Report from America: Hollywood Unwired
By Jeff Goldman, Tue Feb 25 08:00:00 GMT 2003

From ringtones to bowling, industry executives see a bright future for mobile entertainment.


At the iHollywood Forum's third annual Hollywood Unwired event in Los Angeles last month, industry executives took a close look at mobile entertainment in the United States. Discussing everything from corporate sponsorship to phones that sing, the speakers saw a broad range of profit opportunities for the industry.

Seamus McAteer, Principal Analyst for the Zelos Group, began the evening with an overview of mobile gaming. He has high hopes for the industry in the U.S., particularly with most carriers launching comprehensive gaming platforms in 2003. "We're expecting the market to grow over tenfold here in the current year," he said.

Looking ahead, he said, 2004 should see a vast improvement in device quality-but it won't be until the following year that the real criteria for gaming will be met. "By 2005, you'll have a substantial installed base of handsets that support two-finger operation," he said. "Today, you can't shoot and run at the same time when you're playing a game-and for any hardcore gamer, that's death."

Outpacing Europe?

In the panel discussion that followed, the speakers suggested that the U.S. is finally catching up with Europe and Asia in mobile deployments. Rio Caraeff, Vice President of Wireless Services for Sony Pictures Digital, said his division had initially expected to be focused on Europe and Asia, but was pleasantly surprised at the rate of growth in the U.S.

Caraeff said that U.S. growth is due in large part to the fact that prepaid wireless hasn't taken off here: American carriers are able to subsidize the cost of handsets for customers who are under contract, unlike their counterparts in Europe. "Because we have a more subsidized model, we're seeing a greater proliferation of affordable next-generation devices," he said.

In fact, Anthony Stonefield, Chief Strategy Officer for the mobile entertainment company Moviso, said the U.S. is really following in Japan's footsteps in its speedy adoption of new technology. "We're seeing a sudden, aggressive adoption in the consumer market in the U.S., something that I think is outpacing Europe," he said.

Making Music

Until that new technology becomes more widespread, though, Stonefield said music is likely to be the most attractive application on the market. "Last January, we sold 80,000 ringtones in the United States, and by December, we sold 1.5 million," he said. "There's no doubt that music, however you get it to your mobile, is the killer app."

He added that he expects polyphonics to arrive in the U.S. by the end of the year-which will make a big difference for the music industry. "This means an actual piece of a song is your ringtone-vocals and everything," he said. "That's where the record companies come into play, because they become the licensers."

According to Jonathan Schreiber of Island/Def Jam Records, record companies anticipate countless new promotional opportunities thanks to polyphonics. "We expect to see more integrated marketing," he said. "You'll see new things packaged in CDs, even music videos: we'll be opening up much bigger markets."

Gaming Options

For mobile gaming, the consensus was that older is better-at least for now. Doug Dyer, General Manager of the wireless game publisher THQ Wireless said familiar classics like Tetris and bowling are currently the best sellers. "Lord of the Rings is a great brand, and it might be a great game-but everybody knows what to expect with Tetris," he said.

Sony's Caraeff agreed that the quality of the game is the ultimate arbiter: a good brand can only take you so far. "Nothing replaces a good game," he said. "Brands are important, but they don't replace the fundamental game experience."

Still, Island/Def Jam's Schreiber noted, the market is growing fast, and a brand can be a key differentiator. "If Sony's coming out with twelve games, and THQ's coming out with twelve games, and everyone's coming out with twelve games, then what a brand does is get you above all the hype," he said.

Show me the Money

In order to generate a profit in mobile entertainment, many panelists said creativity is key. Lucy Hood, Senior Vice President of Content for News Corporation, said the focus these days is on using wireless to reach a broader audience-through advertising, promotions, and sponsorships.

Others, like Moviso's Stonefield, expect the growth of ringtones in the U.S. to result in significant payoffs in the short term. And others are looking instead at the long term: Island/Def Jam's Schreiber said he's waiting for more advanced devices to arrive that can make better use of rich media. "I think 2004 is going to be a gigantic year," he said.

Ultimately, of course, the aim is to make money-and no one said it better that evening than Michael Anderson, Vice President of Market Development for ADC. "Wireless devices are mobile cash registers," he said. "They're mobile extensions of your lifestyle, and they're mobile extensions of your bank account."

Jeff Goldman is a freelance writer covering a wide range of topics for a number of online journals. He currently writes regular articles for Internet.com's ISP-Planet. Brought up in Belgium, Jeff spent the last decade in New York, Chicago and London; he now lives in Los Angeles.