Source: Flickr user akakumo
It wasn’t so long ago that carriers owned the mobile content world. The most valuable real estate in the industry was the carrier deck where owners of feature phones (remember those?) shopped for overpriced ringtones, wallpaper and games.
The ecosystem changed with the rise of Apple’s App Store and Google’s Android Market, which thrive outside the carrier realm. Network operators have no control over what these retailers sell or how they sell it, and – at least when it comes to the App Store – they are cut out of download revenues entirely. But the emergence of the cloud could help them regain their winnowing relevance in the world of mobile content.
That’s something Verizon Wireless is surely considering with its Media Manager, a $3-a-month cloud-based service that offers 25 GB of storage capacity, that enables users to access files from a desktop a computer or on the go with a mobile handset. The service initially launched last year on feature phones, and has quietly been expanded to smartphones.
As Kevin noted over at GigaOM, companies like Dropbox and Zumodrive have built businesses by enabling users to access cloud-based music, video and pictures. Those types of products are increasingly moving to handsets, which get more sophisticated and easier to use by the day. Verizon certainly has both the brand power and the marketing acumen to push such a service. So Media Manager is a wise strategy that could generate revenues and increase user stickiness, lowering churn. But it also creates an opportunity for Verizon to combine cloud storage with content sales: The carrier could sell songs, games or video content, guaranteeing users lifetime access to their digital content even if they switch handsets – so long as they stuck with Verizon, that is.
But for Verizon or any other carrier to leverage cloud-based content sales, it’s worth minding a few potentially lethal pitfalls:
Customers won’t pay time and again for the privilege of owning and accessing their own content. Users understand they have to pay a one-time fee for a piece of content, and they’ll likely even tolerate a small monthly charge for storage. But Verizon plans to move away from unlimited data plans and embrace the tiered-pricing model, which means accessing data in the cloud could count against any bandwidth caps. That would essentially add a third charge, and that would be the kiss of death for any content sales that could occur through Media Manager.
Storage must be rock-solid. There are lots of benefits to storing premium content alongside personal content in the cloud, but the cloud that stores that stuff can never lose it — or, worse, allow hackers to access it. That’s a lesson T-Mobile USA has learned the hard way multiple times.
Cloud-based services must be marketed effectively. Carriers must not only make customers aware that such offerings exist, they must explain exactly why these offerings have value. Business users could be swayed by the concept of being able to easily access and tweak documents on the go, for instance. And many consumers (most of whom have never heard of Dropbox) would surely love being able to upload hundreds or thousands of photos and videos, accessing them from any device and sharing them via social networks with just a few clicks. It’s just a matter of making such services mainstream, and that’s done through marketing.
There are plenty of other hurdles, of course, and carriers have a disastrous track record when it comes to selling content aside from ringtones (which is why Apple and Google have thrived in the first place). But the cloud provides a tremendous opportunity for network operators to sell content to users as long as they remain subscribers. That not only means new revenues immediately, it gives customers a good reason not to switch carriers.
Related Research: Why Carriers Still Hold the Key to Handset Sales