I Wanna Party Like It's 1999: Let's Celebrate i-mode

I suspect that I'm gaining a reputation as a mobile cynic... as a curmudgeon, if you will. But guess what bitches my friends, I love me some mobile and I love me some mobile entertainment even more. OK, I'm a little bitter that it's almost impossible to generate a meaningful profit deploying a content service in mobile. Like, weren't we entitled to make bags of money in this medium post-dotcom? C'mon, with an intrinsic business model and a ubiquitous install-base... we were going to be printing it baby!... *Xanax kicks in*. Well that never happened. Anyway, CTIA is fast approaching and you know what?...it's time to forget about practical concerns and celebrate! Let's celebrate 10 years of mobile entertainment and the service that launched this madness!

In February 1999 our Japanese friends at NTT DoCoMo, after spending half a decade and a shitload of cash ($10bil) on data infrastructure, launched a proprietary mobile internet service called i-mode and (stroke of genius) rapidly enabled all the handsets on its network to access it. It was, and still is, a very closed, controlled ecosystem... the AOL of mobile. But, like AOL did online in the US, i-mode did an amazing job of introducing a lot of Japanese consumers (who typically didn't have connected PCs at home), very rapidly, to the mobile internet. Perhaps, more importantly, it got them comfortable with the concept of paying for digital content like ringtones, emoji (graphics) & DecoMail (email animations). DoCoMo persuaded content owners to jump on board and make the service compelling by promising ubiquity and generously sharing content (not data) revenue (90%) with those IP owners. For those of us outside Japan, who were exposed to this, it seemed like the Holy Grail... and it was.

In six months i-mode had over 1mil subscribers, by August 2000 they had 10mil. Then, to make the service even super-sexier, in 2001 DoCoMo blessed users with the world's first 3G service (FOMA). By 2006 almost 50mil Japanese were using the mobile internet through i-mode and paying $2 or $3 each in monthly subscriptions for access to each of their favorites from a choice of 12k official, or 100k unofficial, sites. With an average i-mode ARPU of around $17 per month (including data fees)... that meant DoCoMo grossed over $10bil in 2006 from the service (it's over $15bil now) and paid content owners almost $2bil. Most of the content being consumed was local, but western companies like Disney, which was already a consumer products powerhouse in Japan, saw the opportunity early (mid-2000) and created a couple of character-based i-mode sites that quickly became very popular and, as mobile legend has it, Disney Mobile Japan was generating $150mil in annual revenue by 2005.

Frankly, it was the story of Disney's mobile success on i-mode, augmented with some European monophonic ringtone hyperbole, that got a cadre of the brightest young minds outside Japan (who'd been tumbling in the whitewash of the dotcom bust) super-excited about the business potential of content services on mobile phones. These individuals would go on to become the pioneers who created many of the companies, or their antecedents, that I write about on this blog. So thank you NTT DoCoMo, thank you i-mode, thank you Mari Matsunaga (inventor), thank you Disney for creating this frenzy and this fine mess. It's the funnest thing I've ever done.

Breaking: net mobile AG Shares Up 30%+ On NTT DoCoMo Bid

NTT DoCoMo today announced it's intention to buy German mobile content platform company net mobile AG (#16 on my Mobile Entertainment Top 20). net mobile AG, which last year bought platform pioneer Minick, provides (among many other things) WAP services for premium content brands like Universal Pictures. More to come...

Stories I'm Watching This Tuesday Morning

• T-Mobile UK & Orange UK announce planned JV to create Britain's largest carrier (mocoNews.net)... the weakest players in the market are combining out of desperation to create a very big (28mil subs) weak player, the short term result could be the loss of lots of subs to hungry competitors, in a very saturated market, if the transition isn't handled deftly.

• How To Fix The App Store (Business Week)... Wow!...when BW jumps on the criticism bandwagon of Apple's seemingly arbitrary approval process for Apps, it's a clear sign this is no longer just a mobile content industry concern... perhaps Apple is the new Microsoft after all.

• NTT DoCoMo Considering US MVNO (GigaOm)... This is not a post from The Onion! The idea is to promote iMode to the US consumer... haven't we been there, done that bought the t-shirt, and decided it was lame with mMode? Maybe AOL should try to relaunch as an application...or maybe, like DoCoMo's MVNO plan, that would be one of the stupidest ideas ever.

• iPhone Is A Loss Leader, So Says Danish Researcher Strand Consult (PocketGamer.biz)... it's becoming generally agreed that the iPhone is expensive for operators to deploy in terms of paying Apple for exclusivity, customer subsidies & network resources, what is less clear is whether the halo effects more than compensate.

• Mobile and Retail: Calling In Air Support (MediaPost)... great story about how retailers are failing to opportunize the growing propensity of consumers to research purchases while instore via the mobile web and mobile Apps.

Is Japan The Mobile Handset Galápagos?

A great story in the Sunday New York Times discusses the inability of Japanese handset manufacturers to parlay their ostensibly ultra-cool & uber-advanced domestic devices into worldwide consumer phenomena. Despite having developed capabilities like email in 1999, cameras in 2000, 3G in 2001, full-track downloads in 2002, mCommerce in 2004, broadcast TV in 2005, as well as super useful shit like universal barcode readers & video conferencing, companies like NEC, Panasonic, Fujitsu & Sharp get absolutely no love outside the land of the rising sun. The article attributes the problem, primarily, to inelegant, proprietary & "clunky" software...which makes developing apps for the devices cumbersome for publishers...and a Japanese proclivity for oversized clamshell style devices. While I think the software & style points are valid, I think the bigger issue is the difference in the evolution of how Japanese & most non-Japanese consumers perceive/use their mobile devices.

In Japan the mobile device, for most consumers, was the first & primary access point to the internet (and email) and NTT DoCoMo's iMode was the equivalent of AOL, Mosaic & Outlook...which was accessed from an NEC handset over the carrier's network, rather than from a Dell Inspiron 7000 with a 28.8 modem. Therefore Japanese handsets were basically 12-key netbooks from their inception. The capabilities that were mission critical for those devices - email, browsing, chatting & commerce - weren't important in (for example) the US, because early adopter types and soccer moms already had laptops to handle those functions. For Americans, until very recently, their mobile was for calls, texts (never big in Japan) and narcissistically repping badass-ness with a kickin' polyphonic tone. A device that could manage those tasks with the added benefit of looking slick in your hand, on your ear on next to your cutlery at Houstons (e.g RAZR) was an American rockstar. But now that the iPhone has enlightened the average Western consumer to the virtues of the mobile internet and the utility of downloadable apps, perhaps the ways in which we use and perceive our mobile phones are homogenizing with those of the Japanese...and, perhaps, their technologically sophisticated handset industry is going to surprise us with some uniquely evolved superstars in the smartphone game.

Turning Japanese...Adult Content Chokes The Pipe

A double entendre peppered article from Bloomberg this morning highlights network capacity issues that Japanese mobile operators are facing with "unlimited" data plans, on their notoriously virile 3G networks, due to downloads of adult video content. NTT DoCoMo and KDDI have already imposed limits on some of their heaviest users and Softbank is now considering a similar move. One of the biggest issues is that adult content usage is really spikey...with capacity being taxed most greatly in the wee hours of the night (so many troubling images). The article claims that Japanese adult sites are seeing about 1,000 new subscribers a day, paying as much as $100 each to sign up. It's not entirely surprising that this situation is developing first in Japan, where they've had good data-ready 3G networks since 2001, where they have great handsets and where most people use their mobile phones (as a opposed to computers) as their primary access to the internet. So...it's not that the Japanese are any randier than the rest of us, they're simply early adopters (thought leaders, if you will) of a category of mobile content that Juniper estimates is currently worth $2.5bil WW and that will double in value to 5bil by 2013.

The most troubling aspect of this story (and there a few) is that it demonstrates the weaknesses of so-called advanced mobile networks WW. Frankly, it's become glaringly obvious that 3G networks are not yet ready for primetime (or latenight) when it comes to streaming video. The proliferation of data caps, lack of support for video calling and examples like the iPhone's delayed support of tethering, slow-boating of video-streaming Apps and resistance to Flash speak volumes about the continued frailty of these networks. As consumers rapidly get more comfortable with web-browsing on their phones (like in Japan) and come to expect that they're favorite video sites from the fixed-line internet (e.g. YouTube, Hulu, etc.) will work, this issue will become a bigger customer service concern for the carriers...and a more painful lost revenue opportunity for site owners, publishers & content owners. Let's hope that while the mobile operators trumpet the virtues of & spend billions on their WiMax and LTE 4G networks that they don't totally neglect the capacity issues of their 3G networks and sour a generation on the potential of mobile video. Oh yeah, and note to the more prudish mobile networks and hardware manufacturers out there...the history of other media (i.e. cable, VHS, internet, etc.) suggests that you should get comfortable with adult video content leading adoption of video services on 3G, 4G or whateverG...to the extent that's what you want.