Multimedia to the mobile phone is one of the hottest and youngest market segments in the wireless arena. Attempts to bring uniformity to it with open digital rights management standards are premature at this stage, according to a new study released by ABI Research.
The Open Mobile Alliance (OMA), an industry group counting mobile operators, IT companies, wireless vendors and content providers as members, developed an open DRM standard for multimedia content distribution to mobile platforms, and chose MPEG LA to administer licensing.
The high prices set by MPEG LA precipitated lengthy negotiations with operators, and the resulting delay created an opportunity that was seized by proprietary DRM vendors. Mobile operators such as Sprint, Verizon, Telus Mobility and the Vodafone subsidiary SFR have all deployed services using proprietary DRM solutions. Verizon uses Microsoft DRM for its V CAST; Sprint uses Groove Mobile's proprietary solution; Vodafone, while flirting with the OMA standard, has also used DRM from Secure Digital Container (SDC).
"This is a classic example of what not to do when trying to nurture a new market," says Vamsi Sistla, ABI Research's Director, Broadband and Multimedia Research. "It is misguided to pursue an open standard solution in a brand-new market. A better time is after a few years, when the market is disjointed, the competition has changed, and companies can collaborate to benefit from economies of scale. Right now, operators couldn't care less about economies of scale: they are focusing on their ability to monetize this trend and get their solutions to the market sooner than their competitors."
Operators don't want to get bogged down with licensing and interoperability issues, or compromises in functionality. "Any emerging technology should find its way into the market by the trial and error of multiple solutions," says Sistla. "Early in a market's development, companies whose proprietary solutions don't rely on external integration are often more successful than those that must agree with other players in the sector." Apple's iPod/iTunes with its tight, exclusive vertical integration and 80 percent market share is a good example.
The study concludes that when more operators have entered the market and the services start to become commoditized, the time will be ripe for the benefits that open DRM standards may bring.
The Open Mobile Alliance (OMA), an industry group counting mobile operators, IT companies, wireless vendors and content providers as members, developed an open DRM standard for multimedia content distribution to mobile platforms, and chose MPEG LA to administer licensing.
The high prices set by MPEG LA precipitated lengthy negotiations with operators, and the resulting delay created an opportunity that was seized by proprietary DRM vendors. Mobile operators such as Sprint, Verizon, Telus Mobility and the Vodafone subsidiary SFR have all deployed services using proprietary DRM solutions. Verizon uses Microsoft DRM for its V CAST; Sprint uses Groove Mobile's proprietary solution; Vodafone, while flirting with the OMA standard, has also used DRM from Secure Digital Container (SDC).
"This is a classic example of what not to do when trying to nurture a new market," says Vamsi Sistla, ABI Research's Director, Broadband and Multimedia Research. "It is misguided to pursue an open standard solution in a brand-new market. A better time is after a few years, when the market is disjointed, the competition has changed, and companies can collaborate to benefit from economies of scale. Right now, operators couldn't care less about economies of scale: they are focusing on their ability to monetize this trend and get their solutions to the market sooner than their competitors."
Operators don't want to get bogged down with licensing and interoperability issues, or compromises in functionality. "Any emerging technology should find its way into the market by the trial and error of multiple solutions," says Sistla. "Early in a market's development, companies whose proprietary solutions don't rely on external integration are often more successful than those that must agree with other players in the sector." Apple's iPod/iTunes with its tight, exclusive vertical integration and 80 percent market share is a good example.
The study concludes that when more operators have entered the market and the services start to become commoditized, the time will be ripe for the benefits that open DRM standards may bring.