Can carriers morph into media companies?

As I met with operators and listened to panel discussions at the CTIA Wireless I.T. & Entertainment show in San Francisco last week, I had the sneaking suspicion there are still a few mobile operators harboring dreams of being content companies in addition to being wireless carriers. 

You'd think that dream would have been crushed by the downfall of Amp'd Mobile, the mobile virtual network operator that filed for bankruptcy and shut its doors earlier this year. Amp'd, as you may recall, envisioned itself as a content provider. The MVNO spent lots of money building a studio in Los Angeles and developing original content. While it had some success with programming such as Lil' Bush, which started as a series of short-form episodes available exclusively on Amp'd Mobile. It was quickly picked up by the Comedy Channel for extension to a much larger TV audience, but Amp'd was never able to prove that the original content strategy worked. In the end, the MVNO filed for bankruptcy and it was revealed that nearly 80,000 of its 200,000 subscribers weren't paying their bills.

So why would Sprint decide to pursue the original content strategy?  Sprint announced earlier this month the launch of SEE (Sprint Exclusive Entertainment), a new mobile TV network comprised solely of original programming. SEE, along with its production partner Intersport, will produce brief on-demand clips featuring on-air personalities such as former NFL MVP running back and current NFL Network analyst Marshall Faulk, sports mega-agent Drew Rosenhaus and onetime VH1 VJ Rachel Perry. 

I'm surprised Sprint would make this move now, especially when the market for original programming hasn't been proven. According to a recent Yankee Group report, "Recognizing the 10 Myths: A Mobile Entertainment Intervention," one of the biggest fallacies among mobile operators is that they should be media companies. According to The Yankee Group, 15.3 percent of respondents to its consumer survey said they were interested in paying for the same content they already enjoy at home. That small number, according to the consultancy, is tempered by the fact that most respondents (67.8 percent) said one reason for not adopting mobile video was the additional monthly fee. Yankee Group says that instead of pursuing original content strategies, carriers need to recognize that entertainment is entertainment and consumers want what they know and like. 

Verizon Wireless is following the Yankee Group's advice. During a conversation with Lowell McAdam, CEO of Verizon Wireless, he said there are a lot of smart people out there who know how to do content and Verizon would rather let them do it than try to produce content itself. "We are good at building networks and building distribution. We are good at customer service and product development," McAdam said. "[Content] is one aspect of product that I would rather go do a deal with whatever the hottest content is rather than try to be on the leading edge. That's not a skill set for us." 

I think McAdam has the right perspective. Carriers should do what they do best--run networks. And let the entertainment companies develop mobile entertainment. -Sue 

P.S. On Nov. 1 at 2 p.m. EST, I'm hosting a webinar, "Behind the Scenes at the CTIA IT Show--What's Hot? What's Not?"  My special guests include Yankee Group's Linda Barrabee and Andy Seybold of Andrew Seybold Inc. We will be talking about the stories-behind-the-headlines and key trends from the show. Please join us, we've set aside plenty of time for your questions. Register here.