Who Will Control Mobile Entertainment?

SAN FRANCISCO — Mobile entertainment is the next hot thing — and it’s been the next hot thing for a good five years now.

But phones and mobile devices may finally be growing up enough to support the kind of rich content industry that’s developing on the Web. The launch of the Motorola iPod phone earlier this month and the expected release of a Treo smartphone running Microsoft’s Windows embedded illustrate that mobile devices may be ready for prime time.

The Mobile Entertainment Summit is being held a day ahead of the CTIA Wireless & Internet show, which kicks off on Tuesday.

While devices are getting smarter, the business model for mobile content in the U.S. still remains stalled in the “walled garden” model, where network operators limit subscriber access to content, services and wireless Web sites on the operator’s wireless Web portal.

But this model makes it hard for small content providers that don’t have the revenue or business connections to land such a deal. Carriers that enable subscribers to go “off-portal” or “off-deck” to access any available content help grow the mobile content industry, mobile upstart companies contend. In this model, the operator’s revenue comes from increased usage, rather than from a slice of revenue from the content.

Jeremy Flynn, head of commercial partnerships for Vodafone UK, said that discovery and enablement of service will be the main value carriers can offer due to small screen and lack of keyboard.

“If you want to make consumer data services really work, you have to liberalize it and open it up to a free market.”

Flynn said that the 2004 mobile content market in the United Kingdom was around $850 million; 70 percent of that revenue was generated by content that was not on the carriers’ decks.

“Operators are beginning to realize that they can have healthy revenue from off-portal content,” said Jay Emmet, president, Americas, of mBlox, a company that handles contracts and technical interfaces between producers and mobile operators.

Fox Entertainment is one company that has no problem working within the operators’ walled gardens. Lucy Hood, president of Fox Entertainment, said Fox will continue to produce mobile tie-ins to its shows, such as an upcoming phone-based game based on the show “24,” where players use their “spy phones” to direct the action. Content types will include multimedia messaging, mobile video and ringtones.

“We believe in content ubiquity,” Hood said, “but there are times where you need to work with an exclusive partner.” For example, Fox offers mobile clips of Pamela Anderson’s TV show “Stacked” in partnership with Verizon Wireless using Verizon’s Vcast service.

Disney Internet Group, on the other hand, is in a bit of a holding pattern while it waits for carriers to standardize, said Larry Shapiro, executive vice president of business development.

“We’re happy to have the carrier provide the billing service and the customer relationship,” he said. At the same time, Disney has a huge marketing machine that it’s about to put behind mobile content. But explaining to consumers how to access their content through different operators is tough.

“It’s difficult to say, ‘You can buy directly through these carriers, but for these others, here are the eight steps you have to do. And for this carrier, here are the 10 steps you have to do,'” Shapiro said.

Within the next month or so, Disney will begin placing “shortcodes” next to the URLs on movie posters. Shortcodes work among all carriers as shortcuts to mobile content.

“Whether people know what to do with them, I don’t know,” Shapiro said, adding that the company’s debate over whether to start advertising shortcodes sounded like the debate over whether to put URLs in movie posters in 1996. He predicted that shortcodes would be as understandable and widely used as URLs within a year.

At the summit, Adamind announced Spire Production Suite, software that lets publishers adapt digital content to make it accessible to different kinds of devices.

Adamind already provides Spire, a platform for network operators, so that they can make sure the content they distribute suits the target devices of subscribers; both Cingular and Verizon Wireless are customers.

Seth Cohen, Adamind’s director of product management, told internetnews.com that the company developed Spire Production Suite in response to requests from large publishers that want to control the presentation of their content.

Mobile search had a high profile at Mobile Entertainment Summit. JumpTap launched mobile search technology to be incorporated into wireless network operators’ offerings. The company said it “turns the Web into the carriers’ walled garden.”

That is, it allows operators to offer subscribers access to mobile Web content that’s properly formatted for their phones. The unnamed search product, to be branded by the operator, is available as a WAP , Java or BREW application.

JumpTap’s service includes pay-per-click or pay-per-call advertising with the search, a model similar to that used to create billions of dollars in revenue by Yahoo and Google . The advertising platform includes an auction system for keywords and mobile ad inventory. Operators get a revenue share when users click on sponsored links.

InfoSpace also launched Mobile Local Search at the summit.

Mobile entertainment companies can only hope that mobile users find plenty of content to search for.

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