ON TOO EARLY TO SHUT DOWN MVNOs?

PAY UP OR SHUT UP?

Additional negative assessments are coming in on the great "mobile video content via MVNO" experiment by various content (Disney's ESPN) and communications companies (e.g. Earthlink), as seen in these posts by Om Malik, Paidcontent.org, and Merrill Lynch's media analyst, Jessica Reif Cohen.

As Om notes:

"Things are getting a bit dicey in the MVNO Land. Helio is costing Earthlink some profits. Amp’d is d’amp’d. And now reports that Mobile ESPN is finding that attracting sports fans to use their service is not easy. Walt Disney owned service will have 30,000 users by end of 2006, lagging the 240,000-user target for the current year.  

Merrill Lynch & Co. analyst Jessica Reif Cohen says it will cost the company as much as $135 million, and they should shut it down. (I wonder if she has taken into account the airtime being devoted to the service on ESPN, instead of taking paid ads.)"

One of the issues is the high price for these "version 1.0" mobile content services, as I noted in a post back in June,

"...most of these services find themselves forced to price their services at "sticker-shock" inducing prices.  The most compelling data and content packages typically price out from $70 to over $100 a month...not mainstream pricing by a long-shot."

To get a sense of the prices, take a look at the price plans for Disney's ESPN Mobile service here, which ranges from $40/month to $200/month. 

Also interesting to study are the service plans for Helio, which is hoping to attract a few hundred thousand of the millions of teens on MySpace.  But I don't know too many teens who can afford tariffs starting at $65/month, up to $135/month.

Om thinks an additional issue are the phones themselves:

"I think getting cooler phones should be a start. I had stopped by at Best Buy to check out the service, but there was not a single handset that would make me sign up for the service."

I think the bigger issue remains the oligopolistic nature of the wireless industry, which doesn't allow more competition amongst providers of wholesale wireless broadband services. 

When you add the pricing for the wireless pipes, to the pricing for mobile content, it gets us to a point where the services are just not priced competitively even for early adopters, much less mainstream audiences.

Recent surveys have shown that less than 10% of those surveyed indicated that they would pay anything extra for wireless video content, be it in the form of a la carte or subscription fees.

Which leaves advertising as the sole economic leg of the stool to stand on.

This makes the services very wobbyl indeed in the early roll-out phases of their evolution.

So what to do?

Open it up. 

What I mean by that is the following.  One of the MVNOs needs to offer a phone that also has built-in Wifi, and the ability to add more on-board storage, either in the form a memory card and/or hard drive.

Then allow users to use internet telephony via Skype or either software clients as an alternative to the cellular network they've signed up for.

What does that do?

Why, it allows users to then use wifi networks in their homes, offices, and on the road to access and upload content on the wide open internet. 

This allows the user to have the broadest flexibility in using their devices, both as a mini, quasi-PC on the go, AND the benefits of regular cellular, 3G and EVDO services where Wifi is not available.

Of course this means lower revenues potentially on both the carrier and the content side.

But it gives these services a fighting chance to see broader, mainstream adoption.

And that's what the game is really about.

Comments

[Victoria]

I like your post!!

[biehugehkafhue]

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[Morgan]

That's great!!

[Gabrielle]

Good post!

[Sierra]

Well done!!
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