by Carlo Longino

Another MVNO Takes Aim At The Free-Cell-Service-With-Ads Model

from the this-post-brought-to-you-by-Yugo dept

A mobile virtual network operator (MVNO) called Xero Mobile is better known for its connections to the notorious Gizmondo gaming device, but its business plan is equally sketchy. It says that it will offer free phones and service to users, in exchange for sending them ads. The concept is questionable -- while ad-supported mobile content is a decent idea, it's hard to imagine Xero generating enough revenue per user to make the venture profitable -- as is Xero's supposed implementation of it. However, the idea's attracted the interest of some other people, who want to move forward with a similar idea in Europe, with an MVNO called Blyk. The founders come from a little more credible stock than Xero's: one is the former president of Nokia, the other the chairman of a Scandinavian advertising agency. Still, that does little to answer the general skepticism about this business model. The people behind Blyk say they'll send targeted ads to users, and they'll be ads that offer value, rather than ones that are simply tolerated as a non-financial cost of service. They say they're doing a lot of work to make them a natural part of the user experience and unintrusive, so ads in ringtones probably aren't on the table. But the overall question remains: will they be able to generate enough revenue per user to cover the costs of providing free service, let alone to profit? Furthermore, will they be able to offer a service that's worth using, even if it is free? If the service comes with plenty of strings attached, like unreasonable limits on free calls or messages, it won't fly. And there's something of a chicken-and-egg problem: they need to get a large enough base of users to have an inventory that's attractive to advertisers, but they can't attract users without the free service, which requires paying the costs of airtime from suppliers. Blyk's attracted 30 million euros in VC, but looking at the way companies like Mobile ESPN, Amp'd and Helio have burned through their cash -- and not attracted huge numbers of users -- it's hard to imagine that will be enough.

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  • identicon
    Jezsik, 2 Nov 2006 @ 11:03am

    Not so difficult

    I can think of another company that had a similar problem. They had to give away MONEY to get people to use the service.

    No one doubts PayPal's value today.

    reply to this | link to this | view in chronology ]

  • identicon
    william, 2 Nov 2006 @ 12:05pm

    no way

    this will never work but it might get some of the other cell phone componies to lower there prices. Verizon is such a rip off. If you go over your minutes you owe them your first born son.

    reply to this | link to this | view in chronology ]

  • identicon
    Paul, 2 Nov 2006 @ 2:01pm

    How will it work?

    I can't really imagine a reasonable implementation of this.

    Will they be audio ads? Will you be forced to listen to a 25 second ad before you're able to make a call, or answer a call?

    Are they picture or video ads that you'll be forced to wait through?

    Most people don't even look at their phone unless they are ready to make/receive a call or if they are checking the time, so serving up ads during regular intervals is pretty futile so forcing people to review the ad before making/receiving a call is the only feasable way.

    If I want to make a call, I want to do it now, not after watching a 30 second ad, even more so if I am trying to receive a call. Will the person calling me be subject to an audio ad as well?

    "Please wait, your call is being connected.... Your call is now connected"

    The only way I would put up with this kind of b.s. is if the person I am calling just can not afford a real cell phone, and I really need to talk to them. Even so, people who can't afford a cell phone are prolly not the desired targeted audience for the ads, and I would be less likely to call them if I had to sit through an ad every tiem.

    reply to this | link to this | view in chronology ]

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