Telecom Lead Asia: Mobile content revenue is expected to touch $13 billion by 2017 from $2 billion in 2012.
According to Juniper Research, operator storefronts and portals now accounted for 6 percent of content downloads worldwide, with Google Play and Apple’s App Store comprising nearly 70 percent between them.
Increasing popularity of OTT (Over The Top) stores had led to many operators closing their own storefronts.
OTT is threatening operator revenues.
According to a 2012 document from Ovum, impact of OTT players will cost operators $23 billion in SMS revenues in 2012, and that figure is expected to rise to $54 billion in 2016. We have argued that one way for operators to effectively combat this threat is to partner with OTT players, and in the past few months partnerships have begun to emerge between operators and social messaging players.
KDDI and Line were the first to announce a partnership, in July 2012, while 3 Hong Kong announced the “WhatsApp Roaming Pass” in September 2012. The latest initiative comes from Reliance Communications in India, which has launched a new data subscription plan, the “WhatsApp plan”. These partnerships not only increase stickiness among the operators’ subscriber bases, but are also becoming a potential revenue opportunity.
Juniper Research on Wednesday said by offering carrier billing to third-party storefronts, operators could more than offset the continued decline in portal revenues. Storefronts which have already integrated carrier billing solutions have seen a 5-6x increase in conversion rates compared with credit card billing, together with an uplift in average transaction values.
Furthermore, the implementation of carrier billing allowed storefronts and developers to monetise unbanked/underbanked regions and demographics for the first time.
Report author Windsor Holden said: “While many operators have abandoned the own-brand storefront approach, by leveraging their billing relationship with the end user they can retain a foothold in the content play. Simply by offering consumers a billing choice, monetisation rates will rise.”
Carrier billing for higher value content would be less effective amongst prepaid users given the relatively low top-up levels in most markets.
According to Juniper, while Google has surpassed Apple in terms of app downloads on an ongoing basis, monetisation levels of Android apps are markedly lower.
Though in-app billing and freemium has become the prevalent business model, there is still a role to play for PPD (Pay Per Download).
Ovum’s research has indicated that the impact of social messaging will be felt the most in Asia-Pacific; 32 percent of global SMS revenue losses will come in the region. That is perhaps a key reason why most of the operator and OTT partnerships are arising in the Asia-Pacific region. However, the partnerships that have been agreed vary according to the demands of the markets in which they will operate.
In Japan, where IP-based messaging is commonplace, KDDI’s move to add Line to the suite of apps allows it to incorporate a popular app with the potential to grow the operator’s revenues through billing or payments.
In India, Reliance Communications’ partnership with WhatsApp is designed to grow users and revenues from a demographic that may not subscribe to more expensive data plans, while in Hong Kong 3 is targeting travelling users with its WhatsApp roaming pass. Regardless of the rationale behind the partnerships, as SMS revenues and traffic come under greater pressure we will see more operators partnering with social messaging players in the region.
