Tag: monstermob

Zed Stretches its Muscles

On 03/06/2009

In 1

Spanish mobile content giants Zed is ramping it up in recent weeks. First, it bought UK aggregator / distributor Player X (who just snapped up another chunk of Orange UK’s business), now it is said to have taken a majority stake in a Russian aggregator, namely Temafon (here’s also a link to the Russian article). Temfon is apparently the MCP (Master Content Provider) to the no. 2 operator in Russia, Beeline (or VimpelCom by corporate name).

This would add to their Russian activities that they had inherited via their acquisition of Monstermob, which had a subsidiary in Russia, too, namely Infon, which is said to be the leading aggregator in Russia. Now, the Russian market is a bit intransparent from the outside: a lot of the revenues are being made via data charge sharing rather than download fees. Data charges tend to be rather high, which is why operators appear to let aggregators take the lead in provisioning content. The operators get their share via the data charges anyway… With Infon and now (apparently) a majority stake in Temfon, Zed is positioning itself well, it seems, right at the sweet spot of the Russian market: not by trying to sell expensive (licensed) games via portals but by shipping its predominantly generic, home-made content through the aggregation models prevalent there. Smart!

So where does the whole spending spree that saw Monstermob (and, as part thereof, 9Squared in the US, Infon in Russia and a few more here and there), mobile Flash specialists Mobitween, Player X (with Spanish developer Gaelco in it) and now Temfon in Russia lead Zed?

Monstermob bolstered its D2C business (which was part of a larger consolidation in the space in which Buongiorno also participated). Mobitween helped them in their production efforts and spearheading Flash (which powers e.g. the Mobigamz portal on Verizon Wireless, Player X made sense for their operator relationships (O2 and Orange UK, etc.) and Temfon cements their position in what is likely to become a very large market. The closeness to Beeline will be most welcome, too.

And this, I would posit, currently drives the market of the big aggregators: get close to the operators. All of the larger players, Fox Mobile/Jamba, Buongiorno, Arvato Mobile and now Zed are concentrating a lot on the creation of MCP relationships with the carriers. It makes a whole lot of sense to them of course: the D2C market is cut-throat and low-margin because of the marketing spend required to attract attention from fairly brand-agnostic users. The models introduced to fight attrition, namely the infamous subscriptions, have not helped the name of D2C offerings either. However, since all the aggregators possess powerful content delivery and management platforms as part of their (original) core business, the incremental cost for them to run operator “decks” is lower than for pureplay platform companies who cannot cross-collateralize their platform costs by D2C business. Therefore, the big aggregators should be able to make a profit out of lower margins than others.

And Zed has – again – asserted its muscle and plays in the middle of it!

Zed do go a bit further though (in Russia and elsewhere) in that services extend significantly beyond simple content aggregation. Zed is introducing mobile services that are more comprehensive, from user-based SMS services to multi-platform entertainment formats (e.g. the “Instantly Rich” TVformat). But this probably deserves another post focussed on convergence… 😉

From A to Zed in 1/2 billion dollars

By Volker

On 26/02/2008

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!