MTV Networks has agreed to become an investor in privately held Amp'd Mobile and will provide video clips and other content for a wireless service that Amp'd plans to kick off this week, the companies said Wednesday.
MTV, which is also putting an executive on Amp'd's board, is investing $50 million in the mobile venture, people familiar with the matter said. The companies did not announce the terms of the investment in their statement.
Amp'd is renting space on the Verizon Wireless network to sell a mobile phone service aimed at young adults, similar to the market that Viacom Inc.'s MTV targets.
Several companies, including Walt Disney Co. and SK Telecom, are setting up similar ventures with the hope of carving out their own space in the already competitive U.S. market by concentrating on narrow market segments.
And companies such as Helio, a venture between EarthLink Inc. and SK Telecom, also plan to go after the young adult market but Amp'd Chief Executive Peter Adderton said in a telephone interview he believes his is the first U.S. service aimed solely at ages 18 to 24.
"It's going to get competitive but for now we've got the first mover advantage," said Adderton, who believes companies like Apple Computer Inc., Google Inc., and Yahoo Inc. may also launch their own wireless phone services.
As well as using tightly focused marketing, Amp'd and most of its rivals are also turning to features like video and music downloads to attract consumers and add to revenue.
Amp'd hopes to win customers by undercutting pricing on Sprint's existing wireless music service. It plans to sell full song downloads for 99 cents each from a selection of hundreds of thousands of songs, Adderton said.
This is the same pricing used by Apple's popular iTunes music service but well below a rival service from Sprint Nextel Corp., the third biggest U.S. mobile service.
It is set to start selling phones and service plans on its Web site www.ampd.com on Dec. 15 and plans a wider launch with select retailers early in January, Adderton said.
In addition to ringtones, pictures and video from MTV, Amp'd also plans to offer clips from Viacom's CBS, News Corp.'s Fox and Disney's ESPN.
Full pricing details were not immediately available but some clips will be free and others will cost 49 cents.
Amp'd will kick off the service with one cell phone, the Kyocera Jet from Kyocera Corp., and add a phone from Motorola Inc. to its lineup a few weeks later.
MTV's chief digital officer, Jason Hirschhorn, will join the Amp'd board and the companies will also collaborate on marketing and creating original video content for the phones.
Amp'd already had $67 million in funding and is in the process of raising an additional $100 million financing, according to Adderton, who believes the current round will be the last private financing round.
Verizon Wireless is a venture of Verizon Communications Inc. and Vodafone Group Plc.
