How to make money on mobile services
-A picture of the current & future Market for Mobile Services in Europe
|Many people are starting to talk about the mobile services market. New large investments in mobile infrastructure mean that operators must look to new business areas that can create traffic on their networks and billing systems. So people are talking about SMS, EMS, MMS, WAP and Java based services. But to be honest, how much of all this talk in the telecom sector is actually just based on supposition and educated guesses, about a future with so many unknowns?
Strand Consult has spent the necessary time to compile a report that contains no guessing at all- on how the future mobile services market will develop. We have analysed the market for mobile services today in relation to its technology and development, the roles of the different market players and the business models that drive and will drive the mobile services market. The report takes in to account all the factors that affect a market for mobile services – factors like:
The terminal market: Looking at the existing customer base today, the sales of terminals that we have seen the last 2 years – and the fact that most countries are operating with a high penetration of mobile phones – means that we have seen numerous operators switch their terminal sales strategy away from prepaid and heavy subsidising and start to focus on postpaid subscriptions and selective subsidising to the heavy user segments.
Terminal technologies: The experience from recent years show that many new technologies often get delayed compared to the manufactures planned rollout and marketing efforts. Amongst other factors that play a roll are, for example, how many other manufactures support or are compatible with the announced technology and how user friendly the products are that enter the market. Right now the mobile market is largely driven by younger segments, so it is important to look at when there will be terminals featuring new technologies in the segment known today as “mass market”.
Service technologies: The new service technologies must not only be supported by the terminals available on the market, but it is also important to look at when you will achieve enough users with access to the technology to make it attractive for content providers to develop applications for that platform.
Types of services: Many have ideas or opinions on which services the customers will use in the future. We have chosen to disregard many of these often very abstract ideas, as they more often than not, do not take into account legal, regulative or market issues that will have substantial effect on the deployment and success of these ideas. Our calculations are based on the services that millions of people are using and paying for every day – like premium SMS. We have had the privilege of being given access to actual sales figures from numerous content providers in Europe, South America and Asia. Based on what consumers are willing to pay for today, we have compiled an image of the future market for mobile services.
The Mobile operators existing ARPU: When you start looking at the value of the future market for “non-voice” services, you have to look at how much customers are already paying operators in different countries. The mobile market of the future is not just about mobile services, but also about each customers incentive and ability to contribute with more money in the operators till. Terms like “Share of Wallet” will during the coming years be included in many of the speculations that the mobile players will have as they contemplate their future options.
Share of the mobile operators VAS revenue: Today, the primary source of the operators VAS revenue is derived from SMS traffic. Revenue from data services is still very small. Strand Consult believes that the development in this area will be slower than many expect – not because the customers do not want or need these services – but because the operators are slow to create and implement business models making it attractive for partners to develop and market mobile services based on the new technological platforms.
Development of the split between Voice and VAS revenue: In the same way that there is a limit to the customers ability and incentive to spend more money on mobile services, there will also be a connection between the revenue derived from “voice” and “non-voice” services. We do not believe in an explosion in VAS revenue, but expect a constant development that will vary depending on which terminal the customers have now and will have in the future.
When to launch revenue sharing: The primary prerequisite for a mobile services market to emerge is that the operators are willing to share their revenue with those content providers who take on the task of developing and marketing mobile services based on different technologies. The earlier the operators open up for revenue sharing possibilities, the earlier they will experience a sound market for mobile services. Other factors worth mentioning are the number of operators and service providers who allow access to their customer base via revenue sharing. The results from Norway, Denmark, Sweden, Holland and England show that the market does not explode before the content providers have access to around 70 – 80% of the mobile customers.
A countries ability to adopt new technology: In a region like Europe there can be vast differences in how quickly the population will adopt new technologies. This can be seen in for example how the Internet has penetrated from country to country. In the mobile sector, similar factors will play a role.
Key Markets: When you speak about the mobile future, Japan and i-mode has been emphasised by many as the ultimate showcase. In our calculations we have chosen not to include what is happening due to several reasons:
·I-mode does not handle “micro-payments”, which in practice means that I-mode users cannot make impulse purchases, but have to subscribe to the services they want.
·I-mode operates with a “Walled Garden” strategy in contrast to Europe, where most operators in most territories have chosen an “Open Garden” approach, allowing all content providers access to implement and market mobile services with revenue sharing.
This report does not just go through the above mentioned factors and the forces that have influence on the markets for mobile services, but also includes many actual case studies from the different mobile services areas – cases that show what the customers are willing to buy and pay for today. On some markets we have been fortunate to have access to the major content providers figures, which are included in our calculations. We can guarantee you that this report excels anything you have seen before – never before has anyone accumulated so much knowledge about the mobile services market as Strand Consult has in this report.
More information about the report