Tuesday, November 09, 2004

Mobile Entertainment: the Current Landscape

Some entertainment media are cast in stone: Cinema, television, game consoles, CDs, are all standardized media. Most of these media have no element of person to person communication. “P2P” is almost an epithet among content publishers. Viewed in this light, mobile handsets are clearly different: They are created to enable person to person communication, which is sold as a subscription service.

It is tempting, based on JAMDAT’s success, to view mobile games as games for little Game Boy screens, and to focus on the advantages 24/7 mobile commerce availability, OTA delivery, a staggeringly large market, and billing-on-behalf-of (BOBO – one of my favorite acronyms) confer on mobile games.

These are the simpler concepts, and the impact of m-commerce and BOBO is hard to exaggerate. However, leaving connectedness, the unique architecture of the mobile Internet, and the desires and motives of the mobile customer off the table is to ignore that mobile games are games for a communications device.

An overwhelming desire to communicate is what made the mobile network. IMTS, the immediate predecessor of cellular telephony, accommodated about 550 customers in New York City in 1976. A few thousand were on the waiting list for IMTS mobile radio telephones. The business plan for cellular telephony called for clearing out the backlog of orders and some upside beyond that. Nobody envisioned anything as grand as making the mobile handset something every human on the planet who can afford one will have.

The desire to communicate is the driver in mobile telephony that turned it into a business that benefited from hundreds of billions of dollars of investment in mobile telecom infrastructure, propelling it a thousand-fold past expectations. Forgetting to harness that force in mobile entertainment misses the essence of the mobile handset, and misses the core of customer motivation.

These are the elements of the current landscape:

  • Mobile commerce systems that enable all mobile customers, creditworthy or not (i.e. postpaid and prepaid), to easily buy and pay for entertainment products at the push of a button. While the effectiveness of m-commerce user interfaces varies widely, they are in place in every developed and most emerging economies on Earth, and no mobile entertainment provider need worry that the lack of m-commerce stands in their way.
  • Handset hardware platforms that are less capable than most handheld game consoles in graphics, processor power, and storage, but universally capable in anytime/anyplace Internet connectivity.
  • Handset software platforms that have stabilized around two platform types: BREW and J2ME – three if you count Symbian – a manageable number, but that are still wildly fragmented into variants with different displays, memory, and audio, plus a variety of m-commerce APIs.
  • Hundreds of millions of customers accessible through a relatively small number of channels. Some, like Vodafone and Verizon, have achieved Wal-Mart-like domination of m-commerce in their territories. But, overall, the advantage is with content providers. The terms for mobile commerce are most favorable in the most mature markets.
  • Hundreds of millions of new handsets each year that both expand the number of customers and upgrade older customers into a mobile networkthat includes mobile commerce and entertainment platforms.
  • An Internet that is at once populous and fast-growing, and limited in speed and capacity, and one with unique nodes for charging, routing, and delivering the last mile.

It is also worth mentioning something this landscape excludes: Entertainment servers. Ericsson does not sell game servers. They are not an infrastructure node. There will be no 3GPP standard for game servers. To the extent that mobile game technology differs form Internet game technology, it is due to the unique nodes, the unique architecture, the unique capabilities and limitations of handsets, and the unique user preferences of the mobile environment. Mobile game technology is different: One need only consider that the mobile Internet experience is not centered around the Web browser to see that the difference is very large. But mobile game technology is not telecom technology. Mobile game technology belongs to game publishers, not the MNOs, and it comes wrapped in products, not exposed through APIs.

Now that we see the landscape, the next step is to find sources of value.

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