VeriSign Inc. finally jettisoned the bulk of its direct-to-consumer mobile content business, selling a 51-percent stake in its Jamba subsidiary to News Corp. for $188 million.
The companies announced plans to form a mobile entertainment joint venture, with Fox Mobile Entertainment retaining the Jamster brand in the United States and the Jamba name elsewhere. Jamba operates under the Jamster brand in the United States. Lucy Hood, former president of Fox Mobile, will become chief executive officer of the joint venture, which will have “key executive centers” in Los Angeles and Berlin.
“Wireless technology gives us an enormous opportunity to reach billions of mobile-phone users with our content,” said Peter Chernin, president and chief operating officer of News Corp. “With this new venture, we’re looking forward to inventing new and compelling ways to engage this exciting new audience.”
Indeed, the move seems like a natural fit for News Corp. The company in February launched Mobizzo.com, a direct-to-consumer storefront selling licensed content from franchises including “Family Guy” and “24” as well as ringtones from Gnarls Barkely, Jessica Simpson and others. Fox has promoted the site aggressively through its Internet properties and in commercials on its TV network.
VeriSign’s direct-to-consumer efforts, however, have struggled recently. American Technology Research analyst Albert Lin made headlines early this year by claiming the business was “looking like a disaster” and downgrading VeriSign to a sell rating. Lin cited a flattening in revenues from ringtones, which account for as much as 90 percent of Jamba’s sales.
“We believe getting out of the ringtone business would be a positive move (for VeriSign) and we would reconsider our stock opinion,” Lin wrote.
And while Jamba’s business appears to have stabilized?the firm ended the second quarter with 9 million subscribers, marking a 24-percent year-over-year gain?analysts have long questioned the margins mobile content aggregators such as Jamba could generate. Rumors had VeriSign shopping the business for more than a year.
Original content plans
The new Jamba is set to offer a wide aggregation of content from music and media companies, as well as original content created exclusively for mobile applications. Jamba partners include Universal Music Group and Warner Music, among others. In addition, Jamba and Fox Mobile Studios have units that create original content ranging from Crazy Frog to multiple animated characters to genres such as manga, activism and extreme sports.
And Jamba, which was founded in 2000, said it has a real-time ability to track and optimize marketing, and thus can quickly react to consumer needs and interests in order to monetize products and services.
The first products expected to be released under the new Jamba are:
- MySpace Mobile Store, an alliance with MySpace whereby Jamba will be MySpace’s global m-commerce partner. Jamba will build an m-commerce engine to enable MySpace users to download ringtones, graphics and animations from top music and media companies.
- The Simpsons Mobile: Jamba will exclusively offer mobile content from the popular Fox series “The Simpsons” through a subscription package tied to exclusive content called the “Yellow Plan” which will include an array of Simpsons-related mobile content, such as wallpapers, screensavers, ringtones and video. News Corp.’s Chernin said in his keynote speech last week the “Simpsons” offerings would include made-for-mobile material; Fox Mobile later said the effort would?initially, at least?feature only repurposed content.
Key to News Corp.’s deal is Jamba’s substantial presence in Europe and other markets outside North America. Fox is banking that it can increase distribution for its “Simpsons” content by offering a subscription service through an aggregator site as opposed to a brand-specific channel. And while the company is rumored to be struggling to attract users to its Mobizzo storefront, Jamba and Jamster have drawn considerable traffic in some of the world’s largest mobile markets.
Off-deck movement
Licensed content owners have long claimed they can sell their wares more effectively off-deck than carriers can on-deck. “I have millions of people coming to my (Web sites) every day,” said Michael Arrieta, executive vice president of Sony Pictures Home Entertainment, during last week’s MECCA event. “I can convert them.” The Jamba deal allows Fox to move content both through a department store-style Web site as well as through its branded channels such as its online “Simpsons” destination.
The new company will become the largest customer for VeriSign’s Digital Content Services group, which offers infrastructure and connectivity solutions to deliver rich content over mobile and broadband networks. Fox’s Mobizzo unit and Jamba are existing customers of DCS.
The companies said they expect their transaction to be completed by the end of this year.
