Editor’s Note: RCR Wireless News has teamed up with the Yankee Group to conduct a series of market surveys of RCR Wireless News’ subscribers to gauge their thoughts on various technology issues impacting the wireless ecosystem. RCR Wireless News will publish the exclusive results from our joint project, with Yankee Group’s expert analysis, both in print and online at RCRWirelessNews.com.
Those of you who respond to surveys will get an executive study of the survey results and are eligible to win an American Express gift certificate.
Congratulations to last week’s winner, Corey Blanchard, in engineering management at AT&T, and this week’s winner Christine Rills, in marketing at Alltel.
Yankee Group has recently received responses from a joint survey with RCR Wireless News in the spring of 2008. With a sample size of 457, people were asked eight questions about the drivers of mobile content adoption, the payment instruments necessary to fuel future growth, the differences between on-deck and off-deck and the overall market drivers through 2010.
The short answer is you’re bullish about the industry. Twenty-three percent think mobile content will grow 21-30% in 2008, and 21% think the revenues will grow 31-40%.
With all of the talk in the industry about the flattening of mobile content revenues over the next couple of years, it’s interesting to see that 2008 is expected to be such a strong year.
Below is a summary of top-line trends the industry is expecting over the next few years. Full-length music or radio is expected to show the most growth, followed by TV or video clips in both the on-deck and off-deck worlds.
Based on changing market trends, the wider availability of 3G networks and the launch of mobile TV services on both Verizon Wireless and AT&T Mobility, these trends could emerge as the hot growth segments for both on-deck and off-deck services throughout the balance of 2008.
Barriers to adoption for on-deck vs. off-deck
When asked about the barriers to adoption of on-deck purchases vs. off-deck, the results were not surprising.
Consumer awareness, network speeds and the carrier walled garden are viewed as the top three barriers to growth of on-deck mobile content purchases.
However, when asked the same question about off-deck purchases, the top three reasons are consumer awareness, discoverability and the carrier walled garden. It’s strange that network speed is viewed as such an important aspect for on-deck purchases but not off-deck, when completing an off-deck purchase requires additional clicks to access the desired content.
But the fact that consumer awareness, discoverability and the carrier walled garden are viewed as the top barriers to adoption is not surprising. Expecting a consumer to actively search for new content to complete one-off purchases is not always realistic so the importance of off-deck aggregators will become more prevalent and successful in the upcoming years.
The good news is that the consumer demand is viewed as the lowest barrier to adoption and the identified barriers can be fixed. The difficult part of this equation is that it is a time-consuming and difficult process to change the carrier walled garden, the network speed and the consumer awareness of content, whether it be on-deck or off-deck.
Alternative payment channels will dominate by 2010
In today’s environment, purchasing content on a mobile device is typically limited to purchases only made through the carrier bill. That is expected to change, as respondents expect roughly 25% of mobile content purchases to be made through the carrier bill and the balance through some other method of payment. Predominantly due to the crumbling of the carrier walled garden, additional payment methods are expected to dominate the industry in 2010.
Many wireless carriers do not restrict content purchases to the carrier bill, but they do not make it a smooth transaction for the consumer looking to pay by credit card. However, by 2010, these new payment methods will become a reality.
Instead of typing in a 16-digit credit/debit card account number, consumers will also be able to type in the account name and password for a PayPal or Google Checkout account. As the adoption of mobile banking continues to grow, consumers will be able to select the appropriate bank account to purchase the content from a drop-down box. This requires an integrated mobile wallet enabling the consumer to choose the appropriate payment account directly from a single wallet or container. The carrier must enable these additional payment channels. But if they are able to monetize the mobile wallet by controlling the distribution of the wallet, carriers will be able to accept a lower commission percentage for purchases not made through the carrier bill.
So if the RCR Wireless News readers are right, the mobile content industry as we know it today will be drastically different in the next few years.
Revenue growth and consumer demand is expected to be strong with the largest opportunities coming from off-deck purchases through alternative payment methods outside of the carrier walled garden.
But to truly achieve these growth rates and fundamental changes to the business model as we know it today the networks must continue evolve the devices must get into the hands of consumers.