Hollywood Waiting as Wireless Carriers Lag With New Features
By MICHAEL THURESSON
For all the success of entertainment-related wireless products overseas, especially in Asia, Hollywood is having a hard time getting anyone’s attention back home.
Content providers privately cite a lack of commitment on the part of U.S. wireless carriers to support novelties such as cell phone chimes based on hit songs, or cartoon screen savers.
The carriers control the cellular customers, the networks and marketing, but they have been focused on voice service hampering Hollywood’s ability to make distribution deals.
“Two years ago it was hard because they didn’t have the mindset or the technology. A year ago it was the business model. Now, it’s hard because everyone is trying to get their attention,” said Matthew Bellows, publisher of Wireless Gaming Review, a trade publication.
Success in Japan has shown the possibilities. Walt Disney Co.’s Disney Internet Group has more than 3 million Japanese cell phone customers paying between 85 cents and $2.50 per month for its wireless content.
Popular applications in Japan include games that incorporate actual weather conditions into the playing, a movie rental chain that emails coupons to customers’ cell phones, and chat rooms that show color images of people. Currently, the most popular Japanese phones come with cameras built in so users can easily email photos.
While Disney offers ring tones and screen savers in the United States, its operations here are “nowhere near the scale of Japan,” said Larry Shapiro, executive vice president of business development and operations of Disney Internet Group.
Shapiro declined to give specific numbers for U.S. operations.
The vibrant Japanese market came about largely as a result of a push by its phone carriers for wireless entertainment. NTT DoCoMo Inc., the nation’s largest carrier, has gained over 36 million wireless content subscribers since it began the service in 1999.
In the U.S., things are different.
Verizon Wireless, the largest U.S. carrier with over 32 million voice services subscribers, didn’t start selling handsets capable of serving up advanced features until last June. Through December, only 1 million of the Verizon Communications Inc. unit’s customers had data-capable sets. The company won’t say how many have signed up.
Content providers said a common problem is that consumers are not signing up for the service because employees at Verizon stores are not telling customers about it.
“We’re trying to work with carriers on in-store marketing,” said Doug Dyer, general manager at THQ Wireless, a unit of Calabasas Hills-based video game maker THQ Inc.
Color screens, the norm for cell phones in Japan, are seen as another crucial element in attracting customers and content.
Currently, the most popular entertainment offerings in the U.S. are musical ring tones and games. Carriers sell the content which users download onto their phones on a monthly subscription and bill it together with voice service. Carriers then pay out between 60 percent and 80 percent of content revenue to the content providers.
Cell phone users pay $3 to $5 per game and $1 to $2 per ring tone, for content that expires after several weeks.
In Japan, royalties garnered from music downloads amounted to $32 million in 2001, with most of it coming from ring tones, according to a report by the Japan Society for Rights of Authors, Composers and Publishers.
Even rudimentary services like ring tones, which have been available in the U.S. for several years, have failed to gain popularity because of phone and network limitations. For example, Sprint PCS Group customers can’t sample ring tones before buying them because the phone lacks the necessary software.
Television shows are one of the few places where wireless content has made inroads. News Corp.’s Fox television network and Sprint PCS offered live voting for Sprint’s cellular customers during the 2002 World Series broadcasts. In February, Fox launched a similar poll for its “American Idol” television show.
Slowly, the U.S. carriers are coming around.
Within six months, one of every three cell phones sold in the U.S. will have a color screen, said Seamus McAteer, principal at industry research firm Zelos Group.
Verizon Wireless, for example, has begun using software made by San Diego-based Qualcomm Inc. for ring-tone sampling. Content providers are hoping Verizon Wireless’s aggressive marketing will act as a catalyst for other U.S. wireless companies.
In Los Angeles, a number of companies are poised to benefit.
Moviso, a subsidiary of Vivendi Universal SA, specializes in turning popular music into ring tones for cell phones. THQ Wireless increased the number of games it is offering, to 50 from 20 last year, and will supply several new games to Verizon Wireless this year.
JAMDAT Mobile Inc. also publishes games for Verizon, including ones based on New Line Cinema’s “The Lord of the Rings.”
And 20th Century Fox will soon have characters from “The Simpsons” appearing on U.S. cell phones, said an industry source.