Two weeks after swallowing the rest of the Crazy Frog, News Corp. is reorganizing its mobile business.
Rupert Murdoch’s media giant this week will unveil Fox Mobile Group, a three-pronged operation created to leverage its immense portfolio, content-creation capabilities and distribution channels. The company also opened a Singapore office that will serve as a hub for its mobile efforts across Asian markets.
The news comes on the heels of Fox’s acquisition of the remaining 49% of Jamba from VeriSign Inc. for $200 million. Fox gained controlling interest in the worldwide distributor two years ago for $188 million as the ringtone market began to plateau and VeriSign began to step away from the content dance floor.
While Fox will retain the Jamba brand (the division does business in North America under the Jamster brand), it hopes to launder some of the stains Jamba has picked up in the last few years. Like several established content providers, Jamba has come under fire from consumers and watchdog groups for deceptive marketing practices and targeting under-age users with pricey subscription services.
“In part, we’ll try to provide a positive consumer experience when dealing with mobile content, which is something the industry needs badly,” said Fox Mobile Group CEO Mauro Montanaro. “We’ll focus much more on a pull marketing approach rather than the push approach that we and everybody else have used so far. We’re going to work very much with b-to-b companies, with carriers, even with OEMs [original equipment manufacturers] to push our brands out there. Distribution is key.”
More content
And Fox will continue to push the envelope when it comes to developing content, according to Mauro. One of the first players to experiment with made-for-mobile video based on traditional TV content, the corporation drew attention – if not a lot of eyeballs – with “mobisodes” of the “24” and “Prison Break” series.
“Today we see that the models from the Internet in terms of video are still not very well designed. The consumer wants 15 minutes, tops,” of video on the Web, Montanaro said. “We’re looking at snacks (for mobile consumption), we’re also looking at TV series that can be replicated and repeated. We’re doing four TV series on mobile, and we’re aiming at mobile consumers but also something that can be consumed across platforms. We’re looking at properties that don’t stick only on mobile.”
The company will look to other types of content, too, as the ringtone revenues that Jamba enjoyed has flattened in many markets and actually fallen off in North America. Games will fill out a larger portion of Fox’s mobile portfolio, and Fox hopes to create “hybrid” offerings that combine two or more types of content to create new categories of mobile goodies.
Fox may also be uniquely positioned to address a longstanding problem in the mobile content space, Montanaro said: The disconnect between the cost of doing business and the low price points of one-off content sales. While the cost of acquiring customers has plagued vendors such as Jamba, Buongiorno and others, Fox may be able to leverage its standing as a media power to drive traffic and ramp up consumption.
“A fundamental problem is that the economics of this industry are such that many companies can survive only by selling subscriptions and not a single purchase,” he explained. “Nobody can survive with a single-purchase model alone, but that’s what consumers want.”
New brand for N.A.
Perhaps most ambitious, though, is a new U.S. brand slated for launch in the first quarter of 2009. The move is an effort leverage Fox’s video production capabilities and Tinseltown talent to push the mobile content market beyond ringtones and into a new era of rich content that often extends from more established platforms such as TV and film.
“With this new brand we’ll leverage a lot of the synergies with Fox in terms of content production. This industry has suffered in the past from what I would say is extremely low quality of content; we need to utilize some of the creative juices in Hollywood,” Montanaro opined. “Clearly, the lack so far of big media companies in terms of direct presence rather than just licensing in this space has created a bit of a vacuum in terms of quality content. I think the whole industry is still stuck where it was seven years ago. There hasn’t been a lot of action.”
