In my mind, widgets have never been a business model. They are a marketing tool that provide exposure and funnel traffic back to a parent property. This is where a business model and subsequent monetization emerge. I think that companies (and VCs) are starting to realize this, and widget fever is nearing an end.
For clarification purposes, I believe widgets will be around forever. However, pure-play widget start-ups won’t be. The funding of these initiatives will die off as potential investors realize the risks.
Up until recently, it seemed like everyone and their dog was launching a widget-based start-up or a web 2.0 company that served up widgets. The hope was that these widgets would spur viral distribution, creating widespread exposure. In many cases, this did occur. But now what? Where is the monetization? How can revenue be generated via these eyeballs? Most held on to the hope that eyeballs would attract potential acquisitors. In other words, their revenue model was an exit strategy in disguise – the infamous “web 2.0 revenue model”.
VCs just don’t seems to be funding these start-ups like they used to – and for good measure. Without revenues, these companies are unable to sustain themselves. At this point, it becomes a time game. Will the cash run out before an acquisitor comes along? I would bet on it.