Research Notes

The Mobile Operators portal strategy will change over time

– much to the delight of the Content Providers and Customers…

Mobile operators all over the world are investing – and have invested – many millions of Euro in establishing unique platforms for distributing mobile services, either developed by themselves, or purchased from third-party providers. By selling mobile services via plat-forms (on-portal) the mobile operators are attempting to retain their position at the centre of the mobile value chain.

To avoid any misunderstanding regarding the terms off-portal and on-portal, it is necessary to briefly define these two terms:

1. On-portal-sales of mobile content is handled through the operators own distribution channels (Web portals, clients on the mobile handset etc). In other words operator branded channels like Vodafone live and i-mode.

2. Off-portal-sales of mobile content bypasses the operators own distribution channels. Off-portal does not necessarily mean that the seller can avoid having to work with the operator. The mobile operators still plays a central role in the off-portal envi-ronment by binding the players together via their billing systems. But it is no longer the mobile operators that solely decide which mobile services the users have the possibility to purchase.

Currently most mobile operators prefer using an on-portal strategy. This focus on an on-portal strategy is due to the mobile operators being under pressure to find new sources of income that can compensate for the decreasing prices on voice and SMS and many believe that mobile services will become the most important source of revenue for mobile operators on the future mobile market. This focus from the operators should also be seen in the light of the huge investments that mobile operators across the world are currently using for es-tablishing 3G networks, so the sales of mobile services are to help justify these 3G invest-ments and give the operators a sensible financial return over the coming years.

Using their on-portal strategy, the mobile operators hope to ensure that they will receive a larger share of generated revenue from mobile services. By establishing portals the mobile operators hoped they would not end as simple bit-pipes. As part of this strategy, many mo-bile operators have chosen to invest in departments that develop and market mobile services to be able to offer their customers unique mobile services  – a strategy that in most parts of the world has developed into a huge catastrophe – both marketing wise and financially.

There is no doubt that as mobile services become more and more advanced it will be neces-sary to use other and wider distribution channels than those currently being used and it will also be necessary to move focus from the very simple Premium SMS and Premium WAP distribution channels. This is due to that the advanced mobile services and applications need a wider distribution to reach a volume that can give a return on the investments that the services have required. At the same time it will also be necessary to have a more appe-tising way to present the services, to thereby give users a good impression of the services and their functionality. One method that would work when presenting advanced services would be to use portals or clients, as they are a better way of presenting and distributing mobile services than many methods used up to now. But it is not necessarily the mobile op-erators’ responsibility to handle this distribution task.

Many mobile operators have found it logical that it should be the mobile operators that handle this task by launching various unique mobile portals that only their own customers can use. But this is not necessarily the operator’s responsibility and the many fiascos that have been experienced around the world with operator portals is clear evidence that the mobile operators strategies have not been the most appropriate. Over time many mobile op-erators will change their portal strategy. For example mobile operators will let content pro-viders handle this task and instead concentrate on giving the content providers the best pos-sible conditions to sell their mobile services.

This change in strategy will lead to an increasing tendency for a larger share of mobile ser-vices sales to be handled off-portal.

For many mobile operators, having to give up having their own platform and developing their own services will be rather humiliating and something they will have to take a while to adjust to, as they have posted significant investments in internal resources, platforms, mobile services and marketing into this. On the other hand the operator portals have not generated the traffic and revenue that many had hoped for when launching these portals – for many mobile operators the portals have simply been a financial nightmare.

In Strand Consults report – Successful strategies on the future VAS market – we have conducted a thorough and in-depth analysis of the two portal strategies; on-portal and off-portal. The analysis includes a discussion regarding how the two portals strategies are af-fecting the market for mobile services and the various mobile services players measured on a number of parameters like service offerings, a number of customers, marketing costs etc. The conclusion is very clear – the mobile operators’ portal strategy will change over time from an on-portal to an off-portal strategy – which will benefit both the content providers and the mobile customers. 

Successful strategies on the future VAS market

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