Game On for Euro Carriers

Mobile subscribers in Western Europe will spend €2.7 billion on games and entertainment services in 2002, according to Analysys Consulting -- just 2.7 percent of their total €97 billion outlay (see Infotainment Revenues to Boom).

But this sector, which Analysys tabs as "Mobile Content and Entertainment," will attract more and more revenue as GPRS usage increases, 3G networks are switched on, and billing systems are upgraded -- with the figure ultimately rising to €23 billion in 2007, or 17 percent of the total €135 billion (see chart below).

According to a new Analysys report, "Charging and Revenue Sharing for Mobile Content and Entertainment," the services in this sector include premium "push and pull" content [ed. note: not to be confused with the Dr. Doolittle character of the same name], free-to-all content accessed via browsers (which generates access revenues), games, ring tones, logos, cartoons, horoscopes, and other trivial crap -- er, that is, "personalized content."

Just how much of the revenue generated by these services stays in the mobile operators' coffers will depend on three major factors, according to principal analyst Katrina Bond: the state of the operators' back office systems, their relationships with content providers, and their ability to realize that expanding the market is more important than taking as much commission as possible.

"If operators had updated their billing systems they could have had a bigger slice of the revenues," Bond tells Unstrung. She says they need systems that can add event-based transactions, such as the downloading of ring tones or logos, to the customer's mobile bill. Currently such transactions involve the customer calling a premium-rate phone number supplied by a fixed-line operator, which increases the number of parties taking a slice of the revenue. This adds complexity for the customer and content provider, too.

Adding to most operators' billing issues is that they have separate systems for postpaid and prepaid customers. "They need to integrate these systems -- have a common view of their total customer base. Currently they are having to update and add the same pricing information to two systems in many cases," adds Bond.

Bond cites Telenor Mobile as a company that can handle event-based billing and says Vodafone Group PLC's (NYSE: VOD) M-Pay system is also a step in the right direction. However, "most mobile operators are limited by the capabilities of their billing systems."

Bond also believes that the relationship between the operators and those companies that supply the original content is key to the development and growth of the whole games and entertainment market. "The carriers have an important facilitating role to play. The more generous they are to the content companies [in terms of the cut they get from the mobile transaction] the more companies will produce specific content." A bigger slice will also attract more developers and fuel choice and market growth.

A number of different strategies are evolving, says Bond. KPN Mobile has copied NTT DoCoMo Inc.'s (NYSE: DCM) model of offering a fixed percentage of each transaction to the content provider -- 86 percent in KPN's case, 91 percent in DoCoMo's. Others will have a fixed rate for those content companies that take care of their own marketing and an individually agreed rate for deals where the content appears on the operator's mobile portal. T-Mobile's agreement with Disney is an example of this, says Bond. Major content owners and media companies will be in the best bargaining position, and market consolidation will see content aggregators and content developers fall by the wayside.

But no matter who is providing the content, the operators must avoid the old telco way of thinking that equates massive commissions with the highest revenues. "It is difficult for some of the operators to change their mindset," notes Bond. "There are still a lot of operators that see the content and entertainment business as lucrative in its own right. They need to focus on increasing their network traffic to maximize access revenues, rather than trying to take lots of commission [from content]. Growing the size of the market must be the prime consideration for the carriers."

— Ray Le Maistre, European Editor, Unstrung
ronanhigg 12/4/2012 | 10:08:32 PM
re: Game On for Euro Carriers The article should have tied in Sepro rating and billing systems for telecommunications in relation to European service providers.
joset01 12/4/2012 | 10:08:22 PM
re: Game On for Euro Carriers Give us some SOLID reasons why Sepro should be on the list, rather than just telling us they should be, and we'll consider it.

[email protected]
Steve Saunders 12/4/2012 | 10:08:20 PM
re: Game On for Euro Carriers euwwwwww!

lrmobile_JamesMorehead 12/4/2012 | 10:07:32 PM
re: Game On for Euro Carriers The subject line is just a subset of the customers who have deployed Infranet Wireless for a wide variety of pre- and post-paid convergent services - including monetizing mobile games.

A number of the companies noted in the article are announced Portal Software customers: Telenor Mobil (for all data / content pre- and post-paid, including their content community). E-Plus (for the premium i-mode services recently launch). Vodafone UK (and 11 other Vodafone Group members) for a wide variety of voice, data and content services (including GPRS). T-Motion (part of T-Mobile). Other Portal customers innovating in this area are TELUS Mobility (150+ games available, all value-priced) and Sonera ZED.

For those with a interest in this area who doubt it can work in North America please check out TELUS Mobility's Pay Per Use Mobile Web services and pricing models. They have been very successful in the highly competitive Canadian market.

For more information on how we've helped mobile service providers increase the return on network investments while dramatically lowering total cost of ownership, please drop me an e-mail.

James Morehead
Director - Wireless Solutions Marketing
Portal Software (www.portal.com/wireless)
e-mail: [email protected]
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