Everyone in the content game knows that the mobile industry’s biggest bugbear is the large slice of revenues that network operators take. Now its official. Research carried out last week at Mobile Content World in London of the exhibitiors and delegates found that more than half of respondents correctly answered that mobile operators currently take 40 to 50 per cent of mobile content transactions. However, less than six per cent believe this will be the case in three years time. In fact almost two-thirds of those questioned believe that in three years' time, mobile operators should cut their share by at least half — to less than 20 per cent, with 18 per cent of respondents believing that they should take only five per cent.
The study, carried out by Valista a leading, independent provider of merchandising, payments and settlement solutions, finds that what is clear is that in order to safeguard revenues, the industry needs to drive the uptake of mobile content through creative and flexible pricing, content bundling and promotions and cleverly targeted content.
More than 28 per cent of delegates surveyed believe that targeting content by demographic groups and communities will be the most likely way to increase content purchasing, closely followed by flexible pricing (27%) and improved mobile search (20%).
According to Arlene Adams, Vice President at Valista who attended the Mobile Content World show yesterday, "Currently, operators take the greatest share of mobile content revenue, but the distribution of power could shift - particularly when the major media moguls secure their foothold in the marketplace.
Consolidation and the entrance of major consumer brands will shape the future value chain, and operators need to balance recouping revenues with the desire to maximise their share in the long run. In this regard, operators need to look at more innovative merchandising and marketing tools to encourage their consumers to buy more. In addition, a payments model which lowers or eliminates revenue leakage and allows end-to-end traceability for transactions and the parties involved, will allow operators to look at lowering their fees while encouraging growth in the content market."
Good news for the industry came in the finding that mobile TV and Video downloads will be the most popular forms of content over the next few years, an opinion that mirrors recent analyst predictions. Broadcasting rich content will see a move from lower value payments (micro-payments) to higher value transactions (macro-payments). In this regard, operators need to protect their brand and look at personalised and compelling content to grow Average Revenue Per User (ARPU) and drive off competition from more traditional payment schemes. Less positive for operators was the finding that only 15 per cent of content purchased will be part of an ongoing subscription model.
What may make uncomfortable reading is the fact that, according to attendees, mobile operators will not see content purchases making up for falling revenues. More than half of those who contributed (58%) believe that in three years' time, less than 25 per cent of total operator revenue will come from mobile content and 15 per cent believe that it might drop as low as 10 per cent. This figure is interesting given that mobile content and entertainment services market accounted for less than four per cent of total mobile service revenue and less than 19 per cent of non-voice revenue in 2005 according to research firm, Analysys. Another figure quoted by iGillott Research predicts that mobile content will account for 40 per cent of operators' revenue by 2009.
Despite the variations in the predictions above, those questioned in the Valista poll were in agreement on the future of mobile payments, with more than 65 per cent believing that the current system of paying for mobile content via Premium SMS will, in the next few years, give way to more flexible and robust payment methods such as paying via the monthly bill (direct-to-bill charging).