Financial Times FT.com

Mobile phone industry eyes entertainment solution

By Mark Odell and Emiko Terazono

Published: February 16 2006 02:00 | Last updated: February 16 2006 02:00

If proof were needed that convergence is reshuffling the pack of media, entertainment, telecommunications and technology sectors, it could be found in Barcelona this week.

As the mobile phone industry and its suppliers descended on the Spanish city for the 3GSM World Congress, they were joined by companies such as Sony BMG, the computer games publisher, Electronic Arts and Disney.

In an event previously better known for showcasing the newest handsets and debating complex network standards, Peter Bazalgette, the chief creative officer of Endemol, the television production company, gave a keynote speech.

A three-day entertainment "summit" ran parallel to the main event and 80-odd companies set up stalls in a dedicated "content" zone. "Mobile" television proved a key talking point.

Interest in striking new partnerships is coming from content and distribution.

With their revenues from voice services drying up in developed markets, mobile companies want to offer customers media and entertainment features. Likewise, content owners see the uncertain prospects forecast for their traditional advertising-backed or pay-per-view routes to market, and seek the extra distribution a mobile platform can give.

Buoyed by the success of paid-for ringtones and battered by the practice of illegal downloading, the music industry has been searching for new business models.

At 3GSM, the potential for the record labels was underlined when Wang Jianzhou, chief executive of China Mobile, told an audience that the most popular mobile phone download had achieved 15m sales in a month. This compared with 1m physical sales of the same track.

"There was a gasp from the audience when he mentioned those figures," says one participant.

Whether the content being distributed is music, video, games or some hybrid, mobile operators face competitors, most notably the providers of hand-held devices such Apple's iPod.

And the big unanswered question at the 3GSM event was how many consumers will be willing to pay for mobile content, and how much they could be charged.

A recent survey by Olswang, the law firm specialising in technology and media, showed that UK consumers were less excited by content on mobile phones than other innovations such as television delivered via the internet.

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