On Technology and the Future: Education, IoT, AI, Mobility, Games

Tag: thumbplay

Unsung Heroes – SendMe Mobile Looks at $150m revenues!

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On 06/10/2009

In 1

With smart phones, app stores and the likes being all the hype, some of the commercially more successful mobile entertainment companies over the past several years tend to be, well, maybe not forgotten but dropping out of the limelight. I am talking about direct-to-consumer (D2C) providers.

Mobile D2C has been a much-maligned segment: Jamba/Jamster (now Fox Mobile), Zed, Buongiorno (or rather its Blinko consumer brand), Thumbplay, Playphone, and then the ones that have been gobbled up by competitors or fallen by the wayside over time such as Movilisto, Jippii, Monstermob, I-Touch, etc, etc. And the bad name was, at times, fully justified. Various subscription scandals, resulting class actions, general discomfort by consumers on how to handle this new type of service offering (and how to get rid of it again), they’ve had it all.

But what they also have is a real business. Just about the only awe-inspiring numbers the mobile content space has seen came from D2C players: whereas numbers are – as usual – a little hard to come by, Zed had previously been reporting monster revenues, Thumbplay is said to be the US market leader and grew from 2007 to 2008 by a cool 275%, Jamba was past the $600m mark already back in 2005 (I do not have more current numbers).

There are companies however that tower over much, much better known mobile entertainment companies but largely escape the hype, and one of them is SendMe Mobile. Their founder & CEO Russ Klein recently revealed the company’s revenues, which are a not too shabby $10m — per month — and looking to ramp up for a cool $150m p.a. by the end of this year! So Russ’ company, which was founded only in 2006 and which deals with the relatively mundane end of mobile content outsells probably the vast majority of mobile entertainment firms on the planet. So who has heard of them? Many, many of their customers, I suppose.

SendMe has raised around $35m in venture capital to get here and doesn’t expect to needing anymore. SendMe also runs a mobile social community (MBuzzy) and has a reverse-auction service (SoLow). And that’s it. Easy, huh? I tip my hat, Mr Klein!

Game Aggregators: New World Order

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On 02/07/2009

In 1, Deals

The times they are a-changing. Everyone has realized this by now (or so we should think). The question therefore is not so much will there be change but how will it look like.

Some of the weakest links in the mobile games value chain would be, it appears, the aggregators. Why is that? Because they do have the least defensible position: they do not own IP, they do not hold unique positions, they do not produce anything, they seem to be at the mercy of both of the groups they are partnering with: game developers to continue granting them distribution rights to their games, network operators and other distribution outlets to continue allowing them to use their channels to get to the end users. As if this would not be enough, now has arisen a creature that seemingly does away with all these middle-men anyway. It is called app store. So is it all doom then for games aggregators? There is a report out (too expensive for me to buy) that would seem to suggest as much, or so we are told.

The argument, in short, is that, with an OEM app store the number of distribution channels that any one developer/publisher needs to reach is drastically reduced (there are maybe 10 meaningful handset manufacturers in the market vs 300+ carriers and other distributors). Even the littlest companies have (or should have) the resource to deal with 10 partners; chapter closed.

Really?

The above works with a number of simple but crucial assumptions, and the boldest is this: carriers will happily let OEM take over the content real estate. Will they now? There are ample signs to doubt this. The giants of the space do not appear to be giving up, in the contrary: Vodafone has already announced its own app store – across handset brands (!) – and it is about to tighten its links with both China Mobile and Verizon Wireless (in the latter of which it holds a large stake). So what will all the OEMs (all with their own app store of course) do when carriers accounting for nearly half of the world’s subscribers wave them off? Cave in? You bet!

Anyway, does this change the game for aggregators? I believe it does and here’s why:

Carriers have traditionally struggled (with exceptions) to run an efficient, customer-friendly content offering. We have therefore seen an increasing trend to outsource the “decks” to third parties, which are – what? -, yes, aggregators.

Carriers are unlikely to concede defeat over the content side, not necessarily because they fear losing out on a lot of revenue (given their fairly average performance, SMS, voice, data, etc will outsell content as a source of revenue very, very significantly) but because of the strategic value of content as well as the unpredictability of its future impact: bear in mind that the emotional attachment to beloved brands, i.e. affinity (Transformers, Ice Age, Playboy, Tiger Woods, …), will remain higher than that to a network operator, and please do not take offense if you are working for one. Do not be mistaken: carriers are being trusted but they are not being loved. There is just not as much emotional attachment to a cellular network as there is to a rodent in love with an acorn…

Carriers do not have to give this piece up either (they call the shots on what goes onto a handset: see an example), they are not even losing money (they even gain: every cent earned through content sales is a cent more than carriers get from the iPhone app store sales…).

However, what carriers do have to do is catch up with the state of the art in selling, and that means an app store. However, it can also be a carrier-operated/driven app store.

An app store, too, does not however solve the dilemma of having to manage a huge amount of content in a way to allow the consumer a choice. One must not throw everything onto a big pile and let them pick out what they believe they like; this type of sales does not register too well: it is time-consuming, intransparent, messy, not good. So one needs someone to manage it. In comes the aggregator.

Or does it?

Aggregators that went around collecting content in a bucket only to throw it against the next wall to see what sticks are likely to struggle (or have died already: RIP Telcogames et al). However, aggregators that actually provide content management as a service to operators thrive (not exclusively on games, mind you). All the big guns in the space, Fox Mobile (f/k/a Jamba), Arvato Mobile, Buongiorno and recently Zed (through its acquisition of Player X) run riot in the space and bid hard for every deal that comes up (and lots of them do!) and gobble up the market. More on the classic D2C side, Thumbplay grew tremendously in the US, SendMe Mobile seems to go from strength to strength, and a lot of smaller ones, such as Rayfusion, etc. seem to more just hang in there, too. Why do they? Because the features that make an aggregator excellent – managing a wealth of content well – are the exact features carriers would look for when outsourcing their struggling content units. And because it is an aggregator’s core business model, they are really good at this, which is crucial in a low-margin business: be efficient or die.

Marketing and promotion is another point. We already see aggregation-type businesses become forces on Apple’s app store, such as Chillingo (from my very own town!). They publish well over 100 games and thrive on iPhone developers capitulating before the challenge to get noticed amongst the more than 50,000 apps currently available. Chillingo can provide marketing and promotion and make sure that a developer’s product gets not only live but noticed, too. It is very likely that there will be others in this space very, very soon.

So what seems to change is not the viability of being an aggregator but the aggregator’s service to their customers (the carriers!): whereas it may previously have been sufficient to use the “bucket against the wall” tactic, they now have to become better in providing a subtle selection without too much restriction. People will normally welcome a structured environment with pre-selected choices. Just make it a) easy and b) don’t limit randomly or indeed too much. And now get going! 😉

Disclaimer: I hold an indirect interest in Rayfusion.

Et tu, Juniper?

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On 19/11/2008

It must be truly bleak: even the best friend of every young telecoms entrepreneur on the fundraising trail whose reports rarely failed to feature as a footnote in an investment memorandum for the next big digital thing now sounds a word of caution. Juniper (whose reports I still cannot afford) issued its latest report on mobile gaming and it actually reduces (for the first time, I’m sure, even if I haven’t checked) its prior predictions on the growth and size of the sector in the next, erm, 20 years…

They see growth stifled by the restrictive operator business models. Dare I say it? May they be right? They refer to Apple‘s AppStore, which is the anti-christ to every operator’s walled garden: free for all, free price-setting, Darwinian survival of the fittest (or least-charging), thousands of applications, games, etc, etc, and relatively generous revenue shares on top (although 80% of $0.00 is not very much at all).

Juniper points however to 2 important and true factors: the tolls demanded by the operators to access their precious customer base are very high indeed considering that many do not provide a very compelling service in return. Secondly, marketing and marketing opportunities on-deck normally – well – suck. This was all well and good as long as their were no alternatives (other than the likes of Jamba, Thumbplay and few others). But with the ascent of the iPhone, everyone seems to erupt into a frenzy of trying to replicate the “beautifully simple and compelling UI” for which the purveyors of the Big Black Turtleneck are so famed for. This, Juniper fears, will lead to players exiting that business (I have heard unconfirmed rumours that SEGA decided to call it day on internal J2ME development following their huge success with Super Monkey Ball on the iPhone). 
Other than that though, not much new. And Juniper would not be Juniper if they would not predict “significant” growth in the next 5 years (conveniently long in order to be basically unpredictable): they see the market to roughly double in the next 5 years, which would be 20% growth per year (on today’s terms), which is not all that bad after all. 

Thumbplay and Comcast: convergence looming?

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On 10/09/2008

Comcast (for you fellow non-Americans: this is one of the larger broadband providers in the US) and Thumbplay (for you fellow non-Americans: these are the guys who kick serious a** in D2C mobile content over there) announced a deal whereby Comcast will sell mobile content source from Thumbplay through a dedicated website to their highspeed Internet customers. Items available comprise everything from Thumbplay’s catalogue, that is to say, music, ringtones, video, games, you name it.

With Comcast recording serious traffic (14.4m highspeed Internet customers, 3.7bn page views and 17.6m unique visitors per month) and Thumbplay offering one of the larger catalogues on mobile content (100,000+ pieces), this could be intriguing: consumers have so much better opportunity to look and choose if they can do so in the warmth of their home and the giant size of their 21” computer screen rather than on a 128×128 mobile phone screen. Content discovery, previews, all the bells and whistles long known on the Internet could thus be married to mobile content as well. Will it work? I am thrilled to hear about it. Traditionally, one loses a lot of people whenever one crosses from one medium to another (Internet to mobile), so the question will be if the additional churn recorded there is less than the probably improved conversion rates due to the superior content choosing experience online.
Tell us more, guys, when you know it!

Playphone's Pitch: start of D2C shake-up in Europe?!

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On 08/05/2008

US D2C mobile content distributor Playphone announced it would acquire (well, they call it merge) UK counterpart Pitch Entertainment. No details disclosed (yawn). Playphone operates its own content storefront as well as the mobile portals for the likes of ABC, Wal-Mart, Cartoon Network and RealNetworks. Pitch does similar things but predominantly in Europe and a few South-East Asian countries.

The move likely signifies the begin of the assault of the US D2C players onto Europe. This may have been a bit of a surprise a couple of years ago but it demonstrates the change the US market has undergone, which lets companies emerge that have a huge home market in their backs giving them the muscle to try out expansion into other markets. The advantage of US-groomed companies in this space is that they have been growing up in an environment that centers more around the web than it does/did in Europe. And they have become very, very good at that. Numbers are, as always, hard to come by but by the looks of it the likes of Thumbplay have slammed even D2C giants Jamba/Jamster pretty heavily over there.

With the market moving away from expensive, low-margin off-the-page distribution, which also provides limited scalability and the increasing attraction of the mobile web, that medium is likely to gain in significance fast. This will also be boosted by the tumbling walled gardens and the aggressive introduction of data flat rates by carriers (see a piece here). The trio of European D2C giants, Jamba, Zed (see here and here) and Buongiorno are girding themselves for this but a market entry by Thumbplay, which has been going from strength to strength in the US can surely only be a question of when not if. The battle for D2C Europe should be an interesting one…

Carriers lose content sales to off-deck

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On 16/04/2008

I wrote about this phenomenon a short while ago here but now Business Week has some further stuff to tell us. They quote an analyst that the share of content sales via carrier decks versus so-called off-deck (or D2C providers) will drop from its current 80% to only 25% in 5 years time. And, interestingly, all of the sudden the carriers contend they had said it all along: now they claim that a single piece was not as meaningful as access. In the latter the juice is (Sprint Nextel). and now they claim that they never said that content would take over the workd (AT&T).

Do I hear bit-pipe? The article reports that revenue from wireless data, which includes mobile content and Web access, rose 53%, to $23 billion, in 2007, according to CTIA. And, yes, that’s the bit pipe. The carriers start to love it? Hooray!

With D2C giants like Jamba, Thumbplay or Zed all reporting (or being said to record) very meaningful revenue numbers (Zed reported $500m in revenues last year), and OEMs on the move into a more service-driven model (with Nokia as the spearhead; see here, here and here), the pressure onto the carriers seems to have mounted so much that they now look to what they have traditionally been doing best: provide network access and bandwidth (be it for voice or data).

Enter: flat-rate data, walled gardens are so yesterday…

Mobile Content on the move!?

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On 23/03/2008

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.

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