Sunday, July 24, 2011

Foursquare and Gowalla will disappear by the end of 2014

In my French blog, I predicted the coming death of Foursquare and Gowalla by the end of 2014. Some of my friends who are experts in social networks disagreed. Of course, those guys have hundreds if not thousands of “friends” in multiple networks. To me, they are not what I call “ordinary” web users. They are geeks with the latest gadgets always on the lookout for new stuff.

The User Side

Ordinary people get tired of creating and maintaining networks of friends and contacts. The most network oriented people are on Facebook, LinkedIn, Twitter and soon Google Plus. Any additional network is just too much for 99% of the population.

The Business Side

Most businesses do not have the time and money to have a decent presence on all social networks. Right now, they are struggling to manage Facebook and Twitter. Google Plus Entities will be there in a few months. Anything else is just too much to handle.

The Business Model Side

Where will the money come from to support localization services? The users will not pay. The merchants already provide advantages to users who check-in. They will not pay additional money to reduce the little profit they make from the marginal increase in business brought by Foursquare.

The money could come from mobile ads but users hate that. Also, to place ads, you need an ad network and enough knowledge about your users to show relevant ads. Foursquare has neither.

The Behemoths are coming

Facebook and Google are perfect social networks to provide localization services. They have the user database, the places database and the ad network. Right now, they are not really present in the space occupied by Gowalla and Foursquare. This is possibly to keep the anti-trust legislators at bay and because there is not enough money to be made for the moment.

Within 2 years, Facebook and Google will want to occupy and be leaders in the localization space:

  • The number of people with intelligent mobile devices and using mobile apps or websites is rapidly increasing. 
  • Facebook has 750 million users and still growing.  The number of businesses with Facebook pages is rapidly increasing. Facebook Places is a dismal failure but it could be done right easily. 
  • Google Plus is storming in. Its user base grew from nothing to 20 million in 3 weeks. Within a year, it could be well over one hundred million users. Google Plus Entities (G+ accounts for businesses) will be available in a few months. Should they merge them with Google Places, they would have a complete inventory of businesses. 

Conclusion

Nobody can read the future but my hunch is that Gowalla will disappear by the end of 2012 and Foursquare by the end of 2014. By then Facebook and Google will have excellent competitive offers.

Consequently, if you are a business, do not bother looking at Gowalla. For some businesses, especially in very large cities, Foursquare may be interesting for now but keep in mind that the benefits will be limited and will not last very long.

Update March 11th, 2012:
The Gowalla site is now closed. TNW wrote "Well that’s that. Gowalla shuts down".

9 comments:

Anonymous said...

Nice view, especially the business model part.

This is normally the issue with services that start as "sparks" and with no inside montization schema in place.

But to be honest, Still Google and Facebook need to do their home work to make there offerings better.

Marc Poulin said...

Indeed Google and Facebook need to do their homework. They must provide useful functions and decent user interfaces. Their advantage, and it is a huge barrier of entry for competitors, is their brand, their user base, their places database and their ad network.

claidheamdanns said...

As a Gowalla Street Team member, and a fairly regular Foursquare user, I rarely, if ever, check into Facebook places. And I can't even count on one hand the times that I've used Google Places.

I know, as an ST, I am also probably not one of the ones that you would label an "ordinary" user, but I see a different outcome. I find it more likely that one or both of these companies will merge, or be bought out by one of the bigger names, and either trashed, like Groupon did with Whrrl, or rebranded, such as Yahoo did with Flickr.

Marc Poulin said...

Hi claidheamdanns,
The thing I hate about Foursquare and Gowalla is that I have to build and maintain yet another network of contacts and friends. How many networks can one person manage?

The other day, at was at a very popular place. I checked-in using Foursquare, Gowalla, Yelp and Facebook. Only in Facebook did a friend show up on the radar. Few people do checkin using FB but it is where most of my contacts are.

Lately, Facebook introduced new features to help clean up their Places database. With a bit more more work, they could have a decent offering soon.

Marc Poulin said...

Facebook abandons the "check-in" feature and align itself with geotagging posts. Could this be another proof that the check-in concept does not fly with users?

Marc Poulin said...

Gowalla has just been bought by Facebook.

Dave Miller said...

Good prediction on Gowalla!

There was an interview with Crowley recently and he said he's open to acquisition.

They talked about how foursquare is having problems with retaining active users, lack of profitability... I think foursquare is a great platform, and FB needs competition, but it's hard to be competition when you're not making money at it.

What do you think will happen with 4sq?

Marc Poulin said...

Dave,
As you say, it is hard to compete when you are not making money. I would add that it is impossible when your competition (FB and Google) is making tons of money.

I do not know what will happen with 4sq but its future is dim. Who would want a business not making money and in competition with 2 behemoths.

Marc Poulin said...

@Dave,
I stand by my prediction that 4sq will disappear by the end of 2014. Regular people don't care for check-ins and the company has no business model besides being bought-off.

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