The 27-pound sterling silver trophy that NASCAR and Nextel Communications Inc. unveiled this week may have been the latest and most artistic tribute to the organizations partnership. But its the delivery of wireless content to stock car racing fans that runs closer to Nextels core business.
Nextel and NASCAR have been testing that business model since April when on the eve of the Daytona 500 in Florida, the companies expanded a partnership that began with Nextels sponsorship of the NASCAR Nextel Cup Series races, whose winner takes home the silver trophy.
Digital Orchid, a San Diego-based content provider, is the third player in the tripartite affair that sends news, driver standings, statistics, schedules and real-time, lap-by-lap race updates from NASCAR.com to whatever mobile devices NASCAR (National Association for Stock Car Auto Racing) fans are packing.
Nextels senior vice president of marketing, Mark Schweitzer, calls the services “a natural extension of our business.”
The April announcement was one of the first in what Adam Zawel, an analyst with The Yankee Group of Boston, says is becoming “a transition year for wireless” as sports and entertainment companies—at the urging of wireless carriers looking for new channels of business—focus on cell phones as the latest venue for marketing, promotion and profitable partnerships.
Nextel has been one of the most active carriers in pursuing partnerships to push sports and entertainment content wirelessly, but whether this will prove to be a profitable business model remains uncertain.
“This stuff has been on the horizon, and now its really taking off. Those whove been especially active now feel justified and those who have been on the sidelines are scrambling,” Zawel said. “From the perspective of a content provider, the business models are still up in the air. What theyre doing is aggressively testing different scenarios. Its only the second inning, so to speak,” he said.
Carriers Want a Share
More recently, MLB.com (Major League Baseball) has begun pushing wireless content. But unlike NASCAR, which focused on a single carrier partner in Nextel, MLB.com is courting multiple carriers.
Such services mimic what began with financial services and the pushing of stock trade information wirelessly. Stock trade subscriptions succeeded as a text-based service. Today, Zawel said, color screens, faster networks and more capable devices have opened the door to similar offerings from the entertainment industry.
MLB.com, Zawel said, “is treating it as a new line of business.”
Organizations such as NASCAR and MLB are testing wireless as a new channel through which they can provide entertainment and related offerings to fans, including downloadable ring tones and wall paper.
MLB.com is using video in a partnership with Nokia, which is preinstalling an MLB.com icon on its 6600-series phones that opens to a menu of offerings that range from free, text-based reports on scores and standings to a $7.99 video-download service. But the service fees may be only the smallest element in the profit motive here.
In a recent report, Zawel noted that carriers want a part of the retail action. They are not in the business simply for the nickel they receive in transport fees from a $2.49 screen saver.
“As a retailer, carriers can promise to place content within their portals,” he said. “The co-marketing option, which has been under exploited by carriers, is probably the most attractive element of a tighter relationship with an organization like MLB.com.
“Theres big, big money still flowing from the wireless industry to the media and entertainment industries,” Zawel said.
And NASCAR profits from Nextels advertising and sponsorships. “Some of the carriers will advertise during baseball games or on the Disney channel. A lot of these deals are two-way. Theres a lot of co-marketing going on,” Zawell said.
“Certainly, its in the carriers interest to advertise this stuff. They need wireless data to save their business model,” he said.