mobileentertainment's Podcast

Okay - here we go again... More analysts jumping on the MVNO-BASH SPREE.

PRESS RELEASE: "Strategy Analytics, the global research and consulting company, has today released a damning report from its Wireless Network Strategies service on the state of the US Mobile Virtual Network Operator (MVNO) market which indicates that the majority of the virtual networks launched with such fanfare earlier over the past two years, will fail to make an impact on the marketplace.

MVNOs, such as Helio and Mobile ESPN, have not lived up to their marketing hype. Despite promising to shake up the market, they have only attracted miniscule customer numbers. In contrast, less glamorous MVNOs, Tracfone, Virgin, and Boost, aimed at the prepaid and youth market, have carved out a comfortable niche, which the trendy, high-tech newcomers can only enviously ogle.

Sara Harris, Senior Industry Analyst at Strategy Analytics, who wrote the report, comments, "The new wave of MVNOs has failed to learn lessons from its predecessors. The handsets are boring, pricing uninspired and the distribution strategy is flawed. This is a three-fold recipe for failure." At the end of 2005, Tracfone, Virgin and Boost accounted for 65 percent of the US MVNO market.

David Kerr, Vice President of the Global Wireless Practice, notes, "Most MVNOs seem to have forgotten to recognize the digital youth segment's preference for prepaid service when planning these product, promotion and distribution strategies."

To view "US Reseller/MVNO Share, end 2005," a chart in the report, "Disney and Cable Operators Best Placed to Succeed in US MVNO Market," see www.strategyanalytics.com/press/PR00319.htm"

COMMENT: I continue to hope that these MVNO's don't cave-in to this frenzy of criticism... First, they have just launched their products... there is a lot of tinkering left to do. And I challenge that everything is rosy with Virgin and Boost (now Sprint/Nextel)... Many in the industry believe their growth has significantly slowed... Virgin USA has not released sub numbers in a long time.

But it seems to me that next-generation "content" is really the one getting bashed... anyone remember a few years back when net advertising was proclaimed a "disaster"? Look at it today.

Amid all the ulcers and hand-wringing about US MVNO's -- Sue Marek's opinion piece in today's Wireless Week email-newsletter says it all, and I quote:

"MVNO has suddenly become a dirty word. In fact, I recently had a conversation with the public relations person at a very high-profile MVNO. He was disgruntled because I said I was working on a story about MVNOs. He said he would prefer it if I would call the company a wireless operator because from the consumer point of view, this MVNO is no different from an operator. He also said that this MVNO considers its competition to be the traditional operators, not other MVNOs. I told him that Wireless Week is a business publication and our readers are other wireless industry professionals so I thought it was important to distinguish between traditional operators and virtual network operators. He didn't agree. Clearly, he was trying to distance his firm from the term MVNO. Although I won't go so far as to say that the MVNO term has become equated with a failing business, I do think the MVNO business model was over-hyped and now many firms are experiencing a backlash. Do you think the term MVNO is a dirty word in the industry? "

So we have had Wall Street (Merrill Lynch) slam Disney's MOBILE ESPN offering, telling them to kill it -- and the Disney-brand MVNO in the works is tarnished by association. No one will talk about subscribers for AMP'd and Virgin hasn't posted subscription numbers in a coon's age, which probably means no-good-news.. And now we have HELIO launching! HELIO WEB PAGE

I personally like Helio's marketing effort (They have billboards plastered all over LA -- slogan: "Don't Call it a Phone"). It seems cool and more female-friendly by far than Amp'd. And it is becoming clear that the Mobile Content industry in the West is going to have to focus on young women to succeed, just as the Koreans and Japanese have so successfully.

And not to slight Amp'd -- I think the usability of the product and UI is fabulous... It is simply not easy to get teenage boys to step away from the parents (FREE) "family plan" and shill out the money for a unique service... The big difference in the US is that teens simply get a free $$$ ride for their mobile bill -- the youth oriented MVNOs (is there any other kind that has a chance?) need to find a way to cut the apron strings. While in Europe, kids spend almost ALL their available cash on mobile - it's accepted as normal - that is why SMS caught on as fast as it did there.

Personally I think Wall Street and everyone else should cut the MVNO's a little slack and let them work out the bugs -- it's obscene to expect a new product (like MOBILE ESPN & AMP'D) to be kicking ass after 6 months. How long did television or radio take to establish themselves? Years and years. Let's let them figure it out and check back with them in January '07. It is such a HOLLYWOOD thrash-frenzy right now -- Hollywood's favorite thing is to watch others fail -- the town loves it MUCH more than when someone succeeds. The mobile industry should be cheering for these guys to succeed -- remember the billions of dollars in those high-speed networks? Why did you build those again? -- oh yeah -- content.

Check out Sue's excellent MVNO musings here:

WIRELESS WEEK

There is a new report from PARKS ASSOCIATES that shows women are the dominators in mobile gaming.

Telephia recently published similar data, their study showed 65 percent of mobile gaming revenues are from female users. Telephia says females make up 72 percent of the total revenue generated from puzzle & strategy games, which is the hottest category of mobile games.

Parks Associates claims women represent 59% of all U.S. consumers who play games on a mobile phone. Furthermore, women comprise 61% of all those playing mobile phone games 1-4 hours per month and 58% of all those playing for more than four hours per month.

These findings concur with the overall demographic makeup of Internet gamers, where women are the majority due to their penchant for online trivia and card games. Men, on the other hand, hold the majority among gamers who play intense action and role-playing games, and there is not a comparable group of male users in the mobile gaming space.

Press releases:

PARKS ASSOCIATES: http://www.parksassociates.com/press/press_releases/2006/electronic-gaming-mc1.html

TELEPHIA: http://biz.yahoo.com/bw/060626/20060626005581.html?.v=1

The upbeat projections from analysts continue for the growth of 3G and mobile entertainment services. Now a new report from Analysys gives a ray of sunshine to a difficult moment in the industry as consolidation and flat mobile game sales are starting to rain on the parade.

The Western European mobile market is forecast to grow by more than 6% per year to reach EUR198.4 billion in 2011, according to a new report, The Western European Mobile Market: trends and forecasts 2006 to 2011, published by Analysys, the global advisers on telecoms, IT and media. With mobile penetration close to saturation, growth will primarily be driven by rich-media services including music and television.

"We are now seeing a rapid acceleration in the number of full-track downloads and in streamed TV usage," says report author Dr Windsor Holden. "Subscribers are becoming more familiar and comfortable accessing both on and off-portal content; as mobile broadband becomes more prevalent this growth is likely to continue." Holden adds that that the longer term prospects for voice revenues are also encouraging. Total mobile services revenue is forecast to grow at a compound average growth rate of 6.2% from EUR138.4 billion in 2005 to EUR198.4 billion in 2011

Read more here.

You have probably heard about the huge success of the LG "Chocolate" phone. Which has officially shipped more than a million units. There has absolutely been a rush on this phone in the UK (similar to what happened with the Razr). This confirms again what we are seeing is the mobile phone as a true pop culture product, where the looks of the phone and what that look says about you is such a strong motivation, that you are willing to go through such an incredible about of effort to make that statement. In this phone's case, that effort is not only in the form of going to the phone shop and paying through the nose for example, $550 in the UK online as of today (£300), then transferring all your phone numbers and data, giving up all your downloaded games and ringtones and trying to figure out what must be for most European customers, a very foreign LG user interface and software. What do they do this? A quote from Saudi Arabia hits the nail on the head (except for the "affordable" part...):

"Modern buying trends are governed as much by emotion as by product specification and the LG Chocolate phone connects on both levels. It is totally unique, very desirable and yet affordable" said C K Cho, GM of LG Saudi Arabia.

Some are claiming the LG Chocolate a success of form over function. LG certainly should be congratulated for having a hit like this, opening up a new level for them in Europe. I was very impressed by the adventurous spirit of their overall design at GSM world in Barcelona. But there has been some brutal online trashing of the phone's UI and functionality. But the point I want to make is this: if a slick look and red glowing buttons will sell a million (or two or three or ten) five-hundred dollar handsets, what would a cool addictive content service do that was available ONLY for that phone? Why wasn't there an awesome download video service or other exclusive interactive and addictive content service that reflected the same feel and appeal of the design? I'm not talking about a fat content licensing deal or putting movie trailers or repurposing TV shows, I'm talking about a mobile-centric, ORIGINAL service that is AS CREATIVE AS THE DESIGN OF THE PHONE ITSELF. Remember, this is a Pop Culture product, and I think the day has come to see the complete product as one thing - so what the phone can DO for the customer is just as cool as it LOOKS.

See Chocolate links to reviews and photos here:

asia.cnet.com

consuming experience

chocolate.lgbloggers

slashphone

strategiy.com

If you have not yet felt the ill wind of change on your back, you will. It appears that the Mobile Entertainment business, and mobile data services industry in general have entered a period of flat sales and industry re-evaluation, navel-gazing, teeth-gnashing and finger pointing.

THE END OF THE BEGINNING

Is this the end of the boom-time hype-athon about mobile data sales? How can things be slowing down when smart phone sales are growing at a great rate? Why do the the MVNO's seem so BORING? What is wrong with the marketing, UI and WHY is the DESIRE waning? Why has mobile entertainment development not created that next-stage ADDICTION service we all have been expecting?

And when did we first step foot out into the desert?

Maybe it started when Graeme Ferguson of Vodafone called most mobile games "crap" or maybe it was EA's flip-floppy announcements about creating "off the deck" opportunities for itself, to the stories that Verizon and other carriers were "cracking down" on heavy data users and on and on... it seems like a major funk is coming on.

I have some theories about why this is happening which I will blather on about in a future post, but I wanted mainly to point out another blog I like that is discussing this. You should check out "Mobile Opportunity" by Michael Mace (http://mobileopportunity.blogspot.com/).

There are 2 recent posts worth looking at, "Why are Mobile Application Sales Dropping?" (WEDNESDAY, JUNE 14, 2006) and "Trouble with a 3G Smart Phone" (WEDNESDAY, JUNE 07, 2006). The first is interesting but I think, not specific to us in the Mobile Entertainment biz, but the June 7th post however is a "must read". A blistering critique of a new Sprint EVDO phone + service (phone by Samsung). This detailed report about the trials and tribulations of using the phone and service is ABSOLUTELY SMASH ENTERTAINMENT and Mace says many things about the way operators develop services that many of us think, but prefer to keep to ourselves. Enjoy. http://mobileopportunity.blogspot.com/