Free Content On Mobile Phones Would Spur Growth
That's the advice of a new white paper from market research firm Parks Associates and the Entertainment Technology Center@USC titled "How Hollywood Can Out-Apple Apple." It urges content producers to offer up free mobile goodies as loss-leaders the way Apple has used free or low-priced songs and videos to spur iPod sales.
"Demand for mobile content will grow as consumers become more accustomed to it, but their appetite must be whetted with free content," wrote authors John Barrett of Parks Associates and David Wertheimer of USC. Using free clips and previews to promote movies or TV shows will pave the way for paid mobile content later, they argue.
Initially, studios can simply repurpose existing content as a cheap way to tout new theatrical releases and DVDs. Eventually, they would have to create programming that is specialized for the mobile screen, where things like panoramic scenes and rapid cuts don't play well. The content's uniqueness would also add to its appeal.
"In the end, 'advertainment' becomes content in and of itself and a profitable way to provide consumers something to watch when they find themselves in situations where a little diversion is welcomed," according to the report.
In making their case for free mobile content, the authors cite a familiar litany of technological and other hurdles hampering mobile media's growth. In addition to the small screen, these include limited mobile bandwidth, lack of high-quality content and digital rights licensing issues.
The report also notes that consumers are reluctant to pay for portable video content. Less than 10% of Internet users would be willing to pay for a digital movie download (from a site such as iTunes), according to a Parks Associates study.
Once the business and technical obstacles are cleared, free mobile content will help users see the potential for made-for-mobile content. "At the same time, consumers will have a greater tolerance for a less pleasing, small screen experience if they did not directly pay for the content, i.e. expectations for free movie previews will be lower than for paid, feature-length films," the authors argue.
If the Internet is any guide, however, weaning consumers away from free to paid content is hardly a recipe for success. The New York Times last year pulled down the pay wall for access to its Op-Ed columnists after failing to sign up enough subscribers to make it worthwhile. Outside The Wall Street Journal online, few Web publishers have prospered via paid subscriptions.
The Apple analogy drawn by the Parks report also seems inappropriate, since the studios aren't upselling content to much higher-margin products like the iPod. As with the Internet, mobile media will more likely expand through an ad-supported model rather than on a fee basis.
"It's still early, and largely, it's an open area of opportunity," said report co-author David Wertheimer. "Content companies and service providers need to experiment with the models to find what resonates with consumers."