I have been putting off writing this column for months, but I think it is time to come out and say it. Now is the time to ready your content for cell phone delivery. What seemed like a pipe dream of mobile telcos a year ago—getting people to draw down data and entertainment through their cell phones—is now close to the proverbial tipping point, and it is time for any recognizable content brand to stake a claim on the mobile phone frontier.
Verizon reports that it made $500 million in revenue in 2003 simply on data sales (ring tones, games, editorial services) from its Get It Now mobile content store. Most of this comes from micro-sales of $1.99 to $4.99 per download, but the economics of mobile content is in volume. "Swimsuit downloads to the phone are phenomenally successful," says Paul Fichtenbaum, editor of SI.com, which started selling its famous gallery of Sports Illustrated swimsuit model images as phone downloads for $2 each.
Revenue shares with carriers and middleman aggregators can often take a fair (perhaps unfair) share out of that retail price before the remainder goes to the content provider. But even if publishers retrieve less than 50% of the sale price on one of these incremental purchases, the sheer numbers involved with the mobile phone platform give the channel its impressive potential. According to SI.com's mobile distributor, Summus, which launched The Wall Street Journal Mobile, the swimsuit wallpapers sold over 1.1 million downloads in less than six months. "We're selling hundreds of thousands of downloads a month," says Fichtenbaum. "It's just taken off."
Taken off, indeed. This is the kind of surprise success that moved Playboy to think hard about its mobile strategy throughout 2004 and announce a deal in the U.S. in December of that year via content aggregator DWANGO. "Everyone realizes the need for Playboy-style content on cell phones," says Randy Nicolau, president of distribution for Playboy Entertainment Group.
Well, I don't know if we "need" Playboy content on the phone, but like any forward-thinking brand manager Nicolau understands the realities of the mobile phone as a distribution mechanism. Undoubtedly, users will gravitate towards known content brands, and so the land grab for this diminutive handheld territory has commenced as WSJ.com, ESPN, Rolling Stone, Warner Music, and even Web-only brands Napster and BeliefNet all announced or launched mobile content in the last quarter of 2004.
"The market for both music and games is very, very strong," says Alex Conrad, president of DWANGO, which reported a 208% revenue growth between the second and third quarters in 2004. "Last year saw the proliferation of handsets that can accommodate this content. It's moved beyond the awareness phase to rapid adoption." Conrad believes we are now to the point where premium content subscriptions, not just one-off sales, make sense to consumers. His recent successful launch of ESPN Bassmaster, a $4.99 per month fishing game, shows that there is a growing market for selling content bundles for a recurring monthly fee on phones. I would like to see carriers or content aggregators such as DWANGO bring together multiple like-minded content brands into subscription channels that serve general categories of interest: sports, cooking, lifestyle, humor, etc.
One development to watch in 2005 is the launch of ESPN Mobile, a full-fledged wireless phone service that runs on the Sprint network but is sold and branded by ESPN/Disney with much of the company's own content bundled in. We'll see if audience identification with a content brand is powerful enough to warrant its own wireless service.
ESPN Mobile raises a very important point about the peculiar nature of mobile content: customers don't just consume it; they broadcast it. Ringtones, games, and wallpapers on phones have become modes of expression, not just consumption. Irritating as they may be, ringtones announce who we are … to everyone within earshot. The new "ringback" service actually plays a specific tune or celebrity welcome to the person who calls into your phone. "Anyone who calls you knows who you are," says Adrian McAloon, head of marketing at Ztango, which provides this new service for T-Mobile. "Ringtones have grown into an expression of your personality."
It is this highly personalized, expressive element to cell phones that makes them unique powerhouses of content sales. The ringtone market is already seeing how buyers crave the latest, and by this time next year, cell phones with hard drives will begin proliferating in the U.S. The (short text) message is: Publishers should start thinking of the phone as the next iPod and consider how their content fits in.