The torch has been passed: Mobile data traffic now surpasses voice and it will continue to grow indefinitely. As a consequence, operators need to find ways to not only support this new wave of traffic, but also profit from it as well. Content delivery platforms (CDPs) can help.
Yankee Group defines CDPs as software used to bring content from its origin, through the network and to the end-user to create the best content viewing experience for the consumer. But CDPs don’t just make content easily accessible for subscribers; they can also help operators leverage advantages networks already have to create services and generate new revenue streams.
Data is now king
CDPs are increasingly on operator’s radar screens now that mobile data traffic is on the rise. While data still trails voice when it comes to total revenue, it is making up ground in the percentage of total mobile revenue versus voice.
Yankee Group predicts total annual mobile data revenue will grow by close to $60 million from 2009 to 2013. While that won’t surpass voice revenue, the real growth story is in data’s continuing percentage share gains of total mobile revenue (versus voice). In 2005, mobile data made up less than 15% of total mobile revenue. However, in 2013, when Yankee Group forecasts total mobile phone revenue to reach over $1 billion annually, data revenue will represent over a quarter of the returns. Voice may continue to bring in the majority of revenue, but it will gradually lose ground to data. The traffic figures for data will only keep growing, requiring more attention from vendors and operators.
Show me the money
Unfortunately, operators are not seeing massive revenue increases to go along with such high traffic and usage. Operators are charging subscribers for data plans, but the data is becoming more dynamic without the plan charges following suit. Since consumers are accustomed to getting these services at the current rates, any significant price increases will certainly be met with disapproval and will run the risk of driving customers away, which is not an option for operators.
Instead, operators must begin to embrace ideas and solutions beyond their antiquated (for lack of a better term) business models when it comes to content delivery. They need to leverage the intimate knowledge of their network and customers to pursue the following opportunities:
• Leverage subscriber data to enable targeted advertising. Operators should open themselves up to the idea of sharing subscriber information for targeted advertising, which could be quite a profitable venture. Agencies are always looking for ways to reach the exact consumer they’re looking for, and operators have the power to guide them to the right eyeballs.
• Use that same data to personalize content for end-users. With more data, people will be able to find more specific content related to their interests. Operators should look to use their detailed subscriber information to enhance the end-user experience for content viewing on their mobile phones.
• Deploy creative advertising throughout the network. Operators are not tied down to the same specific advertising placement regulations as broadcast TV stations, where ads only pop up every 10 minutes, so they can be more creative about where they place their advertising. This creativity can lead to new revenue streams from places not considered in previous business models.
• Offer dynamic pricing and prepaid alternatives. Charges could be different for time of day or length of usage, or consumers could buy different packages depending on the amount of data they expect to use in a given time.
• Capitalize on social media. The growth of YouTube, Facebook, Twitter and similar sites underscores how people are continually finding new ways to express themselves to the world. Operators should look to capitalize on this market by making it as easy as possible for their customers to upload their own content to various social media sites.
If operators are going to use these opportunities effectively, however, they need a better platform. And that’s where CDPs come in.
The CDP difference
CDPs enable operators to improve their strategy for content delivery by providing a better consumer experience, and they also aid operators in unlocking assets such as subscriber data.
CDPs capture, organize and deliver content from the origin to the consumer, which is the definitive leverage point for operators. Obviously, operators’ main concerns are keeping their network running smoothly and keeping latency as low as possible. A sluggish network puts operators in danger of not only losing existing customers (due to sub-optimal end-user experience), but also gaining a poor reputation, which hurts the prospects of gaining future customers. Since these concerns are directly tied to revenue, operators must ensure they alleviate or stop heavy traffic situations before they occur.
CDP spending will surpass $4 billion by 2013
Yankee Group believes operators will respond to rising mobile data traffic levels by pursuing new revenue-generating opportunities and implementing CDPs. In fact, Yankee Group forecasts global spending on CDPs will exceed $3 billion in 2010 and will push beyond $4 billion in 2013. We predict Asia-Pacific will be the leading region for CDP spending in 2010, but EMEA will surpass Asia-Pacific in 2011 and continue to spend the most of any region going forward. Latin America, however, is predicted to grow the fastest, with a CAGR of 22 percent through 2013.
CDP choices abound
Who can operators turn to for their CDP needs? Several vendors have made savvy acquisitions that position them well, and with such a wide range of options, operators can now pick and choose the CDP that suit them best. For example:
• Amdocs acquired JacobsRimell, ChangingWorlds and jNetX. Amdocs’ 2008 acquisition of JacobsRimell strengthened its OSS offering, making Amdocs the only vendor at the time to provide an order-to-cash solution encompassing all customer experience systems. With ChangingWorlds, Amdocs gained key mobile personalization and intelligent portal capabilities, enabling operators that partner with Amdocs to enhance their mobile portal navigation, mobile advertising and also provide better content search and recommendations for subscribers. Finally, Amdocs acquired service delivery platform jNetX, considered an industry-leading offering, to further expand its position in the marketplace.
• Ericsson acquired Drutt, Mobeon and SinglePoint. In 2007, Ericsson acquired Drutt, a leading content-enabling technology and service delivery platform maker. Mobeon, a leading provider of IP-messaging components for mobile and fixed networks, further strengthened Ericsson’s content delivery capabilities, while also supplying IP-based voice and video mail. Ericsson made its most recent acquisition, SinglePoint, to gain a strategic operator with strong aggregation contract assets. The move not only expanded Ericsson’s messaging reach in the U.S., but it also took the company to Common Short Code Administration Tier 1 status.
• Motricity acquired InfoSpaces’s Mobile Business Service unit and GoldPocket. Motricity’s acquisition of the Mobile Business Service unit of InfoSpace expanded Motricity’s technology offering to include the mCore Platform, as well as its customer base to include four of the top 10 global wireless carriers based on total wireless data revenue: Verizon Wireless, AT&T, Sprint and T-Mobile USA. Motricity can now provide managed services infrastructure for mobile operators, including services like mobile search, storefronts, portals and messaging services. Motricity also acquired GoldPocket, a marketing solutions company for media and entertainment companies that specializes in mobile interact
ivity. The purchase enables Motricity to offer a very attractive marketing/advertising solution that includes the possibility of targeted advertising. GoldPocket also lets media companies deliver and bill consumers for content through operators.
• Wmode acquired ProvisionX. Wmode acquired ProvisionX, a mobile gaming delivery platform with sourcing, management and delivery solutions, from Glu Mobile in 2007. Adding the strengths of ProvisionX will allow Wmode to confidently handle the impending increase in mobile gaming traffic.
• RealNetworks acquired Sony NetServices, WiderThan, Game Trust and Trymedia. Looking to improve its hold in the mobile content market and to expand its mobile media solutions in Europe, RealNetworks acquired Sony NetServices, which provides digital music services to mobile operators in eight European countries. It also struck a similar deal with WiderThan, a mobile entertainment solutions provider, in an effort to strengthen its position in Korea. Finally, RealNetworks built its RealGames offering via its acquisition of Game Trust and Trymedia. Game Trust’s Game Frame platform provides software for community, affinity and commerce models in online gaming. Trymedia, which specializes in syndicated gaming, offers solutions enabling portals, online retailers and game developers to offer PC games through physical and digital channels—all while maximizing revenue throughout the process.
Meeting the challenge
With data traffic climbing every year, operators are being forced to revamp their previous business models and focus more on content delivery. The overall content viewing experience is very important to subscribers; to keep churn levels low, operators must invest in tools—like CDPs—that provide easy and high-quality content viewing experiences across their networks while also presenting them with new, innovative revenue-generating opportunities.
Terry Cudmore is an analyst with Yankee Group’s Anywhere Network team. He focuses on network-based media/content delivery systems and is helping to drive the firm’s research in Anywhere media business models.
