Which mobile strategy should media companies choose?
|The media companies’ presence on the mobile market will become more visible in the future, but the level of their financial engagement will greatly depend on their choice of mobile strategy. In Strand Consult’s new 300+ page report ” How to Succeed in the Second-Generation MVNO Market”, the different mobile strategies available to media companies are identified. The strategic mobile possibilities can be divided into the following categories:
Establishing a mobile concept – brand licensing Production of mobile services and content Launching a Branded Reseller Launching a Service Provider (SP)Launching a Mobile Virtual Network Operator (MVNO)The list above illustrates the sequence that a media company most often will choose to expand their mobile business.
A media company’s investment (CAPEX) in the mobile market increases successively with the above strategies. In other words the financial risk will increase as media companies further develop their mobile strategy. It is not just the size of investment that increases in the above strategies, but also the operating expenses (OPEX). Media companies must use far more resources, both marketing resources (analysing the market, product development etc) and resources to develop a mobile strategy. The resources required will increase if the media company wants to launch as an independent mobile provider (SP or MVNO). The financial risk is connected to the revenue potential that also successively follows the list of possible strategies above. For media companies, the list above also gives a successively increasing level of freedom and thereby increased flexibility, as the media companies become increasingly less dependent on external partners – especially the dependency on a MNO – allowing media companies much more quickly to change pricing plans, marketing campaigns etc. and thereby adapt to a dynamic mobile market.
By a mobile concept strategy we mean that a media company licenses their brand, content etc. allowing a third party to create mobile services, -content and -applications, or create a mobile provider based on the media company’s brand and/or content etc. It is especially in the content area that the mobile concept strategy has become popular, with many media companies or other players choosing to license their brand and content to third-party companies. The final breakthrough is still to come, where media companies or other players choose to license their brand and content to a third party company that wants to use the brand and content to create a new mobile provider. The mobile concept strategy will become increasingly popular among smaller media companies, that neither have the financial resources or competencies to design, develop and produce content for the mobile industry. For the larger mobile companies, the mobile concept strategy will be less attractive and their willingness to allow their brand to be licensed to a third party company will also be correspondingly smaller. As they have done with the Internet, the larger media companies will retain the development of mobile content in-house, to maximise their revenue potential from mobile content.
Media companies that do not find the mobile concept strategy interesting will primarily access the mobile market by being content providers – a method allowing media companies to take advantage of the synergies between the media world and the mobile world and furthermore with limited investments and low costs. Starting as a content provider on the mobile market will give a media company the necessary experience required if they later want to expand their mobile activities by launching as either a SP or MVNO.
The number of media companies that are currently doing business as mobile providers is still limited – but we will however in the future see an increasingly larger drive from the media companies. Many media companies have been active on the mobile market for a number of years and it is this experience they have gained, combined with the decreasing entrance barriers, that will make it both attractive and interesting for media companies to become mobile providers. Media companies will either choose to launch as a SP or a MVNO, whereas the interest in launching as a MNO will be nonexistent. Media companies must compare the advantages and disadvantages of both types of mobile providers before choosing their strategy, as becoming a MVNO gives some levels of freedom that can be advantageous compared to the extra costs involved in launching as a MVNO, rather than a SP. One of the advantages that the higher level of freedom a MVNO gives is that it is easier and cheaper to change mobile operator, Mobile Network Operator (MNE) or Mobile Virtual Network Operator (MVNE), than if they were doing business as a SP.
|Much more information about media companies doing business as mobile providers is available in our latest report ” , How to Succeed in the Second-Generation MVNO Marketthat analyses the media companies future role in the mobile universe and why media companies need to have a mobile strategy. 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.