u.s. on-deck premium mobile content markets – past, present and the future

U.S. On-deck Premium Mobile Content Markets – Past, Present and the Future

Vikrant Gandhi

Senior Analyst

Mobile & Wireless Communications

June 24, 2010

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Focus Points/Agenda

•Overview of the U.S. Mobile Communications Market

•Important Pillars of Mobile Data

•Mobile Content Market Segmentation – On-deck, Off-deck

•On-deck Premium Mobile Content Categories

•Global vs. North American Mobile Device Forecasts

•Smartphone Application Downloads and Revenues

•On-deck Mobile Content Opportunity – what we said and what actually happened!

•On-deck Mobile Content Market – A General Value Chain

•U.S. On-deck Premium Mobile Content Market Opportunity – Revenue Forecasts

•U.S. Operators Data Revenue Split

•Mobile Data Traffic from Streaming Video, Streaming Audio and Mobile Internet

•Conclusions

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U.S. Mobile Communication Markets – Subscribers, Voice Revenues, Data Revenues

U.S. mobile subscribers (connections) expected to exceed 300 million within the next three years.

Wireless will become the prime data connectivity medium for multiple households which will drive penetration of more than 100 percent.

Data revenues currently contribute more than 30 percent to total service revenues.

By 2015, non-voice revenues will likely approach the 50 percent mark and could by some estimates become greater than voice revenues in the next six or seven years.

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Three Important Pillars of Mobile Data Services

Mobile Data Services

Mobile Messaging

-Primarily SMS and MMS based services

-Done al-a-carte or as part of a data plan

Mobile Content/Apps

-Consumer and Enterprise applications

- Generally offered on a premium basis

Mobile Data Plans & Others

-Specific or Bundled data plans

- Deliver max ‘value’ to consumers

Mobile messaging and messaging-based services, premium mobile content and applications, and mobile data plans (messaging, mobile Internet,

unlimited-everything, etc.) are the three important revenue generators.

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Mobile Content Market Segmentation – On-deck, Off-deck

Premium Mobile Content

On-deck Off-deck

Suite of mobile content and web services mostly targeting feature phones and offered by the mobile operator.

Operators retain greater control over content catalog, content presentation, billing, and other parameters.

Examples include Verizon Wireless Media Store, AT&T AppCenter, Sprint Digital Lounge, T-Mobile Web2Go.

Suite of mobile content and web services targeting both feature phones and smart phones offered independently of the mobile operator.

Off-deck content providers or stakeholders responsible for content, billing, customer care.

Growth in this space currently driven by Smartphone app stores. A strong off-deck program also exists for feature phones.

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On-deck Premium Mobile Content Categories

Frost & Sullivan considers mobile music, mobile games, mobile graphics, mobile video services and mobile informational services as part of the premium mobile content market.

Premium Mobile Downloadable Content and Applications

Mobile

Music•Ringtones

•Ringback Tones

• Full-track Downloads

•Mobile Music Streaming, others

Mobile

Games•Downloadable (BREW, Java, Others)

•WAP-based

•Messaging-based

Mobile

Graphics•Screensavers

•Wallpapers

Mobile Video

•Streaming

•Downloads

•Multicast

Informational Services & Others

•Sports/News/Financial

•POI/Navigational

•Weather

•Traffic

•Others

Services

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Global vs. North American Mobile Device Forecasts

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Smartphone Application Downloads and Revenues (off-deck)

Global Smartphone Application Downloads

Global Smartphone Application Revenues

iPhone and Android willbe the Leading Platforms

Smartphone application downloads are expected to increase from around 2.5 billion in 2009 to more than 16.0 billion by 2015

Smartphone application revenues are expected to increase from approx. $ 1.9 billion in 2009 to more than $9.8 billion by 2015

iPhone and Android are expected to remain the main contributors to the Smartphone opportunity with an estimated market share of around 40 and 50 percent respectively.

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On-deck Mobile Content Opportunity – what we said and what actually happened!

2008 2010

On-deck is clearly the leader in the U.S. mobile content markets. Emergence of newer types of app stores has the potential to change this equation significantly.

Mobile operators have accepted the potential of such marketplaces to drive data revenues and are willing to even add value to the overall customer experience.

Entry/expected entry of heavyweights such as Apple, Google, Microsoft, Nokia, Palm and others will help stimulate growth in content, mobile advertising, greater data traffic and benefit the entire ecosystem.

Noticeable slowdown in on-deck premium mobile content markets due to the combination of the ‘economy’ and the ‘Smartphone’ factors.

Besides making high-speed data and next-generation devices available to their subscriber base, operators are also working to expand their portfolio of Smartphone applications and services.

Uptake of mobile applications, mobile web, mobile advertising and mobile financial services driven by improved devices and networks. Operators benefit from increased data revenues.

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On-deck Mobile Content Market – A General Value Chain

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U.S. On-deck Premium Mobile Content Market Opportunity

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U.S. Operators Data Revenue Split


Mobile Messaging

-Primarily SMSand MMS based services


Mobile Content/ Apps







Mobile Messaging

-Primarily SMSand MMS based services


Mobile Content/ Apps






By 2015, Data plans

(standalone or bundled) & Others are likely to

contribute more than 75 % to

total operator

data revenues.

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Mobile Data Traffic from Streaming Video, Streaming Audio and Mobile Internet

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Conclusions

N487-65

The U.S. On-deck premium mobile content market is currently witnessing a slowdown due to the ‘Smartphone’ and the ‘Economy’ Factors.

It is only a matter of time before mobile operators offer a significant catalog of Smartphone applications (where possible) inline with the increasing Smartphone penetration in their subscriber base.

Certain assets are unique to an operator (ex- Ringback tones), operator billing, others. These assets will help operators compete in this market and differentiate their services.

A reduced on-deck premium mobile content opportunity need not translate into reduced operator non-voice revenues – adoption of data plans for mobile phones and other connected devices is expected to grow significantly in the forecast period.

Premium mobile content services are increasingly being offered as part of a bundled data plan. Adoption of mobile content and service( and data traffic generated as a result) is increasing dramatically.

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Next Steps

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For Additional Information

Jake WengroffCorporate CommunicationsInformation & Communications Technologies(210) [email protected]

Craig HaysSales ManagerInformation & Communications Technologies(210) [email protected]

Brent IadarolaGlobal Research DirectorMobile & Wireless Communications(210) [email protected]

u.s. on-deck premium mobile content markets – past, present and the future

Technology