July 18th 2007.
This weeks announcements by Google (mobile search results placing bidding opens for business) and Paypal (Mobile payments service launches) mark the beginning of the end of Operator dominance in the control of mobile content and loosens their grip on the lion’s share of revenues. It comes in the wake of a series of, long overdue, ‘flat rate’ data announcements from the Carriers.
Taken together, the Google and Paypal news stories follow the inexorable trend, previously witnessed in the online world where ISP walled gardens collapsed in favour of open access models. Now the hitherto captive mobile subscriber, encouraged by the arrival of ‘near’ flat rate data and a more open mobile internet world, is ready to go fully mobile. The days of the Operator controlled mobile online experiences, much like the old AOL ISP walled garden experiences are over.
But while there are profound impacts on the subscriber and their usage patterns the impact will also be felt in the pockets of Carriers and their on deck suppliers of content. A power shift is emerging.
Firstly data usage rates will rise, more content will be consumed but not from the ‘on deck’ WAP stores.
The prevailing wisdom today is that 80% of mobile content (games, tones, videos etc) sales come through operator portals today. That’s where the ELSPA mobile charts draw their data. And who would argue since the myriad of off deck portals, WAP sites and direct print retailers are never approached for their sales figures. There remains a deep question mark over the validity of the data collected as the notion that operator sales comprise over 80% is not backed up by any data from the combined set of all other channels. Now if these 80% of sales migrate to the ‘more level’ flat rate playing field . Then savvy off deck vendors will make big gains. Freed mobile subscribers will find their content easier, pay less to buy and incur less overheads in the purchase. The experience will be simpler and enjoyable and more importantly, repeated .
Why the off deckers?, because they are better at what they do. They have had to survive in an unequal playing fiield for years. They are faster and hungrier than carriers and far more focused.
So the current offdeck channels will quickly grow. (and quick in Mobile terms is within a few months). We see it all the time when we service emerging retailers with a nice D2C marketing budget and watch their volumes grow rapidly when they get the mix right. Now with flat rate ,or what passes for it today. takes off they are at no disadvantage. With Paypal Mobile, although it is still cumbersome to get registered, the PSMS revenue slices lost to Carriers are available for re-investing in better promotion and ultimately sales.
Then comes the icing on the cake. If Carriers use Google as an entry point search page, much like the current internet location of Google search on almost everyone’s screen users will become Google hooked rather than carrier portal addicted. It’s a short step to having Google as the home wap page rather than the carrier’s and then the battle is truly lost.
The retailers willing to spend on Google marketing and promotion reap the rewards and carrier portals fade away into the distant past.
The same question that applied to ISP home pages will now apply to carrier home WAP pages….why bother? The subscribers now have the keys to the whole shopping mall and will make straight for the best stores.
Winners : off deck portals who spend on Google and build awareness. Aggregators not tied into big carriers but widely spread between carriers and off deckers.
Publishers who embrace the new regime and spend accordingly. Good retail brands that can transpose their credibility to WAP supermarkets.
Users, who will grow in number now that they understand the whole buying experience better.
Losers : Carriers (will become dumber pipes since they have long ago stopped sending on marketing themselves but rely on co-promotion with developers/publishers and aggregators). Now these people can do it themselves via Google and divert purchasers to their own wap storefronts.
Large publishers who have cosy Carrier relationships and are valued on these contracts. The value of the contracts will diminish rapidly and hence their share prices???
We in Selatra have played a predominantly off deck game waiting for such an inevitable shift to happen. We expect our off deck clients to prosper more than most as the icebergs melt away.
Whither Carriers then ? The era of flirting with captive clients is over. Video, TV, Tones, Music and Games is not their core business and they are ill suited to the entertainment world. They should realise that consumer service innovation comes mainly from 3rd party service developers and should develop platforms that link service providers with advertisers and mobile consumers. Their future is not in Content sales but in voice added services and services brokering which is what they are best at doing. They will also play a key role in introducing content to subscribers and play the service ‘matchmaker’ role. i.e. provide service pipes rather than dump pipes. This is the ultimate win –win for them with revenue at both service ends. Let the match making begin…….
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1 comment:
Well said.
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