News Corp. Buys Jamba from VeriSign

On this particular day, you might say information isn't so much the proverbial king any more, as is content. While the press was focused on Apple's impending announcement regarding Disney movie downloads over the iTunes network, in a quiet corner of Manhattan, News Corp. -- the parent of the Fox entertainment empire -- announced it is acquiring a majority stake in mobile content provider Jamba from VeriSign.

Jamba currently runs Jamster, a download service for such valuable commodities as ringtones and wallpapers, which have in just two years' time become hundred-million-dollar industries. It's not only more difficult but more expensive for content providers to develop applications and services for the information era, than it is to sublicense pretty pictures and scratchy song excerpts from their publishers.

But in so doing, brands like Jamster establish quick names for themselves, so that when it does come time to develop more functionality, their parent companies already have a built-in customer base.

News Corp.'s intention is clearly to hard-wire Fox's presence in the entire content lifecycle, from creation through production and then, inevitably, to delivery on the little 2 x 3 screen on your cell phone. It already had a mobile content provider, Mobizzo, launched in June 2005 under the Fox Mobile Entertainment division.

Among the things Mobizzo was designed to proffer were one-minute episodes derived from Fox properties such as the TV show 24, and supplemental content from the juggernaut American Idol franchise. But after a year, Mobizzo hasn't found itself the major player in this space - in fact, it may be #3 or #4, depending on which analyst you trust.

So to consolidate its presence, Fox Mobile is taking the reigns of Jamster (although VeriSign will apparently continue to hold a minority stake), and appointing Lucy Hood, Fox Mobile's current President, as the CEO of the new venture, which will presumably combine Jamster and Mobizzo to form one unit. By "new venture," we can assume this means it doesn't have a finalized name yet. Jamster is believed by analysts to be the #2 player in the mobile content space.

The number one player, meanwhile, isn't taking this news sitting down. Thumbplay last June claimed all rights to the top spot, based on a survey released by market research firm Hitwise. Financial analysts attribute Thumbplay's leadership position to its marketing deals with major carriers such as Verizon, which place Thumbplay in a prominent location in new phone customers' pre-installed setups.

It's like having an icon on the default desktop of Windows; analysts call this type of real estate "on-deck presence," where the "deck" is the group of links or contacts a new phone or handset comes with. When players such as Jamster and Mobizzo tie the knot, analysts call this an "off-deck play." Such plays are still important, they say, because they increase their visibility in lieu of a carrier deal.

But Thumbplay had a big deal of its own to announce today, signing a content licensing arrangement with the Walt Disney Company - the very same partner that's the subject of today's Apple news. Now, graphics, ringtones, mobile games, and other bits and pieces of high-dollar content with Disney themes, will be exclusively distributed through Thumbplay, enhancing its brand presence and strengthening its "on-deck" relationships with consumers, without having to make a buyout or to be bought out itself.

Content security provider VeriSign purchased Jamba from its Germany-based founder in May 2004, in a deal whose purported brilliance BusinessWeek described the following year literally with sound effects: "Click. Ka-ching." The magazine saw the buyout as part of a grand makeover of VeriSign from a straight-laced brand into a consumer-oriented powerhouse, developing turnkey mechanisms for building revenue.

In 2006, however, the machine stopped going "ka-ching" after the "click." In its second quarter conference call in late July, Verisign CFO Dana Evan reported a downturn in revenue from the Jamba unit, to $74 million for the quarter from $77 million the previous quarter. During the call, analysts reportedly pointed to a predicted stabilization in revenue within the entire mobile content business as a general industry trend, although even VeriSign CEO Stratton Sclavos admitted it came earlier than his company anticipated.

Referring to the historical quelling a few years earlier of consumer demand for domain names -- VeriSign's other major business -- Sclavos was quoted as saying of the mobile content space, "The flood and the false demand is out of the market and now what we see is real demand. We've hit stabilization by hitting the bottom of real demand...growth will come by step-by-step improvements across the platform."

That statement implied VeriSign was planning on taking incremental steps to continue to grow Jamba. That was just last July, and now it finds itself a minority player in this market. Somebody else now gets to press the button that goes "ka-ching."

Since this story was first published, a spokesperson for mobile media provider Thumbplay contacted BetaNews to state that, by its own assessment, it is not an on-deck mobile service provider, but an off-deck provider - meaning, its content is accessed through a Web site portal rather than by a direct carrier-supported service. This, despite some analysts' comments recently praising Thumbplay's quality of supposedly on-deck service. Thumbplay also stated that its recently announced deal with Disney should not be construed as exclusive. We stand corrected.

© 1998-2017 BetaNews, Inc. All Rights Reserved. Privacy Policy.