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Friday, December 31, 2004

Mobile Content – Next Wave, Media Giants Enter

The Wall Street Journal writes, for quite sometime,industry-watchers have been predicting mobile content's breakout . We covered the impressive raise of usage of mobile technology in various contexts like Mobile Spam Exceeds Desktop Spam In Korea, Mobile Phone Revolution Is Next Only To Internet Revolution and also covered the fact Growth In Mobile Phones Exceeds The Growth Of Landline Phones and was also outstripping the rate of increase in Internet users. As in the internet world, where content became king, we are witnessing an identical phenomenon in the mobile world. Excerpts from the article with edits and comments:

Now, after years of unmet expectations, the pieces may finally be in place for cellphone games and other mobile-content services to catch on. Carriers are investing in higher-speed networks. Cellphone makers are selling flashier handsets. Simpler systems are in place to charge users for content."Year 2004 was the year that the broader industry woke up to the idea of mobile content," says Mitch Lasky, chief executive of Los Angeles-based Jamdat. "We had to overcome a lot of skepticism early on." Fancy Phones, Fast Networks - There was a time that cellphones were, quite simply, phones. But technology improvements have transformed them into all-purpose communication and entertainment devices. With the push of a button, users can pay to play Tetris, read news headlines or subscribe to a service that provides driving directions. Soon, they'll be able to do more. Handset makers are releasing cellphones in the U.S. with more vivid color screens, higher-quality sound and more memory, and it is becoming easier to bill consumers directly through the cellphone. Samsung Electronics Co.'s VM-A680 model, which features high-tech polyphonic ringtones and built-in video recording capabilities, sells for as little as $79.99 on Amazon.com.

Several U.S. carriers, including Sprint Corp. and Cingular Wireless, this month announced plans to upgrade their wireless networks, allowing people to connect to the Internet through their cellphones at faster speeds. Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, has begun offering a high-speed network in some markets and plans to expand that service next year.The use of mobile content is greater in Asia and Europe, but the U.S. market is growing rapidly. Boston-based Yankee Group expects U.S. sales of wireless data, such as text-messaging, games and ringtones, to nearly double by 2006.

Merger Mania in Mobile Content - Start-ups are looking to capitalize on the interest in mobile content. Some, like Jamdat, focus on original content. Others partner with companies to distribute branded content, such as games based on movies, to cellphone carriers.Typically, services cost a few dollars for one-time use, and less than $10 for a monthly subscription. Cellphone carriers take a cut of the sales -- as little as 10% and as much as 75% -- then pass the rest on to the content distributors. As interest in mobile content rose this year, the market experienced a flurry of consolidation. Among the dozens of acquisitions, cellphone-game maker Sorrent Inc. announced this month that it will acquire London-based Macrospace Ltd., on the same day that Bellevue, Wash.-based InfoSpace Inc. announced its purchase of Iomo Ltd., a U.K. publisher of mobile games. The industry, they say, is better-suited to a few large players than several small ones. One reason is that cellphone technology is still not standardized, which means companies must ensure their products work with hundreds of different handsets, networks and languages -- an undertaking that is often cost-prohibitive for small companies. Also, mobile content providers rely on cellphone carriers to pick up their products. The size of a cellphone's screen limits the amount of content that users can scroll through, so content providers must fight for the attention of carriers, who control the top spots on cellphone menus. Most carriers want to deal with fewer providers to cut costs and avoid logistical troubles. "They increase their profit margins partially by reducing the number of relationships," says Lewis Ward, an analyst at research firm IDC.Mobile content firms may tout cellphones as mini-PCs, but to many, they're still just phones. Ringtones and simple games still make up the vast majority of mobile-content sales - and some users don't even realize they can download content onto their cellphones.

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