Wireless

January 24, 2005
Mobile content strategies for operators

Geetanjali Wadhwa & Pradeep Chakraborty

NEW DELHI -- Are mobile operators generating sufficient revenues out of mobile content today? If that is not the case, what are the necessary steps that they need to take for increasing the ARPU? Dr. Vivek Mansingh, managing director, Portal Information Technology India Pvt. Ltd., feels generating sufficient revenues from mobile content is still in its infancy in India. "Content downloading drives data adoption and usage, creates a new revenue stream from download of premium content, increases voice usage, and enhances the ability to personalize services. However, this feature is still not mature," he said. Mansingh expressed doubt whether all of the operators were generating sufficient revenues out of content.

According to him, the cost of promotions is one of the major problems for telcos in selling content. Hence, they see themselves more as enablers for downloading content, and entered into revenue-share agreements with content providers. Indiatimes is a good example. Its owns the print media and hence, the cost of promotions is very low.

However, Mohit Bhatnagar, vice president, value-added services and new product development, Airtel Mobile Services, said that driving the convergence of content and mobile has been a key strategy at Airtel during 2004. He said: "After the launch of Airtel Live, we have seen our content strategy around movies, music, cricket and games take off and really contribute to the growth of our services, resulting in 200-500 percent increase in downloads and access of content in different categories. As a first step, the adoption of these services is the key to grow market for value-added services.

Mansingh outlined four major steps that operators needed to take for increasing their ARPUs. These are:

• Operators need to segregate content based on niche markets.
• They should offer content free of cost for a certain period to make it more popular and friendly.
• They should sell it as bundled services.
• They should promote relationships with the content developers.

According to him, developing niche applications that target the Indian market is the key. As the bandwidth increases over wireless, innovative applications are finding their way. However, the reality is customers are not willing to pay for premium content as yet. Another revenue source for the content provider would be to get an advertisement budget allocated for free promos and share the lump sum cost with the telcos.

Regarding the current costs for content acquisition, Bhatnagar said that content costs varied, depending on the property (new/old, music/movie, etc.), branded/non-branded, as well as its relevance and topicality at that point in time. For example, videos from the movie Sholay would have more relevance when the movie is being re-released in theatres, as compared to any other time As a result, the entire value chain works on a revenue-sharing basis, wherein, the operator focuses on marketing the content, while the content creator focuses on its quality and breadth.

Both Portal and Airtel attach great importance to branded content. Mansingh said it creates standardization in terms of quality and cost. It also generated more revenue and is critical to get things going. Bhatnagar added that branded content had its advantages, since it is easier for people to recognize and relate to it. He elaborated: "Customers find it easier to accept branded content, as they have a general idea (as well as a higher expectation) about the type, source and quality of content they are getting for themselves. Airtel Live and Hello Tunes have succeeded partly due to the fact that they have consistently offered branded content to customers. Branded content on Airtel Live and Hello Tunes ranges from Sholay, The Mummy to Robbie Williams, Shabd and Elaan."

On the same token, it is necessary to evaluate the importance of the mobile phone as a content retailing channel. Mansingh agreed saying it is very a important channel, considering the tele-density across the globe. The mobile phone has the ability to support and process different types of content. It also has the ability to support the population of increasingly diverse devices. Next, it allows infrastructure optimization as content can be delivered through multiple delivery channels, such as SMS, MMS and data network. Finally, it leads to sophisticated merchandising as well.

Bhatnagar noted that the mobile phone began as humble content retailing channel with basic offerings like logos. Today, it has graduated to a full-fledged multimedia device that plays MP3 files and can show TV and movies. Obviously, this presents a huge opportunity for the content community, and as more and more handsets come within reach of a larger stratum of people, it will present an even more lucrative business opportunity for content providers. For example, the music industry in India has realized the significant revenue opportunities from ring tones, Hello Tunes, etc. "This non-physical format of music sales will represent a significant percentage of the total music sales in the years to come," he predicted.

The other significant changes occurring in the mobile content arena include varying charging patterns, creation of logical content linkages and recommendation engines, as per Portal's Mansingh. Airtel's Bhatnagar said that multimedia capable handsets are luring more content providers. Handset manufacturers are also getting into the content creation role by partnering with content aggregators and generating the acceptability of their handsets. This also helps them in highlighting the special features on their handsets.

Besides, more movies, music albums and sports events are making the mobile content arena as a part of their marketing and distribution plans. This is a positive sign, and shows that this community now considers the mobile device as a serious business opportunity, and is working with operators to offer content through properties like Airtel Live and Hello Tunes. The biggest change is that consumers have now begun to expect more than a vanilla voice service from their mobiles. The mobile experience must inform, entertain, allow for personalization, etc., in order for consumers to stay loyal with an operator.

Are operators able to develop or are developing efficient content value chains as well? Airtel has a content team that runs a content developer program, and is responsible for offering content to its customers through properties like Airtel Live and Hello Tunes. This team is entrusted with the responsibility of managing the content and alliances chain end-to-end. The activity starts from scouting for content, to acquiring and testing content, as well as co-marketing of content across various media properties.

Bhatnagar said the operator's strategy is to have very strong content aggregators and partners who will continue to develop world-class content/apps. Therefore, it is very important for Airtel to play its role in ensuring a fair and transparent content value chain. However, Mansingh felt that there is still a long way to go before operators are able to develop efficient content value chains.

According to him, certain challenges are involved with the product management, marketing and financial aspects associated with the delivery of premium content services. Within product management, operators need to support innovative ways of charging and attaching quality of service (QoS) with delivery. Within marketing, they need to continue creating awareness in the market, besides taking care of branding and the competition. Within finance, the major challenges include proper accounting, fraud control and settlement with content providers.