According to a report, mobile content is moving off-deck. The consumer survey (presumably for the US market only) found out that today’s consumers use a mix of sources for their mobile content, namely the web, side-loading (called “their own collections”) and the carriers.
When it comes to watching video on their phone, 35% of the consumers would choose YouTube vs 31% who would go for the carrier’s own offering and 28% who side-load.
For music, side-loading leads overall with 48% of the total followed by 35% who bought off the carrier deck.
With games, the situation is yet different: 60% of consumers would only play the games that are pre-installed on their phones.
The report expects this diversification of content sources for mobile phones to increase, which sounds reasonable: just look at what Thumbplay does in the US or Jamba and Zed in Europe! Check out Nokia‘s Ovi initiative (including “Comes with Music“) or Sony Ericsson‘s PlayNow Arena. Falling walled gardens and a general move to flat-rate data will contribute to consumers looking for alternative shop fronts, in particular as carriers have not always shown to be the best retailers out there – at least not for content… No big surprises then.
This one leaves me a bit speechless: other than reporting the press blurb, there seems little to say but then, the press blurb is too large to ignore it. So here goes: :LaNetro Zed announced 2007 revenues of a cool $ 554 million with an even cooler $100 million profit (this last bit is only reported by ME; others mention that it actually does not report any profit). There you have it. Revenues from what? Don’t know. “Proper” US-GAAP revenue? Don’t know. Profitable or not? Don’t know. Everyone reports it, no one seems to know the details. A dilemma…
It is the usual crux with private companies: one never really gets the whole picture. On the other hand, I want to be fair: half a billion dollars in revenue is rather honourable by anyone’s count. So let’s try to dissect it:
- In early 2007, Zed bought a piece of Monstermob and, as part thereof, 9Squared. So this will account for quite a bit of the growth. But still! Zed claims to derive revenue from content 85% of which it owns outright. They do sound-alikes (or “original compositions”) rather than the real thing although 9Squared also licenses the SonyBMG and – recently – KOCH catalogues (for ringbacks). Their rationale for going “original” is compelling though: there isn’t enough money off-deck to pay for royalties, said their US CEO last autumn.
- In October 2007, 9Squared reported over 60m downloads to consumers through its BREW application catalog. “This includes real music ringtones, polyphonic ringtones and wallpapers from 9 Squared’s RealTone JukeBox, Univision Tonos, Alltel’s RealTone JukeBox for Celltop, RingTone JukeBox, mTat2 Wallpapers, Musica Real and GAC Country Ringtones.”
- Zed is an early runner on convergence: its Zed StatiOn combines desktop, online and mobile in one offering. Smart move, I’d say: capture the users wherever they are and hook them in with free services that stick (IM, etc). They hooked in MetaCafe into this, too.
In particular the amount of generic content utilised (which improves margins) is, in a content world driven by brands, brands, brands, a very interesting phenomenon – and no mean feat to pull off: to build a customer base (most of them tied into subscriptions, yes) based on unbranded, generic stuff shows that surrendering to the big brands (and their up-front) demands may not be the only way. If all is clean, then my call will be to the carriers: listen, there is a world out there… There is of course always the suspicion that a lot of the revenue might come from subscribers that cannot extricate themselves from nifty and well-crafted subscriptions and suffer a life of funding Zed’s success. Is that so? I don’t have the foggiest clue!
The whole unbranded thing has an interesting twist of course: if it is possible to get so many consumers into this, then – arguably – quality isn’t the big thing after all: Zed’s games don’t seem to rank high (at least I have never seen them rated by anyone of note) and, with a volume-driven business (on their website, Zed claimed to have more than 27,000 games available today), there is presumably little time to cater for high production values and highly polished games.
It is, in any event, a remarkable story: the ugly duckling into which Sonera sunk hundreds of millions, evolves as one of the powerhouses of mobile content. If only their guys would now get in touch and explain to me in a bit more depth how all this adds up… Hey, dear Zed people: drop me a note (volker [dot] hirsch [at] gmail [dot] com) and let me know how this works (OK, or at least get me a bit more insight on those numbers). Thanks!
Zed announced that it “will unveil a bunch of hugely ambitious community services at CTIA”. The new stuff was apparently previewed at a closed press briefing in Madrid today, to which, alas, I was not privy… Test services will apparently go live in two weeks’ time during CTIA.
Zed had announced it had invested a whopping EUR50 million in a web 2.0/mobile 2.0 strategy to drive subscriptions around community services “such as multiplayer gaming, IM, blogging and so on”.
After former owner Sonera had sunk legendary fortunes into developing Zed into some monster brand, most people thought it was more or less doomed. When Spanish group LaNetro took them over though, it re-positioned itself and, with 85% in-house produced own content (no royalties) and sometimes contested subscription bodels grew revenues to a rather impressive $320m in 2006.
Now, in the community area, Zed is said to contribute some of the cash it invested into statiOn, an application for PC and mobile that consolidates all these services in one place for Zed subscribers. Version 2 (what a fitting version number for a web 2.0 app) will apparently be launched at CTIA.
Whilst I believe it is entirely on the money to predict that “the mobile market will go the same way as the wired internet in the direction of community services”, I am not sure if a – arguably complex-ish – PC-mobile application is the way out; this does not give anyone anything new. In fact, a lot of social networks and communities already today seamlessly evolve into platform-agnostic things: Jaiku uses mobile as a major part, Facebook Mobile sees more users, MySpace and, again, Facebook have announced recent deals in the mobile space, Yospace (acquired by Emap; see also here) is serving 3 and O2 UK, my fine employer Hands-On Mobile has launched Yatta-Video on SFR and soon on other carriers, and everyone else has a “social network” or “community” suite on offer. So will we really need a specific application (downloadable?) that will help connect the two media? Isn’t it much rather about seamless — dare I say it? — convergence WITHOUT the need for additional (complex) application layers? Isn’t this one of the public secrets of web 2.0, its incredible ease of use?
Zed concludes its analysis that “the future is certainly not in solo personalisation products”. Well, yes, that might be true but is it really well enough positioned to capture users on their quest into the social networks, too, in particular in the light of the above? I will never ever discount Zed again, so I am truly intrigued by what they will announce and I really hope it is something exciting and innovative. Go on!
