Record industry giant Sony Music Entertainment bought wireless entertainment company Run Tones, and will use the acquisition to create a new Mobile Products Group within Sony’s Music Digital Services division.
Meanwhile, wireless application publisher Moviso L.L.C., a wholly owned subsidiary of Vivendi Universal Net USA, said it will sell prepaid phone cards that can be used to buy ring tones through more than 6,000 retail outlets, including 7-Eleven and Wherehouse Music. Each prepaid ring-tone card offers a PIN number, and users can call a 1-800 number or visit the Internet site listed on the card to purchase ring tones. The cards will sell for $5 each and be available on most handsets from AT&T Wireless Services Inc., Cingular Wireless L.L.C. and T-Mobile USA Inc., Moviso said.
Separately, New York-based mobile entertainment provider Zingy scored an agreement with Microsoft Corp. to sell its range of ring tones, screen logos, group graphics, voice messaging and greetings services over Microsoft’s MSN portal.
The range of new deals underscores the rapidly growing importance of the ring-tone business in the United States, as well as the position of the wireless industry in general. The Yankee Group estimates the current size of the U.S. market for ring tones to be about 50,000 downloads a day at about $1 per ring tone. By next year, the group predicts ring tones will be the most important premium service in wireless, amounting to $50 million in revenues.
Indeed, ring tones were a major topic of conversation during the CTIA Wireless IT show last month in Las Vegas. Jay Samit, senior vice president for EMI Recorded Music, went so far as to predict the wireless industry will save the recording industry, a business burdened with music piracy. He said ring tones generated more than $1.3 billion last year in Europe and Japan of the $33 billion spent last year on all music worldwide.
Through Sony’s Run Tones acquisition, the company will get Run Tones’ ring-tone service, personal photo service and its private-label wireless portal service. Run Tones’ customers and partners include Adobe, AT&T Wireless, L.M. Ericsson, Nokia Corp., Openwave Systems Inc., Sony Pictures Digital Entertainment, and the Warner Music Group. Sony’s digital services division offers wireless ring tones and album previews.
Run Tones executives J.J. Rosen and Tim Nilson will lead Sony’s new Mobile Products Group.
Sony’s purchase of Run Tones and the resulting new wireless division represents a relatively new dynamic in wireless. As the industry continues to grow its data business, more and more media companies are looking to extend their brand into the new channel. For example, Sega.com recently set up a wireless business to sell Sega games to wireless users.
While these new faces bring new money, they also could exert added pressure to those already providing wireless data services.
“I am personally disappointed by this (Sony’s) acquisition because I believe it hampers the natural competition that should result from a free market of suppliers and ultimately reduces consumer choice,” said Konny Zsigo, president of WirelessDeveloper.com. The company works to connect content creators with carriers and media partners.
Fabrice Grinda, head of ring tone and content company Zingy, takes a slightly different view, even as his company will be competing directly with Sony’s new wireless business.
“It’ll help increase awareness,” Grinda said of the move, adding that is “also a good thing for people like us.”
Grinda said many of the building blocks for wireless data are already in place, from networks to devices, and the missing component is consumer education. He said a company like Sony entering wireless likely will help raise the level of awareness for all wireless players, including Zingy.
