What Happened to Pocket Points?
Source: https://www.businessinsider.com/pocket-point-pays-to-not-use-phone-2016-4
Pocket Points is an app that rewards students for not using their phone while in class. Users can earn points by simply opening the app and turning off their phone while on campus. Interestingly, the app also features an “Earn points with friends” function that allows the app to connect with other nearby users. This function increases the number of points earned per minute. These points can then be put towards discounts and free food.
After its 2014 launch, the app quickly gained popularity. According to a Business Insider article published in 2016, nearly one-third of students on the Chico campus were using the app within mere weeks of its launch. Founder Mitch Gardner even stated that of the “two million people at the schools we launched at, 500,000 people are using the app”. However, despite this initial success, the company is now facing problems.
On September 14, 2018, Pocket Points updated its point earning and rewards system. This update resulted in two changes: 1. Users could no longer earn points using the stopwatch function (points could only be earned by setting a specific amount of time) and 2. Free food rewards were no longer supported. This update caused a significant backlash from its users. Of the top 10 “Most Helpful Reviews” for Pocket Points on the App Store, 8 of them are criticisms of the update. It was also found that reviews within 1 week of the update averaged ⅖ stars. The result? Students stopped using the app.
I witnessed this phenomenon first hand on Cornell’s campus. Pre-update, a large fraction of Cornell students used the app. The “Earn points with friends” function typically averaged 20 people when in the library. After the update? I was lucky to get 5. Within mere days, Cornell’s Pocket Points craze seemed to completely disappear.
In an effort to recover its user base, Pocket Points tried to reintroduce the old point earning system a week after the major update. Unfortunately, however, it was too little too late. At least on Cornell’s campus, Pocket Points failed to make a comeback. This past weekend, I tested to see how many users I could find with the “Earn points with friends” function. In a span of an hour at a busy library, only 6 users were found. It was also found that of the 25 friends I have on Pocket Points, only two of them have used the app within the past week. The rest sit sadly at zero points.
This phenomenon can be linked to network effects in the market. The “Earn points with friends” function acts as a positive network effect for the app. The more students that use the app, the more other students benefit. This can be described in mathematical terms. In the r(x)f(z) = p equation, f(z) is the benefit gained based on of the fraction of the population using the app. Because the app is free, the price (p) and reserve price (r(x)) can be linked to the amount of time students invest on the app. It seems that the Pocket Points update shifted the z’ equilibrium forward while simultaneously reducing f(z). This caused their share of users to fall below the z’ equilibrium. Because the market has network effects via the “Earn points with friends” function, this resulted in significant downward pressure.
Even though Pocket Points reintroduced the original point earning system a week later, their share of users was still too low to rise above the z’ equilibrium. It seems that the only way for Pocket Points to make a comeback on Cornell’s campus is to get the fraction of the population using the app above the tipping point. This could potentially be achieved by reinstating free food rewards. This could cause the fraction of the population using the app to increase to a level that would potentially pass the tipping point. However, if left unchanged, the number of Pocket Points users will likely fall to zero.