Content vs. carriers at Mobile Entertainment Live!

Content squared off against carriers at Monday's Mobile Entertainment Live! event as Walt Disney Internet Group executive vice president of development and operations Larry Shapiro debated Virgin Mobile USA general counsel and founder Peter Lurie on the present state of the mobile content industry. According to data supplied by Nielsen Mobile and cited by moderator Tom Wheeler, managing director of Core Capital Partners, about 90 percent of wireless subscribers now have devices capable of doing more than making phone calls, but only 33 percent of subscribers pay for data plans and only 13 percent use them regularly. Per Lurie, the problem is that mobile content is now between eras, with the first generation of services like ringtones hitting a plateau while the next evolution, like mobile video and over-the-air downloads, is still not ripe for mass-market adoption. "The problem is that products are designed from the content owner's perspective, and not with consumers in mind," Lurie said.

But Shapiro contended the problem lies in content access and pricing. "It's still difficult to buy a ringtone because of the bizarre and complicated pricing structure," he said, arguing unlimited data plans and other more creative approaches to billing can remove consumer resistance to purchasing mobile content. "Carriers have a significant role to play in billing solutions--there's a huge value-add they can provide in that environment, but instead they spend their time picking out home-run content." Lurie's reponse: "I haven't seen any content owner willing to take a share of an unlimited data plan. There are too many hands grasping at revenue." Shapiro nevertheless called for a greater measure of pricing flexibility: "We're forced into a paradigm where games are $6.99 or $7.99--instead, let's value-price it, bundle it, or do subscriptions," he said. "There's not much flexibility allowed at any carrier to play with business models and consumer propositions."

Lurie said that many mobile content offerings fail to maximize the possibilities of the wireless platform: "I find that content is delivered in the way the content owner wants it delivered," he said. "The promise of mobile is instant gratification, on-demand delivery and personalization. That's where we can distinguish our content offerings. Customer experiences need to be functional and value-oriented." But Shapiro argued some carriers don't even fully comprehend the behaviors and tastes of their subscribers, citing the example of an unnamed operator executive who rejected a suite of mobile content offerings based on the hit ABC drama Lost because the exec did not watch the series and therefore deemed it "not right" for customers.

Asked by Wheeler his opinion of open access efforts, Lurie replied that for a pay-as-you-go carrier like Virgin Mobile USA, secure handsets are absolutely imperative. "We don't require contracts, so if our handsets aren't secure, we can't subsidize them," he said. "Prices would quadruple." Shapiro said he could not fault Lurie's argument: "Subsidies are a uniquely American phenomenon, and unless there's a radical shift in the business, it's going to stay that way."