Amp'd Mobile: A better content provider than MVNO
MVNO Amp'd Mobile on Friday confirmed that it has filed for Chapter 11 bankruptcy--not a good sign for an already shaky MVNO market that has seen the demise of Mobile ESPN.
But rather than being a victim of low subscriber uptake, like Mobile ESPN, Amp'd Mobile, with its content-heavy strategy, said it couldn't keep up with subscriber growth. "As a result of our rapid growth, our back-end infrastructure was unable to keep up with customer demand. We are taking this step as a necessary and responsible action to sustain and strengthen our momentum in the market place," the company said in an official statement.
Amp'd Mobile's first-quarter results were impressive: Subscribers grew 70 percent with 84,000 new users, data ARPU was $30 and regular ARPU was more than $100. It now has about 200,000 users. But these nice metrics probably don't mean much given the fact that Amp'd Mobile, which has raised about $360 million from some high-profile investors, has spent extravagantly to get where it is. Heavy advertising, an in-house video studio and $250,000 recording and broadcast trucks are a few examples. Now the company owes Verizon Wireless, its MVNO carrier partner, $33 million with a total debt load of more than $100 million.
Amp'd Mobile says it is working with one of its largest investors to obtain debtor-in-possession financing. The company will emerge from Chapter 11 with a fresh start, but what will the new Amp'd Mobile look like? Will it cease to be the MVNO that we know?
Remember that Amp'd Mobile never wanted to be called an MVNO but a mobile media company. Its goal has been to prove out the mobile media concept as an MVNO and expand that. So far it has racked up deals to offer its exclusive content and its unique user interface abroad. In Japan, Amp'd Mobile has partnered with carrier KDDI to create a content portal. In Canada, the MVNO has a partnership with Telus whereby customers have a direct relationship with Telus but have access to premium Amp'd Mobile services and content via Telus. Amp'd Mobile is responsible for branding and marketing efforts and providing the content; Telus handles sales, distribution, customer care and pricing--all of the aspects that Amp'd Mobile appears to be struggling with in the U.S.
It stands to reason that Amp'd could make a similar arrangement with Verizon in the U.S. (Verizon Wireless has already taken Mobile ESPN under its wing.) The subscriber metrics are there, and Verizon wouldn't have to spend its own marketing dollars to attract these customers. Meanwhile, the operator wouldn't have to spend much more to service Amp'd Mobile customers. Verizon would probably get a better return on its investment rather than waiting for Amp'd Mobile to turn a profit as an MVNO.--Lynnette