Research Notes

Media companies tired of “crystal ball” predictions

Media Companies have spent (and lost) fortunes getting their content on to new media platforms, including the Internet and digital television, based on reports containing fantastic predictions of explosive revenue growth from new media areas within the coming years and a fear of being left behind by their competitors.
Having paid thousands of dollars for these reports, media companies then hired in consultants at exorbitant costs to help them create a strategy that subsequently failed dismally, as markets failed to take off as predicted.

Unfortunately, Strand Consult has found this scenario has been quite widespread in media companies around the world, having interviewed selected media companies that Strand Consult is currently working with.

Given that most of the growth predictions from just a year or two ago for E-commerce, Internet Banner advertising revenue and T-commerce, have not even hit close to the mark, Media Companies are still looking for other areas that they move into, as their traditional media areas get less profitable. But this time areas with a proven track record and working business and revenue models, enabling a return on investment from day one.

The mobile sector has everything the media companies are looking for – proven track records and working business and revenue models. The mobile operators are starting to realise the need to position themselves as attractive business partners, looking for content from the Media industry to push new sources of revenue, thereby financing the new infrastructure investments the operators are facing. Mobile operators already know that voice traffic can only generate around 50 – 70% of their turnover needs in the coming years – the rest will have to come from mobile services.

Many media companies are currently being contacted by the technology- and mobile sector industry who are looking for exclusive deals on access to the media companies content. For the media companies, it is very difficult to determine which horse to bet on. For example, should they go with different partners in different territories, or sell rights across territories, thereby maybe loosing influence on localising content – and what terms and conditions should a media company demand?

Strand Consult is being contacted by an increasing number of Media Companies looking to tap in to this growth market – but this time with a much better knowledge of the revenue potential compared to their investments.

Back in 1994 we at Strand Consult decided not to become a consultancy for mobile operators.
Our goal is to deliver strategic reports containing information that will aide our clients in reducing their need for consultants. Today Strand Consult has sold our reports to over 70 national and international mobile operators world wide and a growing number of major content providers on top of that. One of the benefits our customers have had, is being able to cut down on their use of consultants. Consultants are excellent at defining processes, but lack the deep insight in the mobile world – insight that we have acquired by remaining neutral in our relationships with the mobile operators.

Reports from Strand Consult contain many existing business cases on mobile services from around the world. The latest reports from Strand Consult about the Korean mobile market, where they already have a functioning “3G” platform, very similar to what we will see in Europe, with colour terminals deployed and running download speeds of up to 144 Kb/s, show a huge increase in ARPU, mainly derived from the many services available to the users. A sure indication that there will be a substantial market for mobile services on the European 3G platforms.

Hopefully from now on, the only crystal ball predictions about the future, will cost 1 dollar in a tent at the funfair!
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