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User growth is slowing down to a crawl: * There are 4.16 billion Internet users worldwide.[a] * 26.3% of the world's population is under 14 years old, close t

by cs702 8y ago

User growth is slowing down to a crawl: * There are 4.16 billion Internet users worldwide.[a] * 26.3% of the world's population is under 14 years old, close to Facebook's minimum age of 13.[b] This means 73.7% of the world's population is at least 14 years old. * If we assume the population of Internet users has a similar age distribution as the world's population, that means there are around 4.16 * 73.7% = 3.07 billion Internet users who are at least 14 years old. This is a rough estimate of the maximum possible number of people who can have an account with Facebook today, i.e., the size of the company's addressable market (in users, not dollars). * The true size of Facebook's addressable market could be higher (for example, if the age distribution of Internet users is different)... but it could also be significantly lower (for example, if a substantial number of Internet users cannot or will not join Facebook due to religious, cultural, or governmental restrictions, or due to the availability of established regional alternatives). * Facebook just reported monthly active users of 2.23 billion, up only 11% from 2.01 billion a year ago.[c] This isn't exactly stellar user growth. The company now has around 73% penetration of every person in the planet who can join Facebook today. Again, this is a rough estimate. * The company's CFO disclosed in today's quarterly earnings call that the company expects a "deceleration" in growth.[d] [a] https://en.wikipedia.org/wiki/Global_Internet_usage#Internet_users https://en.wikipedia.org/wiki/Global_Internet_usage#Internet... [b] https://en.wikipedia.org/wiki/Demographics_of_the_world#Age_structure https://en.wikipedia.org/wiki/Demographics_of_the_world#Age_... [c] https://investor.fb.com/investor-news/press-release-details/2018/Facebook-Reports-Second-Quarter-2018-Results/default.aspx https://investor.fb.com/investor-news/press-release-details/... [d] https://www.cnbc.com/2018/07/25/facebook-warns-investors-of-weakening-revenue-in-second-half-of-2018.html https://www.cnbc.com/2018/07/25/facebook-warns-investors-of-... -- EDITS: I updated the global Internet usage figures based on dooglius's comment below (the Wikipedia page is outdated). I also expanded significantly on my original post to make my facts and reasoning as clear as possible to others here.

dooglius 8y ago
The first citation on that Wikipedia page [0] has been updated to an estimate of 4.16 billion internet users as of Dec 31, 2017. [0] https://www.internetworldstats.com/stats.htm https://www.internetworldstats.com/stats.htm
- cs702 8y ago
  Thanks. I'll update my figures right away.
- mrep 8y ago
  From what I can tell (those sources are pretty vague), they include china where American tech companies are effectively banned and thus there population is not really relevant.
some_random 8y ago
>If we assume the population of Internet users has a similar age distribution as the world's population Well, this certainly isn't true. And in any case, the people making these predictions are factoring in things like this, they didn't just slap down a linear regression line and call it a day.
- cs702 8y ago
  > Well, this certainly isn't true. It depends on how those estimates of the world's Internet population are calculated -- e.g., from census and other household data. Is an African village of 47 with a dial-up connection counted as part of the world's Internet population? I don't know. Do you? > And in any case, the people making these predictions are factoring in things like this, they didn't just slap down a linear regression line and call it a day. One would hope so, yet many are acting... surprised. As a headline put it, "Facebook’s forecast for the future looks suddenly bleak."[a] [a] https://www.theverge.com/2018/7/26/17615330/facebook-earnings-forecast-user-growth-revenue https://www.theverge.com/2018/7/26/17615330/facebook-earning...
noncoml 8y ago
Your calculation doesn't make sense. You assume that the percentage of people below 14 that use the internet is the same as the percentage of people above 14 that do so
sytse 8y ago
A 1 year old is unlikely to be included in the internet user count.
thaumasiotes 8y ago
Why would we assume that just because Facebook has a minimum age of 13, there are no 12-year-olds on Facebook? I, personally, would go pretty much the opposite way and assume that if a kid wants to be on Facebook, they will be, completely without regard to an official minimum age, and that therefore the minimum age is absolutely irrelevant to theoretical user count.
- rdlecler1 8y ago
  This is an estimate.
  - thaumasiotes 8y ago
    And I'm arguing that part of it is grossly unmotivated. If you break down an estimate, it should be broken down into things that plausibly matter, not total irrelevancies.
bobsil1 8y ago
i.e. market saturation.
aylmao 8y ago
This is interesting. I would consider the number of maximum possible people who can have a Facebook account is probably closer to 3.07 billion - 772 million internet users in China [1], which means closer to 2.3 billion. I doubt Facebook, at 2.23 billion users is that close to making all possible users MAUs (96.95% penetration? Yikes!), which makes me believe the age distribution of Internet users is different. Counting bots, this moves to (2.23 billion - 270 million [2]) / 2.3 billion = ~85.22%. This is still very high, but interestingly closer to the number at which Facebook users maybe have stabilized in the US/Canada region. I wrote a comment on another thread about this (sources referenced are on the original comment): "I can see the decline in Europe being unsettling, but I'm not really surprised about US/Canada. ~185 million is about 52% of the population of US/Canada. If we assume 35% of the population is simply too young to use it (20% under 14) or too old to be drawn to it (15% is over 65), that leaves only 13% of US/Canada's population which are feasible MAUs no being MAU, which is crazy." [3] I'm guessing here that Facebook has reached 87% of possible users in the region, based on age as an approximation for internet/Facebook use. I wonder how far off these quick calculations are ¯\_(ツ)_/¯. [1]: https://www.statista.com/statistics/265140/number-of-internet-users-in-china/ https://www.statista.com/statistics/265140/number-of-interne... [2]: https://mashable.com/2017/11/02/facebook-phony-accounts-admission/#sxCkkvtJkPqI https://mashable.com/2017/11/02/facebook-phony-accounts-admi... [3]: https://news.ycombinator.com/item?id=17614830 https://news.ycombinator.com/item?id=17614830
- randomsearch 8y ago
  You’re assuming each MAU is a unique person, which is obviously incorrect. MAU is a bad stat anyway. DAU broken down into precise categories, with compensation for duplicate accounts, would be a great stat. I don’t use Facebook for any serious time but there will probably be at least one time per month when I log in to look something up. I’m on the site for a few minutes at most. If I did one google search per month would you care about it as a google investor? The day my Mum told me that she had “decided to use Facebook less” due to their shitty behaviour was the day I decided Facebook were screwed. What I’m fascinated by is what the endgame is for Facebook. It’s still useful in some sense, the world probably needs a Facebook. If it died it would be replaced by something else. So I think the most likely outcome is it will sit at some level where it’s hard for a competitor to dislodge it, but it doesn’t get used much and it doesn’t make much money.

by cs702 8y ago

dooglius 8y ago

The first citation on that Wikipedia page [0] has been updated to an estimate of 4.16 billion internet users as of Dec 31, 2017. [0] https://www.internetworldstats.com/stats.htm https://www.internetworldstats.com/stats.htm

cs702 8y ago
Thanks. I'll update my figures right away.
mrep 8y ago
From what I can tell (those sources are pretty vague), they include china where American tech companies are effectively banned and thus there population is not really relevant.

some_random 8y ago

>If we assume the population of Internet users has a similar age distribution as the world's population Well, this certainly isn't true. And in any case, the people making these predictions are factoring in things like this, they didn't just slap down a linear regression line and call it a day.

cs702 8y ago
> Well, this certainly isn't true. It depends on how those estimates of the world's Internet population are calculated -- e.g., from census and other household data. Is an African village of 47 with a dial-up connection counted as part of the world's Internet population? I don't know. Do you? > And in any case, the people making these predictions are factoring in things like this, they didn't just slap down a linear regression line and call it a day. One would hope so, yet many are acting... surprised. As a headline put it, "Facebook’s forecast for the future looks suddenly bleak."[a] [a] https://www.theverge.com/2018/7/26/17615330/facebook-earnings-forecast-user-growth-revenue https://www.theverge.com/2018/7/26/17615330/facebook-earning...

noncoml 8y ago

Your calculation doesn't make sense. You assume that the percentage of people below 14 that use the internet is the same as the percentage of people above 14 that do so

sytse 8y ago

A 1 year old is unlikely to be included in the internet user count.

thaumasiotes 8y ago

Why would we assume that just because Facebook has a minimum age of 13, there are no 12-year-olds on Facebook? I, personally, would go pretty much the opposite way and assume that if a kid wants to be on Facebook, they will be, completely without regard to an official minimum age, and that therefore the minimum age is absolutely irrelevant to theoretical user count.

rdlecler1 8y ago
This is an estimate.
- thaumasiotes 8y ago
  And I'm arguing that part of it is grossly unmotivated. If you break down an estimate, it should be broken down into things that plausibly matter, not total irrelevancies.

bobsil1 8y ago

i.e. market saturation.

aylmao 8y ago

This is interesting. I would consider the number of maximum possible people who can have a Facebook account is probably closer to 3.07 billion - 772 million internet users in China [1], which means closer to 2.3 billion. I doubt Facebook, at 2.23 billion users is that close to making all possible users MAUs (96.95% penetration? Yikes!), which makes me believe the age distribution of Internet users is different. Counting bots, this moves to (2.23 billion - 270 million [2]) / 2.3 billion = ~85.22%. This is still very high, but interestingly closer to the number at which Facebook users maybe have stabilized in the US/Canada region. I wrote a comment on another thread about this (sources referenced are on the original comment): "I can see the decline in Europe being unsettling, but I'm not really surprised about US/Canada. ~185 million is about 52% of the population of US/Canada. If we assume 35% of the population is simply too young to use it (20% under 14) or too old to be drawn to it (15% is over 65), that leaves only 13% of US/Canada's population which are feasible MAUs no being MAU, which is crazy." [3] I'm guessing here that Facebook has reached 87% of possible users in the region, based on age as an approximation for internet/Facebook use. I wonder how far off these quick calculations are ¯\_(ツ)_/¯. [1]: https://www.statista.com/statistics/265140/number-of-internet-users-in-china/ https://www.statista.com/statistics/265140/number-of-interne... [2]: https://mashable.com/2017/11/02/facebook-phony-accounts-admission/#sxCkkvtJkPqI https://mashable.com/2017/11/02/facebook-phony-accounts-admi... [3]: https://news.ycombinator.com/item?id=17614830 https://news.ycombinator.com/item?id=17614830

randomsearch 8y ago
You’re assuming each MAU is a unique person, which is obviously incorrect. MAU is a bad stat anyway. DAU broken down into precise categories, with compensation for duplicate accounts, would be a great stat. I don’t use Facebook for any serious time but there will probably be at least one time per month when I log in to look something up. I’m on the site for a few minutes at most. If I did one google search per month would you care about it as a google investor? The day my Mum told me that she had “decided to use Facebook less” due to their shitty behaviour was the day I decided Facebook were screwed. What I’m fascinated by is what the endgame is for Facebook. It’s still useful in some sense, the world probably needs a Facebook. If it died it would be replaced by something else. So I think the most likely outcome is it will sit at some level where it’s hard for a competitor to dislodge it, but it doesn’t get used much and it doesn’t make much money.