking; for example, 1 hour of multitasking on desktop/laptop while watching TV is counted as 1 hour for TV and 1 hour for desktop/laptop. 4.4 4.6 4.6 4.5 4.4 4.3 0.4 0.3 0.3 0.3 0.3 0.4 2.4 2.6 2.5 2.3 2.4 2.4 0.4 0.8 1.6 2.3 2.6 2.8 7.6 8.2 9.0 9.4 9.6 9.9 0 3 6 9 12 2010 2011 2012 2013 2014 2015 HoursperDay Mobile Desktop / Laptop Other Connected Devices TV Vertical screens (29%) Horizontal screens (71%) ...Vertical Viewing = 29% of View Time (Multi-Platform) vs. 5% Five Years Ago, USA...
25. 25 ...Full-Screen Vertical Video Ads on Snapchat = 9x Higher Completion Rate vs. Horizontal Mobile Video Ads Source: Snapchat. Completion rate compared against industry standard horizontal ads, as measured by Nielsen. Image: Sprinkr blog, news sources.
26. 26 Mobile Usage Evolved Rapidly... Text  Images  Videos  All of Above... Buy Buttons Likely to Appear Just as Seamlessly
27. RE-IMAGINING CONTINUES
28. 28 Re-Imagining Enterprise Computing = Changing Business Process One Segment at a Time
29. 29 Tweet from Aaron Levie...
30. 30 While Consumer Internet Entrepreneurs Often Pursue Personal Passion... ‘Enterprise’ Internet Entrepreneurs Often Pursue Prior Company Pain Points
31. 31 Business Communications... Slack – Stewart Butterfield Source: Slack, KPCB. Image: TVC Net support website (left), NY Times (right). THEN Email / Semi-Inflexible Messaging Tools NOW Slack Can reduce internal email traffic materially
32. 32 Offline Payments... Square – Jack Dorsey / Jim McKelvey Source: Square. Image: Square (left and right). THEN Difficult to Set Up / Process Offline Payments NOW Square Allows merchants to accept credit card payments via their existing smartphone or tablet & run a sophisticated point of sale system
33. 33 Online Payments... Stripe – Patrick Collison / John Collison Source: Stripe, 5/15. Image: Stripe (left and right). THEN Difficult to Set Up / Process Online Payments NOW Stripe Can dramatically reduce payment integration time for developers and allow them to take advantage of modern APIs, compared with time required to deploy traditional merchant account Stripe Alipay flow Kickstarter payment flow
34. 34 Business Analytics... Domo – Josh James Source: Domo. Image: Omvana (left), Domo (right). THEN Data Overload Without Easy Access for Execs NOW Domo Improved access to real-time data can help users save time & improve decision making
35. 35 Document Signing / Transaction Management... DocuSign – Tom Gonser Source: DocuSign. Image: Good Marketplace (left), PaperlessChase.com (right). THEN Paper-Based Signatures NOW DocuSign Can reduce transaction costs & improve transaction times
36. 36 Customer Communication... Intercom – Eoghan McCabe Source: Intercom. Image: Intercom (left and right). THEN Disconnected Point Solutions NOW Intercom In-app messages can be more engaging (based on reply rates) than traditional email marketing products
37. 37 Customer Success... Gainsight – Nick Mehta Source: Gainsight. Image: Salesforce (left), Gainsight (right). THEN Transactional Sales Process with High Churn NOW Gainsight Typically improves net revenue retention
38. 38 Customer Service... Directly – Antony Brydon Source: Directly. Image: JaimeOrtega.net (left), Directly (right). THEN In-House Support Center NOW Directly Can reduce customer response times & improve customer satisfaction
39. 39 Human Resources... Zenefits – Parker Conrad Source: Zenefits. Image: McBrayer (left), Zenefits (right). THEN Paper Files & Insurance Brokers NOW Zenefits Manages $700MM+ in annual benefits premiums across 10K customers in 48 states vs. traditional brokers which typically work within a single state
40. 40 Enterprise Planning & Performance Optimization... Anaplan – Frederic Laluyaux Source: Anaplan. Image: The Oligarch (left), Anaplan (right). THEN Microsoft Excel NOW Anaplan Can improve ROI for customers that have replaced legacy planning solutions & spreadsheet-based processes
41. 41 Recruiting... Greenhouse – Daniel Chait Source: Greenhouse. Image: Market Wired (left), Greenhouse (right). THEN Reactive / Complex... Only Used by Recruiters NOW Greenhouse Can improve time-to-hire & decrease overall hiring costs
42. 42 Background Checks... Checkr – Daniel Yanisse Source: Checkr. Image: National Federation of Independent Business (left), Checkr (right). THEN Manual / Time Consuming Background Screenings NOW Checkr Typically reduces background check turnaround times
43. 43 Employee Knowledge / Training... GuideSpark – Keith Kitani Source: GuideSpark. Image: GuideSpark (left), GuideSpark (right). THEN Static Hardcopy Manuals NOW GuideSpark Can reduce Human Resource support time & increase employee benefits plan participation
44. 44 Visitor Management... Envoy – Larry Gadea Source: Envoy. Image: APT Research (left), Envoy (right). THEN Sign-In Sheets NOW Envoy Over 1MM visitors checked-in across 1,000 companies worldwide since May 2013
45. 45 Ten Years from Now, When We Look Back at How This Era of Big Data Evolved... We Will Be Stunned at How Uninformed We Used to Be When We Made Decisions – Billy Bosworth, DataStax CEO (2015)
46. 46 Re-Imagining Messaging... With Lots of Improvements / Change / Growth Ahead
47. 47 Messaging Apps = Top Global Apps in Usage + Sessions 6+ of Top 10 most used apps globally = Messaging Apps Messaging Apps  significant app sessions Source: Quettra, Q1:15. Data ranked based on usage. Quettra analyzes 75MM+ Android users spread out in more than 150 countries, collecting install and usage statistics of every application present on the device. Q1:15 data analyzed three months of data starting from 1/1/15. Data excludes Google apps and other commonly pre-installed apps to remove biases. Only apps with 10K+ installs worldwide and 100+ DAU are counted.
48. 48 Communicating via Mobile Messaging = A Beautiful Thing Asynchronous yet Instant Expressive yet Fast Engaging yet User Controlled Easy yet Productive Simple yet 24x7 Real-Time yet Replayable* Current yet Evergreen Accessible yet Global Mobile yet Distributed Instant yet Secure Personal yet Mainstream Casual yet Professional FaceTime... *Up to 24 hours after original broadcast. Images: Company websites, Flickr (creative commons).
49. 49 Facebook Messenger (launched 2011) • Messaging platform • MAU = 600MM, +200% Y/Y, Q1:15 WhatsApp (launched 2009) • Fast messaging • MAU = 800MM, +60% Y/Y, Q1:15 • Messages Sent / Day = 30B Snapchat (launched 2011) • Ephemeral messages, pictures and videos • DAU = 100MM, 5/15 • Story Views / Day = 2B KakaoTalk (launched 2010, Korea) • Messaging platform • MAU = 48MM, flat Y/Y, Q1:15 • Messages Sent / Day = 5.2B • Revenue* = $853MM, +19% Y/Y LINE (launched 2011, Japan) • Messaging platform • MAU = 205MM, Q1:15 • Messages Sent / Day = 13B, +30% Y/Y • Revenue = $922MM, +70% Y/Y WeChat (launched 2011, China) • Messaging platform • MAU = 549MM, Q1:15, +39% Y/Y Messaging Leaders = Growing Fast... Building Expansive Platforms + Moats Selected Global Messaging Leaders Source: Company public filings, earnings transcripts, websites, statements to the press. Revenue figures are annualized as of most recent quarter. *Revenue of Daum Kakao.
50. 50 Messaging Platforms – Asia In-Country Leaders = Developing Evolving Playbooks... Source: Company websites, press releases. Name KakaoTalk WeChat LINE Launch March 2010 January 2011 June 2011 Primary Country Korea China Japan Messaging    Group Messaging    Voice Calls Free VoIP calls (2012) WeChat Phonebook (2014)  Video Calls / Chat   Video call update (2013) Payments KakaoPay (2014) (2013) Line Pay (2014) Stickers (2012) Sticker shop (2013) (2011) Games Game Center (2012) (2014) (2011) Commerce Kakao Page (2013) Delivery support w / Yixun (2013) Line Mall (2013) Media Kakao Topic (2014)   QR Codes  QR code identity (2012)  Food Delivery  Partnership with Foodpanda (2014) Launched beta in Thailand (2015) Taxi Services Kakao Taxi (2015) Taxi services w/ Didi Dache (2014) Launched taxi service in Tokyo (2015) User Stories / Moments Kakao Story (2012) WeChat Moments Line Home (2012) Developer Platform KakaoDevelopers WeChat API Line Partner (2012)
51. 51 ...Messaging Platforms – Global Leaders = Implementing Playbooks & More Source: Company websites, press releases. Name Facebook Messenger Snapchat Launch August 2011 September 2011 Primary Country Global Global Messaging Separate messaging app (2014) Chat (2014) Group Messaging   Voice Calls VoIP voice calls in US (2013)  Video Calls / Chat Free VoIP video calls (2015) Video Chat (2014) Payments Messenger Payments (2015) Snapcash (2014) Stickers Sticker support (2013)  Games   Commerce Businesses on Messenger (2015)  Media  Discover (2015) QR Codes  QR Codes to add friends (2015) Food Delivery   Taxi Services   User Stories / Moments  Shared Stories (2013) Developer Platform Messenger Platform (2015) 
52. 52 In Messaging, Not One-Size-Fits-All, For Now... Many People Use Different Messaging Apps for Various Purposes One User... (Illustrative) Image: Stratechery (right), BoumanBlog (left). ...Another User (Illustrative) KakaoTalk Snapchat Kik
53. 53 If WeChat Trend Continues to Play Out Globally... Mobile Messaging Leaders May Evolve into Central Communications Hubs Image: Facebook. Context e.g. purchase(s) made: Order shirt – from Everlane – via Facebook Messenger Identity Location, Age, Name, Interests Context-Persistent Conversation Context-driven actions and engagement
54. 54 Notifications = Growing Rapidly & Increasingly Interactive... Driving New Touch Points with Messaging Platforms + Other Apps Images: Apple, Android Wear. ...More Up Close & Personal – as notifications appear on more & more mobile devices Direct Interaction on Notification Panel – without users interrupting what they’re doing...

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