MMS Attracts Content Providers
By Steve Wallage, Tue Nov 26 11:50:31 GMT 2002
Content providers have seen mobile as a lot of obstacles and little revenue. MMS can change that.
The major content providers have generally been very disappointed in their trials and investments in the mobile sector. Although most see it as having potential, they need to look at current realities (particularly at the moment) – and that means a tiny revenue stream. Premium SMS has enabled some to recoup part of their investment but MMS has been seen as at least two years away. It is also vying for attention with other digital services – not just Web based but such areas as interactive TV. The good news is that MMS could re-ignite the interest of the major content providers in the whole mobile world.
Issues Being Resolved
Content providers can reel of a list of obstacles in the mobile market. One of the worrying things is that these would vary by content provider, such is the number of obstacles that are seen to mobile commerce.
MMS, linked to other developments in the mobile market, has started to address some of these issues. A key concern has been the lack of handsets which can offer and support rich, digital content. Nokia has promised that more than half of all Nokia phones sold in 2003 will be MMS-enabled. Heavy subsidizing by some operators will also drive MMS handset take-up, with MMS terminals available already for under €200 with a contract. Handsets still struggle to offer the processing power and storage needed by content providers, but this will always be a challenge in the mobile environment and content providers need to adapt to these limitations.
Linked to this, is the need for content providers to adapt content for different handsets and networks. This is an issue which the mobile industry should have resolved far earlier, but there is now far greater urgency to overcome interoperability issues. This can be illustrated by MMS inter-operability initiatives – for example, Dutch operators O2, T-Mobile and Vodafone claim their MMS services will be interoperable by the end of 2002.
It is also being addressed by a number of startups. Companies such as 2Roam and WiredPocket claim that they can convert any form of Internet content into a universally legible wireless format. There have also been moves to utilize wider Internet standards into the mobile arena. Nokia is now offering a web services interface to its MMS offering. As web services adoption grows, which it surely will dramatically over the next several years, then this will allow MMS to be offered as part of a standardized multi-channel solution.
Premium SMS has shown content providers some of the potential in the mobile market. Third party SMS providers are now sending around 1.3 million messages a day in the UK. It has also created a new distribution channel of companies who have, in some cases, made significant profits in this market. These companies are now eyeing up the MMS market and will be pushing the content providers to offer them material.
The Mobile Value Chain
There are still a number of areas that are unclear for the content providers, and indeed for all of the mobile value chain. A key area is the positioning within the value chain – such questions as; who does what? who has the customer relationship? what is the role of the operator? There is an unfortunate habit in the mobile industry to concentrate too heavily on self-interest and focus on their business rather than co-operate and collaborate with other players. A classic example has been the 'walled garden' approach of some operators to content. A major irritant for content providers has been the lack of flexibility in revenue share agreements of the operators.
Ignoring some of the lessons from i-mode, European operators have been demanding up to 50% of any such arrangements. Operators need to be far less greedy in order to ensure the growth of the market to their long term benefit. Their greed also risks content providers looking for other channels to reach consumers. Operators should not be looking for more than 20% of any simple content deal.
Network speed has been another concern for content providers. They would love to see greater penetration of GPRS and early success for 3G. They would also like to see simpler and lower pricing for mobile data. Surely this will soon be adopted by the mobile operators as they finally understand that no 'normal' consumer can relate to megabytes of usage.
Also very important is the whole area of billing and payments. M-commerce is being severely threatened by the wide range of competing payment solutions and standards, with at least 15 different solutions available. These come from startups, banks and credit card companies, mobile operators and IT companies. Clear standards would greatly help the emergence of this market.
Content providers are also very unsure of the impact of Digital Rights Management (DRM) – this is an area which appears likely to keep many lawyers happy.
What users actually want is either the biggest, or a fairly unimportant, issue depending how you view the market. The former category believe that consumers have shown little appetite for mobile commerce and content providers need to invest heavily in research to find out the needs of consumers. The latter category believe that it is very difficult to predict consumer demand, that the most unlikely of content may prove popular, and that there will also be a multitude of different applications.
Content providers have already shown their willingness to develop relationships to exploit MMS. Sports, film, gaming and the adult industry are key early adopters.
Nokia and sports conglomerate IMG have teamed up to develop an MMS Essential Sports Service, to offer images, news, updates and audio commentary. This will be sold to operators to brand and customize for local markets. Hutchison 3G has acquired the mobile content rights for UK premiership football. Sony Pictures is working with T-Mobile to show film clips. This is a global multi-year content deal. Vodafone has signed a two year deal with EON Productions for content from James Bond films. This involves unique content delivered through MMS. MMS is being used to promote the video game, Vice City. As part of a multi-channel approach, the wireless portal will be advertised on the Internet. The adult industry has not been slow to see the opportunities of the MMS. An early alliance has been between Virgin Mobile and the Playboy Channel. Big and Local Win
A lot of startups saw the opportunity in mobile commerce and in gaining the rights to mobile content. Some were visionary but were ahead of their time. The major content providers are ready to ensure they will not miss out in this market.
However, the mobile industry has also learnt from the Internet experiences of companies such as Yahoo. They proved that local content is vital. Services will also need to be tailored for different markets.
The big content providers still see mobile as offering a lot of challenges and uncertain revenues. Some of these obstacles are going to be around for a long time. But MMS will show the potential and opportunity of mobile, and will spark the interest of the content providers. This is good news for everyone in the mobile value chain, except some of the smaller startup content providers who may well be overwhelmed.
Steve Wallage works and writes for the451. Steve has more than 13 years of experience as a technology analyst specializing in telecommunications.