There’s plenty of fish in the sea (and a few whales)

In the tech world, these two groups almost always create a distribution known colloquially as the ‘long tail’. For example:

• On booking sites there are millions of individual Bed and Breakfasts with one room each, but the majority of hotel rooms available are run by two or three chains.
• The vast majority of visitors to a theme park will spend a few hundred dollars each, but a few will pay tens of thousands for VIP experiences.
• There are thousands of small businesses trying to get traffic with Google ads, but the vast majority of Google’s ad income comes from one or two giant online companies.

In fact, you’ll see it in almost every single industry from gaming to health - all of them have a few ‘whales’, and a lot of smaller ‘fish’. It’s a statistical fact your business ignores at its peril, so it’s crucial to decide whether your organisation is a Fisher or a Whaler.

Fishing organisations focus on trying to get as many users as possible regardless of individual value. They opt to monitor and increase engagement metrics - counters like daily active users or minutes of usage. This sort of approach is very common in the early days of startups, where the assumption is that anything can be monetised if there are enough users. However, as we see in Superstore, the danger is that the outcome tends to be much higher costs and lower return on investment per customer.

When gaming streaming platform Twitch was in its infancy, they struggled to get an audience. Having taken investment money and with a team sleeping on the floor of their friend’s apartment, the company was desperate to get the eyeballs they needed to get to the next phase. They changed their front page, altered their advertising spend, and used all the tricks to get their site everywhere on forums. When they finally started succeeding, they found the trouble they had caused themselves. Instead of a highly engaged community creating quality content, they had become a haven for people pirating sport broadcasts and black market adult content creators, all being served and watched by people in countries with extremely high server costs. To top it off, the vibe they’d created scared off the creators with audiences that could start showing a return. The company had to consciously change their strategy, policing misuse of the platform much more vigorously and creating partnerships to attract high quality creators back.

Mathematically this outcome occurs because very small behaviour changes in the Fish have a large impact on engagement metrics. Twitch had a huge group of users that only tuned in for a few minutes at a time, so to double or triple their engagement was easy - moving from 1 minute watch time to 2 minutes isn't a big change. But for the few Whales that were already on the platform most of the day, it was essentially impossible to increase their engagement any further. All the tests Twitch were doing showed big changes in engagement metrics, but in reality everything they were doing only appealed to people that were barely interested in the platform to begin with. Meanwhile, the changes made the platform somewhere the premium creators didn’t want to be seen, so they left. In the end, the changes they made led to much higher cost per customer with an overall collapse in engagement as they lost their dedicated audience.

The alternative approach is to maximise the value you get out of each customer, which necessarily means catering to those that can pay the most - the Whales. These companies use value metrics like spend per customer, or Customer Lifetime Value as their measure of performance. Whaler businesses have an established following, and hope they can push all their Fish customers into the Whale category.

The problem here is that as prices creep up, there is a tipping point where the Fish simply can’t pay more and just drop out. Without their support, overall income decreases, and the company finds itself in an accelerating cycle of raising prices and cutting costs to make up for lost revenue. Eventually the price becomes so high, and related to such little value, that those Whales finally choose to spend their money elsewhere.

One company that’s currently facing this issue is the Themed Entertainment industry, and Disney parks in particular. Disney’s theme parks are the most popular in the world by orders of magnitude, and throughout the last few decades it is very common for their parks to sell out for any given day. This limitation means to increase income, they need to focus their metrics on income per customer. Disney’s VIP tours cater to the ultra-rich visitors, costing up to USD$9500 for a ten hour tour which doesn’t include the cost of admission or food. As you might imagine, the type of person who would book this is unlikely to be deterred by the record high ticket prices for park access in 2026. But for the vast majority of people who love the Disney brand, a day at the park is becoming difficult to enjoy. Everything from concessions to merchandise, and even the reintroduction of paid ‘Lightning Lanes’ that let you skip the queue for a ride, reflect the company’s focus on maximising the income they get from each customer.

While a juggernaut like Disney doesn’t falter easily, it seems the cracks are beginning to show. Visitor numbers are starting to fall for the first time in the parks’ history, albeit only slightly. Recent months have seen a string of media articles about how Disney’s addiction to price hikes are pricing out the middle class of Americans, with some reports stating that nearly half of parents at Disney have gone into debt to pay for their trip. It is clear that while it’s not yet reflected in the accounts, Disney is seeing the inevitable outcome of a value-focused strategy.

Mathematically this happens because Whales have a lot more relative room to move than the Fish do when it comes to their spend, so as prices increase the Fish disappear without anyone noticing at first. While these customers are not worth a lot individually, the sheer number of them means they are critical to business survival. Ironically, as this critical group leaves, value-based metrics start looking more and more positive while actual income drops. Eventually the only answer to maintaining profits is to cut costs, which drives away the remaining Whales who now expect a lot for the high prices they're paying.

So, it would seem that you will run into trouble no matter what you do. Either you cater to the Fish and constantly have to manage high costs per customer, or you cater to the Whales and end up in a cycle of higher prices and lower quality. But there is a secret to managing the long tail and ensuring your strategies balance the Fish and the Whales correctly. A Data Scientist or Accredited Statistician can look at the whole distribution, account for its statistical properties, and give qualified advice that balances the scales.