A Post-Advertising Business Model That is 6X More Valuable - Rita McGrath - Harvard Business Review
It is between interesting and irritating, the key is Relevance.
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A Post-Advertising Business Model That is 6X More Valuable - Rita McGrath - Harvard Business Review
It is between interesting and irritating, the key is Relevance.
Third-party over-the-top (OTT) communication services (messaging and voice) such as WhatsApp and Skype are popular – and proliferating, especially in emerging markets. The advantage of OTT over operator services is that it is perceived as free, though a data connection is needed to access the Internet. Customers like them, but these services generate incremental traffic putting an additional strain on operators. Unless they block OTT communication, operators have to handle these services.
What is worse for operators is that they do not have a direct relationship with OTT users, and as such they are effectively cut out the value chain. While the Rich Communication Suite–enhanced (RCSe) is emerging as the industry-wide standard for IP mobile communication, it’s not ready yet, and operators need interim strategies to combat third-party OTT services. But what are the best strategies?
The main focus of this report is on mobile IP messaging. We examine the significance of OTT communication (voice and messaging), and more specifically the impact of OTT messaging, and take a closer look at six different strategies that operators are currently using to respond to the threat posed by OTT. The report presents case studies from SingTel, Claro, Orange, Telefonica, T-Mobile, Vodafone and Three and examines how these different operators are approaching OTT communication. We conclude with some recommendations for operators as they rethink and refine their strategies.
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Following many years of high expectations, the location-based services market is finally coming of age. Growing adoption of GPS devices is the key driver, helping a whole host of different applications and services to grow. For mobile operators, this is an opportunity to drive new revenue streams, but it is also a threat because it means access to location information is no longer their monopoly. Operators need to become more active in the location space by driving their own-branded navigation and local search applications on devices they distribute, maximizing smartphone sales and bundling people-finding services with packages targeting specific segments. In other segments — including social networking, in-app advertising and advertising-based messaging — the opportunity is more limited, although there are some interesting opportunities here, as well.
The report provides a detailed overview of the current status and size of the location-based services market. It takes a specific look at the positioning of the mobile operators within the value chain and how they can leverage their assets to take a stake in this growing opportunity. A number of services are analyzed, but the biggest focus is on navigation, the largest in terms of revenue where various business models are establishing themselves and a range of different players are focusing their efforts, creating a dynamic and fast-changing market segment. Other services such as people finding and local search are also covered.
Key Findings
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The smartphone segment is becoming central to the development of the global mobile industry. With mobile subscriptions’ penetration of the population having already surpassed 100% in most developed markets and quickly approaching that mark on a global level, a sign of near market saturation, industry players are focusing on mobile data as the main revenue growth source for the future. In addition to network and service investments being made to pursue this opportunity, data services need user-friendly terminals and interfaces to engage customers.
Smartphones are just such devices. Following a sluggish start when mainly targeted at business users, they have witnessed exploding sales in recent years, especially since the introduction of Apple’s iPhone in 2007. The iPhone delivered a landmark consumer-focused user experience and changed the way the industry did business. Further contributing to the smartphone segment’s sky-rocketing growth, the launch of Google’s Android open source operating system in 2008 enabled smartphones to reach the mass market, with more handset makers being able to enter the segment with a similar user experience to that of the iPhone and at quickly decreasing price points.
The growing importance of the segment has brought operating systems (OS) and the ecosystems being created around them to the forefront, sparking a war among different platforms for dominance over the smartphone space. Mobile operating systems and the ecosystems evolving around them are shaping the way forward for the mobile industry because of their potential to attract users and drive new business opportunities in data services. In light of this it is crucial to understand which players are involved and how, comprehend how these ecosystems are evolving, and fully apprehend the influence they have in the present and future of the handset and mobile services industry.
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OTT video market will be worth $37bn in 2017 | |
By Mary Lennighan, Total Telecom
Friday 23 November 2012
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Value of online video market concentrated in just a handful of players, according to Informa. | |
The global market for online video will be worth US$37 billion by 2017, but only a few companies are really benefitting from the growth if the sector, according to a new report from Informa Telecoms and Media.
The analyst firm predicts that video services delivered online will account for 8% of total TV and video revenues by the same date, rising to 10% by the end of the decade.
"Online video...is attracting real, and growing, revenues. But this value is concentrated around a select few players," said Giles Cottle, principal analyst at Informa.
"We estimate that Apple, Google, Netflix and the global broadcasters (including Hulu) combined account for about 70% of all online video revenue today," he added. "If you aren't one of these players, then the chances are you aren't making a great deal of money from online delivery."
There are three main revenue streams in online video: advertising, subscriptions and transactions. Advertising currently generates more revenue than subscriptions and will continue to do so throughout the forecast period, Informa predicts. Its forecasts do not include revenue from managed video-on-demand services offered by operators or TV Everywhere services, where subscribers do not explicating play for the online part of the service.
"The big change to the OTT revenue mix will come when operators start to offer not just low-cost online services, like Sky's Now TV, but stand-alone online versions of their services that come close, in terms of content availability and price, to their core pay TV services today," Cottle predicted.
"Even very modest take-up of these services will completely distort the online video market," he said.
The U.S. will account for 50%-60% of online video revenues in 2017, down from 75% today, as Europe and Asia experience more rapid growth.
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