Research Notes

MMS is a Huge success in Norway

So why Are Mobile Operators In Other Countries Standing In The Way Of Their Own Success
It would not have been completely misleading, if SMS had been the abbreviation for “Surprising Messaging Success” – as the success of SMS messages took the mobile operators completely by surprise. Currently mobile operators are hoping that MMS will likewise mean “More Messaging Success” – but apart from the Norwegian operators, there do not seem to be any operators that have learnt anything from previous mistakes or successes and thereby the mobile operators are preventing their own success.  

There is a proverb that goes “Never try to repeat a success”. What the proverb means is that you will often be disappointed if an attempt at repeating a success does not match the already high expectations – in other words it is better to try to find something completely new that could be a new success.
Currently it does seem apparent that almost all mobile operators in connection with their launch of MMS, have tried not to repeat their previous success, just like the proverb says they shouldn’t. It looks like most of the operators have apparently not learnt anything from their previous experiences about how content providers that sell mobile services via for example Premium SMS, can create a success story for both mobile operators and the mobile services market. Today, Premium SMS services are still an increasingly profitable business for both mobile operators and content providers.
It was Revenue Sharing on SMS services that was the invention that made Premium SMS such a huge success. The business model with revenue sharing was developed by the Norwegian mobile operators Telenor and Netcom and those business models ensured the content providers that they easily and simply could have their mobile services distributed to all Norwegian end-users across the mobile operator’s mobile networks. The revenue from sales of the services was split between the operators and the content providers in accordance with the revenue share agreement. Since then, this Norwegian revenue sharing model has been copied by almost all GSM operators all over the world and has made Premium SMS into an important mobile business that generates billions of Euro worldwide.
MMS is the direct successor of the well-known and very simple SMS messages. The close family ties between SMS and MMS ought to mean that the operators almost automatically ought to be able to transfer all their experience from Premium SMS over to the MMS market. In other words it would seem to be an obvious strategy to try to repeat the SMS success, by using content providers and revenue share model is to stimulate the MMS market. However this vision has only been launched in a very few places around the world – one of them is Norway, the birthplace of revenue sharing models from the Premium SMS market. Because of this, in Norway 1 Premium MMS is sold every time 10 person-to-person MMS’s are sent.
Apart from having launched revenue sharing models for MMS, the Norwegian mobile operators have also launched special bonus models that ensure extra rewards to those content providers that focus on developing and marketing their own Premium MMS services. This means that once again the Norwegian mobile operators are early adopters of new business models that can help the sales of Premium mobile services.
The Norwegian mobile operators focus on Premium MMS has resulted in the 4.8 million Norwegian mobile customers (July 2005) are increasingly sending simple person-to-person MMS messages every day. The Norwegian MMS usage for the first six months of 2005 totalled 88 million MMS messages – a very nice increase from the 20 million MMS messages sent in the same period of 2004. A Norwegian average customer thereby sent during the first half-year of 2005 19 MMS messages, which makes the Norwegian mobile users the most industrious users of MMS worldwide – no other users send nearly as many MMS messages as the Norwegian’s.
At a glance perhaps 19 MMS messages per half-year does not sound like much, but at a standard price of approximately 0.34 Euro, MMS today – after 2 1/2 years on the market -generates a higher share of the Norwegian mobile operators revenue per customer than SMS did after SMS had been on the market for 2 1/2 years. We believe that in three years MMS will very likely generate around 7 – 8% of the Norwegian mobile operator’s total turnover.
It is somewhat frightening that all other mobile operators apart from the Norwegian are in reality doing exactly what the old proverb states with regard to “never trying to repeat a success”, because it is only the Norwegian mobile operators that have launched revenue sharing models for MMS. It is almost even more shocking that these operators have not even tried to “reinvent the wheel”, by trying to dream up some other new business models that might somehow help boost the market for sales of Premium MMS! In other words, the mobile operators seem to be doing an excellent job of preventing their own success.
As we have described in our new report – ”How to get success in the 3. Generation VAS market” –missing revenue sharing models is not the only problem connected with mass distribution of Premium services to end-users. The report analyses a great number of market related and technological challenges, that the mobile operators have to take into account in their attempts to create a healthy and growing market for the sales of Premium services. Establishing an optimal mobile market is in this connection especially about deciding who is going to develop, produce, market and sell the mobile services. Also it is essential to decide which players in the value chain that most effectively can handle the investments and operations of the service platforms that will ensure that end-users can be offered attractive mobile services that they are willing to use and pay for.
On top of the problems with lack of revenue sharing models for Premium MMS, the mobile operators are also hindering the development of the market for Premium MMS by their walled garden strategies, where operators focus heavily on ensuring that the distribution of Premium MMS services is limited to their own portals. Individual mobile operators are choosing this type of strategy in their attempt to differentiate themselves from their competitors.
There are many problems associated with the mobile operators walled garden/on-portal strategies. For a start the mobile operators are having great difficulty differentiating themselves on for example Premium MMS services – partly because these Premium services are easily copied and partly because content providers seldom let individual mobile operators have exclusive rights to use unique services. It is also a problem for the content providers that their MMS services are only distributed via the mobile operator’s portals, as the content providers more or less have no choice but to market the mobile operator’s portal in order for end users to be informed about where the services can be purchased. And content providers usually cannot afford to market multiple mobile operators’ portals, to make all end-users aware of where they can purchase their Premium MMS services.
To put it bluntly, the content providers lose their incentive to develop, produce and market Premium MMS services, when they are neither being offered revenue sharing agreements nor an effective distribution of their services. Is anybody thinking – hey – isn’t this exactly what the mobile operators did wrong when they launched WAP? Are the mobile operators not just repeating all their mistakes from the WAP fiasco?
So yes, there is a proverb that says “one should never try to repeat a success” – but there is another proverb that says “you should learn from your mistakes – and not repeat them twice”. The bottom line is the mobile operators will have to give their existing business models a serious re-evaluation if they are going to have any hope of creating “More Messaging Success”.

the 3. Generation Value Added Service Market

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