| Betting big on Mobile in 2006
With the development of Mobile Gambling looking set to mimic the growth and explosion of gambling on the internet a few years ago, the scope for debate within the industry has widened. It now seems to be more a question of ‘when’, not ‘if’, the Mobile Gambling upsurge will take place, and companies in different areas of the sector are tracking the ball carefully to see if they can predict where it will land. mformobile spoke to a number of key industry insiders to get their take on where they think the industry is headed during the next twelve to eighteen months.
Mike Short, vice president of Group Technology at O2 and Chairman of the Mobile Data Association says: ‘I think things are set to grow organically from the relatively small base that exists today. After that I think acquisitions and consolidations will begin to take place as the market becomes more established. Mobile Gambling is an expanding market, and companies are in a good position to make the most of any new opportunities as they emerge.
Adds Short: ‘At the moment, there’s a lot of experimentation going on with smaller companies and, as they grow larger, the bigger casinos and betting houses will begin forming important relationships with them.’
What will the forming of such relationships mean for the industry as a whole?
‘It will help to push things forward because, while the casinos are familiar with their audiences, they may lack the specialist knowledge of companies that deal with the intricacies of mobile technology.
‘The growth of the sector is now dependent on the fusing of different skill sets, and the ironing out of regulations that currently hamper that growth.’
Fredrik Rosengren, Partner at Globalmouth, a Swedish company dealing in mobile content also agrees that there are opportunities to be realised, but adds that the relationship between the gambling and network operators still requires some clarification: ‘Because the content and service providers are in the hands of the network operators, there’s a revenue issue that needs to be solved,’ he says. ‘We want to be able to offer a good price to the consumer, as well as a service that’s very easy to use. But it’s difficult when the MNOs are taking such a big cut. I think that the industry has great possibilities, but to get things moving a bit faster we need to leverage the percentage a bit.
‘Once the revenue share has been sorted out,’ he adds, ‘the marketing opportunities to attract people to Mobile Gambling services will become more interesting. For example, our company is largely associated with sports and entertainment, traditionally linked to gambling. Because of this, we already have a potentially captive audience to market the Mobile Gambling content to. Our challenge is to make that audience receptive to the idea of gambling on their mobile phones.’
And how does he think this goal can be effectively realised?
‘Right now, we’re approaching various gambling companies to try and come up with a simple way for sports fans to place bets on their mobile. One way is to send an SMS to our subscribed football fans, letting them know when their team has scored a goal. With that information, they’ll also get a link to a mobile portal where they can go to place a live bet if they want. There’s so much room for growth in this area of live betting, and I think that we’ll see a whole new type of gambler emerging.’
And what other factors, aside of clever marketing tactics, are likely to play a part in consumer growth?
‘Because it’s a highly technology-dependent service,’ says Rosengren, ‘the handsets need to be geared up to adequately handle the content. With the massive increase in the number of 3G phones in Sweden, it won’t be long before things really start to take off. But I still think that for industry to work it will have to be consumer led, and any mobile content will need to function within the limitations of the mobile phones, which still aren’t quite fast enough yet.’
Ori Birnbaum, Vice President of Business Development for software company Cellectivity, also believes that the market is building up towards explosive growth in the next few years, but feels that certain mechanisms need to be more securely in place to enable this to happen. Fundamental to the success of Mobile Gambling, he argues, is an effective working relationship between the gambling operators and the MNOs, facilitated by companies offering fully integrated solutions.
Says Birnbaum: ‘A few years back the network operators though that they were going to act as the clearing house for the gambling operators, but now they definitely want a chunk of this business. And the way they are going to go about this, increasingly, is to find third parties such as Cellectivity to run their gambling portals for them.
‘One of the biggest challenges for companies jostling for market share and position in 2006 is going to be not to waste money while they find their feet. This year, spending money prudently in preparation for 2007 and 2008, when things will really start to take off, is imperative. Companies need to get their infrastructure right and get the right software applications in place for a seamless captivation of entry points. Ultimately, 2006 is going to be a key year to get ready for when Mobile Gambling really starts.’
Richard Swann, Mobile Product Manager for Victor Chandler also believes that they still have a way to go before the market becomes fully buoyant, but with a slightly different take on where the MNOs are at in the equation.
Says Swann: ‘The important thing is for the network operators to recognise Mobile Gambling as a viable revenue stream. Right now, as with adult content, they don’t put gambling on the front page because there’s still a bit of a mental block that says there’s something a bit grubby about the whole thing. They really need to overcome that because, these days, gambling is a very clean business, and major bookmakers like us are extremely protective about their image.
‘The other major issue regarding MNOs,’ he adds, ‘is that they have always been very protective of their customers. For Mobile Gambling to really pick up pace, I think the network operators need to accept that handset owners are as much our customers as theirs. MNOs need to see themselves more as affiliates, they need to bring down the barriers that exist and get everyone singing from the same sheet.’
So, taking for granted that all of these things will eventually happen, what would be an ideal future scenario?
‘The ideal position is one where the MNOs have released their grip on the customers a little more, and where the mobile phone experience for the customer has become much smoother – more like the broadband internet experience. This is a major challenge for the industry as a whole with regards to all mobile content, not just gambling.
‘At the moment, we’re waiting for the right time to be able to launch the right products to make it a true commercial success. Before we can do that, it’s important for us to establish a strong working relationship with the MNOs to drive user acceptance up and encourage people to download – that won’t happen until the handset experience is seamless.’
From a Legal perspective, Mike Conradi, Head of Technology Practice at Stephenson Harwood, believes that development in Mobile Gambling is likely to happen in two key areas: ‘Firstly,’ says Conradi, ‘I think that deals between gambling operators and MNOs, to ensure that gambling services are included as part of key mobile content, is essential for the market to thrive.
‘Secondly, as more and more people get hold of mobile devices capable or browsing the wider internet, gambling services will develop that don’t require any sort of kind of agreement with MNOs. This means that mobile content services will be able to develop in the same way that web-based services have, offering a similar level of freedom to the end user. And the MNOs’ ability to block gambling operators (or other mobile content providers) will be restricted by their need to provide their customers with full internet access.’
What other challenges does he think the industry faces?
‘I think another major obstacle for the Mobile Gambling right now is the stigma that’s attached to it. For some inexplicable reason it is often associated with the pornographic industry, and it will be hard for Mobile Gambling to take off until it has shaken off this association and is viewed by the public as a respectable form of business and entertainment.’
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