April 1st, 2005

Carriers’ Walls – Won’t Last as Long as the Incas’ Did

…or even until Verizon launches EVDO in San Francisco? Some estimates in the US already put direct transactions at nearly 25 percent of all content purchases for the cell phone.

Cellular customers in Europe have been buying direct for years. According to my European counterpart, Thomas Husson, nearly 70 percent of ring tones are sold direct. How soon until we see the same business models in the US? Will direct sales be good for the wireless carriers in the long term? I think so. They get 40 to 60 percent of content revenue today in a market that is relatively small. In an indirect market, they are likely to have a cut closer to 20 percent. But, it that’s a smaller cut of a much bigger market, then that’s not a bad thing.

Buongiorno launched in the US this week with their mobile content offerings under the DirtyHippo brand. A bit hard to imagine “fun” in a name associated with one of the most dangerous animals, but they did $106 million in revenue outside of the States last year – hard to argue that it’s not a viable business model.

Thumbplay has had some announcements.

Bango announced on March 14th.

Either these companies don’t think there is enough growth in Europe or they think the US market is ready for direct to consumer sales. I think the US market is ready – at least among early adopters.

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