La Netro Zed acquires Monstermob

Thomas Husson | February 23, 2007, 09:48 AM

So finally, shareholders of Monstermob D2C mobile content player have preferred La Netro Zed offering to the counter-offer of Chinese company Linktone.

We're not financial analyst at Jupiter so I will neither comment on the amount of the deal nor on the value to be delivered to shareholders.

This is just another confirmation of the evolution toward a more mature mobile content value chain as Jupiter higlighted at the end of 2005 in this report, with key trends continuing to shape the market:

- Disintermediation: record labels are striking direct deals with operators bypassing the pure mobile players whose margins decrease on new formats (highlighted by the shift from polyphonic to realtones). Infospace could elaborate on this, now that the company is back to its search roots. So most D2C players now use truetones to upsell and cross sell new content categories (music, games, video and increasingly erotic or adult content for smaller players). And in most cases, those players tend to create content in-house to avoid royalties and licensing fees (more than 80% of LaNetro Zed's content is produced in house).

- Internationalization/Consolidation: after the wave of Japanese players expanding abroad (Index, Faith,...) and some mergers & acquisitions of European players, there are now a couple of players with a really international footprint such as Zed, Buongiorno and Jamba/Fox. At the end of the day, those players need scale and scope to advertise their content.

Indeed, there is a direct correlation between the level of advertising pressure and the number of ringtone downloads. Why? well simply because this is an impulse purchase. Linked with cannibalization effect of new products such as video, chat/IM (young people do not have extensible pocket money) and the difficulty to reach relatively older demographics, ringtone figures have decreased for some players.

So the future of those players will depend on their ability to innovate by launching new products, to invest in marketing and advertising to create a sticky brand (particularly for those relying on the subscription model) and by providing convergent offerings (web+mobile).