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Entertainment Companies Target Wireless As Revenue Source

Executives outline ways for their businesses to profit in the wireless world.
As high-speed cellular and wireless networks finally go live across the United States, major entertainment companies are scrambling to provide content and make money off the new medium. Executives laid out some of the ways that they expect to profit off the wireless world during Thursday's keynote address at the CTIA Wireless IT and Internet Expo in Las Vegas.

"We're very excited about wireless gaming," said Fred Huey, chief operating officer and CFO of Sega.com. Wireless gaming--where users can pick up their cell phones and play a game for a few minutes while they wait on line or for an appointment--represents a great potential revenue source, he said. But there are significant hurdles to be crossed, particularly in the wide array of standards, technologies, and screens available for phones that are often in service only for a year or so before getting upgraded. "We need to make sure that the life cycle is long enough that we can recoup our investment," he said.

For Sony Pictures Digital Entertainment executive VP Patrick Kennedy, the key to making money on the new networks is exploiting existing properties, like selling Spider-Man movie screen savers and ring tones from Sony Music artists. Cell phones are a great place to make money because users want to customize them and are used to paying cash to do so, he said. "This is the dawning of a new medium which is just as personalizable as the Internet," he said, "but where there are existing payment models and where consumers don't expect content for free."

Major music labels aren't just looking at wireless as a new revenue stream, but as a potential savior, according to Jay Samit, senior VP at EMI Recorded Music. Samit said downloadable music ring tones for cell phones represent the first new major revenue source for music labels in years and have already grown into a $1.3 billion market worldwide, a surprisingly large portion of the $33 billion overall music industry market. While that's obviously good for music-copyright holders, it's also great news for wireless service providers, he said, because users who customize their phones are likely to spend far more time using the devices and paying for other wireless services. "The music industry will save wireless," he said, "and wireless will save the music industry."