Last week I participated in Informa Telecoms & Media’s Industry Outlook 2011 in London. Themed around “Telecoms and Media in the Internet Age: Profitable Partnerships and Business Models”, the event brought together a mix of expert insight from Informa’s own analyst team as well as guest speakers from a range of industry players such as Vodafone, 3, Yahoo and Spotify.
The packed agenda included streams dedicated to operator strategies, content and applications, networks, TV, handsets and devices, and broadband, with a mix of informative presentations and interactive panel discussions. Here are my key takeaways from the day:
Ken Hart, Senior Director of Business Development at Yahoo! presented on the mobile internet versus mobile access to the internet. He revealed some interesting insight into how smartphones are changing user behaviour and perception of the services they are using. For example, a survey of mobile users in the UK found one of the most popular “apps” was a BBC one on the iPhone. When in fact this is not an actual app and is just a simple shortcut to the mobile pages of the BBC website. Whether something is technically an app or a shortcut is not important to the end customer, it’s whether it works and provides an easy to useexperience.
This change in perception is driving content aggregators and providers such as Yahoo! to change their focus from pursuing partnerships with operators to working directly with the device manufacturers. The old model whereby an operator would try to provide an all-encompassing portal has been surpassed by the new generation of off-portal applications and app stores. So content providers are now targeting partnerships with the device manufacturers to embed the apps into the standard device build. For example, Yahoo! cited the Weather app on the iPhone which is provided by them.
Yahoo! sees Mobile as an extension of a digital lifestyle, and they are forecasting there will be 1bn mobile internet users by 2013. Interestingly when looking at where this growth will come, the focus is on North America, Latin America, Europe and Asia-Pacific, with no mention of Africa or the Middle East. Perhaps this is just where Yahoo! sees their growth opportunity, but it also fits in with Cerillion’s view that in mature markets mobile services are focussed on lifestyle, whereas in emerging markets such as Africa it is all about livelihood. See our previous blog post AfricaCom 2010 Report: Mind the Power Gap.
The days of walled garden portals are now long gone and consumers will find ways to access content from other sources whether operators like it or not. However, this is not the time for operators to throw in the towel, they still have a key role to play in the content value chain. Over-The-Top providers should seek partnerships with operators to ensure a good quality of experience for the end user, and at the same time leverage the assets that operators already have in terms of their trusted customer relationships for billing.
Though the industry has been paying lip-service to this for several years now, it is reassuring to hear from both industry analysts and content providers that this is becoming the reality: Giles Cottle, Senior Analyst at Informa, commented that for content providers “the billing relationship with the operator is crucial”. Also on the panel discussion, Faisal Galaria from Spotify added that they have no desire to get involved in billing the end mobile customers, they would rather partner with the operators who take that responsibility.
- Making money from music services
If you are an operator, then you probably won’t. That was the thrust of the comments from Faisal Galaria of Spotify, one of the darlings of the mobile music industry. Spotify has done very well and built a large user base in a relatively short space of time, with a simple flat rate model however the margins on music are very low with so many parties taking their share in the value chain. Mobile music is a great play for operators looking to reduce churn or provide a more valued user experience, but to do this you will probably need a level of exclusivity; and you will only get this if you agree to some pretty aggressive growth targets.
A panel question was posed asking whether operators should offer content, or enable the whole ecosystem. In response, Ken Hart from Yahoo! pushed the concept of content curation. With such a wealth of content out there, and with so much user-generated content being created all the time, the big challenge for the consumer, is how to find something of interest. This is where content curation comes in, whereby the user doesn’t have to navigate through mountains of content before they find what they may be looking for. The content curator is the digital “librarian” who can guide them quickly to what they need. The question remains as to who will fulfil this role, but it’s clearly one that the likes of Yahoo! and Google are already very well placed to take, and operators would be well advised to partner with these companies.
- Smartphones or feature phones
Within the industry there’s lots of analysis of the device market, segmenting between feature phones andsmartphones, and forecasting when smartphone sales will exceed that of feature phones, etc. But as Andrew Morley of Motorola Mobility commented “consumers don’t talk about smartphones, it’s about what the device will do for them”. Once again, this industry would do well to put the customer at the forefront of its thinking, rather than getting hung up on the technology itself. See our previous blog post Using Technology to Solve Business Problems.
Overall, the mood of the event was very upbeat, with much optimism about the future prospects for the industry. There’s a long way to go in finding the right balance between operator services and OTT content and applications, but there now seems to be a realism about it. There’s not much point in operators fighting with the OTT players. Better to seek out and negotiate appropriate partnerships, and then provide a more compelling customer experience as a result.