Steep Decline In Second Cycle Value

Steep Decline In Second Cycle Value Rodger August 7

SeaWorld is a San Diego favorite. But when you’ve seen Shamu once, you’ve seen him a million times. A one day ticket is $57, a two day ticket is the EXACT same price and a 2007 pass is just $6 more at $63. That’s not just a steep decline - that’s a decline to ZERO! And nearly ZERO for rest of the days in 2007.

Most things (not all) decline steeply on the second cycle.

And my bet is that more and more, value placed on the second cycle will continue to drop. We’re in the ADD generation, where there is unlimited media, unlimited content, unlimited travel, unlimited goods, unlimited experiences, unlimited expectations. With saturation, comes discontent, impatience and, ultimately, wasted cycles when goods are purchased in an attention deficit society.

Here’s the value proposition I’ve begun to notice for such goods with steep declines. If you can offer nearly all (80 to 90% PLUS) of the value derived from a good for 20% or less of the cost, you’ve got a blockbuster offer and a blockbuster business. Even if you mess up and want to reuse a good, the cost is so low that you can always go and re-experience it.

But even if you require increasing your price to 50% or less of the cost, you’re still going to find a smaller market but still a market. In a world with steeply declining second cycle values, there are opportunities across the entire spectrum.

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