By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Virgin Mobile USA celebrated its national launch with a Times Square stunt by Virgin Group chairman Richard Branson and an announcement that the youth-oriented carrier struck an exclusive multiyear content and marketing agreement with MTV Networks.
The deal includes the delivery of music, games and other content, branded with the MTV, VH1 and Nickelodeon names, to the phones of Virgin subscribers. It also includes plans for MTV-branded accessories, an MTV-branded phone, and promotional airtime on MTV's channels and Web site. In the future, subscribers will use the phones to interact with MTV and VH1 programs, including voting on songs they want to hear on MTV.
For the promotional stunt, Branson joined the Broadway cast of The Full Monty in a musical striptease as he was lowered by crane from a landing above a Virgin Megastore in Times Square. Confetti showered the area as Branson and cast danced while wearing flesh-colored shorts and above-average-size cellphones.
The stunt's theme, "We have nothing to hide," was selected to underscore the simplicity of the carrier's single prepaid airtime plan. The plan boasts no hidden charges, and per-minute charges include long distance, taxes, roaming anywhere on the Sprint network, no peak or off-peak distinctions, call waiting, caller ID, voice mail and incoming text messages.
The charges are 25 cents/minute for the first 10 minutes of the day, beginning 5 a.m., and 10 cents thereafter.
Although Virgin already offers youth-oriented content, including music clips, the MTV deal will supplement that with additional MTV content, said Virgin Mobile USA CEO Dan Schulman during a press conference after Branson's striptease. Entertainment services, along with the industry's "most affordable prepaid service" and absence of hidden charges, will tap a youth market whose wireless penetration rates are low, he contended. The price plan was built around the average youth's use of 200 to 250 minutes per month, he said.
The MTV partnership marries two youthful, irreverent brands, Schulman continued, and will contribute to Virgin's effort at turning a cellphone "into an entertainment device" that can have a "meaningful impact on the purchasing decisions" of consumers under 30 years old.
The Virgin Group's mission, a fully clothed Branson said during the press conference, is to "go where something is not being done well," or where consumers "are being taken for a ride."
Virgin's service is affordable, Schulman noted, because Virgin didn't spend massive amounts of money to build its own network, choosing instead to resell Sprint PCS airtime.
Schulman declined to elaborate on his promotion and advertising plans, but he said, "Don't expect a mainstream advertising approach." The promotion strategy will include advertising on MTV channels, promotion on college campuses, and "guerilla marketing."
During the summer, Virgin will begin rolling out MTV-branded content, including music news, music-trivia contests, downloading of artist pictures for screensavers, downloading songs for ring tones, and use of a star's voice to answer voice mail or make wake-up calls.
Soon after, MTV hopes to offer 30-second music clips and, with 3G networks in place and rights issues resolved, streaming of full songs.
MTV also wants to eventually have subscribers use their phones to interact with MTV and VH1 programs.
Later in the year or early next, Virgin will offer interchangeable faceplates that carry the Virgin/MTV brand, pictures of MTV-show characters, and pictures of rock groups, said Schulman. They will be followed by MTV-branded handsets.
Virgin Mobile soft-launched on June 23 in Sacramento and Columbus, Ohio, through 28 retail locations to test consumer response, "stress test our systems," and get dealer feedback, Schulman said. Virgin phones are now available nationwide through 3,000 stores, including Best Buy, Best Buy's Sam Goody music chain, Circuit City, Media Play, Target and Virgin Megastores. Prepaid phone cards are available in those stores and 8,000 others, including Circle K, 7-Eleven convenience stores, and Winn-Dixie supermarkets. Virgin also sells direct.
Dealers make a margin on the grab-and-go $99 and $129 Kyocera handsets and on the prepaid cards. No credit check or in-store activation is required. A salesperson isn't needed to explain the service or to fill out a subscriber contract, Schulman said.
If Virgin decides to add distribution, he said, it would "expand to a retail place you might not assume." These would be "venues where the young go," he explained.
Virgin worked with retailers to develop "prominent displays" tailored to indvidual chains, Schulman said. Best Buy, for example, built floorstanding displays in its stores and in a large majority of Sam Goody stores, said Best Buy VP Dave Sprosty. In Best Buy stores, the displays are near the wireless departments, and in the fall, the chain will add Virgin point-of-purchases in the music areas, he said.
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