Frengo – not just another SMS play

Earlier this week, Frengo announced the launch of its mobile social network, which allows you to play games and get other forms of entertainment directly to your cell phone. Members can play games via SMS or MMS messaging services offered by their mobile operator.

Mashable reports,

Frengo allows for continued communication amongst friends and across devices, and enables users to even create their own games. Considering the direction in which social networking and the mobile realm are going, it’s no surprise that a product such as Frengo has emerged. Games and other features included in Frengo focus on sports, music and pop culture, as well as useful planning tools and easy integrated widgets for your pages on MySpace, hi5, Piczo and other sites.

Frengo1

What I like the most about Frengo is that it’s a smart play. It leverages several (related) popular trends at the same time, while focusing only on the areas where it can most add value.

Firstly it leverages the popularity of existing social networking sites like MySpace, instead of creating a new one. Next, it’s leveraging the sky-rocketing popularity of text-messaging, driven mostly by gen-Xers. Although it is trying to build critical mass of users, it has started off by focusing on the younger audience, who is most active on the online social networking scene and prolific mobile user. Frengo is attracting this target demographic by offering activities revolving around games, sports, and celebrities, topics that are most likely to appeal to this group.

Frengo2_2

In his exceptionally well-researched post on the state of mobile market by Michael Mace, one thing he mentions that struck me as very interesting and another trend that’s working in favor of Frengo is,

When surveyed, most people in the US and Europe say they will not pay anything extra for mobile device features other than voice and SMS.

Although, it’s still not clear what their revenue model is, but I strongly suspect that it’s some type of revenue-sharing arrangement with the wireless operators and carriers, who will no doubt see the usage and consequently, revenue from SMS and MMS services go up.

According to the company press release,

Targeting young adults, Frengo is partnering with mobile operators such as Boost Mobile which understand the services needed to attract and serve this important demographic. In partnership with Boost Mobile, Frengo launched a text alert-based game in which players predict winners in upcoming games during the NCAA college basketball tournament. Boost Mobile promoted the game on its WAP deck generating thousands of players in the first 24 hours.

The reason, Frengo might just succeed where other Mobile 2.0 startups flounder is two-fold, one is partnership with mobile operators such as Boost, who have a vested interest in promoting the offering to their subscriber base. My assumption here is that Frengo will be able to secure some lucrative revenue-sharing deals with other key mobile operators as well.

Second, is that increase in usage and not necessarily, increase in subscribers is the key to its revenue-growth, although having both wouldn’t be that bad either. The reason, this is important is that for all the network-effect benefits, there is no substitute for increasing activity that actually causes revenue-generation ie. the more the members play, the more money Frengo and its partners make. So far, they seem to be on the right track with ‘sticky’ offerings that will no doubt engage the audience, however, the key is whether the company manages to get enough users to sign up.

Katie Fehrenbacher of GigaOM says,

The company creates games based on SMS and the web, with themes like March Madness-style polls, make-your-own text quizes (which are actually pretty fun) and MySpace mobile text services. Danny Rimer and Vinod Khosla back SMS games? — go figure.

With the US mobile market saturated with over 75% of the population owning a cellphone, I believe that Frengo is more than just a SMS play. Any service, that can increase cellphone use and move it out of the utilitarian status in a highly PC-dominated US culture, will and should be welcomed by the wireless operators.

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