INTRODUCTION Digital distribution for electronic commerce, sometimes described as pure electronic commerce (Choi et al. 1997), has great potential for both reduced cost and new creation of value for consumers. Consumer content such as news, books, music and enter- tainment software no longer requires physical packaging, shipping and retail display. There are of course many barriers that have prevented the mass market from using the new distribution channels (MacInnes et al. 2002) but reduced cost and disintermediation will make it compelling over the long term. Mobile entertainment is an example of a new pure e-commerce service that can create substantial value. Content distribution through the Internet has been a bountiful phenom- enon for consumers. As Internet Service Providers (ISPs) moved toward at fees, consumers were increasingly able to obtain high quality content at an incremental price of zero. This meant that content providers received no revenue directly from Internet users while bearing the cost of their access. Newspapers, radio stations, television networks and game services struggled when attempting to charge users, usually relying on meager advertising revenue and cross-subsidy from physical distribution to justify their Internet operations. The primary A u t h o r s Ian MacInnes (imacinne@syr.edu) is Assistant Professor of Information Studies at Syracuse University in Syracuse, NY. He has a PhD in Economics / Public Policy from the University of Southern California. His research emphasizes digital distribution of consumer content as well as information industry strategy and policy. Janusz Moneta is a senior consultant with Booz Allen Hamilton. He leads the telecom team in BAH’s Warsaw ofce. He has advised mobile operators on product, sales and marketing strategies. He has graduate degrees from Maastricht School of Management and Syracuse University. His research focuses on mobile commerce. Julio Caraballo (juliocaraballo@yahoo.com) is a graduate student in telecommunications management at Syracuse University. Before that he worked in IT at Citigroup in the Dominican Republic. His research interests include wireless technologies and mobile industry analysis, telecom- munications policy and e-commerce strategies. Dominic Sarni (sarni34@yahoo.com) is a graduate student in information management at Syracuse University. Before that he worked in IT at General Electric and Carrier Corporation. His research interests include mobile commerce, online auctions, knowledge management, strategic planning and data mining. A b s t r a c t It has been difficult to develop a profitable business model for Internet content. The emerging medium of mobile communica- tions promises a new opportunity for this type of business because the gatekeeper for the medium, the wireless network provider (WNP), has greater control over what customers can feasibly do with their mobile devices. Higher barriers to entry and usage costs for mobiles should lead to the development of content business models that are more likely to generate profits. Within the mobile value chain, the WNP has the greatest bargaining power and can thus negotiate the largest share of profits. This paper examines the transformation of an industry as it moves toward a mobile, as opposed to Internet, focus. Mobile games are expected to generate substantial revenue but service providers will have to examine where they fit within the new value chain. The most appropriate strategy for WNPs is to leverage their control over wireless infrastructure and customer relationships. The management complexity of such a strategy is high but it is likely to generate the greatest profits. SPECIAL SECTION: ELECTRONIC COMMERCE IN ENTERTAINMENT AND MEDIA Business Models for Mobile Content: The Case of M-Games IAN MACINNES, JANUSZ MONETA, JULIO CARABALLO AND DOMINIC SARNI Copyright © 2002 Electronic Markets Volume 12 (4): 218–227. www.electronicmarkets.org Keywords: mobile games, digital distribution, content, entertainment Downloaded By: [Schmelich, Volker] At: 14:41 16 March 2010