Thursday, July 29, 2004

Channels, Concentrations, and the Global Channel Outlook

Although channel concentrations, in this day of Wal-Mart, are seen as unavoidable, it is worth taking another look at this particular concentration in JAMDAT’s numbers in order to understand what this concentration means, and what the trends are.

While JAMDAT Bowling’s huge numbers indicate a slightly disturbing lack of sophistication in mobile games, the channel concentrations are less a cause for concern and more an indicator of future promise. In 2003, 75% of revenues came from Verizon and Sprint, and in the quarter ended March 31, 2004, this percentage declines to 68%. This concentration is both unavoidable for a company as dominant as JAMDAT in these channels, and the trend is in the right direction.

JAMDAT now has relationships with 64 network operators plus a further 8 indirectly through distributors. There are about 300 network operators worldwide. Of these, 30 or 40 are big enough, and they operate in countries with sufficient economic development, to contribute significantly to a mobile publisher’s revenue. By the end of 2004 JAMDAT can have global reach to all the top markets, depending on how aggressive they are about entering Asian markets. By the end of 2005 JAMDAT will be done developing new channel relationships.

While some channels are getting a bit crowded, and even JAMDAT had to enter into 8 distribution partnerships, network operators are still very open to new entrants with sufficient funding to acquires top brands and create quality games. Technology advantages also open doors at network operators’ games portals. Any new entrant at this time can still attain global reach in 18 months and begin mopping up the smaller channels after the first 12 months’ effort in opening the top priorities.


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