Sony Ericsson plug-in download movies

Sony Ericsson expected to decline this year as consumers, hurt by the economic crisis, cut down on spending. Phone makers hope the new services will help keep existing clients, attract new ones and generate fresh revenue streams.

Sony Ericsson launches plug-in service to download movies

Sony Ericsson going beyond their traditional role as handset makers by offering entertainment and lifestyle content to help increase their revenue amid tough competition, analysts say.

Sony Ericsson expected to decline this year as consumers, hurt by the economic crisis, cut down on spending. Phone makers hope the new services will help keep existing clients, attract new ones and generate fresh revenue streams.

"The overarching story here is that the various device makers are looking for ways to go beyond selling just devices into generating revenues from selling multimedia content and services," said Aloysius Choong, research manager for market intelligence firm International Data Corporation.

"Right now, especially in Asia, we haven't actually figured out the best way , or whether there is a right way to be selling these contents and services," he said.

Nathan Burley, an analyst with market research firm Ovum, said bundling content and services into phone handsets was also dictated by industry trends. Mobile phones are coming with more processing power and wireless connections are becoming more widespread.

"For the handset vendors, these are ways to reduce churn and to tie customers to their services," he said. "There is no doubt that they see services as a key part of their competitive arsenal."

Burley said global mobile phone sales were expected to fall between 5 and 12 per cent this year, compared with 2008.

"In the middle of last year many companies were expecting positive growth. Now they expect negative growth in 2009, in terms of total shipments," he said.

Sony Ericsson have come up with different business models on how to package content.

Last week, Sony Ericsson launched a new service called PlayNow Kiosk, which allows its handset users to download the latest movies, television series, games and music from its retail stores. In the first phase of the launch, the service will be available at more than 80 Sony Ericsson stores in Indonesia, Singapore and Malaysia, the company said.

The stores will feature a station where Sony Ericsson users can plug in their phones, browse from a flat-screen panel, and download the latest movies within just three to four minutes, for a fee.

Popular television series, games, ringtones and music, including more than 1,800 albums and 23,000 individual tracks, are also available.

"The nice thing about the Kiosk idea is that it creates an opportunity for impulse buys and instant gratification," IDC's Choong said. "It's something like hopping into a convenience store to buy the evening paper before catching the train home."

Sony Ericsson's corporate vice president and head of Asia-Pacific region Hirokazu Ishizuka said the company launched the service because there was a need to offer something better.

"The competition is getting tougher so we need to differentiate ourselves from our competitors," he said. "This is our solution. We will provide a mobile entertainment experience which nobody can do."

Finland's Nokia, the world's biggest maker of phone handsets, has already launched its OVI Suite, an "umbrella concept" that allows users to share photos, buy music and access third party services such as Yahoo's Flickr photo site, among others.

Nokia reported last year that its net profit in the third quarter fell 30 per cent year on year, amid falling sales and lower prices for its handsets.

Burley, the Ovum analyst, said Nokia "has taken the most aggressive approach" among the mobile phone makers in offering content and services.

However, he said Apple's stylish iPhone, which was bundled as a phone, iPod and Internet device, "has lifted the bar on many levels."

iPhone user Junel Tan, 50, agreed, saying: "There's so much fun using iPhone. Never in my life have I enjoyed a phone as much as this."

IDC's Choong said mobile customers needed more than just music, which was why some phone makers were offering movies and television shows for people on the move. However, the content should be widened to include Asian movies and TV shows.