The “Winning Cards” in the Digital Era: Internet, Smart Devices, and Online Network Services

It was the “Walkman” which transformed Sony from a relatively unknown small company in the 1970s to the prominent global giant that we know today. Given its popular reputation, it is remarkable to think that the Walkman suffered from poor sales when it was initially released. This poor performance may well have been due to its small size as the Walkman featured only a playback function and required headphones to listen to music, which was very different from the prevailing large-sized record player.

Despite these initial difficulties, Sony was smart enough to use a “Word of Mouth” (WOM) strategy or the passing of information from person to person by oral communication. It was this process that made the Walkman a big hit around the world. Sony targeted young people as the Walkman’s potential users and proceeded to hire Japanese youths and asked them to wear the Walkman on their belt with headphones on while they wandered around Yoyogi Park, a popular place in Tokyo where hip youngsters gathered and trends were born. Brandishing Walkmans, these youths hid the fact that they worked for Sony. At the same time, Sony took photos of them and sent the images anonymously to magazine publishers that targeted young readers. Thus this Walkman trend was disseminated by word of mouth, and media outlets began to talk about it. As the trend developed, Sony began to advertise its Walkman more aggressively.

However, this WOM strategy continued to be used by Sony even after it became a giant multinational corporation. A good example is AIBO or the robotic pets that Sony produced and released from 1999 to 2005. But this time Sony used the Internet, instead of covertly-hired youngsters. Like with the Walkman, this approach worked as an effective intermediary to promote the sales of AIBOs. Although Sony only sold a limited number of AIBOs online, this was done on purpose in order to generate a great deal of anticipation among its fandoms about the next release date. As a result, all AIBOs were sold out immediately, and Sony advertised and disseminated this sellout across the Internet and Internet-based media outlets. This Internet-based WOM worked well and AIBOs became very popular.[1] If the Internet and smart devices existed in the 1970s, Sony would have undoubtedly taken advantage of them and have achieved greater success within a shorter span of time.

Online WOM has become more powerful in our age with the evolution of the Internet (as well as online network services) and newly developed smart devices, such as smartphones, tablets PCs, and even laptops. A good example is the story of “Ducklings” better known as “Oh! Duck!,” a smart device-based online game which became a viral hit among Korea’s online communities. This game was developed by Snake Oil Studios, a small two person German venture company.

Struggling to develop a popular game and to overcome other difficulties, the two young German developers decided to travel to Korea in order to refresh their ideas and cheer themselves up. They visited a bar in Seoul and met a Korean guy over beer. At this moment, they showed him their prototype of the game which featured a duckling jumping to avoid various types of obstacles. They asked him to play it and wanted to know his opinion on the game. The Korean guy was limited in his English and simply stated that the title of the game was not very good. In response, the German developers asked him to suggest a better title, offering a glass of beer in exchange. He was mischievous enough to offer them a bad name in Korean, “Oh, Duck!” This name sounds reasonable for English speakers, however in Korean the sound is very similar to the term for “people with obsessive interests.” He even wrote the name in Korean for them. These simple-hearted German youngsters took it seriously and released the game entitled “Oh! Duck!”

By accident, the Korean guy found out about this fact later and confessed to one of his friends that he had messed around with the German venture company and its developers. His friend found this story very funny and wrote about it on his blog. The “Oh! Duck!” story became viral online, and Korean netizens were curious about the game. Only a few months later (January 2016), Oh! Duck!, a German-produced game, ranked top in terms of downloaded numbers (600,000) in Korea without any marketing budget. One of main Korean T.V. channels even reported on it,[2] which helped the game to become yet more popular. Afterwards, the German developers were invited to Korea for interviews and to meet fans of the game.[3] Importantly, through these series of events, they regained confidence that they are able to develop good games and continue their business with fewer (financial) burdens: they even met some Koreans who were keen to invest in the German venture for further development.

Note: The German game developers. Johan Dettmar (left) and Sven Schmidt (right) thank Korean game users. Source: SBS News, http://news.sbs.co.kr/news/endPage.do?news_id=N1003362328 (January 15^th, 2016).

As highlighted before, WOM is effective as a strategy when it is a disseminator and promotor and offers opportunities. Throughout world history and in our time too, many successful cases ― political, social, economic, among others ― can be found that employed WOM. While the importance of WOM is constant, the means of this strategy have evolved more from spoken words and magazines to the Internet, smart devices, and online network services. With evolution in the means of dissemination, the impact has increased greatly while the costs are significantly lower.

In this respect, venture companies and game developers can find it easier to start up and perform better business ― in addition, without geographical boundaries ― all thanks to the Internet, smart devices, and online network services, as described in my blog piece on Geo-blocking (Feb. 2016). These digital intermediaries can also further create and stimulate other industries. Although the Walkman only accelerated the development of the music industry to a certain extent, digital intermediaries have had an impact on almost every industry today: even the music industry has grown as a result of an expanding digital music market. To sum up, digital intermediaries promote benefits, creativity, convenience, and even help to develop other related and new business opportunities. Yet, digital intermediaries and companies in this sector often stand accused of damaging record sales and are therefore imposed with huge copyright levies. What a paradox!

These digital intermediaries, e.g., smart devices, online network services, and the Internet per se, are somewhat like the trains, particularly freight trains, and railways of yesterday. The Internet can be considered to be rail lines, while smart devices and online network services can be seen as trains. They transport in bulk and at speed: sometimes even with well-organized compartmentalization. These intermediaries should be encouraged more instead of worrying about potentially negative sides. It should follow the pragmatism exhibited when rail lines and trains first emerged and were put ahead of negative concerns, such as the fact that railways can be exploited by the enemy when a war occurs or trains can take away certain traditional jobs.

Some distort the picture even more by arguing that some intermediaries have gained political and social power that goes beyond their stated role as mere conduits. But these intermediaries should be distinguished from Internet-based online media outlets that reflect the same role as traditional media sources. The reality is that these intermediaries are often driven by media outlets and others who seek political and social power ― the “beauty of digital intermediary” is in the eye of the beholder!

The winner is always the one who knows how to best use new technology; stone in the Stone Age, bronze in the Bronze Age, and iron in the Iron Age. Now we are in the “Digital Age,” and the winners will be the ones who are smart enough to embrace digitization to maximize the benefit of digital intermediaries. Given that Korean entertainment companies embraced digitization efficiently, it is not very surprising that Korea emerges as a cultural powerhouse, which was once considered as the periphery of culture before (see my blog piece on digitization [Dec. 2015]).

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* This work was supported by Laboratory Program for Korean Studies through the Ministry of Education of Republic of Korea and Korean Studies Promotion Service of the Academy of Korean Studies (AKS-2015-LAB-2250003).”

[1] In 2006, Sony informed a discontinuity of AIBO in an effort to make the company profitable. This is because of the high salary for AIBO developers. Still many Japanese keep AIBOs as their pet, although Sony stopped manufacturing them and supporting aftersales service.

[2] SBS News, http://news.sbs.co.kr/news/endPage.do?news_id=N1003362328 (Jan. 15^th, 2016), accessed April 1^st, 2016.

[3] See https://www.facebook.com/ducklingsGame/.