So What’s Happening in Mobile Content? Powerful Devices and Fast Data Networks Have Changed the Game

by Steven Masur

Introduction

We are often asked what is happening in mobile content. Here’s what’s happening right now. Since the beginning, content developed for mobile phones has been a game of low bandwidth and slow processing speeds. Like a painter who is tasked with creating art on a very small canvas with only one color, mobile content developers did as much as they could with the resources at their disposal. First there was “Snake,” the game on Nokia phones in which you would direct a tiny line around the screen until it hit a wall, or itself.Then at the turn of the century, monophonic ringtones exploded onto the scene with tinny reproductions of popular songs, whistles, crickets, farts and anything else that sounded halfway decent using only the tones that could be made by your mobile phone keypad. A number of people got rich and the world took notice. Development proceeded apace as new technologies, better devices and faster networks rolled out. With each incremental improvement, developers would create incrementally better mobile phone content.

Fast forward to now.

The game of low bandwidth and slow processing speeds is ending very, very quickly.  High speed networks and mobile broadband are becoming increasingly ubiquitous.  Handsets like the iPhone, the Nokia N Series, RIM’s new Blackberries, the new Symbian phones and the phones from Asia which most of us haven’t even seen, which for years have delivered fully duplexing video conferencing, streaming music, over the air downloads, and fully integrated mobile transactions, are starting to take over the world.  Also, we are seeing more convergences with gaming devices like Sony’s PSP, and with the new slew of mini notebook computers that sell for between $200 and $500 and do nearly everything your $2500 laptop does.

So theoretically, you will soon be able to do anything on your mobile device you can do on your computer…. Stop. Aren’t you bored with hearing this sort of corporate futurist
nonsense? It’s like saying that just because it is possible, you will use your vacuum cleaner to order popcorn and your power drill to mow the lawn. It doesn’t really help you.

OK, so where are the new opportunities?

Communicating and Sharing

Mobile is about communicating and sharing. That’s what people use their mobile phones
to do now, and these are the services that people will pick up and use when they are rolled out.

Furthermore,

Sharing = Social Networking

Already the online social networking applications like Facebook, MySpace and Twitter have moved onto mobile platforms and users are adopting them like wildfire. This trend
should continue and accelerate. As these platforms become more robust, speed increases and new technologies ship with mobile phones, we will see new mobile social networking applications proliferate. Watch what is done with GPS technology, Bluetooth, accelerometers, built-in cameras and video, and just plain old fast processing and high speed networks. Any service that is easy to use and enhance people’s ability to share in
a fundamental way stands to do well. What’s even better is that this stuff can make money.

Referencing

People want the information they need, when they need it. With easy access to the internet, mobile devices can deliver on this promise. Applications that assist this can make money in a wide variety of ways. Directions and mapping technologies, airline flight information, train, underground and bus schedules and information, banking, customer account information, names and numbers, even trivia information.

Media Delivery

That people want to access their music, books and movies wherever they are goes without saying. The demand for good media services is there. Now the handset technology and high speed networks are also there. These services just need to be refined and made better and cheaper.

The media service has to work well, provide a measure of surety that users will not lose access to their content be incredibly convenient and be affordable. Once there is a service that delivers these things at a price that customers see as reasonable, more people will use it. The value provided will compete well with free, and it won’t need to feel free. The illegitimate services will always be there, but they will no longer be the primary way many people get music or other media.

Games

The mobile games business is growing. Just read the newspaper, or look at people in waiting rooms and ques everywhere, or look at your kids. The dedicated game devices have been compelling for a long time and are even more compelling now. Now that the regular mobile phone platforms support better games, more people will play games on their mobile phones. Watch this area both for general growth and for big out of nowhere hits.

Problems

I have outlined above some major growth areas in mobile, here are some of the problems.

Confusion

iPhone, Blackberry, PSP, nano, Archos, Sansa, Napster, Rapsody, iTunes, Comes with Music, Get it Now! With a plethora of expensive and functionally overlapping devices and new media services with various kinds of payment plans on the market, it is easy to get confused. Just attracting prospective users to change their habits and adopt new
services is difficult enough. Difficulty differentiating between a wide variety of overlapping devices and services with different payment structures could lead users to freeze and wait until there is a clearer differentiation of value, especially in a down
economy.

Burn ‘em

Mobile subscribers who get gouged by their data plan one month can limit it, or turn it off the next month. Ultimately they just need the phone for talking. Also, if you think file sharing hurt the music business, just wait until you see a highly motivated and widespread workforce of hackers create alternatives for mobile subscribers who have been burned by carriers gouging them on their data service plans.

Churn ‘em

Once they’ve been burned, or a different service offers a better value proposition, mobile subscribers can “churn”, or move to different carriers, or off the carrier completely if there is an opportunity. There are already wifi and Skype phones on the market, and you will see much more choice in this category, along with a lot of innovation.

Services that are not Compelling Enough, or they Break

If a service does not provide the functionality users want, or it stops working, or crashes their phone, you have lost them, and they don’t come back. Just watch the adoption
curve on the typical iPhone AppStore application. Users pick it up, try it once, than never touch it again. It becomes more digital detritus sitting on their iPhone menu pages. It’s great that these apps are easy to make and launch, because a lot of cool stuff is being developed. But this also means there will be much more garbage for users to sort
through in order to get what they like, and for you entrepreneurs, it just means higher marketing and promotion costs to make your App stand out among the crowd.

Financing

Well, there is none. That’s the problem. If you can’t make it for free or cheap, you probably won’t get it made.

Difficult to get Content

Simply stated, if your service relies on content from others, especially major music labels or film studios, then it’s going to take you a long time to launch a new service. The majors are still suspicious of new services, and they feel they have been burned and wasted a lot of time on licensing content to services that never really get off the ground. They are getting better at licensing out content more quickly to be sure, but for the typical entrepreneur, it is still very expensive and time consuming, so I state it as a problem.

The Carriers are Still the Gatekeepers

You still have to go through the carriers to get to the customers. Having to pay mobile
carriers some part of your revenue in order to even address your customers is not a great place to be. This is changing with an increasing number of internet connected phones, but only a few services, for example Twitter, have worked through this problem so far, so it
is still very real.

Platform Squeeze

Take the last two problems above and mash them together. If you are a service that relies on licensed content AND you need the carriers in order to launch, then you risk being squeezed out of your own business after it becomes successful. Witness ringtones.Whereas previously there were a plethora of companies providing ringtones and wallpapers, it became easy for the carriers to do deals directly with the major labels, who sourced the most popular ringtones. The middlemen were squeezed out.

Opportunities for the Future

Of course, there are more problems, but it is more interesting to end where the opportunities are. The brilliance of the iPhone is its simplicity. It delivers complicated services in the simple way. Everyone should follow this example. But having blazed the trail, Apple is limited by the compromises it had to make along the way. Ask yourself
why you have to sideload and can’t download music directly, or why there is no media card port on your iPod Touch. Why are tracks still 99 cents on iTunes? Is that really the market price, or did Jobs just make that up in order to get the label deals done? Where is the competition in all of these categories?

The solutions to these, and all the problems stated above are where the big opportunities are. And never forget that historically, the biggest companies are founded in down economies. I don’t have to reach too far into the past to identify Google as one of these, and you could do a lot worse than them and still be completely OK.

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