Feature: Waiting for the mobile revolution - June 2006  

In the late 1990s, we all believed that WAP, GPRS, 3G and mobile broadband technology would revolutionise sports, writes Björn Stenbacka, CEO of Sports Telecom, a company specialised in coordinating mobile operation for brands and rights owners. The general opinion in the telecom industry, at that time, was that the more distinct mobile killer applications would be based on sports. With high speed mobile broadband, sports fans would be able to watch soccer, ice-hockey, car racing and other sports on their mobile. But seven years later, we are still waiting for those killer applications to revolutionise sports.

The fact that the mobile revolution has not occurred has made rights owners, brands and the sports industry disappointed and even suspicious. There is still no real proof of the power of mobile services and mobile technology as a generator of major income and an effective media channel for the sport industry. There are good examples, but we have not witnessed any revolution per se. Traditional merchandise is still more important than mobile services and mobile applications for the rights owners.
Mobile services and mobile technology is and will be a powerful revenue generator and media channel for the sport industry, this I am sure of. Perhaps the biggest problem today is that rights owners have not yet paid mobile services and applications enough attention. Network owners, mobile carriers, content providers and technology developers have mostly been seen as potential sponsors and technical partners, not as providers of tools for building a lucrative mobile entertainment service portfolio around the brand.

Mobile goes large

The good thing is that especially carriers tend to introduce mobile broadband concepts in connection with big events. The FIFA World Cup in Football in Germany is no exception. Indeed, large events such as the Super Bowl, NHL finals, FIFA World Cup, the Olympics and Indy 500 offers excellent opportunities to demonstrate mobile technology.
Many rights owner have experience from single downloadable mobile services. One single Xbox, Playstation or PC game can bring in a lot of revenue, but this is not possible with a single mobile game - not even if the brand is very strong. For mobile services to generate as much money as a successful console game there need to be many different games and services built around a brand.
To achieve a mobile service concept including many different services, everything from 2D and 3D games to different graphics, MMS, SMS, video services and interactive services, and covering different market demands and technology platforms, the rights owner needs to build a network of mobile service partners. This is sometimes hard for rights owners to understand. It is a much more difficult and time demanding task to be successful on the mobile market than for instance on the console game market. 

Seeing the wood from the trees

In general, I believe rights owners easily see no big difference between mobile games, graphics and other downloadable or preloadable services and online and live mobile services and applications. The truth is though that the difference, both in terms of technology and investment, is huge. Especially when it comes to live and online services there is so much specific technology involved that it becomes a problem. Rights owners prefer easy turn key solutions.
On the other hand, I believe technology companies have problems in understanding that the sport industry is secured by rights and licence agreements. They believe that their mobile services and applications are easy to introduce. I have met executives of global telecom companies assuming that you just build a mobile NASCAR, soccer or golf service and launch it. They have a hard time to understand how protected the sport industry is by licences. 
There are not many companies on the market offering a one interface solution for rights owners. There are many technology partners, but no companies coordinating the business, smoothing the technology driven approach, implementing the ideas and handling the rights and license issue. There is, as I see it, still a quite significant communication gap between the sport industry and the telecom industry. This gap is holding back the development of mobile sport.

The importance of the brand

How important is then the brand itself? Since Sports Telecom was founded in 1999, we have built mobile concepts around brands. The first services we developed were in 2002 for Formula One drivers Michael and Ralf Schumacher. We found out that even though they both were known Formula One brands, there was a huge difference between the interests for the two. Schumacher, as World Champion and Ferrari driver, could sell any mobile service and the distributors where fighting over the services. At the same time there was almost zero interest for Ralf Schumacher-branded mobile services.
For a mobile service to be successful and to generate good revenue the brand needs to be strong. This has become more and more important in recent years. Go to a carriers or a popular portals website and look for mobile services. You soon find out that many of the services are branded, with a sports or an entertainment brand.
Why is it then so important that the brand is strong enough? If we look at simple downloadable mobile games it is clear that the stronger the brand is, the shorter is the value chain. With a short value chain we usually understand a direct carrier distribution. There is a content provider producing the content, but no distribution aggregators or other ‘partners’ are needed to get the service out to the consumer. The carrier usually takes 50% of the revenue, simply because the carrier owns the network and usually also markets and supports the service. With every aggregator or distributor added to the chain another 10-20% of the revenue disappears. So in the worst case, the brand is left with a couple of cents in revenue per downloaded service.

Differences in the brands

Sports Telecom has compared the success of mobile games based on three relatively strong brands. We have looked at games distribution network, distributor game support, average revenue per downloaded game and sales volumes. The games have been based on the brands of Formula One driver Juan Pablo Montoya, Indy Racing League contender Scott Dixon and Formula One driver David Coulthard. The brands have been rated as one, two or three stars, with the possibility to a plus. Montoya got a two star+ rating, Coulthard a two star and Dixon a one star rating. A three star brand is a brand with global reach, a factor very important for a mobile service.
The Montoya game was launched in November 2003, the Dixon game in April 2005 and the Coulthard game in January 2006. The Montoya game was immediately distributed by Nokia worldwide and supported by Nokia after launch. The Coulthard game also got direct operator distribution with support immediately after launch, but mainly in Europe. The Scott Dixon game was distributed after launch through aggregators and portals. The average revenue per download for the Dixon game was 50-70% lower than for the Coulthard and Montoya games. Volumes were 50-70% lower as well.
That the brands differs is one conclusion of this study. But a strong brand is not enough, the service itself also need to be strong. The success of the service is also very much dependent of the success of the brand. Volumes can rise 10 times if the brand starts to succeed. If Scott Dixon had won the Indy 500 this year (he came sixth) we would probably have seen a boost in sales of the game too.
A single mobile service is very sensitive. A rights owner needs to build a mobile service portfolio. Take a Formula One team or a soccer club. The amount of data, information, sounds, pictures and footage in different formats is huge. The basis and the structure for building a broad mobile service portfolio is there.  But we need more courage from the rights owners to invite the telecom industry to build services and applications. We need more good examples such as NASCAR - examples that show the potential of mobile technology. It is a question of getting the job done!

As well as being CEO of Sports Telecom, Björn Stenbacka, is a PhD student at the Swedish School of Economics and Business Administration in Finland.

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