The Monetization of Mobile Multimedia
Until a new service becomes mainstream, service providers won't realize a full return on investment
By: Mitch A. Lewis
Jun. 12, 2008 11:30 AM
The demand for and widespread usage of popular video sharing sites, communities of interest, social networking and personalization has increased exponentially in the past year. While multimedia services and usage are at all time highs in terms of minutes of use, service providers and content owners are still adjusting their revenue and go-to-market models toward consumers and enterprises.
A fundamental change will be the ongoing deployment of IP Multimedia System (IMS) in wireline and wireless networks. IMS networks will allow for the co-existence of IP and legacy circuit-switched networks and services and will ultimately simplify the network architecture and allow for new services such as presence and other services not yet envisioned. While IMS is not mandatory to deliver video and multimedia services, most operators understand the importance of having IMS-ready services and networks today to enable graceful migration in-line with revenue and cost-savings expectations.
In this global market, consumers have also shown that services that start in one country (BlackBerry in the U.S.) may ultimately find a home in other markets, while other services never emerge beyond their own specific market. For example, while iMode was a well-known success in Japan, the cultural and behavioral factors involved (e.g., long subway commutes) did not inherently translate to other markets. This emphasizes the need to be able to deploy services universally but adapt them to meet local market needs.
Bundled Video Applications
Since fewer than 10% of current mobile subscribers are on 3G networks, combined services allow operators to realize greater revenue potential through content, better network utilization, and lower churn. Combining video call completion to voice (VCCV) and video ringback tones (VRBT), which make use of video/voice mail, video telephony and avatars, enable greater call completion for 3G calls. VCCV and VRBT services also enable 2G and 3G subscribers to access the same network and services in a more seamless manner. In markets where combined video services have been launched, we see call-completion rates increase by 10 points, ARPU increase by 15%, and churn decrease by 10%.
In markets where video calls have been priced the same as voice (e.g., South Africa and France), uptake and profitability has immediately followed. Consumers are also more willing to use video services when bundled inside monthly minutes packages (e.g., UK).In other markets where calls are heavily regulated and tariffs remain unchanged (e.g., Germany), the uptake remains sluggish.
New business models, along with declining network infrastructure costs, demonstrate how service providers can afford to economically price new applications. One business model is ad-supported mobile multimedia similar to what has developed on the Internet. For a monthly subscription fee, end-customers can decide to pay less or nothing for a call by viewing advertisements.
The best examples of successful deployments come from Indonesia and Singapore where marketing campaigns used traditional and Internet advertising, contests, and celebrities along with general word-of-mouth. Many service providers today have capital expenditure budgets greater than $1B USD. There is a continuing need to sell compelling services to the mass market through tailored campaigns. These activities are localized and utilize the operator’s knowledge of their subscribers’ communications behavior, with an understanding of the additional challenges and opportunities that video and multimedia present.
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