Research Notes

The future growth of media companies will come from the mobile market

In a world becoming increasingly mobile, with customers demanding access to services and content anywhere and at any time, mobile media is moving business away from traditional media and becoming a more integrated and central part of customers media consumption. Media companies will therefore need to have a professionally developed and adapted mobile strategy to future-proof their company to the changing media habits of consumers.
The mobile handset’s share of the total media consumption is still relatively limited. On average, mobile customers only use their mobile handset for 4-5 minutes a day, whereas they watch TV for 2-3 hours a day and a consumer in the Western world spends 7-8 minutes a day reading catalogues. The technological development of the mobile handsets is changing consumer habits, resulting in that an increasing share of our media consumption will take place via the mobile media.
So media companies will need to be prepared for the changes in customers’ media habits by having developed and adapted a mobile strategy that can ensure a place in the customers’ media windows, thereby allowing customers to consume the media companies’ content. By developing a mobile strategy, a media company can actively evaluate whether the mobile media should be a future media platform they should focus on, allowing them to market and sell their products to customers.
The media sector is currently experiencing a smaller paradigm shift, moving away from TV, radio, newspapers and magazines and over to newer media like the Internet and mobile. The paradigm shift is resulting in media consumption moving from TV and newspapers, to the Internet and mobile, with especially Internet consumption significantly increasing and thereby resulting in TV and newspaper consumption decreasing.
Compared to older media, the mobile media is different in a number of positive areas. Where the traditional media channels (TV, radio, newspapers and magazines) are primarily vertical media that only operate within their own respective media, the new types of media are horizontal, as they can be used by the more traditional media for both distribution and interaction. For example the mobile media is being widespreadly used by traditional media for interaction. One example of this is the many different reality and talent TV shows that are using mobile media for voting. This interaction has proved to ensure more loyal, involved and interested TV viewers that week after week faithfully follow their favourite TV programs.
From the media companies’ viewpoint, the mobile media has a number of advantages compared to other new types of media (Internet and broadband) as the mobile media already has business models that allow the different players to receive a financial return on their investments. The Internet can still not offer content providers any really viable business models. There are no global “Micro payment” solutions and in reality it is not yet possible for content providers to build their own billing systems. There is little doubt that these types of systems will try to be launched – there have already been many attempts at this around the world, but it will still take a while before they will be operational on a larger scale. The only other alternative for content providers on the Internet is to base their business on advertising, which has up to now been unprofitable for almost everyone.
The mobile media offers far more possibilities to achieve a profitable business in the form of already existing Micro payment and revenue sharing business models that ensure that all the market players receive a share of the generated revenue. The mobile business models are very flexible and there are a great number of variations of the different types of business models. As MNOs upgrade to new technology, an increasing number of new business models become possible. But the implementation of these models requires that the MNO has the ability and willingness to redefine their own business models, making it profitable for content providers to develop the necessary mobile content.
Consumers’ media habits are not the only reason that media companies are developing mobile strategies. Media companies also need to show growth in turnover and profits and therefore need to find new distribution channels that allow customers to consume their content. The mobile media is an obvious new distribution channel. Focusing on mobile media will result in media companies having increasing costs – costs that initially will not be able to be covered by revenue from the increased sales of mobile content. Therefore media companies will have to accept that in a transition period they will experience top line growth, but that mobile media will not contribute to their bottom line.
For many media companies, the primary objective of being represented on the mobile media will be that they thereby cover the whole media spectre. Financially it could be a while before they receive a sensible financial return on their mobile investments. However media companies can take advantage of existing resources and the synergies between the mobile media and other media that they already have experience with, to create a more sensible and profitable mobile business.
Much more information about media companies doing business as mobile providers is available in our latest report How to get success in the second Generation MVNO Market that analyses the media companies future role in the mobile universe and why media companies need to have a mobile strategy and which market phases the media companies will go through. Included in the report is an analysis of media companies’ assets/strengths and risks/disadvantages when doing business as mobile providers. The report examines relevant and inspiring cases that document that the media companies entrance/involvement in the mobile area is not something that may happen in the future, but is in fact a very current phenomena that will become even more dominant and visible in the mobile industry over the coming years.

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