What's holding back wireless?
By ERIC FISHER
Staff writer
Published June 16, 2008 : Page 17
The schism couldn't be more clear. Mobile phones stand as America's most ubiquitous personal technology, reaching 84 percent of American households and 255.4 million U.S. people overall. The number of wireless-only households has more than doubled in the last two years, to more than 16 percent of the U.S. population, according to industry estimates.
Yet, for each of the major sports properties and media outlets with significant sports profiles, wireless remains decidedly a secondary business line with revenue still a fraction compared with that derived from broadband Internet and television.
Take MLB Advanced Media, for example. The company, by many accounts a trailblazer in nearly all things relating to digital media and sports, recently introduced mobile video alerts to its expanding suite of mobile products. The much-hyped addition of the near real-time video links has met with enough consumer acceptance to prompt MLBAM to project a tripling of its total mobile alert subscribers this year to about 100,000. But at $3.99 per month per subscriber, a seven-month campaign (including playoffs) will gross less than $3 million for the season, and those subscriber fees are shared with the various mobile carriers. Even when including the rest of the company's wireless products, mobile still adds up to a small percentage of a total company revenue base targeted to exceed a half billion dollars in 2008.
Similarly, advertising on mobile devices has seen almost none of the meteoric growth witnessed in recent years within the online industry, as it has yet to offer any comparative, meaningful scale. Fewer than 10 percent of all mobile subscribers perform higher-end functions such as conducting Web searches, watching video, or accessing a social-networking site or blog, according to industry research firm M:Metrics, recently acquired by comScore.
"The business model is still evolving," said Bob Bowman, MLBAM chief executive. "None of us has this all figured out yet. Consumer usage is still very much on the growth curve we saw a few years back, which is very encouraging. But we just haven't fully monetized yet."
A series of industry developments set to occur over the next 12 to 18 months, however, is squarely aimed at closing the gap between big-time usage and big-time revenue. On the hardware side, the next suite of smartphones will make their heralded introductions this summer, led by the much cheaper and faster iPhone 2.0, and BlackBerry Bold, which brings the Research In Motion brand its first meaningful step into true mobile multimedia.
Venture capital firms are pouring millions into gaining traction in mobile advertising, joining heavy corporate research and development pushes in the space by more established Internet players such as AOL, Google and Yahoo!
And with that underlying framework fervently being burnished, the content offerings are similarly beginning to take hold. SI Digital this week will introduce a dramatically revamped mobile site with a heavy focus on proprietary content such as its featured columnists and swimsuit galleries. Sling Media is finishing an iPhone version of its Sling Mobile Player. The development will at last link the Slingbox, which allows for geographically remote viewing of a home TV, and the iPhone — two devices that strongly overindex among sports fans.
Sprint, servicing a massive sponsorship with the NFL estimated to be worth as much as $600 million, recently showed the NFL draft live on its mobile devices, did the same last year with the NFL Network package of Thursday games, and will continue to ramp up its wireless NFL video this coming season.
The same story of mushrooming content can be said at rival carriers AT'T, which offers a growing battery of exclusive NCAA, WWE and auto racing content, and Verizon, which recently expanded its existing ESPN relationship to add ESPN Radio to a mix that includes NHL highlights and video content from both ESPN and Fox Sports. And NBC, of course, is making a big mobile push for its coverage of the upcoming Beijing Olympics.
Rights issues, and the desire to cut exclusive deals around top-tier rights, by definition will prevent a true plurality of content availability. But the development push is nonetheless moving ahead fast and furious.
"The technology is now catching up, and as it does, you definitely get more control over how and where you can display your content. It's not just about where you are on the carrier decks," said Stacey Vollman, vice president and general manager of SI Digital. "We're really trying to figure out editorial on the phone, how you can move beyond just the core stuff such as scores."
With the benefit of hindsight, it's not hard to see why the wireless industry heretofore has been something of a fractured mess, even as total industry revenue grew last year to nearly $140 billion.
Perhaps the simplest single reason is device diversity. MLBAM, for example, programs its mobile content for more than 160 phones, many of them with their own particular coding specifications and operating on networks generally deemed inferior to their international counterparts.
Compare that with the Internet, where content publishers need only contemplate a few different major browsers and have significant control over the software used to deliver their video content to consumers.
As Apple announced its new iPhone 2.0 last week, MLB Advanced Media was outlining
an exclusive application for the device called
MLB.com At Bat that will be a mobile version
of the existing online GameDay product. Such
new products and applications bring greater
opportunities to monetize wireless technology.
To that end, many businesses are thriving not in the development of high-end, licensed mobile video, but ultra-simple text messaging.
"Simple is still winning out in a lot of areas in mobile," said Jeff Vick, president of FanDrive Media, which powers mobile marketing programs for more than two dozen pro teams, many involving text-to-scoreboard and other similar applications. "We're getting into small social-networking products and event-driven [wireless] sites. But what consistently works day-in, day-out is text. It's what works on everybody's phone."
Another issue that has thwarted the rise of mobile video and higher-end applications is the simple battery and data-plan drain such content has on many devices. MLBAM and other content publishers still lose customers by the thousands due to incompatibility between content and phone and service plan.
But the continued rise of iPhone, which was built in part on the long-run battery success of the iPod, and of unlimited data plans now becoming commonplace among carriers are beginning to turn that dynamic on its ear.
The Apple products, not to mention the bevy of portable video game players, are also conditioning consumers to embrace watching video on small mobile screens.
"In total, the numbers for mobile TV are still relatively small, but I think we're on the verge of seeing some very cool stuff," said Tim McGhee, AT'T director of national sponsorships. "I have no doubt that there will be a very vibrant market for [mobile] sports video as long as the content is compelling and is priced right."
But perhaps most important, a massive sea change is occurring with regard to the openness of mobile networks. Content publishers and application developers, previously thwarted by the rigidly controlled walled gardens of carriers and handset manufacturers, now are enjoying the creative freedom of more open networks that more closely resemble the unfettered nature of the Internet.
Last week's announcement of the iPhone 2.0, while heralded for its improved speed, dramatically lowered price, heightened international reach and enhanced battery life, was arguably far more important for the paired arrival of the third-party application developer network and store for the device that provide programmers a guidebook and retail distribution to create products for the much-revered device.
"We learned so much from the first iPhone," said Steve Jobs, Apple chief executive. "We did figure out what our next challenges are, the next mountain we have to climb to go to the next level."
2008-06-28
