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Fox Mobile Group Surrenders to Application Store Dominance

by Nitesh Patel | 1月 14, 2011

The failure and subsequent sale of News Corps direct-to-consumer (D2C) mobile asset, Fox Mobile Group, (which includes Jamba, Jamster, Mobizzo,  iLove, and Bitbop) to Jesta Group underlines the challenges faced by media companies aiming to build a position in the fragmented and fast moving media landscape. Furthermore, it serves to highlight the need to understand <a href="http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=4732">the dynamics underpinning mobile media content distribution</a>. 

News Corp. acquired a controlling interest in D2C mobile content provider (e.g. ringtones, wallpaper, games, and video) Jamba from Verisign in September 2006 for $188 million. In October 2008 it acquired the remaining 49% for $200 million. The unit was merged with the Fox Mobile Entertainment unit. 

There are obvious pros and cons for media companies to develop their own branded distribution channels. On one hand media companies can take a greater share of consumer spend if they retail the content themselves, rather than through an operator or mobile content store that take a share of revenue for retailing. Owning distribution also allows media companies to control their business model and promote their own content favourably ahead of other content providers. Media companies also have the capacity to make their own content exclusive to their portal, creating consumer demand to visit their sites (assuming they have desirable content). On the other hand owning distribution channels can lead to internal conflict between whether to license content for distribution through alternative channels or not. Most importantly, content distribution requires a different set of skills to media creation e.g. content acquisition, aggregation, and merchandising among others.  So, despite access to strong and desirable content, and the fact that globally <a href="http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=5750">consumer spending on premium mobile content will continue to grow from approximately $35 billion in 2010 to $65 billion by 2015</a> what went wrong?

<strong>1) OEM stores to the fore:</strong> OEM application stores, lead by Apple’s App Store have become a popular method of accessing mobile applications and content. 

a) OEM app stores provide greater diversity in applications and content than the traditional ringtones, wallpaper, games and video content offered by many D2C mobile portals. App stores also offer content from a large number of content providers. 

b) OEM stores are typically well integrated with the handset and provide a better user experience than ordering via mobile internet or using premium SMS.

<strong>2) Sullied brand:</strong> Jamster and Jamba developed a bad reputation for misleading young consumers into signing up to expensive subscription based services. Although it attempted to amend this image the tag remained.

Although Fox Mobile Group no longer exists we do not expect News Corp. to abandon its ambitions in this area. In our opinion emphasis should now be placed on driving branded applications and content distribution through popular OEM app stores, while simultaneously licensing content to publishing brands that have achieved success in content distribution, e.g. <a href="http://blogs.strategyanalytics.com/gwp/?p=171">Hulu or Netflix</a>. 

Nitesh Patel

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