Established mobile service providers switching to 3G technologies have lost their subscribers to newcomers during the transition to 3G. One of the main reasons for this is that newcomers are providing richer mobile content. The whole phenomenon stems from the fact that most service providers and content providers do not have a vibrant revenue distribution model, the consequences are that the mobile content generation industry has become very risky and the performance it does not produce enough resources to develop richer desirable content. for 3G In case the revenue share does not become more in favor of the content providers and the content does not get richer, the mobile operators will have no one but themselves to blame if the subscribers slip out of their hands. hands.
A lesson from the Japanese mobile market
The world took notice when iMode, the wireless Internet service run by Japanese giant NTT DoCoMo overtook AOL as the world’s largest ISP, with 35 million subscribers in 2003. It took AOL 15 years to reach 30 million subscribers. , while iMode achieved it in three years. It put a hem on the fact that mobile was the fastest growing new content platform in the history of communications. But DoCoMo stumbled during the transition to 3G. Second-place rival KDDI capitalized on the momentum with innovative content, acquiring subscribers at a much faster rate. And third place Vodafone was wiped out in Japan during 3G migration Global mobile content disparity
There is regional disparity in the case of mobile entertainment. The Far East, specifically Japan and Korea, is considered to be the leading region for adoption and acceptance of mobile entertainment. Europe ranks second in acceptance, with Scandinavia, the UK and Italy being the most aggressive markets. The US, when it comes to overall mobile service adoption, lags behind when it comes to mobile entertainment service adoption. Status of mobile content providers
Market analyst reports continue to forecast multi-billion dollar industries for mobile games, mobile music and other forms of mobile entertainment. The most successful service to date is ringtones. Despite the large revenue generated by mobile entertainment, insufficient amounts of this revenue flow to the companies that provide the content and technology. The operators earn money by using the network regardless of the content. Content providers have difficulty calculating the value of content. Even in Japan, cited as a leader in mobile content delivery, 20% of content providers are responsible for generating 80% of revenue. Therefore, most content providers do not make a profit and are at risk of stopping their operations. Current Revenue Sharing Model Subpar content cannot command separate content fees on top of network usage fees. There is a lot of discussion about the overall value chain and how revenues should be divided among industry players.
Most experts advocate dividing all end-user fees among value chain participants based on a revenue-sharing model. Despite their hype, content providers, the innovative start-ups that created the industry, lack the clout and impactful apps to garner a reasonable share. The telecommunications industry has not adopted this revenue sharing premise, nor does it normally operate under such arrangements. Telecom Operator Mindset Traditionally, telecom operators are more used to investing in technology, providing a service, and charging for that service to generate a return on investment. However, the problem is that operators are currently not investing. As major entertainment companies become more involved in the mobile space, the question arises as to whether they will be strong enough to bring about some of the necessary changes. Wireless carriers with tacky marketing. remain reliable phone services offering quality national telecommunications coverage while Content is not a primary focus.
The ambiguity in the telecommunications mindset is revealed in their operating budgets. The typical mobile operator’s content team is understaffed and under-resourced and hidden in the bowels of the marketing department. These hard-working souls try to match the output of an entire cable TV company on a shoestring budget. The billing on behalf of others, or BOBO, fee structure used in Japan, where operators charge a fee for content billing, and content providers keep 91% of content fees is not enough to content providers to remain profitable. In 3G, this area requires more investment because the content is more complex.
Failure of market segmentation
The lack of market segmentation is another explanation for the delay. Carriers keep repeating the mistake of selling the same product to everyone. More than 75% of American adults have a cell phone. However, mobile content is presented in the same way to almost all segments. The success of mobile content services depends on the operator’s ability to find lucrative niche audiences and satisfy their interests. Slow Acceptance Rates The third reason for slow acceptance rate is boring merchandise. All mobile operators offer a content mall, but these costs do not match the ease of use of Apple Computer’s iTunes store. Most mobile content stores are difficult to navigate, making the discovery process difficult. It’s no wonder that just die-hard enthusiasts have the stamina to find new content. Operators rely on content providers to spark consumer demand. The resulting content offering seems drained, embedded with the same names that dominate conventional media. User Fatigue The final reason is consumer fatigue.
Mobile operators hate to admit that phone consumption drops six months after buying a new phone. This could be the result of lackluster content due to media limitations, or possibly what consumers perceive as the ‘content’ they are paying for is the cost of content and the cost of the network combined. If consumers are supposed to be astute in realizing the full cost they pay to get the entertainment value, then the question of whether the cost of mobile entertainment is too high for the entertainment value would need to be addressed. Without new investmentsEach month, more engaging content is available. However, media has its limitations and only when the content can justify a separate fee structure will the industry hit the mass market. Until then, the dispute over the business model will continue to prevent companies from investing in mobile entertainment.
To help market growth, the Mobile Entertainment Forum’s (MEF) business initiative should work toward a revenue model for the industry. Operators need to start thinking about the real cost of delivering incremental network usage and how the balance should be spread across the value chain that incremental usage creates, as well as getting rich 3G content downloads on mobiles. The revenue sharing model needs to be addressed right now, so that we won’t have a hard time finding a robust and stable content provider industry that matches the content delivery and user features of a true 3G network in the near future.
A message to the mobile industry
Telcos must learn from recent history and prepare analytically for sustained high growth in both volumes and revenue from mobile content as they transition to next-generation networks and deliver innovative, unique and richer content to the mobile user. . Regardless of the current buzz about entertainment on mobile phones, the mobile content market has hit a bump. Wireless entertainment is reeling during a critical transition to third-generation mobile telephony, or 3G. The bets skyrocket. The winners of this race will create annual billing relationships with millions of consumers of new digital entertainment services. Having created this new market, mobile operators will have no one to blame but themselves if subscribers get out of hand.