Et tu, Juniper?

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?

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 128x128 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?!

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

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!?

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.