Mobile Applications and Video

Transcription

1 Mobile Applications and Video Dr. Jerzy Kalinowski August, 12, 2015

2 Agenda Drivers of mobile apps developments Where is money? 03 Success stories 04 Video in mobile devices 05 Summary 2

3 Drivers of mobile applications developments

4 Smartphones are already dominating in mobile space Smartphone penetration (%) Europe 2014: 64% 2019: 89% North America 2014: 80% 2019: 95% South America 2014: 57% 2019: 86% Source: The mobile technology outlook, Forrester 2014 Middle East and Africa 2014: 47% 2019: 76% Asia-Pacific 2014: 51% 2019: 83% 4

5 Smartphones and tablets have become key digital access devices Total # of SIM Cards CAGR Total mobile (bn) 7,1 9,2 4% Smartphones (bn) 2,6 6,1 15% Mobile PCs, tablets (m) % 3G/4G share of subscriptions North America 100% 100% Western Europe 75% 100% CEE 50% 85% South America 40% 90% Asia Pacific 40% 85% Middle East and Africa 20% 70% Smartphones make up the majority of mobile broadband devices today. Growth of mobile usage is driven by demand for digital services and increasing affordability of mobile devices and services. Source: Ericsson Mobility Report On The Pulse Of The Networked Society, Ericsson, June

6 Mobility is exploding in countries that have been developing in recent years Mobile % of Total Internet Traffic by Country, 5/15 Nigeria India South Africa Indonesia Poland Turkey Iran (I.R.) Mexico China Japan Colombia Spain Philippines Argentina Korea (Rep.) Vietnam UK Italy USA Brazil Egypt Germany Canada France Russia 33% 30% 30% 28% 27% 26% 25% 25% 24% 23% 22% 22% 22% 19% 17% 15% 14% 11% 39% 38% 52% 50% 57% 57% 65% 76% Source: Internet Trends 2015 Code Conference, KPCB 6

7 How people use mobile digital device?s Where do we use our smartphones? Where do we use our tablets? 70% Living room 74% Living room 65% Bedroom 65% Bedroom 36% Home office 34% Home office 68% Car 46% While traveling 62% While traveling 17% Car 69% Outdoors 28% Outdoors 69% In stores 24% Work 54% Work 10% In stores Source: The mobile technology outlook, Forrester 2014 Smartphones are used in more locations than ever before Tablets have significant importance when people are at home 7

8 Clouds drive strongly mobility mobility drives clouds usage #cloud services positively influences on the smartphone adoption. #smartphones stimulates the growth of mobile cloud services 8

9 Mobile digital ecosystem is becoming more and more complex What is the Internet of Everything? THINGS Data Collection Processing DATA Modeling & Prediction STRATEGY & BUSINESS PROCESSES Data Storage Data Cleansing APPLICATIONS Secure Networks Sensors Data Access Data Visualization Automation / Robotics Device Connectivity Recommendations Source: IoT 2015, KPMG PEOPLE 9

10 Smartphone users prefer applications in majority of their mobile moments Mobile moments mobile moments have typical user each day Mobile apps users preferences 55% more convenient Spend most their time on mobile phones in apps 85% of time on smartphone Use relatively few apps 84% of that time is top 5 apps Source: Your Customers Will Not Download Your App, Forrester; ZQ tracking data 48% 40% 28% faster easier to browse better user experience 10

11 What are key challenges? Key market challenges Compatibility issues Security concerns Piracy Enormous pool of available mobile applications Distribution channels Key customer challenges Compatibility Functionality Choice Performance Price Reliability User engagement 11

12 Where is money?

13 Free applications dominate the mobile app market Total number of mobile App Store Downloads (bn) % % % % % % f 2015f 2016f 2017f Source: IDC, May 2015 Free downloads Paid-for downloads Users are providing troves of data, and often accept advertising or data connectivity in exchange for access to applications. 13

14 but value of mobile applications market grows more dynamically than overall software market Mobile App Market Revenue, worldwide (USD bn) f 2015f 2016f 2017f Paid-for In-app purchase Advertising Source: Gartner (September 2013), Forrester (January 2015) Mobile applications market is growing 6x faster than total software market. Mobile application CAGR 32,7% vs. CAGR 5.2% of overall software market In-app purchases will play more and more important role Increase from 11% mobile apps market value in 2013 to 48% in

15 There are different revenue models for mobile apps Applications free to download for users, but ads displayed during usage. Applications free, but the user needs to pay a fee to proceed to higher levels and to get an access to more advanced features of the application. Freemium 27,5% Advertising 42,5% Mobile Application Revenue Model Subscription 7,5% Subscriptionbased mobile app requires users to pay a monthly fee to use the app. The app users purchase virtual goods and micro transactions Inn-app purchase 27,5% Pay per download 25,0% The user has to pay to download the app Source: State of the Developer Nation. Q

16 Android is dominating, but ios has still very strong position Smartphone Vendors Market Share (%) Operational systems market share (%) 37% Others 42% 2% 10% 6% Others BlackBerry Windows 18% 1% 0,3% 3% 3% 3% 5% 23% LG Huawei Lenovo Apple 5% 5% 6% 18% 23% 59% ios Android 78% 29% Samsung 25% Q Q Q Q Source: IDC, May

17 but ios users generate more revenues from mobile applications Monthly revenue structure from primary platforms 39% ios 12% 25% 24% 24% 7% 8% 19% Android 20% 35% 26% 12% 4% 3% BlackBerry 16% 46% 22% 10% 6% Windows Phone 22% 50% 14% 10% 4% $0 $1-500 $ $5-50K $50-200K $200K+ Source: Developer Economics Q1 2015: State of the Developer Nation 17

18 App Stores Growth Accelerates 1,6 1,4 1,2 1 0,8 0,6 0,4 Total number of apps by app store (m) Google: >1.4 m apps ios: >1.2 m apps Revenue vs. downloads (2014) $6,9 Revenue $1,8 (bn USD) 29 Number of downloads (bn) 31 0, Source: Total apps by app store: AppFigures 2015 ios Android Source: Google Play stores more applications and provides more downloads. However, ios App Store generates more revenues! 18

19 The most popular mobile business apps Most popular business apps Instant Messenger Office Conferencing E-commerce Social software CRM Collaboration ERP Enterprise search 26% 28% 25% 26% 20% 23% 20% 23% 19% 23% 18% 23% 17% 23% 16% 17% World CEE Source: Mobile Application Market 2013, Gartner; Nielsen 46% 43% 37% 40% Companies in CEE region have adopted very quickly mobile business applications 19

20 Games are the most popular apps among consumers Most popular consumer apps Games 65% News/weather Maps/Navigation Social Networking 56% 55% 54% Music 46% Entertainment 38% Finance Sports Productivity Shopping 31% 30% 30% 29% Source: Mobile Application Market 2013, Gartner; Nielsen 20

21 Business apps generate higher revenues Enterprise application revenue 18% 13% 26% 25% 9% 9% 43% of business apps make more than 10K per month vs. Consumer application revenue 38% 18% 25% 12% 4%3% 19% of consumer apps make more than 10K per month $0-100 $ $1-10K $10K-100K $100K-500K $500K+ Source: Developer Economics Q1 2015: State of the Developer Nation 21

22 Development of mobile applications has been already well structured SERVER SIDE LOGIC How the developer truly customizes the user`s experience. 6 DATA INTEGRATION Allowing users to access information from and publish data to third party sources including social networks. USER MANAGEMENT Creating user accounts, managing authentication and access control 4. 2 backend 8 9 PUSH Maintaining engagement with users continuously. Source: Mobile Application development, Crispy Codes START DATA STORAGE The building bock of any native app`s backend. 10 weeks VERSIONING Make version 2 live without breaking version 1. CATCHING Storing data locally to speed load time. 18 weeks total 8 10 weeks UI SMOOTH The differentiating last mile of the user interface, where an app truly stands out from the crowd. SYNCHRONIZATION Enable off-line usage and resolve data conflicts frontend UI DEVELOPMENT Translating mock-ups into functioning user interface code WIREFRAMING Blueprint for user interface and experience. UI DESIGN Pixel perfect mock-op of user interface. 22

23 Success Stories

24 Buy Buttons = Optimized for Mobile... Minimize Friction to Moment of Interest Facebook Monthly Active users: Mobile vs. Total (m) Facebook App % 81% 79% % 87% 88% Q1:14 Q2:14 Q3:14 Q4:14 Q1:15 Q2:15 Mobile Monthly Active Users Monthly Active Users Average Revenue per User (ARPU) Q1:14 Q2:14 Q3:14 Q4:14 Q1:15 Q2:15 ARPU $2.00 $2.24 $2.40 $2.81 $ Source: Facebook Earnings 2015Q2, 2014Q2 24

25 Car manufactures have also realized that car is another digital device Source: 25

26 WhatsApp History of success (1) Jan Koum - too poor to succeed? 1976 to be continued Jan Koum born in Ukraine came to U.S. with mom gets food stamps works as a janitor learns to code starts college (hates it) and soon quits works at Yahoo quits Yahoo starts WhatsApp thinks to fold WhatsApp sells WhatsApp to Facebook for $19 BILLION (and keeps practicing boxing) Source: Anna Vital How WhatsApp Founder Jan Koum Went From Welfare To Billionaire 26

27 WhatsApp: History of success (2) WhatsApp monthly active users worldwide (m) April, 2013 Aug, 2013 Dec, 2013 April, 2014 Aug, 2014 Jan, 2015 From April, 2013 to January, 2015 the number of WhatsApp monthly active users has grown steadily worldwide (CAGR is +28%) WhatsApp is the most popular mobile instant messenger application in the world Most popular global mobile messenger apps (number of monthly active users, m) Jan Koum signs the $19 billion Facebook deal paperwork on the door of his old welfare office in Mountain View, CA December, 2014 Source: Statista 27

28 11 Bit How to make monies on mobile games 11 bit studios (Polish company) multiplatform (PC, ios, Android) game development studio selling own games worldwide 2010 founded by former CD Projekt (The Witcher) developers 2011 the first game Anomaly Series, received Apple Design Award and a number of other awards 2014 the second big title This War of Mine; cost of development was paid back in first weekend since its premiere (revenue in 2014 was $1,35 m) Source: 28

29 Video in mobile devices

30 58% of consumers watch short videos daily or more frequently on their smartphones How often do you watch video on your smartphone Never Less than once a month Monthly A few times a month Weekly A few times a week Daily Heavy users World/Europe (Several times a day/daily): % (60%) % (37%) Enough large mobile data package of the consumer is the key enabler for frequently video usage. Those with an unlimited data package are significantly more likely to be frequent consumers of mobile video Several times a day Short videos (under 5 minutes) Long videos (5 minutes or more) Source: Mobile Video 2015: A global perspective, iab Country: Total, Argentina, Australia, Austria, Brazil, Canada, China, Colombia, Denmark, Finland, France, Italy, Japan, Mexico, New Zealand, Portugal, Russia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, UK, US Date: May 2015 Base: Total respondents 4800, Per market:

31 Mobile video has great potential to grow I watch more video on my smartphone now than I did a year ago I only watch video on my smartphone when I have a Wi-Fi connection I would watch more smartphone video if it didn't use up my time/data plan I switch to a bigger screen for watching longer videos like full-lenght movies I watch less TV because I watch video on my smartphone 35% 40% 25% 31% 22% 65% of those who have a limited data plan say they would watch more smartphone video if it didn t use up their time/data plan 22% of those who frequently watch long videos say they watch less TV because they watch video on their smartphone Source: Mobile Video 2015: A global perspective, iab 31

32 Apps are the most popular in accessing mobile video People who watch on-demand media more than weekly (%) 5% 12% 13% 22% 22% 26% Only use mobile apps Mostly use mobile apps Use mobile apps and mobile web about equally Mostly use mobile web Only use mobile web Don t know 48% Only/Mostly vs. Mobile Apps: 18% Only/Mostly Mobile Web Video quality will be one of key drivers for the further dynamic growth of mobile data traffic When you use your smartphone to watch mobile videos, which of the following are important to you? 40% 38% 33% 32% 30% 29% 25% Good picture quality Video content that is free Source: Mobile Video 2015: A global perspective, iab That the video buffering/streaming speed is fast Good sound quality I'm connected via Wi-Fi, nor 3G or 4G That the video comes from a trusted source The video is in HD/high definition 32

33 and people are not willing to pay for mobile video content Have you ever paid for videos that you have watched on your smartphone? Have you ever paid for videos that you have watched on your smartphone? East Asia 26% 16% Australia & New Zealand 18% Yes latin America Europe 13% 14% 84% No US & Canada Aggregated response 16% 23% Specifically related to mobile video you watch on your smartphone, would you rather: 78% 8% 15% Pay for each mobile video I watch, with no advertising Pay a subscription fee for a package of mobile video over a month, with no advertising Have free mobile video that has ads in it 84% have never paid for videos watched on a smartphone Source: Mobile Video 2015: A global perspective, iab 33

34 YouTube World biggest video content provider How it was? founded first video 1 m hits $3.5 m investment from Sequoia Capital first professional acquired by people get paid content (NBC) Google ($1.65 m) for their content Feb, 05 April, 05 Sep, 05 Dec, 05 June, 06 Oct, 06 May, 07 1 b hits live-stream of the Olympics started live renting movies first adds mobile app Dec, 12 July, 12 April, 11 Jan, 10 Aug, 07 June, 07 >1 billion users 2014 net revenue of $5.9 billion (+43% y/y) 1 - mobile revenue is up over 100% y/y 300 hours of video are uploaded every minute 1 Acording to Jefferies & Co report: Source: Youtube site. 34

35 Video is the fastest growing mobile ad format Instream video Interstitial video Ads appear within video or streaming content Ads are triggered by user actions In-banner video Native video Ads are static or rich-media banner ads with video embedded Ads are videos embedded into the site or app Source: Executive Q&A: Five Key Questions To Kick Off Your Mobile Video Advertising Strategy by Jennifer Wise, May 13, 2015 Time, spend on video advertising on tablets and smartphones will be growing by 36.9% annually, and in 2019 will represent 43.8% of total display ad spend on these devices 35

36 Mobile video ad spend is experiencing rapid growth % of Time Spent in Media vs. % of Advertising Spending, USA, % 41% Total Internet Ad = $50B of which Mobile Ad = $13B 24% 23% 24% 4% 18% 11% 11% 8% Growth opportunity Print Radio TV Internet Mobile Time Spent Ad Spent Source: Internet Trends 2015 Code Conference, Mary Meeker, May 27,

37 Mobile advertising is just taking off Shift of video viewing to mobile 25% adults and 66.7% among younger adults (aged 18-24) stream video/tv content in USA on a smartphone at least weekly or more often Growing video inventory Growth of coverage and transmission speed High customer interactions Compared to 2014, user video posts to Facebook increased by 75% in 2015 MCN startups (Multichannel networks) like Maker Studios begin to dominate over traditional media players gaining viewers time spent on media encouraging Disney to acquire Maker Studios for almost US$1 billion in 2014 Global adoption of broadband gives mobile video delivery a boost 4G-LTE networks will cover more than a third of the global population by the end of 2015 (GSMA Intelligence) McDonalds successful Facebook video campaign Source: Executive Q&A: Five Key Questions To Kick Off Your Mobile Video Advertising Strategy by Jennifer Wise, May 13,

38 Case study: McDonalds successful Facebook video campaign 2014 FIFA World Cup: FryFutbol video ad campaign launched by McDonalds on its Facebook news feed across Europe 80% of ads appear within mobile news feeds 20% increase in brand favorability in France 36% growth in purchase consideration in the Netherlands 19% increase in purchase intent in France, the Netherlands and Germany Source: Executive Q&A: Five Key Questions To Kick Off Your Mobile Video Advertising Strategy by Jennifer Wise, May 13,

39 Summary

40 Wrap-up Mobile apps represent the fastest growing sector of software development In-app purchases will play more and more important role Majority of smartphone users watch short videos daily or more frequently on their smartphone Mobile video advertising will be growing by 36.9% annually. Mobile applications and video content will drive the growth of demand for the network capacity 40

41 Development of mobile video implies the significant growth of mobile traffic Mobile data traffic by application type (monthly ExaBytes) 30.5 ExaBytes 20% 5% 15% 30% 10% 15% 45% 3.3 ExaBytes 55% CAGR 13x growth 60% Video Social Networking Web Browsing Other Source: Ericsson Mobility Report On The Pulse Of The Networked Society, Ericsson, June

42 Dr. Jerzy Kalinowski Partner Head of Telecommunications, Media and Technology, Central & Eastern Europe E: #Kalinowski_KPMG This presentation was prepared exclusively for Telco Trends 2015 conference in Riga in Whilst the information presented and views expressed in this presentation have been prepared in good faith, KPMG on behalf of itself and all other member firms affiliated with KPMG, and all partners, staff and agents thereof, declares that neither KPMG, nor any of the aforementioned persons shall accept responsibility for any information contained herein and disclaims all liability to any person arising out of or in connection with any decision based on 2012 KPMG Advisory Spółka z ograniczoną odpowiedzialnością sp.k. jest polską spółką komandytową i członkiem sieci KPMG składającej się z niezależnych spółek członkowskich stowarzyszonych z KPMG International Cooperative ( KPMG International ), podmiotem prawa szwajcarskiego. Wszelkie prawa zastrzeżone. such information. 42