Mobile Entertainment

European football fans don’t think twice about seeing Israel compete in the Euro Championship qualifiers. It always has. Yet Syria doesn’t. Neither does Lebanon – and they’re both closer.

But then Israel is different. Politically, economically and culturally it behaves more like a European country than its close neighbours. And in mobile, it’s a genuine global powerhouse, home to some of the industry’s most innovative and influential companies.

Israel has produced game changing companies in Amdocs (billing), Comverse (networks), M-Systems (memory cards), Infogin (transcoding), Celltick (idle screen) and many more (see box). According to Invest In Israel, the country had 70 companies listed on the Nasdaq in 2006 – more than any other country apart from the US.

This from a 60 year-old country of 7.3 million people. So what is it about Israel that makes it such a force in mobile. The military is one factor. Israel’s brightest all get fast-tracked into the military’s technology operation when they do national service.

And this support is complemented by government initiatives such as the $400 million provided annually by the Chief Scientist’s Office. Indeed, in 2007, it’s estimated that 462 Israeli high-tech companies raised $1.76 billion from local and foreign VCs.

Such factors act as a cradle for a entrepreneurial spirit that is abundant in a population  of immigrant Jewish Europeans, Americans and Russians. And, of course, success breeds success, so many of the people employed by Amdocs, Comverse and the rest go on to create their own start-ups. Meanwhile, the relatively small size of the domestic opportunity forces a global outlook on these nascent businesses.

Eyal Reshef, CEO of the Israel Mobile Association, certainly believes this. He says: “I recently met a German start-up and everything it did was focused on the German market. Israeli companies can’t do this, so they think big and global from the beginning.”

Having said that, the Israeli mobile market can be a fine test bed for interesting content ideas. It’s home to three evenly matched operators in Cellcom, Orange and Pelephone, each running different network types (TDMA, GSM and CDMA2000 respectively). However, 35 per cent of subscribers use 3G and 70 per cent are post-paid, which points to a population that’s affluent and open to rich mobile services.

This consumer advancement is why Cellcom is now embarking on a major initiative to prepare itself for a converged communications era. It’s working on various ideas to maximise its ‘three screen’ offer across web, mobile and TV, such as its video-on-demand joint venture with Blockbuster Digital. Adi Cohen, VP of marketing at Cellcom, says: “We’re fortunate to have a population that’s very advanced while being locally oriented.”

Mobile advertising is a particular focus for Cellcom, which launched a service called  ‘Time Is Money’ in September that gives free minutes to consumers that watch ads on a PC. It also signed a deal with local specialist Media Layers to use the latter’s multi-channel SMART system to power ‘Time Is Money’ and to insert ads in real time into all its rich media content channels.

SMART enables Media Layers' partners and customers to centrally manage mobile advertising across all mobile service channels – WAP, messaging, video streaming, content downloads, Ringback Tone and more – and is a fine example of Israeli innovation, using predictive modelling tools to deliver ads in real time. This gives brands and operators the kind of targeting possibilities that are the holy grail of mobile advertising. It’s already being used by German content distributor Arvato Mobile.

Assaf Katan, VP of marketing and business development at Media Layers, says: “SMART can use hundreds of parameters to target ads according to user profile, usage history, content and live parameters. It can also use learning algorithms to fine tune the targeting of a campaign in real-time. This is what advertisers want, and the fact that it’s done in real time reduces the costs involved. In one project we used an operator’s existing database with our technology and increased reponse rates by three and a half times.”

The innovative spirit of the Israeli operators is unsurprising in a market with relatively small off-portal sector. Although the D2C space is promising enough for one of its protagonists Unicell to acquire rival TippCom for around $2 million last year, most observers give the on-portal market 98 per cent of all content revenues in Israel.

This at least makes the territory easy to manage for mobile entertainment publishers. In games, for example, Glu and Gameloft go direct into the carriers, while most of the rest work with local aggregator RayFusion, which says Israelis buy around 350,000 game downloads a month.

RayFusion was acquired in September by Connect2Media, the recently formed content publisher. Can the deal help RayFusion to forge operator deals beyond the Middle East and into EMEA, Asian and Latin America? Well, it wouldn’t be the first Israeli firm to do so.

Take InfoGin for example. The company has almost single-handedly changed the way operators approach the mobile internet by offering a transcoding solution called the Intelligent Mobile Platform.

Quite simply, the solution performs real time ‘web to mobile’ content adaptation, so that users can surf the regular web without being presented with pages that don’t work on the small screen.

The transcoding approach has captured the imagination of operators, many of which have used it as the basis of ad campaigns alerting their subscribers to the possibility of visiting sites such as YouTube from the handset. In September, Infogin closed a huge deal with Telefonica and now claims over 20 million people are served web pages from its platform globally on a daily basis.

Infogin is now firmly in the front ranks of Israeli companies on the world stage. Maybe, like memory specialist M-Systems (bought for $1.6 billion by SanDisk in 2006) it will become a target for acquisition. Maybe it will flourish independently. Either way, the innovation will continue because the entrepreneurial spirit is apparently hardwired into the Israeli DNA.

M-Systems itself is a case in point. Shortly after its purchase, founder Dov Moran launched a new company called Modu to develop the idea of a tiny mobile handset which slots inside other consumer devices to give them connectivity. Crazy idea. But then so was USB when Moran invented that; Modu was the undoubted hit of last year’s Mobile World Congress.

Israel facts & figures

- The subscriber base in Israel will increase from 9.18 million in 2008 to 9.70 million in 2010.
- In 2010, the average ARPU in Israel will be $40.52 per month, with Partner’s  $45.83 ARPU the highest in the Middle East.
- As of September 2006, there were 70 Israeli companies on the US Nasdaq.
- In 2007, 462 Israeli high-tech companies raised $1.76 billion from local and foreign VCs.

Operator, Network type, Subs (millions)
Pelephone, CDMA2000 (UMTS from 2009), 2.5
Cellcom, TDMA/GSM/UMTS, 3.1
Orange (Partner), GSM/UMTS, 2.86
MIRS, iDEN ESMR, 0.41
Source: Invest In Israel

Israeli mobile content specialists

Company, Core business
Adamind, Inter-operability solutions
Amdocs, Billing
Amobee, Mobile ad platform
BeeContent, Content aggregation/D2C
CellAdmin, UGC
Celltick, Ticker-based information
Clip in Touch, Rich media messaging
Chooz, Original made-for-mobile IP
Comverse, Network services (messaging, ringbacks, avatars)
eBiz.mobility, Billing
Emblaze, Handsets
Emoze, Push-email
Hingi, Integrated broadcast/music downloads
Infogin, Web to mobile transcoding
Inner-Active, Embedded content ads
Logia, Content management
Media Layers, Mobile advertising
Mobilitec, Content delivery platform
Mobixell Networks, Content delivery systems
Modu, Devices
M-Systems, SIMs and storage
Nareos, P2P content services
Olista, Data services efficiency management
Pontis, Mobile personalisation platform
Pudding Media, Ad-funded content services
Radvision, Video services
Siano, Mobile TV chips
Spin3, Gambling
Targetise, Mobile search and discovery
Tippcom, Content aggregation/D2C
Trixcell, Mobile magic tricks
Unicell, Content aggregation/D2C
Unipier, Content management systems
Vollee, Mobile game developer
Vringo, Video ringbacks
Zlango, Messaging/graphics
777 mobile, Gambling