The second panel, moderated by Nielsen's Puterbaugh, was entitled Holy Grail or Holy Fail? Straight Talk on Mobile Entertainment. It featured Lawrence Harris (SVP/Analyst CL King), Bill Lowenthal (VP Limelight Networks), William Quigley (Co-Founder, Clearstone Venture Partners), David Shrehlow (Director Media Solutions, Huawei), Kevin Arnold (CEO IODA), Gary Schwartz (CEO Impact Mobile), John Orlando (CMO LiveWire Mobile). Again the topic really went out the window and discussion focused on the 4 areas outlined below:
Are The Carriers Dumb Pipes?
- LiveWire’s Orlando sees a trend amongst more progressive players, like Sprint, to embrace more open systems. Generally the smaller operators are strongest value added service partners. Frustration with the big guys stems from lack of marketing support for mobile entertainment product
- Arnold thought they were mostly dumbpipes, with a couple of non-US exceptions like Telefonica.
- Leventhal suggested that mobile entertainment providers need work with the carriers to enhance the content experience over their networks
- Schwartz said that to be a dumb pipe you have to be pretty smart (interesting point…it takes a lot for big companies to realize their limitations)
- Strehlow advised that operators are hungry, rich and unloved…and that mobile content creators should use them now while they are desperate
- Following up on this, Harris said Verizon's and AT&T's wireline businesses are declining. ARPU associated with voice is declining, and thus these operators are focussed on their data businesses. 30% of revenues are now come from data. With the US mobile market saturated, Data ARPU is THE growth area for operators
- Quigley suggested that from his standpoint, if you look at management teams at handset manufacturers (or carriers), they don't have the right people to run mobile entertainment businesses... it's not in their DNA. He thinks there are real opportunities for big entertainment companies like Disney who want to work with handset manufactures
- CL King's Harris suggested that you have to look beyond the established handset guys. The business is coverging with the PC business and vice versa…Nokia is making a netbook, Apple is making a tablet, HP & Dell are desiging similar devices. He believes there will be a lot of touchscreen devices, between a mobile phone & a laptop, well suited for video & ebooks.
- Orlando said there's a new category of converged mobile/portable devices called MIDs (mobile internet devices). OEMs like Dell are looking at devices that use both wifi and sideloading (at kiosks or via SD cards), which can very disruptive. Handset manufacturers will play a big role in this space.
- Leventhal said we're moving from the session based to an always connected internet, driven by social nets like Facebook or Twitter. Mobile networks are beginning push consumers to open internet devices that use these data heavy apps.
- Schwartz complained that you can’t get all the content you want, when you want it in mobile. Convergence is hot topic…but handsets are not content companies…they're just using content as a vehicle to sell hardware. Content anywhere has to be OTA…but wifi is the best experience…better than expensive mobile data networks
- Quigley raised an interesting issue, he suggested that carriers wouldn't have the networks to support the data usage if everyone had a smartphone; they're still using old technology.
- Strehlow thinks Nokia bundling Ovi with handsets is a good example of an OEM driven content service not tied strictly to operators...but it's mostly happening outside the US. He reminded the audience that the World is a much bigger place than the US.
What Is The Most Exciting Area of Mobile Entertainment For Your Business?
- Lowenthal said video is driving business for Limelight. He heard Bill Nygren of The Oakmark Funds speak recently about how devices are the window into media and the media kids were watching was video (not reading newspapers), therefore he was biasing his portfolio accordingly. LTE will make mobile video network
- Quigley pointed out that there are lots of cool mobile entertainment businesses that make no money, but he thought mobile casual games have a real business model
- Harris likes text messaging; most US consumers are doing it, teens are driving it and it still growing at 75%...SMS is still big opportunity
- Schwartz thinks discoverability and CRM are the big opportunities. It's still a challenge to find content on mobile devices
- Orlando still likes full tracks, ringbacks, tones, etc., but sold off deck. On deck there are 6 vendors (at least) starving trying to sell this content. LiveWire has had a lot of success with an off deck store where it can create its own rules and bundle content the way consumers wants it.
- Arnold likes the rise of music subscription services. It's been difficult on iPhone because they've resisted services that compete with iTunes, but he's encouraged by the approval of Spotify (which bodes well for Rhapsody, etc. on that device).
- Like Harris, Strehlow likes good old SMS because it has the best margins of anything a mobile operator sells. However, he’s also encourged by Uverse’s (AT&T’s landline IPTV product) demonstration that you can push a lot of data through old infrastructure. In mobile he thinks compression and sessionless video from Flash and Silverlight will overcome limits at towers and that wireless video via wifi and mobile networks is the future.
