Cable Industry Provides Content Model For Wireless, Says Myers
Mobile phone operators are on the verge of a new era in wireless services, one which will require them to change the way they have previous run their businesses, according to an analysis by Jack Myers of Jack Myers Report.
The wireless industry is in a transitional stage at present, as operators move from “a commoditised business built on selling ‘minutes’, to being a content-dependent services medium,” says Myers. With the increased capabilities of third generation wireless technologies (3G), customers will increasingly demand premium content and information services.
Money to be made Jupiter MMXI forecasts that by 2006 European mobile users will be spending E3.3 billion for content on their phones. By way of comparison, PC users’ spend on online content will be just E1.7 billion by the same time (see Mobile Content Will Be Worth E3.3 Billion By 2006, Says Jupiter).
It is clear then, that there is money to be made by wireless operators in the provision of premium content and information services. Jack Myers Report forecasts that whilst only 5% of mobile phone users currently pay for enhanced data services (voice portals, messaging, concierge services and WAP access), by 2006, 50% of subscriptions will include such services.
In order to provide such content, operators should look to forge alliances with content providers if they are to benefit from the increase in average revenue per user (ARPU) that these high margin services can bring.
Cable provides model Myers says that the cable industry offers a model of this type of transition in business. Initially, the US cable industry was a technology-based industry that provided ‘boosted’ access to broadcast programming in areas where aerial reception was poor. It was only during the late 1970s and ’80s that it moved to become an industry which aggregates and promotes third party content offerings.
Such partnerships between cable operators and TV content providers “led to exponential growth and dramatic increases in market valuation for cable system operators,” says Myers’ report.
Wireless companies currently find themselves in a similar position. However, whilst the cable operators in the US forged this new business structure in a relative monopoly, wireless carriers operate in a very competitive environment.
“Consumers will demand certain branded content and information services that are available from several of the wireless carriers, while other services will be exclusive to individual carriers. The growth and expansion of premium content will be based on third-party content service providers that aggressively market their services and distribution partners directly to consumers,” says Myers.