Fandango, a Los Angeles-based online movie-ticketing outlet, has partnered with Microsoft Corp. to bring on-demand movie information to millions of BlackBerry users through its voice-recognition technology.
The free downloadable software was released last week and is compatible with BlackBerry phones. It allows users to say a movie title into the GPS-enabled mobile device, which will then display nearest theater locations and show times. Tickets can then be purchased over the phone through Fandango.
"More and more moviegoers are making their moviegoing decisions on the go and we need to be there when they're making those decisions," said Chuck Davis, the company's chief executive.
Fandango.com, a movie-ticketing site originally formed by seven of the country's largest movie theater chains eight years ago, provides ticket services to 15,000 screens across the country. The voice-based movie search is likely to direct more traffic to the site, and bolster the Fandango brand.
The technology will help Fandango, which already dominates the market, stand out from its two main competitors, Moviefone.com and MovieTickets.com. The cutting edge technology gives Fandango an added boost.
While the rollout isn't going to produce an immediate windfall, it's a key development because the nascent mobile advertising and purchasing is expected to blossom in coming years.
For now, Microsoft and Fandango are dependent on only one revenue stream, which is produced by a service charge when people buy tickets on the phone. Even Dariusz Paczuski, vice president of consumer services at Microsoft division Tellme, expects no more than a trickle of revenue. Tellme is a business-to-business voice-recognition software provider, with clients including FedEx.
"We want to build a great service first and then find the right way to monetize it later," Paczuski said.
Only a small percentage of people are expected to buy tickets using the service on their BlackBerry phones. They may turn to the service to get show times and theater locations, but wait until they get to the theater to buy the ticket instead of paying a surcharge for a mobile purchase.
In addition to BlackBerry, the service has been pre-installed on some Helio phones, such as Mysto, and will be rolled out as downloadable software for iPhones and Windows Mobile-based smart phones later this year.
The voice-based search also offers local information on traffic, weather and retail. These are all provided by Microsoft brands, including Live Search and Live Search Virtual Earth; Fandango provides the movie services.
Microsoft's strategy to use Fandango for entertainment content is sound, said Greg Sterling, Internet analyst for Opus Research.
Roughly 20 percent of U.S. cell phone users access the mobile Internet on their phones, he said. Among those users, 40 percent searched for entertainment, including movies last year.
Fandango is expecting an immediate swell in traffic as the voice-based search software gains traction among BlackBerry users.
The company's Web site attracts about 6 million unique visitors every month, and advertising revenue generated by that traffic accounts for about half Fandango's total revenue, which the privately held company declined to disclose.
Advertising revenue was lower before Davis took the chief executive job. When he arrived two years ago, he said the site functioned something like an "Amtrak ticketing machine." Users would call it up, buy a ticket and leave in a few seconds.
As a result, the site wasn't attractive to advertisers, who want what's called a "sticky" online environment. That means users stick around long enough to click on their ads.
So when Davis took the helm, nine months before Fandango was acquired by cable company Comcast Corp. last year for a reported $200 million, he made notable changes. He added movie reviews, a ratings system and Hollywood news. Traffic has grown by about 30 percent over the past year.
Davis said he saw the importance of building an advertiser-friendly, user-generated community around a brand through the success of Shopzilla, a comparison shopping site where he worked as chief executive, which was sold to E.W. Scripps for $569 million in 2005.
"We're a dot-com," Davis said. "The business model has to monetize every page."
That's the right move, said David Card of Jupiter Research.
"Online movie ticketing is primarily an advertising business," Card said. "It can't count on ticketing revenue every day."
Most people who pay the extra $1 surcharge to buy a movie ticket in advance live in metropolitan areas. Outside those cities, there might be a spike in online ticket sales at the release of a much anticipated movie, such as the "Lord of the Rings" series, when there is a risk of theaters selling out.
For example, "Iron Man," which opens May 2, made up about 20 percent of Fandango's sales a week before the opening.
Card estimates the online movie ticketing industry generates "several hundred million" in sales. He expects no more than single-digit growth in sales, comparable with box office sales.
Davis said ticket sales at Fandango have grown by 25 percent in the past year.
Moviefone, which was acquired by AOL in 1999, was the early market leader. In response, the country's largest movie theater chains, including Regal Entertainment Group, Cinemark, and Loews, now a part of AMC Theatres, formed Fandango in 2000.
"Fandango essentially kicked out Moviefone from the movie theater chains," Card said. "But Moviefone remains a bigger brand and makes a lot more money in advertising than Fandango does."
The same year, a handful of companies, including AMC Entertainment Inc. and Viacom Inc., followed suit and created MovieTickets.com. It remains the weakest of the three.
When Davis took over two years ago, Fandango dominated the market with a staff of just 40 employees. Today there are 100, and they enjoy an impressive array of perks.
Employees skip out on work three times a year to go to movies together. When David Beckham came into town, management chartered a bus to take staff to his premiere soccer game. Then there's a Halloween carnival, complete with games and sacks of candy, where employees and their children are encouraged to come to work dressed in costumes, which get rated by a panel of judges.
The company also caters lunch for the employees twice a week.
All that helped Fandango land a top spot on "California's Best Places to Work" list. The rankings were compiled by the Employers Group, an L.A. human relations consulting firm.
"It teaches you a great lesson in life," Davis said. "Some of the simplest benefits are the best benefits."
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