big boys are buying!3G and all it offers25/11/2005Smart Money is...

big boys are buying!

3G and all it offers
25/11/2005

Smart Money is finding its way into 3G applications, content and aggregators....here comes the mobile revolution!!
3G is to be launched withn the next 12months is expected to change the experience for consumers, and there is evidence that it does. According to BRW. IDC says Hutchison has about 530,000 subscribers, and more than 65% of them (345,000) are actively using content, compared with the average of 10% across all mobile-phone users. Optus claims one million OptusZoo subscribers, Vodafone live! claims 400,000 and Telstra, which recently launched i-mode and will not release subscriber numbers, is estimated by IDC to have about 60,000 subscribers.

The spread of 3G will also create more opportunities for small and medium-size enterprises looking to cash in on the mobile boom. The smart money will be that which builds a community, that will be sold to the majors!!

The non-voice market is already big. Australians spent $1.53 billion on non-voice services in 2004, according to research company IDC; $65 million went on buying ring tones and graphics alone.

The market potential is what excites Australian venture-capital investors and entrepreneurs. Australia has 17.9 million mobile-phone users, according to IDC; as yet, only a sliver of this market has plunged into non-voice services. Although 60% use SMS (short message service), only 10% have downloaded ring tones or graphics, 9% have used MMS (multimedia message services) and just 3% use mobile data.

ASIA has a lot more!!

3G makes all sorts of new services possible, and the battle for customers between carriers will rest on the quality , price and service. Telcos power will be on the way they can use their billing procedures to bill for the services.

Ring tones and wallpapers are still a big market. IDC predicts the category will grow from $65 million to $100 million in 2005. But music and video services will be the fastest-growing of the new categories. The market for music, from a small base of about $1 million in 2004, is expected to reach $5 million in 2005. IDC predicts video, which encompasses subscriber services such as gig guides and news services delivered by SMS and MMS, will grow from $30 million last year to $66 million this year. The market for games, worth $12 million last year, is expected to reach $21 million in the current year.

Australian companies are busy launching new services in an effort to grab a share of the market. Their offerings are advanced by world standards, according to IDC's research manager for wireless and mobility, Warren Chaisatien: "We are pretty advanced when it comes to mobile content because we have a very mature mobile market, with 90% penetration today."

Two different categories of company are vying for a share: content developers and content aggregators. Content developers make applications, games, ring tones and graphics. Among the innovators in this market are Viva La Mobile, and Mobidata. Aggregators pull together content from a variety of sources and sell it to carriers. They include BlueSkyFrog, owned by LegionInteractive (bought in March 2005 by listed company Photon Group), iTouch Australia, and ninemsn.

Another category of company is also emerging to take a share of the market: those developing platforms and applications that make content easier to deliver and to charge for....watch out for Jonathan Zufi and Michael Mak of Start.

Investment capital is flowing into these companies. In March this year, the listed Photon Group bought LegionInteractive, for $17.45 million a great result for VC Investor, and Start has just raised $5m.

BSI is an advisory firm that manages one of the Federal Government's early-stage technology investment funds, Australian Distributed Incubator (ADI). ADI received $6 million in 2000 under the Federal Government's BITS (Building Information Technology Strengths) programme, and then another $4.3 million in 2004. A director of BSI, Alan Milwidsky, says the company runs investor forums in Sydney, Melbourne and Brisbane. "The most recent one [in Sydney] had 120 investors. There are about 25 venture-capital funds and early-stage investors, and the rest are high-net-worth individuals," he says.

Multi-player games will motivate growth in the games market, according to IDC's Chaisatien. Viva La Mobile is a Sydney company with 17 people that creates single and multi-player games. Multi-player games enable several people to play against each other, rather than artificial opponents (single player). The founder and managing director of Viva La Mobile, David Kainer, says the company launched Australia's first multi-player game, Badlands, in August 2004, and now has three multi-player games on the market. Kainer says: "We have about 100 players at any one time, and about 100,000 game sessions a month."

The way companies make money from content varies. Viva La Mobile sells single-player games for about $5 each. It gives away its multi-player games, then charges customers 50? a session. As in arcade games, 50? buys a number of "lives", rather than time spent playing. Kainer tries to get a 40-50% share of the session revenue, with the rest going to the carrier; but in Australia, Hutchison gets a bigger share (he will not say how much) because it paid advance royalties to support the company while it developed the games.

The chief executive of ninemsn, Martin Hoffman, expects SMS and MMS subscriber services to be the biggest growth area for his company, which already sells ring tones and wallpapers. He says: "We have a small share of the ring tone market, but our core focus is on content sites and brands from PBL (Publishing & Broadcasting Limited). The other is conversion of our five million active hotmail accounts in Australia so that they can access e-mails on their mobile phone." It provides SMS services on the latest Australian Football League and NRL scores, surf and weather reports, horoscopes and flight times as well as sites for Cleo and Money magazines, and for the television travel programme Getaway. Hoffman says ninemsn will soon launch 2.5G and 3G sites for National Nine News.

The innovators are predicting a big future for personalised mobile content. One example is ninemsn's weblog site, started in March, which allows people to update their blogs with photos and text by using their mobile phones.



BSI Clients in this space:-

Destra

Listed company Destra is an online music store that recently signed a deal to sell ring tones and wallpaper through the web site BlueSkyFrog. Explaining why Destra planned to start selling ring tones and wallpaper, chief executive Domenic Carosa, says: "The ring tone market is already bigger than CD singles." According to the Australian Record Industry Association, revenue from wholesale sales of CD singles was $26.7 million in 2004; research company IDC says Australians spent $65 million on ring tones and wallpaper.

Viva La Mobile

A privately owned Sydney company, Viva La Mobile makes games for mobiles. With Telstra, Optus and Vodafone about to launch 3G services, chief executive David Kainer expects the market for multi-player games to grow quickly, a view backed by research company IDC. Already Viva La Mobile has three multi-player games in the market. They are distributed free (single-player games cost about $5 each) and players are charged 50? per session. The technology allows players to compete with opponents anywhere in the world.

Mobidata

Publicly listed Mobidata wants to help consumers protect the content on their mobiles from loss or attack. It has products to back up contacts and data, to protect them from viruses, to filter spam and to provide instant messaging, which managing director Richard Carey likens to a chat room rather than a mobile phone.