Tag: zed Page 1 of 2

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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!

Mobile Browser-Based Flash Games?

By Volker

On 29/09/2009

In 1

Today, I read a press release from UK firm MoMac who announced the launch of a browser-based games platform, which uses Flash Lite. I had been looking at the use of Flash Lite for mobile gaming quite a while ago (2 years back in fact; see here and here). The front-runners on this (not browser-based but downloadable) was Mobitween, a French company that was bought by Zed last year. Back in 2008, the estimated install base of Flash Lite on mobile phones was already approaching half a billion, so just ever so slightly more than there are e.g. iPhones. In principle, all good.

But where did it go from there? uGenGames, the company’s original user-generated games site, seems to be stuck where it was back then. There is still the showcase of mobiGamz, a Flash-Lite-based gaming portal on Verizon Wireless. But otherwise? Nothing much…

So MoMac will do it in the browser then. I don’t think it makes that much of a difference but, given my early enthusiasm, wondered where the pitfalls (of which there apparently are some; otherwise it would have taken off more forcefully) might be. So where then?

I have argued in the interim the advantages of applications vs mobile web, and this still stands: apps often will give better usability and navigation tailored to the input constraints of (small) handsets when compared to browser-based solutions.

Discoverability might be another – albeit perhaps short-term – constraint: people are not (yet!?) used to looking for games (or other “applications”) on the web. That is arguably one reason of the huge success of the app store: it does what it says on the tin and it is very easy to discover.

Billing would be the third big differentiator: Apple managed what probably only a brand of Apple’s power can command, namely that people happily and without second thoughts sign up with credit cards and all via iTunes. To replicate this somewhere on the open seas of the wide web is almost certainly wishful thinking at best. The only other companies who have as easy a billing interface are the carriers who will almost always be more control-minded than independent service providers might wish for. MoMac claims that

the first casual games portal to go live on major MNO’s in October

and that might change things in this department a little. However, it will arguably take a few of those major MNOs in order to make it worthwhile for developers to address the platform.

A fourth point – and this is following from the above – is content. MoMac seems a little light on this side. It claims the availability of 30 games through its partner Booster Media and, with no disrespect (!), they do not seem to have the most compelling stuff available. This of course is nothing that comes with the concept but perhaps with the (current) offering, the announcement of which I believe might actually have come a little early because of this.

Anyway: the principle is (still) great, and I really wish them all the very best. Keep me up to date, guys; I’d love to publish a retraction of my take here…

Game Aggregators: New World Order

By Volker

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.

Zed Stretches its Muscles

By Volker

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… 😉

Mobitween bought by Zed

By Volker

On 09/09/2008

In Deals

Every reader of this blog will have realized for some time that I am a fan of mobile Flash and the good folks at Mobitween (just see here and here), the mobile Flash pioneers from Paris. And, boy, would I have wanted to work with them some more but, alas, it seems this will remain wishful thinking as they have been the first prey of D2C giant’s Zed M&A fund: yes, they have been acquired.

The deal – unfortunately for me, I guess – makes a lot of sense to Zed, who have been raising their revenue numbers to heights so dizzying they would nearly make the initial investments comprehensible… (if only the initial investors had seen anything of that success; but well…): Zed famously claims to make up to 85% of their revenue with

predominantly in-house produced generic content, and when it comes to speed and efficiency, mobile flash in general and the guys at Mobitween in particular have no match.

So, well done them, and let’s hope Flash will continue to roll as it started to promise, so that we can all marvel at dramatically reduced time to market and, consequently, hopefully a vastly improved content offering all around (oh, and buy Zed shares if you can).

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

By Volker

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

By Volker

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…

Tag: zed Page 1 of 2

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

Mobile Browser-Based Flash Games?

Game Aggregators: New World Order

Zed Stretches its Muscles

Mobitween bought by Zed

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

Carriers lose content sales to off-deck