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Summary:

More than half of all U.S. adults own a smartphone. But using them as a replacement for paper tickets still hasn’t found a home in the mainstream. Some big brands are counting on Apple’s newly rolled out Passbook feature to push mobile ticketing forward.

Passbook in iOS 6

If you’ve flown on a major airline in the past few years, you’ve probably seen someone using a mobile boarding pass, or maybe even used one yourself. But mobile ticketing still isn’t universal, especially in the U.S., despite the ubiquity of smart mobile devices. Apple’s Passbook app, which launches on Wednesday with iOS 6, already has some big names on board, some of whom believe that Passbook will give a swift push forward to the mobile ticketing industry.

More than half of all U.S. adults own a smartphone. But using them as a replacement for paper tickets and wallets still hasn’t found a home in the mainstream — see the slow adoption of Google Wallet as an example. While this shift will happen eventually, in some industries, it’s a little slower than many would like. Many airlines still don’t take mobile boarding passes. Amtrak, which sees tens of thousands of riders each day, didn’t start scanning mobile train tickets until this summer. And when it comes to showing tickets at sporting events, it’s very hit and miss.

Many companies are chomping at the bit for anything that will drive customers to their mobile apps or sites. The appeal for movies, travel and sports is clear: When you arrive at the venue attached to your ticket, the location-aware iPhone will pop the pass right up on your screen for easy access and scanning — no paper required. For businesses this means faster, more convenient transactions, better data about customer behavior, and more accurate management of empty seats or cancelled tickets.

Early Passbook adopters

Fandango worked with Apple on Passbook before launch. Fandango is the biggest brand in online movie tickets, and it’s also been at this mobile ticketing thing for a year. While there are 2,600 theaters in the U.S. that can accept mobile Fandango ticket, the number of moviegoers redeeming tickets via a mobile device is still pretty low: only around one-third of those theaters see as much as half of tickets scanned via mobile device.

In other words, there’s much room to grow for mobile tickets at movie theaters, a place visited by two out of every three people in the U.S. and Canada, according to the MPAA. So Apple basically endorsing mobile tickets is encouraging to companies like Fandango. “Passbook is interesting because it brings this to the forefront,” Jessica Yi, chief product officer at Fandango, told me.

An industry that’s not nearly as far along as movie theaters is sports.The folks at StubHub, the online and mobile marketplace for event ticket resellers, sound even more hopeful about the impact Passbook will have on their transition to mobile. The market for reselling tickets is valued at about $10 billion a year, and half of that is being done online through services like StubHub. Still, only 20 percent of their business is on mobile, said Mehdi Ghazizadeh, StubHub’s senior director of software engineering, in a phone call.

“We’ve gone from zero to 20 percent of traffic being generated from mobile in two years,” he said. The big thing holding a fuller transition to redeemed tickets via scanned barcode is inconsistently deployed technology at venues. Attendees, meanwhile, have been pushing for the convenience of mobile ticketing.

“The fans are demanding it, and this is going to be the catalyst, the driver by which venues will finally accept they have to accept this technology at the gates,” Ghazizadeh said of Passbook.

A boarding pass made with Tello’s PassTools service

As if to prove this point, when StubHub’s Passbook integration goes live in a few weeks, it’s starting with just two partners: the University of Texas and Purdue University. Tickets to events at those schools, which are outfitted with the appropriate barcode ticket scanners, will be the pilot program before StubHub’s Passbook option rolls out more broadly to other sports venues between now and early next year.

Outsourcing Passbook integration

Not every company has the in-house development teams that can build Passbook-ready tickets. Enter companies like Tello, which is planning to offer its services for airlines, venues, or any brand that want tickets or passes to work with Apple’s app. Tello’s product is called PassTools, is a WYSIYG-style tool that lets any company build a single pass or thousands of tickets in just a few minutes.

Tello is charging $99 per month for up to 1,000 passes issued each month, $999 per month for up to 20,000 passes. For businesses requiring more, they’ll negotiate. Tello isn’t the only company trying to build a business off of creating Passbook passes — there’s PassKit and PassSource too.

Like StubHub, Fandango and others, these companies see Passbook as an easy way to push the mobile industry forward.

“Eveyrone realizes if Apple does this well, this could be in the hands of millions of consumers very quickly. So they’re asking, ‘How do we particpate in this?’ I think you’ll see pretty rapid adoption later this year, early next year,” said Joe Beninato, founder and CEO of Tello. “Most large companies will be figuring out their Passbook strategy at that point. Some already are.”

Disclosure: Tello is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

  1. Scott Forstall introduces Passbook, a new app that allows one “to collect all of your passes in one place”. Its a digital wallet that stores event and service tickets; currency equivalents like gift cards; and electronic coupons. He also shows how Passbook is sync’ed to the locked screen of an iPhone: arrival at the airport triggers the e-ticket to be produced once the screen is slid over.

    * * * * * * *
    His one-minute presentation is exciting for three reasons:
    (1) Digital wallet has the potential of disrupting payment paths.
    That is, instead of paying by cash or credit cards, a Passbook can become both the currency and a bank by which one direct deposits their money. It disintermediates the traditional financial institutions and processes of physical currency, replacing it with an economy predicated on completely digital transactions. What does that mean? You may not need to swipe a credit card (which means the credit card companies and offerings like Square and Intuit are in trouble because the transaction fees go to Apple). You may be able to use Passbook for online payments (which again hurts credit card companies and PayPal – and the transaction fees go to Apple). And it means that Apple could add to its already impressive cash-on-hand balance: iBank, anyone?

    * * * * * * *
    (2) The E-airline ticket scenario implies that Apple has some degree of geo-fencing in place.
    Contextual, geographically triggered actions is one of the fundamental requirements for successful SoLoMo – the blending of social, local / location and mobile – in the pursuit of a greater user experience through relevant ad exposure, but more importantly, for proper mobile monetization. That Passbook can understand when to present a digital airline ticket when the user is at an airport is pretty promising. It reveals that Apple has the map and GPS features working (thanks to TomTom); and that it has an algorithm in place that matches location to specific Passbook content (a sign of relevance).

    * * * * * * *
    (3) There can be validation of mobile monetization through Passbook acting as a digital loyalty card and accounting agent.
    Another problem with mobile monetization is the inability to track the efficacy of ad spend. The challenges that face a company are …
    (a) Is an ad presented properly?;
    (b) If the ad is seen, is a purchase directly attributable to the ad?; and
    (c) How does one track if the spend is from a new customer (which is desirable in building a wider customer base) or an existing customer (with the complaint that a sale still would have occurred in the absence of a “wasted” ad or that a digital coupon conceded margin in a sale that would have happened even in the absence of discounting).

    If Passbook is properly installed,
    (a) Cross-checking social profiles against map products produces relevant ad presentation;
    (b) Could be assumed based on comparing the times between ad acknowledgement and purchase. This can be further facilitated by a digital coupon with an expiration time; and
    (c) By creating a zero-date, customers can be categorized by not only “first spend” (new vs. existing customer), but data collection on variables such as locations frequented, time and dates of spend, frequency, average sales ticket, and products purchased can be initiated. Campaigns could be built by segmenting the customer base and defining their level of bonding.
    All of these things validate mobile ad sales.

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  2. Is anyone else under-whelmed by the real passbook app that was released today with ios6? There are only a handful of no-very-useful apps intefaced with it. Nothing like the vaporware we see in the demos.

    The screen shot on apple’s site shows target, delta, american airline, and starbucks among others. None of these are actually available. Apparently, apple is expecting those companies to go to the trouble of modifying their existing apps to tie into passbook. There is no incentive for them to do so, considering they already have the capabilities passbook has and more built into their existing apps.

    On top of that, I have to load the compatible app. Now why would I run 2 apps to do the work of one? Passbook is nothing more than a gloried file folder, from what I can see.

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    1. Actually there’s a lot of incentive for those companies to build in more functionality. For one, it can drive more usability. Imagine a scenario where a company has mobile coupons but prior to Passbook wasn’t using a location-enabled feature to prompt consumers. Chances are those coupons would be used far less and thus the app/coupon feature would be valued less by the consumer. But now with Passbook integration those coupons pop up on the screen as the consumer spends time in that store, thereby driving higher usage and leading to the consumer deriving more value from the app.

      Passbook also helps in that file folder scenario you mentioned. Between the Groupons, Livenation tickets, baseball tickets, and loyalty cards, there’s just too much stuff to save and remember when doing every day stuff. Having it all in one place and it dynamically updating and reminding consumers when they’ve arrived is a huge help.

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  3. good point @dave

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  5. I have to agree with Dave, why would I want or need to install the retailers app when their integration with Passbook could or should be done by Apple’s servers. This would allow the ticketing or other integration to work more efficiently.

    Apple should have done more upfront work to get more retailers and venue’s to sign on making this a better and more readily useful tool. Restaurants would be a good one, where you could get a reservation and have your iPhone signal to them if you are in range, running late, etc. More features, more benefits.

    Apple is moving past just being a hardware vendor and into a services provider, but if they don’t actually follow through on the necessary steps Passbook could go the way of Ping.

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  6. Tello must have a very good sense of humor. I noticed the boarding pass: the airlines, the flight path, and the passenger. Oceanic flight 815 though flew on September 22nd not July 22nd :-)

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  7. I love the idea of paperless tickets but I used the fandango app the other day and the movie theater still gave me a paper ticket. That made me a little frustrated since the idea of having a mobile ticket meant, to me, that I wouldn’t need to get a paper ticket. Hopefully that will change.
    I think Passbook could be a good thing for mobile transactions and I would love to see more loyalty cards intergrated. It would be nice if it could eventually replace our wallets but I doubt that will ever happen. At least it could shrink it down.

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