The spotlight has been turned away from traditional media content on mobile

By Guillermo Escofet

There was a time when the mobile entertainment industry was all about content – about music, images and video produced by the big media brands and about how mobile could act as a new distribution channel for that content.

Fast forward not that many years and we now find that the focus is on applications. It’s all about online stores populated with numerous downloadable services from, mostly, obscure developers, designed to cater to the myriad information and entertainment desires of mobile users.

Even the term “mobile entertainment” has become a bit outmoded.

Everyone in the mobile industry seems to want to offer an application store. Computer giant Apple set the trend earlier this year with the launch of the App Store, a highly popular add-on to the iPhone. Web-search giant Google has also gotten in on the act with its Android Market, as part of the Android open-source operating system it has developed for handsets.

Operators don’t want to be left behind either. Carrier group Orange has launched what it calls its Applications Shop, to showcase the applications created by the thousands of developers affiliated with its long-running Orange Partner program.

This week, rival carrier group Vodafone unveiled the Vodafone Widget Manager, essentially also a store from which users can download mini-apps to their idle screen that provide shortcuts to online content. The apps for the store are created by a community of developers that Vodafone is cultivating around its Widget Zone developer platform.

Operators are trying to copy the Web 2.0 model and create environments in which developers can more easily hook up to mobile-network APIs and “mash up” different components into cool new apps. This week, T-Mobile became the latest to join the rush with the launch of its DevPartner Community initiative.

But what does all this mean for media companies? How prominently, and profitably, will their content feature in this new world of mobile application stores?

The Web 2.0 environment hasn’t been a good one for traditional media brands. They have seen their intellectual property pirated and widely distributed among online users. And, perhaps more worryingly, they’ve seen how the professionally produced content they specialize in has been overshadowed by user-generated content propagated by sites such as YouTube. According to estimates, 60-70% of digital content worldwide is user generated.

The Internet has democratized content creation – or “dumbed” it down, depending on your perspective. It has also devalued the price of content made by professionals – be that music, video, news, etc. – to the point that users expect to get most of it free. Just about the only “professionally produced” content that users are prepared to pay for on the web is pornography.

And the new mobile app stores are likely to ape to a great extent what is happening on the Internet. You only need to look at the bandwagons that mobile vendors have been jumping on in the past year or two to see where things are going. And these bandwagons bear the names of “social networking,” “user-generated content” and “the content long tail.”

The traditional outlets on mobile for media companies have been through the licensing of content to the creators of games, ring tones, wallpapers, screen savers and so on. But licensing such content is expensive for mobile content providers and has become increasingly unsustainable as the market for premium handset-personalization content has shrunk. Off-deck-mobile-content giant Zed has made a success of its business in part because it steered away as much as possible from licensed branded content, and it is now reinventing itself as a social-networking player.

One just needs to look at figures from market-research firm ComScore M-Metrics to see that the number of people purchasing mobile games and ring tones in Western Europe’s five main markets has fallen in the past year an average of 10% and 18%, respectively. Users are turning to the mushrooming pool of free, and often pirated, mobile games, tones and wallpapers on the Internet and are personalizing their phones with their own content.

All is not lost for media companies, however. When 3G data services, such as full-track music, video-on-demand, TV streaming and broadcasting, finally take off – if they ever do – they should provide new outlets on phones for music labels, broadcasters and movie studios. However, there are still more ifs than certainties with these services: How will revenues be split? Will users be prepared to pay for such services? Is there even any demand for them?

What is certain is that, more and more, users want to take the reins of entertainment rather than be spoon-fed by the big traditional content houses.