Blyk Mobile Finally Gets Off The Ground - InformationWeek

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Commentary
9/24/2007
10:39 AM
Eric Ogren
Eric Ogren
Commentary
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Blyk Mobile Finally Gets Off The Ground

The ad-supported "free" mobile service in the U.K. is officially launching today after a long ramp-up period. Blyk is taking the MVNO in a new direction with its free services, but is this business model feasible?

The ad-supported "free" mobile service in the U.K. is officially launching today after a long ramp-up period. Blyk is taking the MVNO in a new direction with its free services, but is this business model feasible?The idea is to pair advertisers with their target demographic--in Blyk's case, 16 to 24 year olds--and give them free mobile service as long as they agree to view ads on their mobile phones.

Specifically, Blyk subscribers will have to watch six text message-based ads each day. In exchange, they get to send up to 217 text messages and talk for 43 minutes per month. Text or talk any more than the allotment, and the users will have to fork over some cash. Want to surf the net? That will cost Blyk users 99 pence (about $2) per minute. Ouch. And Blyk is serious about the age range. Once a user reaches age 25, they'll have to start paying for the service.

Another interesting aspect of Blyk is that it is based on SIM cards only. Although Blyk will help customers purchase a handset if they don't already have one, it expects most customers will have handsets of their own. Blyk's services will be tied to getting SIM cards through an invitation-only process.

So Blyk will make some money from its subscribers in overage charges, but what is it getting from its 45 initial advertisers? Fees are charged per message sent to each user. Picture messages will cost advertisers 20 pence ($0.40), text messages 5 pence ($0.10) and 2 pence ($0.04) for each ad tagged to the bottom of a private text message. How many users will subscribe though, is a bit murky.

According to Blyk, there are about 4.5 million users who are the right age and fall into the right usage patterns in the U.K. With about 85% of that number already using pre-paid services, Blyk hopes to catch users who are dissatisfied with their current service and will switch over. So Blyk is banking on churn.

But what will Blyk's churn rate be? Will its users be satisfied enough with its service to stay with it for more than a few months? I mean, 217 text messages and 43 minutes doesn't sound like a whole lot to me, considering young adults the world over often send thousands of text messages per month.

Furthermore, will the advertisers be happy with their costs, as well as the uptake/penetration rate on their ads? Will they get their money's worth?

Only time will tell.

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