MEOW! Mobile Entertainment Opportunity Watch
by Tapio Anttila

A monthly report with a personal touch from the world creative media capital of  Los Angeles.  Focus on pinpointing opportunities in the mobile media and entertainment area.  Subscribe at:  http://www.anttila.net 

MEOW! Mobile Entertainment Opportunity Watch #6, 2002

December 10, 2002

IN THIS ISSUE:

* Narrowband is Erotic, Broadband is Pornographic

* SMS in the US - Can Someone Make It Happen, Please?

* Picks from the Mobile Hollywood Scene

* Picks from the World Mobile Scene

I just arrived in Finland where I came to take a 'trip' of perspective after being overwhelmed by the giant US mobile consumer market trying to launch itself.  It is still too early to draw conclusions but this is definitely a great learning experience.  And both markets have things to teach each other.  More about all of that in the next issue of MEOW!.

Best regards,

Tapio Anttila

tapio@anttila.net

NARROWBAND IS EROTIC, BROADBAND IS PORNOGRAPHIC

I recently came across an article on SMS-dating in India: how the surging use of SMS is creating some controversy in the land of Kamasutra. India is still in the backwaters as a mobile phone culture by the number of subscribers and yet already we are seeing Indian cultural elite call it 'electronic aphrodisiac'.  This is an ultimate testament to my one-liner: 'Narrowband is erotic, broadband is pornographic'.   http://www.atimes.com/atimes/South_Asia/DK08Df02.html  

For the purposes of seduction, usually too much explicitness is counter-productive.  The process of selecting a mate of the opposite sex naturally developed into a game of skill where the contestants tried to make a case for their cerebral qualities.  In the medieval ages the church tried to clean up the language used by peasants and the poets - 'under the gun' - replaced the prohibited word 'woman' by the expression 'Souvenir de Parfum'. 

Similarly, in today's mobile market we are restricted by technical, not moral, restrictions of expressions.  People all over the world are cramming their social pitches into 160 characters, condensing creativity, meaning and value.  When we are taking this potent beast into higher forms of technical expression - animated characters, photos, music and so forth - we had better keep in mind that we cannot build popular culture, we need to offer flexible tools for the public to make the culture happen.  And as to mobile porn, soon to be endorsed by Hutchison 3G and Vodafone for instance, they should really rethink the relevance of it in a social context.

SMS IN THE US - CAN SOMEONE MAKE IT HAPPEN, PLEASE?

SMS in the US has experienced phenomenal growth.  In June 2001, there were 30,000 (yes, thirty thousand) SMS messages sent per month in the US. By June 2002 that number had grown to 1 billion (yes, Billion) per month.  This all came probably through the young demographics really picking it up after the introduction of inter-carrier interoperability (which now covers all nationwide operators except Sprint PCS).  According to Yankee Group, there are 13.4 million active users of SMS in the US in 2002 (9%) - active meaning one SMS or more sent per month.

(By the way, according to a Finnish mobile lifestyle magazine Isohai, of all the 'senior' people in Finland (50+) 68.5 percent own a mobile phone and of those 77.9% use SMS.  http://www.e.finland.fi/Education/)

Part of the reason for the rapid US growth was that the operators decided to give SMS out for almost free and not even try to make money at this point:  The cheapest rates include Cingular's $9.95 per month for 500 messages which amounts to 3 cents per message.

The US GSM operators and Verizon (Vodafone influence?) are in the driver seats when trying to build a business out of SMS.  Two new enhancements are needed: Premium SMS and short-code standardization.  Premium SMS platforms enable charging more for an SMS per application and revenue sharing in the backend.  According to industry sources, AT&T Wireless and T-Mobile are readying their solutions to be ready sometime in 2Q 2003.  Short-code standardization allows for the introduction of cross-carrier premium SMS services where the users are given one SMS number to send their message to in order to participate in TV voting, for instance.  There are plenty of complexities to make this happen on the US market and it looks like we will be in 3Q 2003 before AT&T Wireless and T-Mobile have led the way to offer a solution in this area.  I am told Cingular does not even have it in their 2003 plans.

SMS is a short-term revenue opportunity for US carriers to build a market, a usage model and a business model that simulates the success in Europe.  Two years down the road this opportunity will be gone with cheaper Java-based instant messaging on GPRS threatening the extremely lucrative SMS service market.  The US market is currently in 'exclusivity mode': operators will pay for exclusive sponsorships to be included in media properties such as TV shows to seed the SMS market.  (Media companies:  there is sponsorship money out there - go get it!)  According to my Finnish friends this has been natural first phase of evolution worldwide and it has led naturally into inter-carrier cooperation.  However, the jury is out there on whether the US operators with their rather big egos and a rather weak industry body GSM Association North America will build a market in time or whether it is up to the media industry to take the lead.

PICKS FROM THE MOBILE 'HOLLYWOOD SCENE'

According to recent data, Boost's trial prepaid service using Nextel's iDEN network in California and Nevada added only 2,800 subscribers to Nextel's subscriber base since launch. Virgin Mobile has signed up an estimated 35,000 prepaid subs since its national launch in August.  As for Virgin Mobile, they cut phone prices by $40 at the distribution outlets - making the early models available for $59 and $89.  This is a start but still very early days for any MVNO success in the US.  In my view the biggest hurdle is in the distribution channel:  the phone purchase in the US resembles the early days of the PC market where one needed to be a post-graduate on the subject before the purchase decision.

Sony Music acquired New York -based RunMedia who have provided the ring tone platform for AT&T Wireless among others.  RunMedia will become Sony Music's mobile entertainment division and they will start executing on Sony's strategy in the domain.  This move is similar to Vivendi-Universal acquiring Moviso (which in turn is looking for ways to reposition itself) and it will certainly make other labels accelerate their moves.  It is still my understanding that in the Sony empire it is very much Sony Pictures who sit in the driver seat and cut global deals with the operators.

X-traFun out of Colorado has developed a Bluetooth-cartridge for the GameBoy Advance.  It enables peer-to-peer playing between seven players and an unlimited number of players in a server-to-peer configuration.  http://www.x-trafun.com/home.htm

PICKS FROM THE WORLD MOBILE SCENE

O2 is gearing up for a full commercial launch of its Java game arcade.  The new functionality includes high scores and there will be an enhanced focus on community aspects and multiplayer gaming - the guaranteed traffic boosters.  It is also noteworthy that O2 has launched a 'three strikes and you're out' policy for developers to improve their quality...  http://www.newmediazero.com/nma/story.asp?id=238193

CelebSnapper is a new MMS service in the UK where people with MMS phones can do celebrity sightings and post photos onto a community site.  People without MMS phones can receive SMS alerts which makes this a good handset vendor 'upsell tool' which entices people to go ahead and buy a multimedia phone. The company behind the service is Mobile Entertainment Company who have engaged NetCatalyst in Santa Monica to look after their US interests. http://www.celebsnapper.com/  http://www.mobile-ent.com

Tesco, the UK supermarket giant, which has been trialing mobile content retail in a limited number of stores since August, launched it throughout its UK network of stores. Tesco will become the first mainstream European national retailer to launch boxed mobile Java games before Christmas.  http://www.newmediazero.com/nmz/story.asp?id=238328 

The UK legislators are drafting up a law which would severely restrict the use of premium SMS for game, gambling and lottery-type applications.  The industry mounting up its resistance to the law which is due to be taken up in the parliament in the autumn of 2003.  http://www.160characters.org/news/dsp_newsDetail.cfm?id=702

BMG in the UK has experienced conversion rates up to 40% in its SMS marketing campaigns (four times the industry average).  It recently launched an innovative mobile marketing campaign in partnership with mobile entertainment agency K Technologies and Trikatu.  The campaign combines text messages & automated phone calls in a single interactive application.  Trikatu providers and integrated 'send to a friend' functionality for viral marketing.  http://www.ktech.biz/

I start having the feeling that SonyEricsson could actually stage a temporary 'coup' with the Mophun gaming platform that is now available on the T300.  It is suited for mass-market phones and significantly faster than J2ME.  What's the use of five million Java developers and the huge potential if the technology is not ripe for the mass market?  Coolness is the only thing that counts!  I did try it at the T-Mobile shop and I guess I will have to go and buy the $100 phone.  It is interesting that they sell it with the help of a free camera accessory which is pretty useless in real life. The reason is reportedly the fact that T-Mobile will be the first in the US to launch an MMS service.  www.mophun.com

Here's the next killer application in mobile music after ring tones:  In the UK, Shazam will be providing a full service for customers - from hearing a song, to tagging it and then buying it from Amazon.co.uk.  As part of the agreement Shazam will be promoted throughout Amazon.co.uk's music store, receiving visibility on the music homepage and across music category and detail pages.  http://www.amazon.co.uk/exec/obidos/tg/browse/-/1200344/ref=ed_ln3_h_1_1_20/026-0201544-8835617

UK: Lycos has launched what it is claiming to be Europe’s first PC-to-mobile MMS composer service for users of its portal. The web portal firm also plans to launch the first cross-network PC-to-mobile MMS service in the UK by mid-January, ahead of UK operators’ plans to launch similar portal-based services or sign cross-network agreements for MMS.

A French company Apeera has a solution for operator-controlled application distribution that enables application sharing and other 'super-distribution' features.  I find the idea very compelling.  Openwave is among investors.  www.apeera.com

As we know, roaming is one of the main problems for the market introduction of MMS services.  Orange is one of the first to launch a roaming service into ten countries and operators outside its own group of companies.  The roaming also works in a prepaid model, a crucial feature for MMS to  take off in the core target market (youth).  Sending an MMS message with Orange prepaid costs approximately $0.60 with no fee to receive.  http://www.mobileyouth.org/news/mobileyouth615.html

VIP Mobile is partnering with GemPlus and SmartTrust to offer operators a SIM toolkit -based community creation tool, kind of the 'GeoCities' for SMS.  Their focus is on low income countries in APAC with a launched scheduled for January in the Philippines (a country with 130 million SMS messages per day...).  Their business model is revenue-sharing. Cingular is on their board of directors which raises questions about the potential for this in the low-income segments in the US.  www.vipmobile.com

INDUSTRY ANALYSIS

Sun announced the completion of the J2ME MIDP 2.0 standard, and the availability of the final Specification and beta Toolkit.  MIDP 2.0 adds lots of media and game functionality previously available only from manufacturers' proprietary APIs. MIDP 2.0 devices are expected sometime next year.  http://www.wirelessgamingreview.com/news/shownews-580.html

HOLLYWOOD MOBILE ENTERTAINMENT CAREERS

Rio Caraeff at Sony Pictures is still looking for more resources, both in LA and in the UK.  This time around the focus is on consumer marketing for mobile games in LA as well as p,roduct management and business development roles in London.

I have opened up a a whole job market on my website - see www.anttila.net!

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Disclaimer:  Opinions presented herein are those of the undersigned and do not represent the position or message of any company I might be affiliated with.  

Information: tapio@anttila.net 
Site management: tapio@anttila.net 

11 April 2005 21:56