Given the fast pace of the wireless industry, it’s no wonder things are constantly changing for aggregators as well.
The middleman is always susceptible to that age-old question: Is it really necessary?
Wireless aggregators, both those that handle messaging and those that handle content, are no exception, although the question arguably might be more pertinent for content aggregators than messaging companies. After all, carriers can and do go direct to content companies, especially big-name brands, to do their business, eliminating the need for an in-betweener.
Yet even at this stage of industry maturation, you’d be hard-pressed to find someone, including those at major carriers, predicting aggregators will be taken out of the picture altogether. Insiders say carriers are cherry picking the deals they want to do direct with big media companies and leaving the rest to content aggregators. And the rest, apparently, is enough to keep at least some of them busy. “It’s not that the need or the function is going away,” says Steve Spencer, CEO of Upoc Networks. “The trend clearly is combining a couple layers of the value chain for different companies.”
CHANGES IN THE AIR
If nothing else, reorganizations and consolidation are fairly certain. Last fall, Zingy, citing a decline in the ringtone and mobile personalization services market, closed down its personalization division and reorganized under the name Vindigo, a developer and distributor of mobile applications and advertising solutions. Dada Entertainment acquired Upoc Networks, and last year it aligned with Sony BMG in a joint venture.
Motricity completed the acquisition of the mobile services business unit of InfoSpace, which sold its Moviso content business to FunMobility. This year, FunMobility acquired Moblastic, a mobile social company with photo editing technology.
Interestingly, Dada is not only Upoc’s parent company but a top client as well. Combined, they represent both the messaging and content sides of the equation. Dada Entertainment is a content aggregator; it collects content from Sony BMG and other entities. Upoc acts as Dada’s U.S. messaging aggregator.
Messaging aggregators can be likened to an Internet ISP, Spencer says. They’re the link that connects a short code to all the carriers that have agreed to carry it, for example. They also typically perform billing functions. Mblox, VeriSign’s M-Qube and Amdocs’ Qpass/Open Market business fit into that category. On a different layer sits the content aggregator, which essentially licenses content from various providers and resells it.
Italy’s Buongiorno frequently pops up in conversations about mobile content, but it is not focused on striking deals with U.S. carriers at this time. The direct-to-consumer company last year was embroiled in a lawsuit filed by a U.S. citizen, but that suit was dismissed. In a lengthy statement, Buongiorno says it never engaged in targeting cell phone customers who had not previously initiated a subscription with the company. Even after customers subscribe, the company says it gives them two chances to opt in to the service before they pay for any content, and it offers an opt-out at any time.
For its part, Dada Entertainment, also of Italian descent, sees big potential for growth in the U.S. market, according to Dada Entertainment CEO Massimiliano Pellegrini. He expects more consolidation and sees great advantages for being connected to U.S. carriers as opposed to simply being a middleman.
Upoc, with its emphasis on social networks, is doing more than your typical aggregation. Upoc is working with Rock the Vote, for example, to engage under 30-year-olds to vote in the primaries. The company tries to engage communities through chat groups, microblogs and the like and is using polls, quizzes and alerts to keep the audience interested. Even after the election, the plan is to keep the community somewhat engaged until the next election cycle. “You can build on top of each event, that’s really the power of doing this,” Spencer says. With Rock the Vote, Upoc acts as a connection aggregator for the short code, which happens to connect to Upoc’s own application, which Rock the Vote also is licensing.
Moviso, which InfoSpace acquired from Vivendi Universal Net USA in 2003, played a big role in the early days of the ringtone business. It was a significant player in the industry, back when it was cutting deals with music labels and creative people in Hollywood. But that role began to change when companies started to take on the challenge themselves of making their content ready for the mobile world. “The role of aggregator may come back, but for now we are not hunting for the next hit … We don’t want to hold the bag of that license,” says Brendan Benzing, a former InfoSpace executive who now serves as senior vice president of product strategies and marketing at Motricity.
|Benzing: Motricity remains committed to the carrier market.|
It’s kind of like being in the movie studio business. For every Tetris – the highly successful mobile game – there are hundreds of flops, and being the one that has to make the decision about what will work is risky at best.
While Motricity is no longer in the business of aggregating direct-to-consumer content, it’s still an aggregator in the sense that it provides companies with connectivity for the delivery of content to a consumer’s handset and billing directly to the cell-phone bill. It works with companies like CNN to manage news alerts and FOX for debates.
Benzing says Motricity remains dedicated to the wireless carrier market. It’s moving its headquarters from Durham, N.C., to Bellevue, Wash., closer to where some of its biggest customers are located. Motricity’s customers include 10 of the top 13 operators in North America and 20 of the top television networks. The company says it has generated more than $1 billion of gross content sales to date and powers five of the top six operator “start screens” with its mobile portal product, which will support billions of page views this year alone.
Going forward, the company will be aligned with its core business of providing mobile content infrastructure services, enabling consumers to discover content inside and outside the walled garden. Those services include powering portals, storefronts, managed Web and search for mobile operators, along with messaging gateway services.
The macro trend is really for the consumer to be his or her own aggregator, in a sense, Benzing says. Consumers use Tivo to set their television line-up. Viewers determine winners on “American Idol.” While it hasn’t quite hit mobile in the same way, that’s the direction it’s going. It coincides with personalization and consumers’ desire to determine what’s on their handset. Motricity already has done that to some extent with carriers like AT&T Mobility and its MEdia Net, where the consumer can set preferences from the browser’s start page.
The bottom line is the role of the aggregator may change, but it’s not going away. “I believe there’s always going to be a market for aggregators … as it relates to supporting the carrier’s objective,” says Mark Levy, a former Moviso content licensing executive who now is CEO of the digital media and entertainment consultancy MaxxoMedia. Too much content and too many independent creators of content exist, making it more economically sensible to have an aggregator – one that is lean with little overhead – distribute to multiple points. “There are times when the aggregator may have a better relationship with the content provider than the carrier does, and they’re in the position to bring something special to the carrier,” Levy says.
Content providers need aggregators, too. “It’s all the bits and pieces and smaller upstarts that need a go-between because they don’t have the staff internally,” says Jupiter Research analyst Julie Ask.
A lot of observers say the role of the aggregator, whether for messaging or content, was predestined to change. In early SMS or MMS messaging days, aggregators were necessary before carriers had interoperable systems. Like the early wired Internet days, aggregators work well in new and emerging industries, when few companies know how to process content for a new space. “Depending on how things play out, roles are created for them,” Ask says. It’s just that their long-term role is not always clear.