May 8, 2006 12:00 AM,

Enter the content kings

By Kevin Fitchard

Mobile ESPN and Amp'd Mobile have something to prove. They're the first of the boutique MVNOs, the first mobile virtual network operators not just focusing on a particular customer segment but on a very specific type of customer, one to which they intend to sell a complete lifestyle, not just a tailored service. They're milking the MVNO model for all it's worth. And with a few months of operation under each of their belts, the industry is watching them closely to see how they'll perform.

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Mobile ESPN's target is obvious: The rabid sports fan, the customer already likely to be using many of ESPN's TV, Internet and print products. But Amp'd crosshairs are trained at something much more ephemeral. It's building a brand around a particular type of customer, and although it loosely defines its target segment as youth between the ages of 18 to 30, it's actually going after far more specific groups within that broad demographic, ones that revolve around specific, highly insular music, sports and gaming communities.

You could draw parallels to Virgin Mobile, which also targets youth, but its demographic is broad and its primary tool is its prepaid model. Amp'd, on the other hand, is going after a youth culture, and it's luring them with very specific types of content, whether it's the latest game, the hippest band or the most extreme sporting event.

Despite their differences, Amp'd and ESPN are delving into a completely new territory. Both companies plan to live and die by their brands and associated content. If these two MVNOs don't succeed, it's unlikely that the dozens of other content- and brand-focused MVNOs following in their wake will, either.

“The problem with being the first major post-paid MVNO is that we don't have a road map to follow,” said Manish Jha, senior vice president and general manager of Mobile ESPN, which launched at the Superbowl this year. “We're on our own, and we've been learning a tremendous amount.”

Mobile ESPN and Amp'd have taken completely opposite approaches to their mobile content, which both companies claim to be their core value. Mobile ESPN, naturally, is leveraging its parent company's massive stores of content, as well as its relationships with sporting franchises worldwide, to create a sports content experience unparalleled in the mobile world. Its key application is called Sideline, a content organization user interface, conceived by mPortal and built by ESPN and UIEvolution. Sideline is an ever-present Java application that allows customers to access sport scores, stat highlights, newsreels and fantasy team applications with one click, all of which can be customized to a customer's tastes.

This is included with the basic bundle of service. But those monthly charges are high. Although ESPN has added a budget 100 minute plan for $35 per month, the majority of its plans start at $65 per month and go up to $225. In addition, the usual array of games, ringtones and wallpapers — many of which are sports themed — are available through a wireless application protocol portal.

ESPN's strategy is fairly straightforward, pushing sports right up to the top of the phone. Not only are millions of individual scores, stats and other cataloged minutiae available within a click or two, ESPN streams live scores to the idle screens of its closed flip phones. Jha said he couldn't emphasize enough how important real-time scores are to Mobile ESPN's customers. “We're often a couple of seconds ahead of our [TV network] — that's quite a feat,” Jha said.

Amp'd, on the other hand, is targeting specific communities of users that display fierce loyalty to a particular type of content or style. Chief Marketing Officer Doug Dobie said that those communities could be in part whittled down to four groups: hard-core gamers, extreme sports enthusiasts, and music fans of either hip-hop or heavy metal music.

What do an Xbox console, an Ultimate Fighting Championship match, a bull rider, a grinding mosh pit and a DJ turntable have in common? At first glance, absolutely nothing, but there are a few ties between those communities: A UFC fan is more likely to listen to heavy metal than R&B, and a lot of youngsters play games no matter what else they're into. But for the most part, Dobie said, those communities are fairly distinct. However, taken individually, all of those forms of entertainment share the common trait of having fiercely loyal followings, loyalties that demand community participation as opposed to passive consumption. It's that sense of belonging to and participating in a community Amp'd wants to tap into, Dobie said.

“Elements of our content will appeal to all of our customers, and certain elements won't appeal to some customers,” Dobie said. “But what's key here is that we get below that superficial level that most carriers stop at. We're trying to dig down to the underpinnings of these communities to find out: What are the things that hold these communities together?”

Without a network to run (Verizon Wireless supplies the EV-DO and voice network), very little marketing and a limited retail channel to worry about (Amp'd now only sells online), most of Amp'd's resources are focused on content discovery, Dobie said. That focus goes well beyond discovery to creation itself. Amp'd has not only sponsored live sporting events and concerts, it has broadcast them over the EV-DO network directly to its customer, bringing in its own hosts, analysts and commentators to create what is basically an Amp'd TV channel.

It has also been homing in on the community aspects of its content foci by promoting user-generated content, allowing “megalogs” where people can post their own media — whether it's video, music or the typed word — for other customers to see. Only an Amp'd user can discover a completely unknown local DJ on its content portal, listen to his music, get other users' feedback, find out where he's playing and post an entry about the performance, Dobie said. And if there's enough interest, Amp'd Live might just broadcast their next concert.

Oddly enough, deciding what content to promote may not be as important as the decision of what not to promote, Dobie added. Many of these communities are just as adamant about what they don't like as they are about what they do like, and Amp'd has to respect those tastes if it is to succeed in pushing Amp'd to the forefront as a brand.

“There's just some categories of music, like country western, that we're just not going to offer,” Dobie said. “We won't do something that's completely down the middle or too mainstream. That's Verizon's sweep spot, and we just won't do it.”

Amp'd is taking a different approach on billing than ESPN because of its different communities with different preferences approach. It's offering basic voice plans starting at $30 and selling everything from messaging to push-to-talk to its Amp'd Live video service a la carte, as well as charging for individual game, ringtone, song and clip downloads.

One key differentiator between Amp'd and the mainstream carriers, however, is the pricing Amp'd has chosen for its core music service: just 99 cents a song, a price on par with wireline services like iTunes, but far below the $2 to $2.50 most carriers are charging for over-the-air downloads.

Although ESPN's and Amp'd's approaches might appear entirely divergent, they might not always be so. ESPN may have a unified content offering allowing it to offer a unified content bundle, but Jha said there is still a lot of room for segmentation within ESPN's already constricted but dedicated demographics. Just as Amp'd has music fans that lean more toward hip-hop than heavy metal, Mobile ESPN has sports fans that love football but could care less about hockey and has tennis fanatics with milder interests in baseball or basketball, Jha said. Right now, ESPN allows them to customize their content portals to reflect their sporting tastes, but there are plans to segment the service further to target the individual rabid fans in each category, Jha said.

“It's all part of the plan you see unfolding in front of you,” Jha said. A lot of that strategy is governed by retail, he said. With its current distribution in Sprint stores and mall kiosks, ESPN has to offer a very broad service, but as it refines its retail channels, it can focus services geographically and along different sports lines.

“Right now, we're just educating people about the service,” Jha said. “We wanted to start out with a broad service — we launched at the Superbowl, you can't any broader than that.”

Unlike the other MVNOs launched so far, Amp'd and Mobile ESPN are not trying to distinguish themselves on price, billing or a service tailored to a specific market. They're differentiating themselves entirely through content. It's a strategy that MVNOs like Helio, which will focus on cutting-edge technology, and Disney Mobile are expected to follow later this year. But an MVNO isn't the only way media companies are approaching the wireless space. A lot of big name brands with loyal followings haven't announced any plans for MVNOs. In fact, many of them are approaching the market more with merchandizing content in mind, rather than creating a dedicated wireless service.

Motricity and other mobile merchandizing companies have gotten into the business of wireless by enabling entire brands without tying them into a specific service or network. Motricity's partnership with BET is a perfect example. BET is a brand that has a specific and loyal demographic and loads of content to sell, but it has chosen not to pursue an MVNO, said Dov Cohn, senior vice president of marketing solutions development for Motricity.

“BET is building a strong mobile brand, but it is not getting into the business of selling its own voice plans and phones,” Cohn said. “Becoming an MVNO is not necessarily the right or wrong choice for a media company. It's just a different strategy. It all depends on what kind of business a company wants to be in, but ultimately, being an MVNO is a very expensive proposition.”

And although the Walt Disney Co. has chosen to launch its own wireless services around the Disney and ESPN brands, it will still have to do exactly what BET has done: create a dominant mobile content presence to satisfy the needs of Disney and ESPN fans who aren't quite committed enough to devote their entire wireless experience to those brands. In fact, aside from a few exclusive bits of media, the content they are offering over their MVNOs isn't any different than the content they are offering over other carriers' portals or over third-party wireless Internet sites.

ESPN isn't denying sports scores to Sprint users, and Disney isn't reserving all of its wallpapers for its Disney Mobile subscribers. It's the way they are presenting that content that makes their MVNOs different, said D.P. Venkatesh, CEO of mPortal, the company consulted on the creation of ESPN's portal and the designer of Disney's.

Verizon's Vcast Music will carry the same songs that Amp'd is promoting. Amp'd will merely be bringing the songs with which its users identify to the top of the deck, eschewing Britney Spears and Justin Timberlake for the Yeah Yeah Yeahs. ESPN will still deliver the same stats to any handset in a few browser clicks, but it will stream those same stats directly to the external idle screen of the Mobile ESPN MVP phone.

Those companies have already taken the first steps to tightly integrate their audiences' favored content with their phones, and that integration will only become tighter and tighter, Venkatesh said.

“At the end of the day, this content is not unique,” Venkatesh said. “The MVNO isn't delivering you anything new. It's just changing the way you consume that content.”