final smule report
DESCRIPTION
Smule ReportTRANSCRIPT
Smule Product Development Process
And Analysis of Magic Piano Application
GSB+3
Brad Bonney, Austin Deyan, James Nelson, Jonathan Poto
March 13, 2013
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I. Executive Summary
Smule is the market leader in disruptive "music entertainment" mobile application products
within the rapidly growing smartphone application market. Smule’s mission is to increase
accessibility, expressivity, and social interactiveness in music content creation. Smule’s most
successful product to date is the Magic Piano application, which enables users to experience the
creation of popular music, earn achievements, and share their performances on a global platform.
Smule is in the midst of expanding from solely a disruptive, innovation-‐based model to a model that
incorporates creating derivative products of proven successful applications. Using Magic Piano as a
case study, this report examines the evolution of value creation at Smule as well as the process
changes required to successfully incorporate a “farming” business model into its existing structure.
II. Description of the Field Study Project
Broad Description/Scope This report analyzes Smule's PDCP process to understand how Smule works to meet its mission
and underlying business objectives. The report also examines the evolution of the value creation
model for the Magic Piano application, comparing this to Smule’s general business and PDCP model.
Objectives 1) To provide background on the general smartphone app industry, the music gaming app market, and
the evolution of Smule’s value creation model;
2) To analyze Smule's PDCP, from market research and R&D through product release;
3) To provide a background of the product of focus, including its market, technical capabilities, and
product team structure; and
4) To examine the evolution of the value creation model for the Magic Piano product line.
Focus Area and Why It Was Chosen This report examines the expansion of capabilities of the Magic Piano line through the lens of
Smule’s evolving value creation model. The Magic Piano line of applications is quintessential to
Smule's family of music creation and social experience apps. Magic Piano parallels the more general
evolution of Smule’s value creation model and overall product development process.
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III. Background Info
The Industry
Smule develops music based game applications for the iOS and Android ecosystems. Created in
2008, these App ecosystems are rapidly expanding. Estimates place the iOS market at $4 billion in
revenue for 2012. Apps downloaded via Apple iTunes are increasing linearly at a rate of 12.5 million
downloads per day year-‐over-‐year, with 50 million downloads in 2012. Exhibit 1 shows 2012 iOS and
Android purchases per download normalized to January 2012. Revenues for 2012 (for application and
In-‐App purchases) were estimated at $300M for January 2012, growing to $333M by October 2012.1
Market Characteristics Smule sits at the intersection of touch-‐based interactive games and music creation, seeking to
disrupt the way the average consumer understands and interacts with music. Smule is a powerful
niche player in the $65 billion Music Entertainment industry. Since its 2011 acquisition of its primary
competitor Khush, Smule has amassed more than 65 million application downloads and its users have
performed over 350 million unique songs,2 a previously unseen level of music creation and sharing.
With the advent of mobile and the explosion of social media, content generation and sharing
markets have nearly limitless potential. As the smartphone app markets has become saturated,
publishers like Smule are able to leverage their existing user base to market products to mass
audiences. CEO Jeff Smith explains, “I can point 250,000 eyes onto a new product within three days,
at almost no cost.” This easy distribution with little monetary expenditure affords significant ability
to test and iterate with an actual customer base. Another driver of customer accessibility is the
growth of the “Freemium” model to the application ecosystem. Implementation of an “in-‐app
marketplace” on the iOS platform has caused companies to shift towards providing products at no
upfront cost, further expanding product accessibility. Monetization models (and hence product
development) depend on increasing user stickiness, product virility, the availability of premium
content, and the likelihood of customers purchasing that premium content. According to Smith it
1 http://www.guardian.co.uk/technology/appsblog/2012/dec/04/ios-‐android-‐revenues-‐downloads-‐country 2 http://www.smule.com/presreleases
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took only 18 months for freemium apps to overtake paid apps as the top grossing apps on iTunes.
Company History Jeff Smith and co-‐founder Ge Wang created Smule in 2008. Ge Wang invented “ChucK”, a music
processing language as part of his Princeton dissertation with “the goal to create a language that is
expressive and easy to write and read with respect to time a parallelism, and to provide a platform
for previse audio synthesis/analysis and rapid experimentation in computer music.”3 He approached
Smith with the intention of leveraging the iOS platform and iPhone technology to commercialize
these tools. Smith utilized his experience in technology startups, creating a culture based on product
testing, data evaluation, and iterative design. Together, they built a company of 70+ individuals and
launched over a dozen top-‐ten grossing music applications for iOS and Android mobile devices.
IV. Company's Product Development and Commercialization Process
Smule’s production development structure fluctuates between autonomous and lightweight
development teams (Exhibit 2). The project manager has the strongest connection with the
engineering group given its role in product release. Design teams consist of four to five members
with specialties such as User Interface (UI), User Experience (UX), and visual artists. Marketing and
finance teams are mostly removed from initial processes. Advantages of this approach include faster
development cycles due to fewer PM constraints, comprehensive system solutions that don’t resort
to incremental add-‐ons, and a lower overhead on centralized marketing and finance. One major
disadvantage of relying heavily on nearly autonomous teams of engineers recruiting and retaining
talented members. Additionally with the loosely knit structure, teams and individuals are more likely
to underperform with respect to timelines and benchmarks. Smule’s PMs tend to be more concerned
with engineering, while other divisions (i.e. finance and marketing) report directly to management.
Fortunately this structure allows projects to maintain a course and direction desired by management
with strict stop-‐gate processes in place to delineate phases and prerequisites for project progression.
The PDCP is clearly defined at Smule. Phase 0, idea generation, gives all Smule employees the
opportunity to pitch ideas (in theory). The team conducts very limited exploratory market research, a
3 https://ccrma.stanford.edu/~ge/thesis.html
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weakness as they work to incorporate derivative products into their overall portfolio. Instead Smule
relies on a few key innovators to generate product ideas. Four metrics are used for evaluating
products: 1) user location, 2) daily activity-‐push to Facebook, Twitter, and email, 3) sales per daily
active user, and 4) daily user activity. Popularity is sometimes gauged through response to teaser
product trailers posted online via YouTube. Management “Green Lights” project proposals to
proceed to Phase 1.
Phase 1 involves rapid prototyping. An imposed thirty-‐day requirement insures progress towards
a working prototype. In-‐house developers and company management test the prototype, and
management decides whether the project moves forward, has another 30 days, or gets canceled.
Phase 2 applies to Continuous Improvement Projects (CIPs). Adding to an existing product poses
risks due to the inability to accurately gauge user responses to new product features. Improvements
directly tailored to user needs is limited by the absence of user needs research.
Phase 3 involves Alpha testing. A project budget and final product rollout timeline are approved.
Budgets range from $50K to $2M depending on size and scope. Development lengths can be as short
as two weeks and as long as six months. Products with a development cycle longer than six months
are usually canceled. As the development cycle draws to an end, Smule releases a teaser video on
YouTube highlighting the final product to generate demand. Videos must be no longer than 30
seconds in length and accurately convey the products value.
Phase 4, or Beta testing, is accomplished by releasing the product under a pseudonym that
protects Smule from negative feedback. The team immediately begins analyzing data (NT and K-‐
factor) to track usage patterns, virality, and feature adoption of the product post launch.
Responses are evaluated and minor changes are made before launching globally under Smule’s
name brand. See Exhibit 3 for related time-‐to-‐market and stopgap process breakdown.
V. Description of the product and the state of its development
Target Market The Magic Piano app targets smartphone owners of all ages and gender groups, although the
product is most success among teenagers and young adults (13-‐30 years old). The product harnesses
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the universality of the piano as an instrument of expression and music creation, the playing of which
the users are familiar with. The majority of the 500+ songs featured in the library are either piano
classics or popular songs from various genres, most identifiable with the under-‐30 year old crowd.
Technical description Magic Piano’s user value centers around two components: an achievement based “Play” mode,
and a global music sharing “World” platform. Core value exists in gameplay mechanics allowing a
player with zero piano experience to enjoy feeling control and mastery over a real-‐time song
recreation. Colored orbs are displayed on the screen. The orbs are horizontally spaced to correspond
to relative distances of those notes within their respective chord formations, and vertically spaced
according to the tempo of the song. When the player taps the screen on an orb or chord of orbs,
sound emanates from the device in real time giving the player to control over the rhythm of the song
(but not the actual notes being played). Users receive real-‐time feedback through a scoring system
based on timing and tap location (proper notes and chords). Achievements accrued through scoring
in the ‘Play’ mode encourages the user to practice, buy, and play a greater number of songs. Value to
the user is augmented through a low-‐pressure freemium model; free content and premium content
(popular songs to play) can be earned (by watching ads or completing affiliate offers) or purchased
depending on the user’s desire to spend.
VI. Discussion of the area of Focus
Exhibits 4 and 5 shows Smule’s value creation model as applied to the Magic Piano product. Since
it’s initial launch in 2010, the app has evolved with respect to timing, environmental factors,
technological factors, and value contribution. In the first version of Magic Piano (released in April
2010 for the iPad), there were only five songs to play. Smule created value by utilizing the inherent
capabilities of the iPad’s large screen, multi-‐touch display, and fast processing. In comparison to the
general Smule value creation evolution, this stage was remarkably different because the app was
launched on a non-‐iPhone platform. Smule was given exclusive access to the iPad tablet prior to
product release and leveraged this knowledge to create an application that catered to the tablet
market. By May 2011, Smule had already upgraded the Magic Piano product, marking the second
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stage of the evolution. Such changes included making the app free, creating a scoring system for
each song, and implementing premium content that could be purchased using virtual Smoola. The
underlying value creation proposition was to increase the user base by making the app free and
adding popular songs (and premium content for purchase) to increase user enjoyment. Magic
Piano’s evolution differed from Smule’s other products in that users had the ability to earn Smoola by
using the app, not simply buying it. This showed a marked improvement in user retention. The next
versions of Magic Piano added an interactive leaderboard and expanded to the Android marketplace.
The socially competitive nature of the leaderboard combined with the subsequent expansion to
Android created an explosion in both user adoption and sustained interaction while creating a
product that still achieved Smule’s central mission. The most recent version (released in February
2013), continues to tactic of introducing “unlockable” achievements and premium content, such as
releasing a new free song every day, to maintain its existing user base. This creates a sustainable way
for a non-‐paying user to gain new content through regular gameplay. Adding free content increases
the product’s value to consumers while simultaneously growing the user base.
VII. Problems and Opportunities for Improvement
Statement of the challenge Smule experienced rapid growth in value creation for their initial products including Magic Piano.
However, as innovations become harder as the marketplace matures, competition increases, and
customers become more discerning, it grows more difficult to consistently provide increasing value.
While Smule has combated these challenges by more effectively monetizing their existing products, it
must adapt its future product design processes to more efficiently address user needs and wants. As
users understand the features and capabilities of their mobile devices, Smule must be reticent to that
fact in order to drive new customer sales and increase the long-‐term appeal (stickiness) of products.
Top-‐level challenges for the Magic Piano and new applications include improving: (1) the virality
of the product (k-‐factor: Number of recommendations per user to contacts times proportion of
referred people who buy the product.), (2) the stickiness of the product, and (3) sales conversions for
user. By surveying actual Magic Piano app users, these objects appears accomplishable through high-‐
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level product improvements in ease of learning game mechanics, expressivity of gameplay, clarity of
pricing, availability and access to premium content, depth of social experience, and use as a music
making/recording tool. Exhibit 6 lists enhancements desired by these current Magic Piano users.
Requirements All production process or Magic Piano solutions must allow Smule to maximize creativity within
the bounds of profit-‐motivated decision-‐making. Smule must also maintain a balanced product
portfolio with revenue from sustaining products offsetting high-‐risk and high-‐cost breakthrough next-‐
generation products. Finally, products development must continue within a reasonable budget and
project timeline given the financial health and size of Smule.
Constraints Smule’s production process is constrained by needs of the product design and management
teams, and the availability of engineering talent. Magic Piano design is constrained by technological
platform development, current and potential user expectations, and project portfolio and financial
concerns.
Alternatives – PDCP Process and Team Structure on Multi-‐Generation Products 1) Create a rigorous brainstorming “Phase 0” process to discover new sources of product value.
2) Shift to heavyweight development teams to increase the total engineering talent pool.
Recommendations – Ways to implement process alternatives within Smule’s constraints 1) Identifying new product value is important given the large numbers of major design
improvements determined through a general market print (Exhibit 6) and Kano Analysis (Exhibit 7).
The slowing growth of perceived product value (with no significantly new product features since the
introduction of Smoola as a way to purchase premium content) must be combated. While the current
“hypothesize à test à gather data à iterate” model process is effective at improving efficiency and
clarity of existing functionality, a more expansive model will overcome roadblocks in creativity
(Exhibit 8). By sending engineers to conduct personal interviews with users in target market
demographics, Smule will be able to more accurately refine product ideas in the “hypothesize” phase
by discovering what current users desire. Smule will be able to match the product directly to user
needs and wants as they work to expand their new derivate product offerings.
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2) Given the need for creative, system-‐wide solutions for implementing new value-‐adding
features, Smule should not abandon its lightweight team structure. Rather, Smule should identify
low-‐difficulty functionality improvements, and assign those projects to a separate team of engineers
who remain within their functional group. The ability to assign multiple low-‐difficulty projects to a
dedicated team with the resources of a function group will lower the talent threshold required to be
an engineer at Smule, and will improve overall company efficiency.
VIII. Conclusion
Smule’s current product development process is undergoing a transition. As it converts from a
purely innovative company to a company that also builds upon successful ideas through derivative
products, it must not overlook the necessity of market research in early stages of its’ idea generation.
While previously content with “throwing ideas against the wall and seeing what sticks,”4 Smule must
interface with users to understand their desires. Mobile devices are no longer new and
misunderstood. Their features and capabilities are known, and there are many competitors in every
market space. As the user landscape shifts, so too must to product development process. For
derivative or parallel products with incremental innovation, it is imperative to match the new value-‐
add to customer’s needs and wants. Smule was a groundbreaking innovator. In order to remain as
competitive in its new approach of “farming” existing winners for future success, it must adapt its
product development processes to include more pre-‐launch market and user needs research.
4 From an interview with Jeff Smith, CEO of Smule
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Exhibit 1: App Download Trends
source: http://www.guardian.co.uk/technology/appsblog/2012/dec/04/ios-‐android-‐revenues-‐downloads-‐country
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Exhibit 2: Current Lightweight-‐Autonomous Team and Proposed Heavyweight Structure for Low Design Challenge Products and Product Features Current Product Development Team
Proposed Team Structure for Low Design Challenge Products and Product Features
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Exhibit 4: Evolution of Smule’s Value Creation Model
Exhibit 5: Evolution of Magic Piano’s Value Creation Model
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Appendix to Exhibit 6 **Explanation of Value of Product Feature (1 and 2) Smule should incorporate both an “Accurate Touch” mode (app will play a note based on position of touch, not just a preset tone), as well as a “Visual Piano” option that shows a dynamically changing piano superimposed behind the note orbs. This will increase the realism of gameplay and the value as a piano learning tool, without compromising gameplay ease-‐of-‐use. (3 and 4) While uploadable content would be the ultimate way to address low content availability, it is technically challenging to create a music analysis and score writing algorithm that could create arrangements equally as engaging as those made in Smule’s lab. Furthermore, this could cannibalize sales of premium content. Smule could still increase the amount of desired content available by targeting current popular songs to add to the library. Currently only 2 of the top 10 ten singles of 2012 are on the Magic Piano. (5, 6, and 7) The seemingly random denominations of Smoola tend to confuse users. Change the pricing of songs to multiples of 25 Smoola, while selling Smoola packages in multiples of 100, for easy off-‐hand conversions of song prices. By limiting the number of packages, the buyer’s decision-‐making process is simpler. Subscription services or direct song purchase should be considered to make purchase costs of songs 100% transparent. 8) The Tapjoy affiliate interface (1) appears to be a “nickel-‐and-‐dime” approach to achieving revenue, lowering the perceived value of the product and the premium content that is earned and (2) results in a distracting program exit (right), reducing enjoyment. This should be removed to focus the user experience on gameplay and premium content purchases. (9) Smule should implement an algorithm to break up current song scores and allow users to play duets either live or on delay (one person record’s their half then uploads it). “Duet” mode was available in version 1 and would increase interactivity of the social experience. (10) Smule’s mission is to enable music creation on a social platform. Creating a means of improvising with someone around the globe would maximize the achievement of both these value propositions. (11) “Freestyle” could be enhanced for small screen mobile devices. Small screen size makes it difficult to either touch the desired keys on the smaller keys of keyboard. Provide the user with the ability to select major and minor keys, to choose different types of scales, and to use specific gestures to produce major, minor, or sustained chords. This will allow the user to create a truly musical and song-‐like experience. This will add value at no cost. (12) Users desire the ability to record their music. Allowing them to perform multiple overlaid tracks on Magic Piano and export that as a layered music file or a compressed mp3 will make Magic Piano useful as a professional music creation tool, rather than simply an instrument representation.
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EXHIBIT 7: Smule Current vs. Potential Next Generations Market Print
Red = Magic Piano Version 5 Blue = Magic Piano Proposed Version 6 Black = Magic Piano Proposed Version 7