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The Brands that Fit

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Two months ago, hip-hop impresario Sean “P. Diddy” Combs took the stage during the opening keynote session at the Cellular Telecommunications & Internet Association Wireless 2005 event to make a simple yet provocative declaration: “I am an MVNO.”

The rapper, producer and entrepreneur was not at CTIA to actually launch a mobile virtual network operator (MVNO) business but to make the point that he could — that his influence, reach and fan base together form the necessary foundation to build a wireless brand. “I don't own spectrum,” Combs said. “I don't have network infrastructure. I don't make customer service calls. But I do have subscribers… tens of millions of them who spend billions of dollars every year.”

Although Combs and his Bad Boy Entertainment empire still have yet to officially announced an MVNO service in the months since CTIA, a growing number of brands from far outside the traditional telecom sphere — family entertainment giant Disney and sports network ESPN chief among them — are now planting their flags and claiming a chunk of the wireless landscape for their own, hoping the influence they exert over their respective audiences will carry into the mobile services market.

Today's wireless business resembles a Hollywood awards show as much as it does a sector of American industry. Companies like film studio 20th Century Fox, Marvel Comics and music magazine Billboard are lending their properties and trademarks to mobile multimedia initiatives. Athletes like golfer Tiger Woods and skateboarder Tony Hawk are providing their massive name recognition to mobile games. And in the weeks leading up to the release of “Star Wars Episode III: Revenge of the Sith,” it seemed like Cingular Wireless marshaled more of its advertising force to promote its exclusive portfolio of “Star Wars”-related content that it did its voice services.

More and more in the wireless industry, the brand's the thing.

“If you look at most mobile operator decks today, content is classified by the type of download or technology distribution — there will be a messaging section, another for multimedia messaging, another for ringtones or music download and another for news and information about a certain topic,” said Robert Tercek, executive vice president of programming and chief strategy officer for mobile content developer Mforma. “But we've been looking at this mobile opportunity the way you might look at another network, like cable television — cable isn't organized as sports, news and information and entertainment. People channel surf via brand, and over time, that's the direction that mobile entertainment is likely to go.”

While some American consumers align more closely with certain brands — Coca-Cola over Pepsi, say, or McDonalds over Burger King — than they do with political parties, it seems safe to assume that only a tiny fraction of subscribers feel any kind of personal loyalty or affection for their wireless carriers. After all, they select mobile operators based on coverage and pricing, not brand affiliation. That's where content partnerships based on brands that consumers do care about come into the picture.

“Something like [Mforma partner] Marvel Comics is great because it starts out with that core fan base,” Tercek said. “In any kind of entertainment, there are passionate, committed fans, and they really identify with that particular brand.

“And it's not limited to comic books or Marvel — there are equally passionate fans for certain console games, motion pictures and sports teams as well. Almost everybody's got their particular thing they truly identify with. We like to think about entertainment brands that have an emotional connection to people — the essence of brand management is understanding the nature of that emotional link.”

It's a lesson that Mforma President Jonathan Sacks learned during his previous life as president of IDG Books Worldwide, where he spearheaded the launch of the highly successful “For Dummies” instructional book series. “At first we thought that was the most idiotic idea we'd ever heard and doubted anyone would ever call themselves ‘dummies,’” Sacks said. “But we decided to give it a shot, and it worked. People had an affinity for it — it resonated. What you learn about consumers along the way is that they have their own tastes and desires. The job of the media business is to leverage that — you're looking for resonators and to build brands because brands win.”

And while traditional wireless network operators must cater to the widest, most general audience they can reach, a new wave of MVNOs is tailoring its services to smaller niche demographics, specifically targeting teens, Hispanics and other groups with pricing plans, applications and content portfolios geared toward their desires.

“We've seen two developments: A lot of big brands are getting much more real about their initiatives, and on the heels of that, we're seeing a lot more opportunity, even in the small and mid-tier markets,” said Matt Johnson, CEO of mobile virtual network enabler Visage Mobile, a company founded to provide the back-office systems and support to private-label wireless brands. “Traditionally in the MVNO market, you had to get big, but now we're seeing a lot of opportunity in small, focused segments — the more focused you get, oftentimes the better economics you get. Their loyalty is probably higher, and your ability to redeem that customer is that much greater.”

Johnson cited the pending launch of ESPN Mobile as a perfect example of a company that can pinpoint a certain customer segment — in this case, sports fanatics — yet create a thriving business based on its sheer domination of that given market. “ESPN is going after the diehard sports fan because they already own that customer,” Johnson said. “They own them emotionally, they own them from a media consumption standpoint and they own them because they self-identify as sports fans and ESPN watchers.”

But determining a brand's core audience is the easy part — translating that brand to wireless, whether it's a comic book, cable network or record label, is a much more complex proposition.

Consider that ESPN is owned by the Walt Disney Co., which several years earlier launched Disney Mobile — currently offering ringtones, games and graphics based on the company's vast library of film and television content via the Internet — and plans to introduce a Disney-branded, family-oriented MVNO service in the near future. Still, ESPN Mobile will go live first. According to Larry Shapiro, executive vice president and general manager of Disney Mobile, that's because determining what ESPN's predominantly male viewership desires in a sports-themed mobile service proved far easier than creating a family-friendly mobile platform for mothers and their children.

“We've been seriously investigating a Disney MVNO for a long time, and we think we've finally nailed the business proposition,” Shapiro said. “This is greenfield territory, but that means determining what these moms, kids and families really want. It was easy to do that with ESPN, but not with Disney.”

For carriers seeking to partner with popular media brands and content, the benefits are obvious. The reach is vast for media brands like Disney and Fox (which is creating original “mobisodes” based on its hit television series “24” for Verizon Wireless' VCast streaming video service). Not only will ESPN market its mobile service across its six affiliated cable channels but also on its Web site, its national radio network and in its magazine. Likewise, Disney also can leverage its other television networks (including ABC and the Disney Channel) as well as its feature film and video releases in promoting its wireless content. As a result, carriers that partner with these types of global brands should experience a significant push into the mass-market consciousness.

For example, through its deal with Marvel Comics, Mforma will create mobile games and content based on the publisher's flagship title “Fantastic Four,” which will also hit movie theaters this summer in a feature film starring Jessica Alba.

“If you're fan of the ‘Fantastic Four,’ you're going to be aware the movie is coming, and you're probably likely to be interested in getting the ‘Fantastic Four’ every place you can,” Tercek said. “That's where these kinds of brands pass on benefits to operators because there will be plenty of residual awareness when the movie opens, then later comes out on video. With every subsequent window, there will be a new marketing push, and that will sustain interest in the ‘Fantastic Four’ game on the carrier deck. That's a tremendous lift.”

But basing mobile games, ringtones and video downloads on popular brands is not enough — mobile content developers must create products that complement and capture the flavor of that brand in a meaningful and entertaining way. A Hollywood blockbuster could outstrip the box-office returns of all six “Star Wars” movies combined, but if its accompanying mobile game fails to capitalize on what audiences loved on the big screen, forget it. Likewise, carriers must be choosy about which brands and titles they add to their decks — just because both series are on CBS doesn't mean the drop-off from “CSI” to “JAG” isn't enormous.

“Not all brands are created equal — some brands lend themselves to exploitation in mobile more readily than others,” Tercek said. “When we evaluate an entertainment brand, we want a name that really resonates with consumers, that gives you a vivid mental image of what's behind that name. In addition to the brand name, we want their content. We're not interested in just a title — we want pictures, sounds, animation and video. The partners we work with must provide us with a mass catalog of content. There must also be a definable audience that knows and recognizes it. I don't want a cold brand — something from the icebox that hasn't been activated in years.”

But as carriers and content developers alike scramble for their piece of the most popular brands and licenses, they must also avoid the flashes-in-the-pan that are the inevitable byproduct of the starmaker machinery.

“There is an art and a science to brand acquisition and content acquisition,” Tercek said. “We apply a lot of cost-benefit analysis, and if we can't figure out a way to get an ROI out of a brand partner, we decline. But there is a lot of opportunistic licensing happening out there today.”

But whether your passion is the New York Yankees, Elvis Presley or the Three Stooges, somewhere out there is wireless content expressly for you. The trick is getting the word out.

“For all parties in the value chain, it's necessary to educate consumers,” Tercek said. “We need to make them more aware — to give them more reasons to explore and more reasons to return to mobile entertainment.”

A brand for every passion

A sample of some of the many companies with branded wireless services
BRAND SERVICE
ESPN Announced MVNO launch for mid- to late 2005
Disney Mobile Sells multimedia content via Web site; MVNO plans confirmed but not officially announced
7-Eleven Launched Speak Out Wireless MVNO service in April 2004
Fox Sports Mobile games and multimedia distributed via Sorrent
CBS Sportsline Mobile games and multimedia distributed via Mforma
King Features Mobile games, comics and puzzles distributed via Mforma
Hasbro Mobile games and family entertainment distributed via Mforma
Def Jam Mobile music and multimedia in partnership with AG Interactive
Source: Company Web sites

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