On the face of it, the mobile content business isn’t of immediate relevance to the mobile retailer. Yes, it’s interesting, even occasionally fun. But why should we give so much space to a subset of the industry that involves selling direct, or preinstalling goodies on handsets, or supplying via network portals – all of which effectively bypass the channel?
Because more users and all the operators are looking beyond voice and texts. Anything that increases the appeal of the mobile phone – like mobile content – has real and direct significance, simply because it means more and maybe different usage. And if the retailer knows what’s going on, he or she can talk about the options, discuss the functions and facilities that will be required, sell more product, and build a bigger, better relationship with the customer.
So let’s get started …
What’s mobile content anyway?
We identify three hot areas of interest:
• Mobile TV: it’s what many of the operators would like to push, because it consumes a lot of airtime and can be charged at premium rates. And there are a lot of technology vendors who are keen to promote their software and hardware components. But there are still two fundamental questions: do any of the punters want to pay for TV on the mobile? And given that we have the technology, why isn’t mobile TV widely available now?
• Location-based services: increasingly this is looking like the magic bullet for 3G services – everything from locators for your kids to GPS-based driving instructions, via ‘find me my nearest pub’ and ‘click here for directions to our office’. LBS works and it has obvious value, so when will it take off?
• Games: if nothing else, the success of Sudoku in the last few years has proved that casual gaming isn’t just for kids and doesn’t have to involve destruction of planes, people or planets. Mobile gaming is now a mature yet still booming business.
So how important are services other than voice and SMS for the mobile market? Will content and other offerings always be a minority interest?
In fact operators still make the vast majority of their revenues from voice and SMS traffic, and other mobile formats are yet to make a substantial contribution. Here’s the view of Grahame Riddell, O2’s head of content marketing: “The vast majority of our revenues still come from voice and SMS but we are seeing our data revenues grow. We expect this to growth to continue as users increasingly use their mobiles to consume content like music, images and video and the mobile browsing experience becomes more like that of the fixed world.”
And Robert Thurner, Commercial Director at Incentivated, agrees. “As consumer knowledge of ever more sophisticated handsets increases and data pricing becomes more transparent, their mobile behaviour will change, heralding a rich future for mobile marketing, mobile advertising and mobile search”. In particular, marketing will drive the content business: “Mobile offers brands the opportunity to reach their customers with highly targeted, relevant, time and location specific information which makes it a compelling proposition”.
Pricing is critical, thinks the Chief Technology Officer at Airwide Solutions, Vince Kadar. “Consumers are being kept in the dark when it comes to the data charges associated with downloading off-portal mobile content – they can be charged up to £7.50 per MB downloaded. Worryingly few consumers realize the costs can be this high.
“When it comes to mobile content there is one thing we really can’t put a price on – gaining and maintaining consumer trust. To avoid losing consumer trust due to misleading pricing, we either need to educate consumers about the costs involved in content downloads, or change those costs to be fair and affordable. “
Flat-rate pricing and a degree of transparency are prerequisites in Vince Kadar’s view. “Clearly there are other factors hindering the growth of the mobile internet (such as slow download speeds and layout) but by adopting the right pricing strategies operators can encourage users to try mobile services rather than shy away because of persistent data charges.”
The BBC for one is banking on mobile for its future. — "mobile is the future of media and technology” said the BBC’s director of future media, Ashley Highfield at the recent FT Mobile Media conference. The beeb believes mobile content is about to enter boom times (“"It looks like the shift we saw when broadband took off") and Highfield identified a number of factors that are “coming into alignment for explosive growth". Among them: better pricing, ditching the walled garden approach to content, and improvements in phones themselves (including the addition of GPS).
TV on the go: who needs it?
There’s already a small but steady market for narrowcasting TV to mobiles, meaning a signal sent to a single handset usually at a time of the customer’s choosing. This works acceptably with standard GSM phones, and it’s how networks like 3,and independents like Rok have popularised a style of video delivery. The downside is the cost of the connect time.
The alternative is broadcasting – one signal transmitted for reception by anyone with the right receiver, which is what happens with home TV sets. There are two hot technologies here, and one of them is already available.
That’s DAB, digital audio broadcasting; it is currently used for digital radio signals in the UK, but BT Movio has a way of piggybacking a TV signal on to it. This is currently provided by one supplier, Virgin Mobile, and on only one handset.
DAB is relatively simply but has a downside in that it requires more power than DVB-H; it has not proved a massive hit, even at quite attractive flat-rate prices, partly because of the limited content (at the moment the service offers only a handful of broadcast TV channels alongside dozens of radio stations) and partly because of the lack of choice in handsets.
The likely winner for the near future is DVB-H, which is set to the standard for broadcast TV at least in Europe. A number of ready-for-TV phones with inbuilt DVB-H receivers have been launched by the majors, notably Nokia, Samsung, LG and Sagem, but it will still be months (maybe years) before DVB-H is widely available. That’s because telecoms regulators around the world have been reluctant to release spectrum for the signal transmissions; the earliest a nationwide service will be seen in the UK is reported to be 2011.
Despite a good number of trials and pilot projects, the appeal of mobile TV isn’t at all clear – will enough people want to use it? And will they pay to use it?
Grahame Riddell puts the O2 view: “As handset and network technology matures, operators will be in a position to deliver a suitable experience that consumer value and will be willing to pay for.
“Turning mobile TV into a viable profitable business remains the challenge, and to succeed it will require partnership throughout the value chain.”
And people vary from one place to another.
The type of content is also an issue. As Keith France of www.xomobo.mobi puts it: “Will people be watching whole episodes of soaps on the train, or do they want bite sized catch up clips of their favourite shows and content brands?
It is however clear that some types of content, specifically sports and news, are always going to make sense in a video format because they have the immediacy that some consumers at least will value. “Mobile users need to enjoy a consistently high quality mobile experience before mobile TV takes off,” says Incentivated’s Robert Thurner, “News, sport, music and business information will be most highly demanded, though in 5 to 10 minute segments, which can be seen by people on the move.”
Grahame Riddell thinks it’s a mistake to fixate on live TV feeds. “Mobile is perfectly positioned to compliment ‘traditional’ live TV via a personalised service, allowing consumers to interact with their favourite TV shows and ‘snack’ on short-form TV content.”
“Our research has shown there is an appetite for TV content on mobile either away from the home, or actually using the mobile as an alternative portable TV set when in the home. However if customers are sold ‘Mobile TV’ you must give them ‘TV’. Expectations levels are raised, so you must deliver handset choice, good quality, and a wide range of content from the channels they know and love from their living room.
Still, just under half the people in a recent Canalys survey among European mobile phone users had no interest in watching any kind of TV on a mobile phone, even if it was free. The fact that 51% expressed some degree of interest may be encouraging for operators planning to roll out such services, but there are obvious challenges.
And content is definitely one. “When asked what types of mobile TV programming they would be interested in, consumers’ preferences are quite diverse, and there is unlikely to be one type of killer content,” commented Canalys analyst Adrian Drozd. “This suggests many different content partnerships and charging models may be required, which will add complexity for users and for the operators developing such services.”
“There is an opportunity to target particular consumer segments that will likely be more responsive to certain mobile TV propositions,” Drozd added. “For example, more than 40% of those who were already frequent users of YouTube said they would watch similar content on their phones. They also exhibited much higher levels of interest in all other mobile TV content types.”
Playing the game
In terms of mobile content, gaming is the elder statesman — ‘Snake’ was first made available on handsets back in 1997. But it’s still big business; the market is currently worth €1.6bn, according to Screen Digest.
Games certainly outstrip the other main forms of on-portal content, music and wallpaper downloads, in sales figures released Orange World. Orange UK’s 15m customers downloaded an average of 250,000 mobile games a month in the first quarter of 2007 compared to 65,000 wallpapers and a combined total of 250,000 ringtones, full-track music downloads and music videos.
The top selling games for the quarter were Glu’s Sonic the Hedgehog, THQW’s Worms and Taito’s Space Invaders (Anniversary Edition). That perhaps illustrates the obvious but relevant truism that making a good mobile game is all about user experience and playability, just as with games on PC or dedicated consoles.
Peter Karsten, CEO of Cecure Gaming, also points out that a good mobile game should be designed with the mobile and not the PC gamer in mind. “Mobile players like fast games like Tetris, Pacman and Poker, none of which are in the top 10 sales lists for PCs. This is because mobile players want to quickly get in, play a quick fast game and get out because they are often doing something else while playing – such as commuting.
“Mobile play and design needs to assume that players will come and go freely without repercussions, whereas PC designs expect concentration and can punish players for impatience. For example, in PC poker games, players can be penalised for jumping tables too fast.”
David Gosen of iPlay also points out that constraints of the device means mobile naturally lends itself to more of a casual gameplay experience. “The constraints aren’t just visual, but also on the game-playability. Who wants to have to power away at three different keys on the keypad, whilst simultaneously trying to steer? This is where simple, intuitive and casual playability comes in.
Mobile game-playing is also characterised by where the game is played. “Mobile gaming is gaming on the go,” says David Gosen. “People play as part of another experience: whilst catching a train, sitting on a conference call, or waiting in a queue.
“Mobile games developers really have the toughest job in the market, since mobile gamers are looking for immediate gratification, so developers have to win over their audience in the first two minutes of gameplay.
“But if it was easy, it wouldn’t be any fun, would it?”
Herbert Vanhove, who glories in the title of Vice President and General Manager QUALCOMM Internet Services and MediaFLO Technologies, Europe, thinks the technology is important too. “We’re already seeing PlayStation 1 quality gaming on mobile becoming a standard amongst casual mobile gamers, while there is an ever-growing niche of subscribers interested in higher-quality, premium 3D gaming.
“TIM Italy’s recent success with renowned titles from publishers such as Electronic Arts and Gameloft, via the BREW Gaming Signature Solution, has proven that the market for premium games is there. Offering advanced handsets which can support them is vital to retailers.”
He sees a big future here: “As we enter the realm of 1GHz mobile processors, connected mobile gaming communities and handsets that incorporate advanced connectivity – whether with projectors, controllers or even dance mats – the mobile will become an increasingly important gaming device.”
Not everyone is so bullish. Half of the current €1.6bn market is accounted for by South Korea and Japan, and market growth is so much that by 2011 it will be worth only €2bn – increasing only incrementally in the next five years. Screen Digest analyst David MacQueen believes that as operators shift focus on to music and TV services, the mobile games market will stall unless current business models change.
The direct-to-consumer option
Most mobile content is still delivered via the operators’ own websites and portal services, but a strong off-portal direct-to-consumer market for mobile content and services is developing.
The operators’ data pricing has tended to act as a brake on people browsing the mobile internet on their handsets. Robert Thurner, Commercial Director at Incentivated, thinks all-you-can-eat broadband will change things: “With Vodafone’s decision to join 3 and T Mobile in launching flat rate data packages, it looks like this obstacle will be removed”.
Even so, the networks will want to keep their options open – and so will many of the content producers. “In many cases those off-portal content providers want to have a dual offering and ensure that they have on-portal placement as well as a direct service,” says Grahame Riddell of O2. “We see improved search capability, better navigation and accessibility to content via the operator portal being a key element to maintaining a strong balance”.
Vince Kadar, Chief Technology Officer at Airwide Solutions, also points out that there’s wide variation among users. “Findings by research house M:Metrics, for example, suggest that UK smartphone users are more likely to browse within the walls of their operator’s mobile portal than step out of the garden.”
He says there are a number of reasons for this: “In Europe there has been a lot of work done first with Microsoft and then latterly with Symbian to customise the smartphones to drive consumers straight on to the operators’ portals. By contrast, the US market is more weighted to Windows users than the European market so it is likely that in the US Windows users are more likely to browse.”
Keith France, MD of www.xomobo.mobi, has launched a direct-to-consumer content portal for smartphones in the UK and reckons that the early uptake suggests there is a significant level of demand for off-portal sites. “We believe that consumers are feeling restricted by the operator’s limited offering – they want more than just some ring tones and icons.
“The future of this market is about really understanding the audience. While the teenage market has its place, there’s a lot of room out there to cater for higher end users with more powerful devices, a market that’s been all but ignored thus far.”
In the States there’s been a real boom in Assisted-GPS (A-GPS) solutions over the last year. A-GPS uses both wireless networks and existing GPS infrastructure to determine location faster, more accurately and more efficiently then either method alone, and it’s being required by US authorities for emergency location purposes.
Similar requirements were announced in Japan last year, prompting NTT Docomo to guarantee that GPS will feature in all its 3G handsets.
The EU remains vague about future regulations regarding positioning of emergency calls and some member states have not even introduced the common emergency number 112. André Malm, telecom analyst at Berg Insight, however believes that new regulations will be considered once the European Galileo satellite positioning system becomes operational around 2010.
“Galileo is the most advanced pan-European technology project to date. Obviously, there is going to be a strong political interest within the EU to demonstrate the benefits of the project for the public as quickly as possible. A future EU directive calling for Galileo positioning of all mobile emergency calls would at the same time improve public safety and create a mass-market for European high technology”, André commented.
As well as the practical benefits, embedding location technology into phone systems has added value to the networks. Herbert Vanhove of QUALCOMM includes A-GPS technology in his portfolio: “A-GPS solutions, such as the BREW Locate Signature Solution, allow wireless service providers to deliver a vast array of location-based services to subscribers – including the traditional friend finding and local directory listings, in addition to more complex offerings, ranging from practical applications, such as child-tracking, emergency services, route finders and location-aware user interfaces, to entertainment-focused services, including geographical tagging, social networking, location-based gaming and marketing.”
As LBS become more compelling to users and A-GPS services begin to reach Europe over the next few years, they will undoubtedly offer both operators and retailers a rich new revenue stream.”
In the Canalys mobile user study we mentioned about, navigation applications were regarded by users a considerably more interesting than TV — “Consumers are much more excited by the prospect of having GPS on the handset than mobile TV,” said Canalys, noting that 62% agreed or agreed strongly with the statement that it would be useful to have satellite navigation built into their phone, with even higher levels among existing navigation system owners and regular business drivers.
For advertising-supported services, the survey showed higher interest around vehicle and pedestrian navigation, mobile e-mail and IM than for TV. “It shouldn’t come as a great surprise that mobile propositions with location or communication at their core resonate the strongest with consumers. Operators need to think carefully before prioritising unproven content services over applications that consumers already accept are useful and have value.”
The BBC, which is tailoring more and more of its content to handheld devices, is keen to exploit location-based services. BBC director of future media Ashley Highfield is considering the possibilities of adding location tags to programmes such as Springwatch, so those viewing content via a mobile could access extra information. "You could say ‘show me all sightings of the greater spotted plover within five miles of where I am now’," he said.
Viewers could also use their mobile to give more detailed responses to broadcasters, such as visiting the BBC website to add a location tag if they see a particular bird themselves.
Overall, the potential market for LBS applications is enormous – not least because it is correlated to the expansion of the overall mobile phone market. The more phones there are with LBS capability, the more the services will be used. The wireless analyst firm Berg Insight forecasts that 60% of handsets shipped worldwide in 2010 will have integrated GPS or Galileo receivers.
Mobile web had 6m users in January
Some 5.7m people in the UK used a mobile phone to access the internet in January, according to the MobileWeb Metrix research programme from comScore and Telephia.
The mobile web audience is already 19% of the total who used a PC to access the internet.
Early adopters of mobile internet tend to be males under the age of 35, according to the researchers. Users under that age account for 67% of the total mobile web audience in the UK, but only 39%of the PC-based internet audience. And 63% are men, compared to 54% of those who access via a PC.
comScore and Telephia also revealed the leading sites on the mobile web. Ranking by unique visitors, and excluding the operator portals and landing sites, the BBC topped the list by an impressive margin:
Leading mobile web sites, January 2007
Website _ Mobile unique visitors _ Mobile reach _ PC unique visitors (000) _ PC reach
Total internet access _ 5.7m _ 100% _ 30.1m _ 100%
BBC _ 2.3m _ 40.9% _ 17.6m _ 58.4%
MSN-Windows Live _ 1.6m _ 30.8% _ 4.1m _ 80.0%
Yahoo! _ 1.5m _ 26.5% _ 19.7m _ 65.4%
Google _ 1.4m _ 25.1% _ 25.8m _ 85.8%
Sky _ 1.2m _ 21.0% _ 7m _ 23.1%
Source: comScore/ Telephia MobileWeb Metrix
Coincidentally, a another study – this one by Yell.com mobile and homing in on mobile search – suggests that peak interest in the mobile web comes from an older user group—self-employed middle aged men searching the web for functional, day-to-day items such as train times or their nearest DIY store. More than half (54%) of the 35-44 year olds Yell surveyed said these services would attract them to the mobile web.
Although youth has led mobile trends in the past, the Yell.com mobile study reveals that people 44 and over were just as likely as younger age groups, if not more so, to search for maps and directions on the go.
For all groups, the top five drivers for mobile web adoption were:
1. Maps/directions and local information
2. Email and instant messenger
4. Transport information
5. News and sports clips
Entertainment services such as dating, social networking and mobile TV were seen as more likely to put people off adopting the mobile web. Some 72% of respondents would choose to use mobile web for practical, information services rather than for entertainment reasons.
A sixth (16%) of those questioned in the study see banking as an attractive proposition for the mobile web.
Martin Wilson, head of Yell.com mobile marketing, said: “For a long time, mobile internet just hasn’t been attractive to consumers, as bad experiences on WAP, high costs and slow applications have put them off. Our study shows that consumers are now starting to find a real need for mobile search in their everyday lives.”