Geographical Differences in Mobile Service Offering and Markets - A Case Study: Finland and Singapore

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MARKO SORVAMAA

GEOGRAPHICAL DIFFERENCES IN MOBILE SERVICE OFFERING AND MARKETS -

A Case Study: Finland and Singapore

Master’s Thesis

Topic approved in the Information Technology Department Council meeting on 3rd of March 2010 Examiner: Professor Hannu Jaakkola (TTY)

Researcher Petri Linna (TTY)

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Abstract

Consumers’ use of mobile communication devices has been increasing rapidly for several years. Recently the use of data services, such as text messaging, gaming, contact, and payment services have become more important for both consumers and industry players. New services are being introduced at an increasing rate.

Success of these new services is vital for many players in mobile industry:

Operators, device manufacturers and naturally service and content providers.

As for any product or service the consumer behavior is different in different parts of the world. Therefore understanding the geographical differences in content and service consumption is becoming more and more important for industry players. Big portion of mobile content and services can be assumed to be globally relevant, but there are also many differences between regions. Some of the differences are easy to explain, for example application for real-time following of stock exchange rates is most like not very commonly used in rural areas, but weather forecast might be very important for farmers in same area. For some content the differences are not so obvious and this makes it interesting and important field to study.

Culture is one factor that has an influence on mobile content and service consumption. Many different models exist to evaluate and score different cultural factors, few of these are briefly introduced in this study, one, the Hofstede model, is explained in more detail and also used to compare the case markets, Finland and Singapore.

By making an assumption that content offering reflects the content demand and by examining the offering in different markets some conclusions can be made also about the demand side. This is the method used in this study, content offering in case markets is evaluated by examining few channels in markets, the findings are summarized and the conclusions presented.

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TAMPEREEN TEKNILLINEN YLIOPISTO Tietotekniikan osasto

Ohjelmistotekniikka (Pori)

SORVAMAA MARKO: MAANTIETEELLISET EROT

MOBIILIPALVELUIDEN TARJONNASSA JA MARKKINOISSA - Case:

Suomi ja Singapore Diplomityö, 47 sivua

Tarkastaja: Professori Hannu Jaakkola Kesäkuu 2010

Avainsanat: mobiilisisältö, mobiilipalvelut, mobiilisisältömarkkinat

Tiivistelmä

Datapalvelut, kuten tekstiviestit, pelit, kontakti- ja maksupalvelut ovat tulleet yhtä merkittävämmiksi sekä kuluttajien että mobiiliteollisuuden toimijoiden kannalta.

Uusia palveluita otetaan käyttöön yhä kiihtyvällä vauhdilla. Näiden uusien palveluiden menestyminen on elintärkeää monille mobiilialan toimijoille:

operaattoreille ja laitevalmistajille sekä luonnollisesti palveluiden ja sisällön tarjoajille.

Mobiilipalveluiden, kuten minkä tahansa tuotteen tai palvelun, kuluttajakäyttäytyminen vaihtelee eri puolilla maailmaa. Maantieteellisten erojen ymmärtäminen on yhä tärkeämpää alan toimijoille. Suuren osa mobiilisisällöstä ja -palveluista voidaan olettaa olevan relevantteja maailmanlaajuisesti, mutta on myös paljon alueellisia eroja. Osa eroista on helppo selittää, esimerkiksi sovellus tosiaikaiseen arvopaperipörssin seurantaan ei välttämättä ole kovinkaan yleisesti käytetty maaseudulla, mutta samalla alueella sääpalvelu voi olla hyvin tärkeä maanviljelijöille. Erot eivät ole näin ilmeisiä kaikella sisällöllä ja palveluilla, mikä tekee tästä mielenkiintoisen ja tärkeän alueen tutkimukselle.

Kulttuuri on yksi tekijä, joka vaikuttaa mobiilisisällön ja –palveluiden kulutukseen. Kulttuuritekijöiden vaikutusten analysointiin on olemassa monia erilaisia malleja, muutama niistä esitellään lyhyesti tässä tutkimuksessa. Yksi niistä, Hofsteden malli, on selitetty yksityiskohtaisemmin ja sitä käytetään myös verrattaessa Suomen ja Singaporen markkinoita.

Tekemällä oletus, että sisällön tarjonta heijastaa sisällön kysyntää ja tutkimalla tarjontaa eri markkinoilla joitakin päätelmiä voidaan tehdä myös kysynnästä. Tätä metodia on käytetty tässä työssä, sisällön tarjontaa esimerkkimarkkinoilla on arvioitu tarkastelemalla muutamia sisältökanavia näillä markkinoilla, työssä esitetään yhteenveto tarkastelun tuloksista ja sekä tulosten perusteella tehdyt johtopäätökset.

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Acknowledgements

I started to do this thesis work “only” 12 years later than I was supposed to. Well as they say better late than never. Doing the thesis now, about area that I have been working on for the past 10 years in Finland and in Asia Pacific, probably made the process easier as I had pretty good idea what I want to say, just needed to get it to paper. And surprisingly it was also interesting to dig into the theoretical side of things that I have been working with on the practical side.

In the process Professor Hannu Jaakkola played a key role by giving very valuable comments and guidance. Researcher Petri Linna also gave valuable feedback when finalizing the thesis. Also I need to thank all my current and previous colleagues and business partners who have provided me with a huge amount of information and knowledge during the past ten years of my career in the field of mobile content and services. Big thanks also to Marja for checking my

“rallyenglish” and helping me in translating it to more proper English. And last but not least I want to thank my lovely wife Tanja for continuous support and encouragement during the process. And Vilma, now that this is done, daddy has more time to spend with you.

Kangasala 20.05.2010

Marko Sorvamaa Ilvestie 8

36100 Kangasala

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1 Introduction

The mobile phone is arguably the success story of the modern electronics industry. Starting as a rare, high-end business tool less than 20 years ago, mobile phones are now in the hands of almost half of the planet’s population. In many developed markets the penetration is already more than 100% and the growth rate in emerging markets is still predicted to rise the in coming years.

Not only the penetration is increasing but also consumers’ use of mobile communication devices has been increasing rapidly for several years. Initially mobile phones were used for voice services only, but recently the use of data services, such as text messaging, gaming, contact, and payment services has become more important for both consumers and industry players. The consumer behavior is shifting from the Internet to a more contextually sensitive mobile environment, this can be characterized as a change from ‘sit and search’ to

‘roam and receive’. (Pihlstöm M 2008) New services are being introduced at an increasing rate. This development is happening globally but the pace is much more rapid in emerging markets like India, China and some Latin American countries.

Mobile content and services market has attracted a lot of interest among content developers and owners, operators, major corporations and media during the past ten years. The development of mobile devices, software and networks has been opening new opportunities. However, monetizing many of these new opportunities has been challenging, as for most of all other online services. It is fair to state that the market has not exceeded the expectations set in the early days of mobile content and services market. On the other hand, there are several successful players in the market. During the history of mobile content market the opportunities have been over- and underestimated. For example ringtones and wallpapers were generally not expected to become a notable business in the early days of the market, which they still are. On the other hand, news services were generally estimated to bring significant revenue streams. Both of these beliefs have been proven to be wrong.

The overall mobile Internet usage has exploded during the past couple of years. The growth has been driven by many simultaneous developments, including more and more new mobile devices in the market with big color screens and browsers, the improved mobile networks and the increasing number of mobile-dedicated Internet sites. Increase in usage has not necessarily translated into growth in revenues though.

Global mobile content and services market, which includes all mobile data (non-voice) services, is estimated to generate US$344.1 billion in revenues in 2013, up from US$182.9 billion in 2008. (Informa Telecoms & Media 2009b) Although voice will remain the dominant source in revenue generation, estimated to generate US$683.5 billion in revenues in 2013, the data revenue is

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by no means meaningless or minor as it will be almost one third of the total revenue generated by mobile services (voice and non-voice).

In the 1990s the European mobile industry was growing rapidly: GSM technology was launched, European manufacturers and operators became the leaders in the industry and it was argued that European customers had more and better services than customers in US and Asian markets. This has changed dramatically during the past ten years. Europe has not been very successful in turning the new services into success stories, whereas for example i-mode in Japan has been a huge success story, same cannot be said about WAP in Europe.

The success of mobile data services is important for several reasons: For operators, as the mobile voice revenues are decreasing due to competition they need to find new revenue streams. For device manufacturers, as new features are being introduced in devices there need to be services using these features and vice versa. Also device manufacturers are starting to see the potential direct revenue from services business and thus we are seeing new content and service channels being launched by device manufactures, like Apple with its App Store and Nokia with its Ovi Store. Most important the success of mobile services is naturally to service provider or developer of the service, these companies range from one man garage-company to big multinational enterprise. For smaller companies the success of one service can be a matter of life and death, making it vital to understand what kind of services potential customers desire and are willing to pay for.

The nature of business is shifting increasingly towards global business as major global device manufacturers, software companies and Internet players introduce their application stores. A majority of the applications will remain to be developed by small companies, but the application store providers attempt to become the chosen distribution channels for mobile content applications. In a way they are looking for a gate keeper position for the mobile content.

Download stores are connected to a broader phenomenon where major Internet players are looking for ways to gain and lock customers for themselves. The purpose of email, photo and other services is to gain new customer and create customer loyalty. It seems like their strategy is to lock customers to their services and only then to look for business opportunities. Currently the application stores are provided by major device manufacturers, such as Apple and Nokia. In the long run we will see more download stores assuming that this business will become lucrative.

As for any product or service the consumer behavior is different in different parts of the world. Understanding the geographical differences in content and service consumption is becoming more and more important for content and service providers, device manufacturers, and operators. There can be many causes for the differences: operator strategies differ by region, market conditions are different, culture is different and simply the customer needs are different.

Chapter 2 of this thesis gives an overview of cultural factors and explains different models used when studying the cultural differences, one of them, the Hofstede model will be explained in more details. In chapter 3 the mobile

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content and services ecosystem is explained. Classification of mobile services is discussed, different players and their roles in the ecosystem are introduced and business overview is given. In Chapter 4 the global mobile content and services market is discussed, both the current market size and forecasts until year 2013.

Chapter 5 summarizes the results of the case study. In the case study mobile content and services offering was studied in two different markets: Finland and Singapore. Several content sales channels in both markets were examined and differences in content offering are presented in this chapter. The conclusions and ideas for future research are then presented in chapter 6.

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2 Culture and mobile services

The mobile device market has widened to a global scale and consequently mobile devices are distributed throughout the world (Kim and Lee 2005). As the use of mobile phones pervades the world, the globalization of mobile device user interface design is becoming more crucial to business success and building a loyal customer base. Communications technologies are entirely dependent on a social network for adoption and use, and therefore the diffusion of these technologies within a culture should be studied. The context of the mobile user includes user culture and the influence of culture on mobile phone use (Urbaczewski, Wells et al. 2002). This necessitates a review of culture as an essential part of understanding users and the factors that influence mobile phone usage.

The word ‘culture’ originally stems from an agricultural root: ‘culture as cultivation of the soil and plants’ (O’Sullivan, Hartley et al. 1994). Applying this to people offers a metaphor for the cultivation of products, minds and social relations.

There are various definitions of the term ‘culture’. Culture can be seen as the social production of sense, meaning and awareness (O'Sullivan, Hartley et al.

1994). Culture can also be seen as learned behavior consisting of thoughts, feelings and actions (Del Gado 1996), while Hall (1990) describes culture as communication through words, material things and behavior.

Honold (2000) argues that it is more meaningful to find a definition of culture that suits the specific area of research than to produce a general definition. Ford (2005) defines culture in the context of Human-Computer Interaction (HCI) as ‘the patterns of thinking, feeling, and acting that influence the way in which people communicate among themselves and with computers’.

This definition is also applicable to mobile interaction and we consequently adapted it for the purpose of this study to consider culture as ‘the patterns of thinking, feeling, and acting that influence the way in which people communicate among themselves and use mobile devices’.

Several metamodels of culture exists, such as the onion model (Trompenaars 1993), the iceberg model, and the objective culture and subjective culture model (Stewart and Bennet 1991). Hofstede proposed a model with international variables to show subjective culture affects human mental programming (Hofstede 1995). Hofstede further encompassed this model within the pyramid metamodel that comprises three levels (Hofstede 2001)

• Human nature is common to all human beings; it is inherited and not learned.

• Culture is specific to a group of people and is learned, not inherited.

• Personality is attributed to an individual and this attribute is both learned and inherited.

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The metamodels of culture form the basis for the development of different models of culture. The basic models of culture are mostly based on some form of ethnic culture even though they may apply to the business environment, the work environment or peer group culture.

Hofstede conceptualized culture as ‘programming of the mind’ and focuses on determining the patterns of thinking, feeling and acting that form a culture’s mental programming. In the 1970s and 80s he did a survey at IBM that dealt with ‘the employee’s personal values related to the work situation’ and investigated cultural variations within five different dimensions. The dimensions are (Hofstede 2001):

• Power distance (PDI), denoting the extent to which less powerful members expect and accept unequal power distribution within a culture, and scaling from high-power-distant to low-power-distant.

• Masculinity vs. femininity (MAS), referring to gender roles, not physical characteristics, as commonly characterized by the levels of assertiveness or tenderness in the user, and scaling from masculine to feminine.

• Individualism vs. collectivism (IND), referring to the role of the individual and the group, and is characterized by the level of ties between an individual in a society, and scaling from individualistic to collectivistic.

• Uncertainty avoidance (UAI), referring to the way in which people cope with uncertainty and risk, and scaling from high-uncertainty-avoidant to low uncertainty- avoidant.

• Long term orientation (LTO), referring to people’s concerns with the past, present and future and the importance they attach to each, and scaling from short-term orientation to long-term orientation.

These dimensions will be used later in this thesis to compare Finnish and Singaporean cultures. Few studies have been conducted on cultural differences in mobile service usage, the following studies all use Hofstede’s model:

Choi et al. (2005a) looked at cultural influences on functionality design of mobile data services by comparing 24 Korean, Japanese and Finnish users. They found 52 attributes considered important by mobile data service users and identified 11 critical attributes related to the user interfaces of mobile data services devices. The critical attributes such as minimal keystrokes, iconic menu style, logical ordering of menu items, variety of fonts and font colors, etc., all showed a clear correlation with characteristics of the culture of the user’s country (as identified by Hofstede).

Kim & Lee (2005) investigated cultural influence and mobile interface design to clarify the relationship between cultural traits and mobile phone interfaces. Their subjects came from the USA and Korea. The results suggest a possibility of cultural impact on icon recognition. They found that Korean

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subjects performed better using concrete representations, while American users preferred the abstract icon representations.

Lee et al. (2005) studied multi-cultural usability in mobile phone navigation in a laboratory-based usability experiment with participants from the USA, West Africa, Eastern Europe and South America. They collected cross-cultural usability information in the product development process to determine universal and to-be-localized components, detect mistakes that lead to critical miscommunication, and assess the usability of cross-cultural user interfaces.

They found no real differences between the various cultures for the issue of supportiveness, but found evidence that the perception of the same icons differs across cultures.

Marcus (2005) studied cross-cultural user-experience design. Marcus’

opinion was that even though Hofstede’s model is well established, and many studies have been based on it, there are also criticisms of the model:

Old data

Little emphasis on media, sociology of culture, politics of culture Corporate subjects only, not farmers, or other laborers

Assumes one culture per country

Assumes fixed, unchanging relationships Gender roles, definitions debatable Seems too general, stereotypical

Marcus makes the following conclusion in this study: Computer-mediated communication and interaction occurs in a context of culture. It is inevitable, also, that user-experience development must account for cultural differences and similarities. Models, methods, and tools exist, but many research issues lie ahead. Design/analysis professionals cannot afford to ignore the resulting issues.

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3 Mobile content and service ecosystem overview

This chapter presents the overview of mobile content services ecosystem, definition of mobile content, players in ecosystem, relationship between them and the value chain.

3.1 Classification of mobile content services

This chapter describes the typology of mobile services used in this study, and discusses briefly recent trends in service research. Mobile services represent one domain of information technology. The terminology is not always very clear, different players define content and services in different ways. End user’s understanding of what is mobile service might be totally different from service- or content providers’ understanding. For instance, market research firm Analysys divide services into two broad categories of "person-to-person messaging" and "mobile entertainment services” (Analysys press release 2003).

Kalakota and Robinson (2001) propose two different scenarios of mobility:

• mobile but offline (the device can be used to run self-contained programs while not connected to the Internet), and

• mobile but online (the device is 'always on' in the presence of any wireless network, i.e. has a real-time live Internet connection).

This definition is very interesting as the mobile industry often uses the following definition; content is downloadable content that does not need a connection to work, (for example a game) and service needs the connection to Internet (for example a weather forecast service). Even when using this kind of distinction between content and service the borders are not clear; for example game can have a high score upload functionality which needs a connection, but this does not mean that game is a service. On the other hand one could call the high score upload functionality a service inside the content (game). In this kind of definition service and content are considered to be on the same level in hierarchy where as literature most often considers service to be one level higher in hierarchy and downloadable content being one sub-set of it, messaging service another and so forth. Interestingly some literary and research considers content higher in the hierarchy and service being as subset of it for example Idean (2009), it its report of Finnish mobile content and service market considers the relationship between content and services this way.

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Figure 3-1 Topology of mobile services

In this study the following definition will be used: Mobile service combines all the services used by mobile device, content is just one subset of services. This seems to be most commonly used definition in literature. Topology of mobile services in illustrated in figure 3-1. Mobile services is divided into three different sub-categories; conversation, content services and data access.

Conversation is further divided into two sub-categories; mobile voice and messaging.

3.2 Mobile services industry

Mobile services industry is a complex adaptive system as described by Vesa (2005). Funk (2006) makes a distinction between simple network industries, such as music and video players, and more complex network industries, such as telecommunication, broadcasting and the Internet, which may involve tens if not hundreds of different interfaces where different firms and different standard setting groups may focus on different interfaces. Tilson and Lyytinen point out that while the number of major air-interface standards has been reduced to just two as a result of the on-going transition to third generation (3G), the overall number of standardization bodies has increased by almost an order of magnitude while the number and scope of interfaces being standardized has grown at a breathtaking pace (Tilson and Lyytinen 2006).

Rather unique in mobile industry is the dynamics of change in industry as it is moving from one technology generation to next, commonly known as 2G, 2,5G, 3G, 3,5G and 4G. According to Palmberg and Martikainen (2003), technological systems can be defined along three dimensions:

Mobile Services

Conversation Content Services Data access

Mobile voice Messaging

Voice call

Video call

Push-to-talk

SMS

MMS

E-Mail

Mobile IM

Mobile chat

SMS-based content service

MMS-based content service

Browser based content service

Downloadable applications and games

GPRS

CDMA

EDGE

UMTS

WLAN

WiMAX

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• Cognitive dimension defines the technologies that make up the system

• Organizational and institutional dimension defines the network of actors that operate within the system and

• Economic dimension refers to the ways in which the system turns technological opportunities into business opportunities.

As discussed above, Vesa (2005) suggests that the mobile services industry can be defined as a complex adaptive system. He argues that the mobile business

"gets more complex as the industry moves from voice-centric services to mobile multimedia services containing elements such as voice, text, graphics, and video. When thinking about the complexity of an industry, various aspects of complexity affect the way of doing business in a given industry or market.

According to Vesa (2005), in the mobile services industry, the two important dimensions of complexity are technical complexity and commercial complexity.

The current shift towards non-voice mobile multimedia services will mean an increase in the complexity of the mobile industry especially when it comes to the commercial complexity of the services offered (Vesa 2005). He argues that the focus of the mobile industry is shifting from the inherent complexity of the internal technical core of the global mobile telephony system towards the commercial and business complexity on the edge of the industry. Vesa concludes that the increasingly open and networked business environment represents new kinds of challenges to business management and service developers (Vesa 2005).

Another dimension of the complexity of mobile services is the issue of usability of mobile services. Still today, mobile handsets and services are often considered to be difficult to use by an average user. Albeit the focus of this study is on the supply-side factors of the adoption of mobile services, usability issues are related also to the supply of mobile services. The level of operator participation in the design of user interfaces, and more broadly the usability of services, varies greatly in different markets. It is also important to make a distinction between the usability of devices, an area which has been studied for decades, and the usability of complex systemic services.

Mobile data services can be described as "complex goods", which Mitchell and Singh (1996) define as an applied system with components that have multiple interactions and constitute a nondecomposable whole. Further, in complex systems like this, the overall performance depends on component performance, as a chain is only as strong as its weakest link (Vesa 2005). Funk emphasizes the complementary nature of mobile data services by stating that the mobile Internet is not just a service; it is a new network industry that requires complementary innovations (Funk 2004).

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3.3 Players

In order to take advantage of the opportunities in mobile content, developers need to be aware of the ways in which the mobile content business practices differ dramatically from those of the desktop Internet world. In particular, the operators of mobile networks exert a degree of control over the distribution and use of content that has no analogy in the desktop environment.

The key actors in the mobile value chain are:

• Content owners, ranging from multinational entertainment conglomerates to individual artists

• Content developers, who develop and prepare content for mobile distribution and use. Often content owner and developer are the same.

• Publishers and aggregators, who assemble, test, and promote mobile content

• Provisioning and hosting providers, who provide the actual physical means for content distribution

• Marketing and delivery agents, which includes the mobile operators, as well as others who sell mobile content to end users

Roles are very often overlapping; content owner can be same company as the developer for example independent game developer, then another company can take care of publishing, provisioning and marketing for example Nokia with its Ovi Store.

Content owner

User generated content is getting more and more important in mobile world, but major part of the content that end-users consume is still commercial content produced and distributed as business. Owner of the content ranges anything from one-man developer-company to big multinational company, from TV network to sports league. Typically from content owner to end user there are quite many steps and parties to share the revenue, thus content owner receiving relatively small portion of the end user price.

Content developer

Content is either developed directly for mobile platform or ported from some other platform, either way there is some development work needed: games need to be adjusted to smaller screen, application need to be changed for touch screen input only and so forth. This process is called “porting”. Unfortunately it is not enough to port the content for example from PC to mobile just once, but because the mobile device base is very much fractured the porting needs to be done to several platforms. Figure 3-2 illustrates the smart phone market shares by manufacturer and operating system (platform).

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Figure 3-2 Manufacturer and operating system market share. (Canalys 2009)

Development platforms that sit on top of the operating system like Adobe Flashare developed and offered to reduce this problem by providing a common environment across multiple device types and platforms, thus making it possible to develop only once and yet provide the content across multiple devices and platform. But development platforms are not yet playing any significant role in mobile ecosystem.

Publishing and aggregation

Typically content owners and developers do not have a channel to promote content to consumers and manage relations with operators, and creating a channel is not easy, even with substantial resources to expend.

Publishers and aggregators are specialists who take content from multiple sources, test and validate that it operates on different devices and networks, price and promote the content to operators and other distributors, creating content bundles as appropriate. If content is going to be embedded in handsets prior to shipping, publishers often work with the device manufacturers, often referred as OEM (Original Equipment Manufacturer) to provide the content in the appropriate format.

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Marketing/delivery

Initially, mobile operators were the only source of non-voice content for end users, and even though other players have entered this portion of the value chain, operators are still critical in the process by which consumers learn about new content, acquire and pay for it. Other key players in this part of the value chain include:

OEMs. Handsets often come pre-loaded with some content, but some handset manufacturers are interested in playing a more active role in providing mobile data. Nokia has recently launched Ovi Store, a new direct-to-consumer content offering for owners of its handsets. OEMs like Nokia must be careful in such direct-to-consumer offerings to avoid conflict with the content sales efforts of the operators, who after all are their biggest customers. Apple has quite similar offering in its App Store targeted at Apple iPhone users.

Independent retailers. So-called “off portal” vendors market content to consumers directly. One popular method of delivering off portal content is via short message service (SMS) codes. A consumer might see an advertisement for a screensaver, for example, and send a text message to the SMS number in the ad; the off portal vendor downloads the file to the phone, with the cost typically appearing as a charge on the consumer’s phone bill.

3.4 Mobile content business models

Given the relatively short period of time, in which there has been an active mobile data market, and the great number of different players and types of players in the market, it is not surprising that business models are still evolving.

A lot depends on the type of content, and there is no one “best practice.”

However, looking at the situation from the perspective of the content designer/developer, there are a few different models that seem to dominate current practice:

Development for hire. This is the simplest model, and is used in situations where, for example, a large content owner might see an opportunity for a mobile game based on a licensed character, but does not have the internal capacity to develop the game and optimize it for different mobile platforms. The content owner will hire a studio to create the game for a flat professional fee or time-and-materials, and will deal with the rest of the distribution chain itself.

Revenue sharing through publishers. This model gives the designer/developer the opportunity to share the rewards, if the content turns out to be particularly popular. Revenue sharing can be managed in different ways, but a common one is for the entity that collects the revenue from the consumer—the mobile operator, for example, or an off portal retailer—to pass the revenue up the chain to the publisher, retaining an agreed-upon margin. The publisher then pays the designer/developer and any other parties to the transaction, such as a hosting service.

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Direct to consumer. This model typically pertains to larger designers/developers, who have established a consumer brand identity with other products. In this case, the designer/developer will typically have a website and or mobile website to promote and sell content directly.

Advertising supported. Advertising is still a relatively new factor in the mobile space. So far designers and developers have benefited primarily by creating and/or modifying the advertisements themselves. Product placement in mobile content is one of the more promising avenues for incremental developer revenue; prevalent for several years in console and PC games, it will inevitably shift to the mobile phone world. Some large companies do commission developers to create mobile content for promotional purposes, contests, etc., but a more common practice is for operators to follow something more like the television network model. In other words, they develop opportunities for ad content placement in conjunction with ad sales partners like Yahoo! and sell this inventory to appropriate advertisers, for example vitamin water on a sports clip service. To the extent that mobile advertising creates more revenue for mobile operators, the terms of upstream revenue sharing might become more generous.

3.5 Mobile content distribution practices

Just as there are multiple different business models, there are many different ways by which content is actually discovered by users and delivered to handsets.

What they all have in common is the need to make the process as simple and easy to use as possible for the consumer, given the limitations of handset size, user interface and wireless network bandwidth.

3.5.1 Content delivery

In terms of the actual connection that gets bits into a handset, there are two alternatives:

• Download the content over the wide area cellular network (over the air) directly to the handset.

• Use another form of connectivity (USB cable, Bluetooth, Wi-Fi or another short range wireless technology, or a removable memory card) to transfer content from another source, such as a PC. This is referred to as

“sideloading.”

Historically, operators have favored over the air delivery, as it gives them greater control over what can go into the handset. In fact, operators and OEMs have often limited the kinds of sideloading that can be done, as well as the kinds of applications that can be installed, reflecting in part security concerns and hardware limitations. The iPhone, for example, initially was not going to be open to third-party applications; Apple has subsequently changed its position on that.

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Over the air delivery also allows them to drive traffic over the cellular network and generate transport revenues for data that is priced on a time or volume basis. However, as more operators have moved towards flat rate billing, the transport revenue argument is diminishing in importance. In addition, sideloading frees up network capacity for other applications like online gaming that require real-time connectivity. As a result, operators’ tolerance for sideloading is increasing.

3.5.2 Content discovery

Before content can be delivered to user it needs to be discovered, for content discovery there are numerous methods:

Content discovery directly with device. Majority of the content is discovered and purchased directly with the device. There are two alternatives for this. Content can be discovered by using a WAP or WEB browser, this method is similar to downloading content to PC from web. Biggest difference is that because the delivery takes place via operators’ network the billing can happen seamlessly with phone bill. Alternatively a dedicated shipping client can be used, this method is gaining popularity as device manufacturers are starting to include an application dedicated to content shopping into devices. Actual content delivery can take place via operators’ network or by sideloading.

WAP Push. Wireless Application Protocol (WAP) is an open standard developed in the early years of mobile data to allow handsets to access the Internet. In WAP push systems, the consumer receives a short message that contains a clickable link that causes the content to be downloaded. The consumer may have opted in to a service that sends such messages in areas of interest, or may have initiated the exchange in response to a print ad, or may have found something of interest while browsing the mobile web.

SMS Short code. Short codes are special short phone numbers (3 to 8 digits, depending on the country) primarily used to receive specialized SMS messages, which in turn can begin delivery of content. An ad for a movie might contain a short code; a text sent to the short code could trigger the downloading of a screen saver based on the movie.

Embedded codes. In order to eliminate the step of requiring the consumer to key in information, various schemes have been developed to take advantage of handset capabilities to capture information automatically;

Quick Response (QR) bar codes are being used in Japan to promote content, especially music. QR barcodes are printed in magazine ads, posters, etc.

Consumers take pictures of them with their camera phones, which decode the bar code information and take appropriate action, such as starting the process to download a sample of a song.

Fujitsu has experimented with a version of this called “Fine Print Code”

which embeds the code invisibly into still images.

An Asian startup, ColorZip, has devised an encoding scheme that uses 2D color patterns to embed download or other information that can be interpreted by

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software on a camera phone. One advantage over bar coding is that the color pattern can be used as part of the overall graphic design.

Nokia has experimented with Near Field Communication (NFC) (a very shortrange radio technology) as a way to facilitate downloading content. In a mobile payments trial in a sports stadium in Atlanta, NFC-equipped handsets were able to read RF tags embedded in posters, which triggered the download of appropriate content.

3.6 Value chain

Revenue sharing is the typical manner of distributing revenue along the content value chain. Mobile operators typically claim between 40-60% of all revenue from content sold through their portals, although there are regional variations: in China, revenue-sharing agreements have typically been set at 15:85 in favor of the content provider; in India, the content provider will receive about 25% of revenue; and in Italy the split is around 70:30 in favor of the operator. (Based on the empirical studies of the author)

Revenue-sharing agreements can vary within a single mobile operator; large content providers with strong brands are often able to extract higher revenue shares from operators than those with less bargaining power. Middlemen, such as content aggregators, also negotiate the revenue shares and take their cut once the operator has taken its percentage.

Figure 3-3 shows a typical way in which revenue is allocated among the entities that provide different functions on the value chain.

Figure 3-3 Typical revenue split in mobile data. (Strategy Analytics 2008)

Factors that can vary the allocation of revenue among the different players include:

• The mobile operator’s strategic objectives. In the early years of its i- mode service, for example, NTT DoCoMo made the conscious decision to encourage a large content community by decreasing its own share of

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revenue, in some cases to as low as 9%. Similarly, while Maxis, a Malaysian mobile operator, was trying to encourage use of its GPRS network, it passed 70% of revenue on to its partners for GPRS content, as opposed to 60% for SMS. (Based on the empirical studies of the author)

• The brand equity of the content, which in many cases is a function of the size of the non-mobile audience for the content. Content providers with a strong franchise outside the mobile world, like Disney with Mickey Mouse, can capture a higher percentage of the revenue than content that is less well known.

• Number of intermediaries. Direct to consumer content provisioning is likely to leave content providers more of the revenue stream than models that heavily involve other players in providing marketing and billing functions. However, these functions still need to be performed, and obviously have associated costs.

• Competition from other delivery modes. Downloading songs over the air from a mobile operator is only one of several ways to get music to listen to while on the go. Consequently, mobile operators in some regions are passing on as much as 85% of the download fee to the music publishers and rights owners.

• Regional effects. Different regional practices, particularly the degree to which mobile operators control content delivery, can affect revenue distribution.

The revenue splitting arrangements that have evolved in the industry have all presumed that revenue is generated through the sale of content to consumers, whether on a subscription or a by-the-piece basis. As advertising supported content becomes more common, the models will need to adjust so that all parties are adequately compensated for the value they contribute to the process.

3.7 Business overview

Although mobile data has been touted as a key revenue driver for mobile operators over the past few years, it is only now that the industry is really starting to see returns on the investments made in spectrum, infrastructure, content and services. The commercial launches of 3G, 3.5G and high-speed broadband networks continue unabated around the world. The term “maturity”

may be too strong to use right now, but there are certainly strong indications that mobile operators are fostering a consumer base of data-savvy users who are spending more and more each month on non-voice services. Although for most operators the vast majority of their data revenues stem from messaging services, more and more users are purchasing non-messaging, premium content. This is not to say the market is booming, the levels of growth have varied across regions and content types, with certain segments seeing shrinkage as users’

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tastes and desires evolve. However, the general trend for mobile data consumption is an upward one.

Within the communications sector, SMS traffic will continue to grow in both emerging and mature markets. In emerging markets, SMS traffic growth will be driven mostly by increasing mobile penetration. In mature markets, growth will come from both the enterprise and the consumer sector. In the enterprise sector, SMS is increasingly being integrated into the IT&T systems of corporations and government agencies. In the consumer sector, mobile operators are promoting the use of SMS by offering attractively-priced bundles and buckets, as well as enabling their subscribers to use SMS to access and interact with new media, such as social networking, instant messaging and photo-sharing communities.

MMS messaging is coming into its own in mature markets, or in markets where mobile operators have invested in marketing MMS and in educating their subscribers about how to use the service, and also in those markets where MMS is priced attractively. Informa Telecoms & Media (2009b)

Flat-rate data packages will help to increase the adoption and use of IP-based messaging applications such as mobile e-mail, mobile instant messaging and social networking. However, mobile subscribers will continue to face a trade-off between the respective functionalities of browser-based versus client-based applications, and their device’s battery life. Mobile music will be the largest revenue driver amongst entertainment categories over the next five years, accounting for over 50% of total revenues. The strongest growth is expected in mobile TV and video services, which will grow from a small base currently.

Overall, the revenue from music segment is growing globally. The decline in the growth of ringtone revenues is being bolstered by the growth of the full-track- download market, as well as streaming services and the associated subscriptions.

Ringback tones are also seeing strong growth and contributing significant revenues, especially in emerging markets. The user experience is the key to the success of the mobile Internet and hence of browsing revenues. This does not mean that the mobile Internet needs to be identical to the fixed-line Internet, but it does mean that it needs to be equally as enjoyable to use. Ideally, mobile Internet should be populated with content that is designed with the context of mobility deliberately in mind. Informa Telecoms & Media (2009b)

Mobile Internet traffic will be driven by more than just the browsing of transcoded fixed-line and made-for-mobile Web pages. Usage on lower-end devices will be encouraged through widgets, while Web applications will use mobile browsers to provide application-specific, remotely-hosted services. In addition, applications stores have the potential to generate plenty of traffic.

The idea behind these application stores is to give developers a forum in which to publish their products and sell them directly to end users. They follow a self-publishing model which is freer than traditional operator content portals, where only a select few products gain placement after a long vetting and certification process and where pricing, contact with end-users and all other aspects of retailing and marketing remain firmly in the operators’ hands.

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3.8 Content market is changing

The mobile content and service business is shifting towards global business as major device manufacturers and other big players are introducing their application stores. Most of the applications are still developed by smaller companies but the distribution channel is more and more often owned by bigger industry players. Channel owner owns the customer relationship and acts as a gatekeeper thus having a big influence on what will be sold and to whom. By controlling the application and service store the players gain and lock the customers.

Apple App Store, which was launched in summer 2008, has set the new standards for the application stores. Apple’s success with App Store may not be underestimated, yet it remains to be seen whether the potential has been overestimated in more mature markets like Europe, also the mobile browsers start to be so capable and services are available via the browser that they start to challenge the downloadable applications.

Nokia has quite similar approach as Apple to application business. Nokia is collecting the services under the Ovi brand and this way trying to lock the customers to Nokia’s content and services.

Traditionally operator billing has been the common way to charge the end user for the mobile content. This means that the end user pays for the content in phone bills. Lately alternative billing methods have emerged, mainly credit cards and other payment methods used in the fixed-line Internet world like PayPal. For example, Apple App Store does not have operator billing at all and Nokia accepts credit cards as an alternative way to pay for the content.

Even though alternative payment methods are available in the mobile world, operator billing is so straight forward for consumers, it will most likely remain as the most important payment method, at least in the short run. The most compelling reason for content providers to seek alternative methods is the high operator margins (as high as 70%) compared to relatively low fees charged by credit card companies.

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4 Mobile content and service market globally

This chapter presents the mobile content and service market size. Unless otherwise stated the data this chapter is based Informa Telecoms & Media (2009b).

Although mobile data has been touted as a key revenue driver for mobile operators over the past few years, it is only now that the industry is really starting to see returns on the investments made in spectrum, infrastructure, content and services. The commercial launches of 3G, 3.5G and high speed broadband networks continue unabated around the world. The term ‘maturity’

may be too strong to use right now, but there are certainly strong indications that mobile operators are fostering a consumer base of data-savvy users who are spending more and more each month on non-voice services. Although for most operators the vast majority of their data revenues stem from messaging services, more and more users are purchasing non-messaging, premium content. This is not to say the market is booming, the levels of growth have varied across regions and content types, with certain segments seeing shrinkage as users’

tastes and desires evolve. However, the general trend for mobile data consumption is an upward one.

In the coming years, the distribution channels is the area that will see the most activity, and will make or break many players in the mobile content and services value chain. Off-portal (direct-to-consumer) distribution is becoming common in most developed markets, and in those where it is not, operators are under increasing pressure to open up their user base to third parties. An increasingly common development is that major brands with significant distribution channels and high levels of consumer recognition are entering the market as content aggregators. Direct-to-consumer portals, which are typically young companies that are heavily reliant on expensive media for their market exposure, are in the firing line from this and it is likely that even the flagship operator portals will feel the knock-on effect of this trend.

Increasingly mobile operators are bundling mobile data as part of their core subscription plans. This move is based on the belief that the closer that data services move to core subscription plans, the greater the chance that these will reach mass-market consumption. However, the downside is that a simplified pricing structure will make tariff comparison easier and could encourage customer churn.

4.1 All mobile services

Informa Telecoms & Media (2009b) expects the mobile content and service market, which includes all mobile data (non-voice) services, to generate US$344.1 billion in revenues in 2013, up from US$182.9 billion in 2008.

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As shown in figure 4-1 highest growth rate is expected to happen in Africa – Middle East and North America following quite close by. In more mature markets, such as in Western Europe and Asia Pacific, the growth rate will be roughly half from that of Africa. Still it is predicted that the biggest revenue in 2013 will come from Asia Pacific.

Figure 4-1 Global mobile content and service revenues by region

When looking at different service categories shown in figure 4-2, the highest growth rate will take place in payments and banking and location based services.

Yet these will remain to be minor revenue stream compared to mobile Internet and messaging, as these two alone represent roughly half of the total revenue.

The revenue contribution of messaging is expected to decline from 52.7% of global total content and service revenues in 2008, to 38.8% in 2013 and will, in fact, be overtaken by Mobile Internet access revenues in 2012; Internet access revenues are forecast to reach US$133.7 billion in 2012, while messaging revenues will reach US$127.6 billion in that same year. (Informa Telecoms &

Media 2009b)

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Figure 4-2 Global mobile content and service revenues by service category

4.2 Mobile messaging

As illustrated in figure 4-3, global messaging revenues will total US$133.7 billion by 2013, according to Informa Telecoms & Media (2009b). SMS will remain the biggest money-spinner for the mobile messaging industry, and is forecast to generate US$107.9 billion in revenues by 2013, up from US$82.4 billion in 2008. Although mobile e-mail will have the smallest customer base of the four messaging types in 2013, with 809.3 million users, it will retain its position as the second-highest generator of revenues behind SMS, at US$13.6 billion in 2013, up from US$7.6 billion in 2008. In line with the highest compound annual growth rate (CAGR) in terms of users, at 35% between 2008 and 2013, mobile IM is also forecast to have the highest CAGR in terms of revenues, at 25% between 2008 and 2013. Mobile IM will generate US$3.7

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billion in revenues in 2013, up from US$1.2 billion in 2008. Meanwhile MMS revenues will total US$8.4 billion by 2013, up from US$5.1 billion in 2008.

(Informa Telecoms & Media 2009b)

Figure 4-3 Global mobile messaging revenues

4.3 Mobile entertainment

Informa Telecoms & Media (2009b) forecasts that the global total revenues generated by mobile entertainment services will rise from an estimated US$19.5 billion in 2008 to US$36.3 billion in 2013, this is shown in figure 4-4. Mobile music will be the largest revenue driver among entertainment categories throughout the forecast period, accounting for 50% of total revenues. The strongest growth is expected in mobile TV and video services, which will grow from a smaller base of US$2.9 billion in 2008 to US$ 8.3 billion in 2013, a compound annual growth rate (CAGR) of 23.7%. (Informa Telecoms & Media 2009b)

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Figure 4-4 Global mobile entertainment revenues

4.4 Mobile payments, banking and financial services

The market for mobile payments, banking and financial services has failed to reach the mass market except in a few isolated cases. The reasons for this are manifold: technological immaturity, lack of standardization and interoperability, regulatory overprotection or uncertainty, inability to capture consumer interest or quell concerns regarding security risks, lack of coordination and trust between the key players in the ecosystem and uncertainties regarding business models and the business case.

The situation is now changing for the better. Mobile phones and network technologies are now more sophisticated and mature. Industry initiatives are now more coordinated and standardized. Regulatory authorities are being empowered by national and regional government agencies to take a more

‘enlightened’ approach to this market. Consumers are becoming more familiar with the use of the mobile phone for applications beyond calls and are more confident in the use of electronic commerce (via online shopping). Furthermore, there are signs that the key players in the ecosystem are now more prepared to collaborate and invest in creating the systems, infrastructure and consumer confidence necessary to ensure this market thrives. As seen in figure 4-5, the

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end-user service revenues from mobile payments, banking and financial services are expected to grow from $233.2 million in 2008 to over $5.4 billion by 2013.

(Informa Telecoms & Media 2009b)

Figure 4-5 Global mobile payments, banking and financial services revenues

4.5 Location Based Services

Informa Telecoms & Media (2009b) forecasts for Location Based Services (LBS) are specifically for A-GPS-enabled, subscription-based services provided by mobile operators. This means that, unlike many other value added services (VAS), the addressable market is markedly restricted to those mobile subscribers who are in possession of an A-GPS-enabled mobile phone. The quantity of A-GPS-enabled devices is quietly increasing. LBS do not require A- GPS functionality as an absolute pre-requisite. However, A-GPS is in practice a de facto pre-requisite for providing a level of positioning accuracy sufficient to give LBS enough practical functionality and a high enough quality of service to make them worth paying for.

It is also important when considering user and revenue forecasts for LBS to make mention of free applications. Services like MSN Live Search and most notably Google Maps are undeniably Location Based Services. They are

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available free to download by anyone with a supported device, either over the air interface or to a desktop computer for side-loading and installation. They also provide ‘best-effort’ level of support for non-A-GPS-enabled devices by allowing manual text entry of location data, in the case of MSN Live Search, and by supporting cell-of-origin location (in certain handsets only) in the case of Google Maps.

Google has shown particular commitment to the provision of mobile LBS by gradually compiling an independent international multi-carrier cell site database.

This database is based upon information gathered from Google Maps users who have A-GPS-enabled devices and from whom Google could begin to determine the x-y coordinate location of the serving base station that the handset reports that it is using. The more A-GPS fixes made in the vicinity of a given base transceiver station (BTS), the more accurately it comes to be mapped over time.

The cost to the end users of free LBS like MSN Live Search and Google Maps lies, firstly, in the amount they have paid in wireless data fees to download the applications over the air interface, if applicable, and, secondly, in the amount of data required to use those services on an ongoing basis, in the downloading of map images, for example. The service revenue associated with LBS of this type is therefore covered in mobile Internet revenue forecasts (see later in this chapter).

As seen in figure 4-6, LBS is expected to gain the most traction during the forecast period is personal navigation. The quantity of subscriptions globally is estimated to have totaled 5.6 million at the end of 2008 and is forecast to increase to 81.4 million by the end of 2013. Personal navigation is one of the most obvious uses for location data in a mobile VAS and is a direct substitute for satellite navigation systems. ‘Sat-Nav’ systems were arguably the first application-specific commercial implementation of GPS technology and a large proportion of consumers are already fully aware of their purpose and are familiar with using them.

Point-of-interest (POI) services are expected to be the second most popular consumer-centric LBS, the number of global subscriptions at the end of 2008 was estimated at 2.4 million and this is forecast to grow to 48.2 million by the end of 2013. While POI services are essentially the simplest type of LBS, their development has historically been hampered by the availability of comprehensive enough datasets of geo-coded information for reporting adequately useful search results back to the end user. In addition, the uptake of standalone POI LBS may be cross-cannibalized by other LBS that can sometimes incorporate a POI element, such as personal navigation and friend finder services.

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Figure 4-6 Global location based services revenues

Friend finder services are one of the most interesting Location Based Services at present. This is due to the huge popularity of social networking on the fixed-line Internet and the emergence of mobile social networking, both as a fixed-line complement and in the form of new mobile-specific communities. Of the five LBS profiled here, friend finders are the most recent to be developed and deployed, so make a little longer to gain traction in the market.

At the end of 2008, it is estimated that there were a total of 1.3 million paying friend finder subscribers, a figure that is presently forecast to grow to 38.7 million by the end of 2013 (Informa Telecoms & Media 2009b). It is hoped that friend finder services could be tied into other social networking services;

however, while the most popular fixed-line communities are free, operator- delivered friend finder services must be paid for. This may not be a transition that social networking users wish to make, preferring instead to access a similar yet free equivalent, the ‘cost’ of which will simply be a part of their mobile data tariff.

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4.6 Mobile Internet

Mobile Internet forecasts are for users of wireless data tariff subscriptions.

These subscriptions may be add-ons to an end user’s existing voice and messaging package, or they may form part of a single, all-inclusive tariff. For 2.5G wireless subscribers, the former is usually the case, with access to their wireless carrier’s GPRS or EDGE network being at an optional, additional premium. All-inclusive voice, messaging and data tariffs are more commonly offered by 3G and 3.5G operators; their networks are all-IP by design and allow for much better integration of traditional voice and messaging with the Internet and remotely-hosted content/services.

GPRS and EDGE networks are packet overlays to the pre-existing circuit switched Time Division Multiple Access GSM networks. As such they have less available capacity for mobile Internet services, due to the prioritization of voice calls and the limited availability of timeslots for data transfer. Timeslot availability is variable and dependent upon localized network load at any given time. This results in 2.5G mobile Internet services having a best effort level of service, with no guarantee of either a consistent connection speed or the availability of a connection.

This limited availability makes GSM timeslots a more ‘valuable’ network resource per unit than their 3G and 3.5G wide-band, spread-spectrum counterparts. 2.5G data packages are therefore offered with smaller MB allowances than 3G and 3.5G mobile Internet packages, making them arguably poorer value for money and providing a less satisfying end user experience.

In emerging markets where mobile Internet access is being used as an alternative to fixed-line Internet access, 2.5G wireless communication technology will be the dominant driver of mobile Internet subscription growth.

In these markets, 2.5G represents the first opportunity to access remotely-hosted content and services, as there are no fixed-line or broadband parallels upon which consumers can base any quality-of-service comparisons. Here 2.5G wireless technology is not only for the mobile Internet, but for the Internet in general. This is in stark contrast to regions such as Europe and North America, where the use of the mobile Internet has historically been called into question due to the large discrepancy in the end-user experience when it is compared with fixed-line Internet access.

The global service revenues generated from mobile data tariff subscriptions are forecast by Informa Telecoms & Media (2009b) to grow from US$57 billion in 2008 to US$120 billion in 2013. The most significant global region in terms of revenue generation is expected to be Asia Pacific, which is unsurprising considering its majority share of the world’s mobile Internet subscriber base.

Asia Pacific is forecast to be worth US$24.3 billion in 2008, growing to 39.7 billion by 2013; at which point it will account for 33% of the global mobile Internet service revenue, this is illustrated in figure 4-7.

Furthermore, mobile browsers have become an almost ubiquitous feature of modern mobile phones. The increasing desire among mobile subscribers to have

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access to the same information when mobile as when using the fixed-line Internet makes the mobile Internet one of the first VAS that subscribers become aware of and wish to add to their tariff plan. An additional attraction of the mobile Internet is that it is a general-purpose service billed on the same volume usage basis as the messaging and voice services that consumers are already familiar with.

Figure 4-7 Global mobile Internet revenues

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4.7 Mobile social networking

The forecasts for mobile social networking describe an industry with an extremely high potential for growth. With the exception of well-established and low-complexity services, such as text chat rooms – which are still growing at a rate of over 25% per year, the 2008-2013 compound annual growth rates (CAGRs) of mobile social networking revenues, users and usage globally are expected to exceed 30%. (Informa Telecoms & Media 2009b)

Figure 4-8 Global mobile social networking revenues

The growth of the mobile social networking industry is multi-directional. It spans:

• High growth in number of active users

• High change in the usage patterns of users in different categories, all pointing upwards

• High growth in the number and variety in the types of services offered

• High influx of new and existing companies participating in the value chains.

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Where there exists the potential for high growth, as predicted in this forecast, there is also a high level of investment, competition and risk. Each individual or company using these forecasts must weigh these factors against the alternative markets or strategies within the mobile social networking market as well as in other industries.

The revenue forecasts are the most critical and also the most difficult as they include combinations of assumptions on the number of unique users, their patterns of registration and behavior in their mobile communities and, finally, the average revenue each user will generate in a community type. Informa Telecoms & Media estimates that global revenues from mobile social networking services in 2008 were approximately US$1.1 billion and are predicted to grow to US$4.5 billion in 2013, this is illustrated in figure 4-8.

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5 Case Study: Mobile content and service market in Finland and Singapore

This chapter describes the mobile content market of two markets studied in this thesis, Finland and Singapore. The objective is to investigate what kind of content and services are available in those markets. By making an assumption that the content and service offering also reflects the end-users content and service needs we can make some conclusions of differences in end user behavior and needs.

The Finnish and Singaporean mobile content and service markets were chosen as case markets because just looking at the market size, economical situation, telecommunication and IT industry and history the environment is very similar, thus the differences, if any are coming from other sources such as culture and strategic choices of the content providers and/or operators. Similar background can be seen in table 5-1.

Table 5-1 Comparison of Finnish and Singaporean economy and mobile markets

Finland Singapore

Economy

Population 5 350 462 ¹ 4 987 600 ⁴ Geographical area 338 424 km2² 710 km2⁴ GNP per capita (Eur) 47 600 USD ⁵ 34 760 USD ⁵

Mobile industry

Mobile networks 3 3

MVNOs, resellers 15 ⁶ 2 ⁷ Mobile penetration 128% ⁶ 137% ³

1 (stat.fi 2010)

2 (stat.fi 2010b)

3 (Ida 2010)

4 (Singstat 2010)

5 (Worldbank 2008)

6 (Kiiski 2008)

7 (Ida 2010b)

Geographical Differences in Mobile Service Offering and Markets - A Case Study: Finland and Singapore