Is the app store the MVNO of 2009?
September 3, 2009
A panel at the Mobile Entertainment Forum discusses the app store distribution model
LOS ANGELES - The Mobile Entertainment Forum assembled a group of thought leaders in the wireless industry to discuss accelerating mobile revenue into the U.S. mobile entertainment industry.
With mobile entertainment topping 32 billion dollars globally, the panels tackled issues on how main-stream entertainment companies and discussed which current initiatives will thrive and what models will die on the vine. Based on Neilsen research the consumer will only stay loyal to a limited number of applications.
“The consumer will only actively use five applications on their smartphone at a given time,” said Eric Puterbaugh, director of client services at Nielsen.
However, the app remains the focus for most entertainment companies.
Gary Schwartz is president/CEO of Impact Mobile
“It is all about the experience for the artist,” said Troy Carter, Lady Gaga’s manager. “Present applications offer new distribution channels: Tap Tap, Karaoke and other remix solutions drive reach and revenue.
“The apps have to be a focus for us today because that is where our audience is,” he said. “In two years that will change.
“We follow the consumer.”
So is the app store the flavor of the year?
“Yes, it is a key destination for the consumer, but we have seen what happened to MVNOs few years ago and now there is a different app store being launched every day,” said Ron Czerny, CEO of Playphone.
“Only few destinations will succeed and the one that can deliver mobile apps and content globally with the best user interface will be the winner,“ he said.
Mr. Czerny explained that the mobile market is going through a consolidation process and offering a global solution to content developers and consumers is key for success.
The audience concurred that in many cases the handset manufactures are leveraging the store to sell more hardware and are not motivated to drive commerce. The manufactures leverage applications to showcase product.
Some applications have a robust business model.
“For many of applications, content is king,” said Steve Byrd, executive vice president of Stats, a leading sports statistic content provider.
Mr. Byrd indicated that Stats’ revenue has grown 10 percent due to the demand for Stats data in mobile applications.
“The consumer will pay for the immediacy of this data,” Mr. Byrd said. “A good example of this is MLB’s $10 smartphone app download.”
But many rich content applications demand considerable data, which is a burden on the carrier network. Smartphones consume ten times the amount of data as feature phones.
If rich-content is king, many questioned if the carriers will realistically be able to handle quality data delivery OTA (over the air).
There seems to be an elephant in the room. Who is benefiting from the new mobile distribution channels? Who will pay for the needed infrastructure of this increased data pipe? What are the business models beyond the storefront?
“The wide-ranging topics discussed today and the varied points of view presented are representative of MEF’s unique position spanning the entire mobile value chain on a global basis,” said Jim Beddows, chair of MEF Americas.
“Having that far-reaching insight into emerging services and business models and a sense of what will be sustainable is a huge value-add to MEF’s member base,” he said.