Mobile Media and Entertainment in the US: value chains and pricing models. Alexandra Rehak with Mike Grant

Transcription

1 : value chains and pricing models Alexandra Rehak with Mike Grant

2 2 Contents [1] Contents 7. Document map Executive summary 8. Carriers control the value chain in the US mobile media and entertainment market, and pricing models are still in a state of flux 9. The trend toward off-deck MME service provision has begun, but off-deck and on-deck service provision will co-exist in the medium term 10. Carriers and other players can drive take-up of MME services by focusing on end-user needs and personalizing the MME experience 11. Document map Introduction and scope 12. This report offers a detailed analysis of the complex value chains and pricing models prevalent in the US MME market 13. This report classifies MME services into 10 categories that comprise more than 20 different service types 14. Document map State of the market and key players 15. Wireless data was the sole driver of ARPU growth in the US during the past year, and business applications are growing faster than MME services 16. Data ARPU is growing faster in the US than in Western Europe, and non-sms data s share of total ARPU is increasing 17. Several factors are inhibiting the development of the US MME market, despite the growth in data services revenue 18. Technology issues are constraining the market, but many will be addressed in the next six months 19. Carriers are focusing on MME offerings because of their mass-market appeal, but business models continue to be unclear for many services 20. The critical questions for the development of the US market are: when and how will it open up to off-deck MME offerings? 21. Most market players operate across multiple sections of the MME value chain 22. Apple, Google and Nokia are attempting to wrest control of the MME business model from carriers 23. The US MME market will change significantly in the medium term as business models become clearer 24. Document map Value chains by service category 25. Value chains by service category: Music 26. Mobile music is the most significant part of the MME market after personalization, but its business model is still evolving 27. Carriers are gradually moving away from operating in all areas of the mobile music value chain, while maintaining relationships with labels and artists 28. The mobile music value chain varies according to the artist, carrier, music label and the music product

3 3 Contents [2] Contents 29. The mobile music proposition plays a critical role in music labels plans, but ringtones are the primary source of revenue at present 30. The online music market and itunes rapid growth are influencing the development of the mobile music business model in the US 31. Alternative mobile music business models include subscription-based, over-the-air music rental, and handset vendor-subsidized music services 32. Several factors will have a significant impact on the mobile music value chain 33. Key inhibitors to the growth of mobile music in the US remain, but some will be addressed by simplified service offerings and pricing 34. Value chains by service category: TV and video 35. Adoption of mobile TV and video services is progressing slowly in the US MME market 36. US carriers will find it difficult to differentiate their TV offerings as long as Qualcomm s MediaFLO is the only broadcast option 37. Technology plays an important role in shaping the market for mobile TV, but the user experience will drive growth 38. The mobile TV value chain is complex: the number of players and content producers demands help keep enduser prices high 39. All of the major networks and media companies are considering the mobile TV market, but few expect it to generate significant revenue 40. Alternative mobile TV and VoD business models include three-screen content packages and advertising-subsidized programming 41. Broadcast TV will continue to offer the best user experience, but streamed offerings can succeed in parallel 42. Value chains by service category: Games 43. Mobile gaming is a well established segment of the US MME market 44. Carrier decks continue to be the critical point in the mobile games distribution channel, so carriers have significant power in the value chain 45. Handset manufacturers play a much larger role in the mobile games value chain than they do in other MME service markets 46. The mobile games market is becoming more important to online and console games developers, but mobile-specific developers are also succeeding 47. Prime placement on the carrier deck continues to be the most effective distribution point for mobile games

4 4 Contents [3] Contents 48. Social networking, community opportunities and advertising will influence the development of the mobile games value chain 49. Value chains by service category: Social networking and UGC 50. Social networking and UGC are a natural match for MME services, but where is the money? 51. Carriers want to take advantage of the leading social networking sites strong brands and sticky subscriber relationships 52. The value chain for social networking and UGC depends more heavily on advertising than do business models for other MME services 53. Players from other parts of the value chain, such as handset vendors and consumer brands, are also offering and partnering with mobile social networks 54. Some carriers aim to drive the UGC market by paying subscribers to create and post content, and charging other users for downloading it 55. Carriers should view social networking and UGC as a critical component of the consumer offering, but not necessarily as a major source of revenue 56. Value chains by service category: Adult content 57. Mobile adult content is still a small business in the US, and carriers reluctance to participate in its value chain inhibits market growth 58. Cultural resistance to mass marketing of adult content may make it impossible for US carriers to offer adult content directly 59. Adult-content providers are encouraging US carriers to adopt the UK model of content classification and age verification 60. Content providers and intermediaries will be best placed to maximize revenue in the value chain for mobile adult content 61. Value chains by service category: Personalization 62. Mobile personalization is the most mature segment and the highest revenue generator in the US MME market, and carriers are struggling to drive growth 63. US carriers employ a variety of strategies in offering personalization content, and face direct competition and price pressure from off-deck providers 64. The mobile personalization content value chain is relatively straightforward, but revenue is shifting away from carriers as off-deck provision grows 65. Personalization content offerings are a natural match for social networking and UGC initiatives

5 5 Contents [4] Contents 66. The personalization services value chain is unlikely to change in the medium term, but more players will enter the market 67. Document map Services pricing model analysis 68. US carrier pricing of data services and MME content and applications is often overly complex and poorly presented to potential customers 69. Most carriers offer flat-rate data plans, but these have not had the anticipated positive impact on MME market growth 70. US carriers data plans differ dramatically in terms of price and structure, which makes them difficult for end users to assess 71. The pricing models for digital music services are still evolving, but price pressure from online services is an influential factor 72. Pricing for mobile broadcast and streamed video continues to be high, considering the limited quality and range of services on offer 73. Pricing models for games are more mature than those for other MME services 74. Some carriers charge monthly fees for social networking services, but other methods of generating revenue may be more successful 75. Carriers need to simplify data and content pricing to provide transparency and encourage usage 76. Document map Mobile advertising in the MME value chain 77. Advertising will be a significant source of revenue for some MME services, and will provide the primary funding in some cases 78. The value that operators bring to the MME value chain is the ability to help advertisers offer personalized, locationspecific advertising 79. Mobile advertising is in the early stages of development in the US, where carriers and their partners are focusing on banners and sponsored search links 80. Advertising has attracted attention from a wide variety of players because of its potential as a revenue source and beneficiary of the MME proposition 81. Mobile advertising holds little appeal for US subscribers, but early evidence from reward-based advertising programs is positive 82. Virgin Mobile s reward-driven Sugar Mama service is one of the most innovative advertising-subsidized mobile businesses 83. As the mobile advertising market develops in the US, operators will play a key role in protecting privacy and the provision of subscriber information

6 6 Contents Contents [5] 84. Document map Actions 85. Actions [1] 86. Actions [2] 87. Actions [3] 88. Document map Authors, copyright and glossary 89. Authors 90. Acknowledgements 91. Copyright and disclaimer 92. Glossary of terms [1] 93. Glossary of terms [2] 94. Document map List of figures and tables 95. List of figures and tables 96. List of figures and tables (continued) 97. Document map About Analysys reports and services 98. Reports from Analysys Research 99. Market intelligence services from Analysys Research 100. Custom Research from Analysys Research 101. Analysys Consulting

7 95 List of figures and tables List of figures and tables Figure 1: Voice and data revenue in the US, Figure 2: Data ARPU as a percentage of total ARPU for selected operators, 2Q 2006 and 2Q 2007 Figure 3: The evolution of operator approaches to MME service provision Figure 4a b: The on-deck and off-deck mobile music value chains in the US Figure 5a b: The broadcast and streamed mobile TV and video value chains in the US Figure 6a b: The on-deck and off-deck mobile game value chains in the US Figure 7: The mobile social networking and UGC value chain in the US Figure 8a b: The on-deck and off-deck mobile personalization value chains in the US Figure 9: The mobile advertising value chain in the US Figure 10: Free voice minutes awarded by Virgin Mobile USA as part of its Sugar Mama campaign, June 2006 September 2007 Table 1: Table 2: Table 3: Table 4: Table 5: Table 6: Classification of the MME market by category and service type Market player positioning in the MME value chain Apple, Google and Nokia s MME value-chain strategies Mobile music content provision models in the US Mobile TV and VoD content provision models in the US Mobile game service provision models in the US

8 96 List of figures and tables List of figures and tables (continued) Table 7: Mobile social networking service provision models in the US Table 8: Mobile adult content provision models in the US Table 9: Mobile personalization service provision models in the US Table 10: Major mobile operators flat-rate and per-kb data service pricing in the US Table 11: Major mobile operators music service pricing in the US Table 12: Major mobile operators TV and VoD service pricing in the US Table 13: Major mobile operators game service pricing in the US Table 14: Major mobile operators social networking service and UGC application pricing in the US Table 15: Importance of advertising to MME revenue by service type Table 16: Significant acquisitions in the US mobile advertising market,

9 97 Document map Document map: About Analysys reports and services Executive summary Introduction and scope State of the market and key players Value chains by service category Services pricing model analysis Mobile advertising in the MME value chain Actions Authors, copyright and glossary List of figures and tables About Analysys reports and services

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