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Ovum comments on KPMG surveyKPMG's latest survey on mobile phone users' willingness to pay for mobile content services reveals that most users are reluctant to pay a premium for wireless content. The company surveyed 3,600 users and found that 40% were unwilling to pay a premium on their current bill in order to receive multimedia services. This attitude was particularly prevalent in Asia, where wireless content uptake has a 1-2 year lead on Europe and the US. Ovum Comment: It was bound to happen sooner or later. Over the last few years, numerous end-user surveys have asserted that we are willing to pay a premium for all sorts of wireless content services, the latest 'beneficiary' of our largesse being mobile TV. Now it seems the tide has turned. But does this survey result really indicate a fundamental change in the prospects for the wireless content market? It is not surprising that the survey reveals that 40% are unwilling to pay a 'premium'. We will only pay a 'premium' for mobility if there is a clear value associated with it. The value of mobile access for many content services is not always so clear. But there is value. We believe that there is demand for the new wireless content services, and that users will be willing to pay something for it. Ovum's latest forecast for Western Europe show that total wireless services revenues will grow 13% to $193bn in 2010. Voice revenues decline by 4% over the forecast period, but data revenues grow by a very healthy 78% to reach over $52bn, and reach 27% of total revenues. Admittedly, around 65% of data revenues still come from messaging, but there is also good growth from content services. Of course, it will be challenging for wireless operators to build a substantial content-based business. Not all will be successful in selling wireless content. Some will be able to adopt a business model based on a large share of content revenues. Others will focus on making their money from the network traffic generated by content consumption. Advanced multimedia services such as full-track download and video services move the wireless operator out of the "ringtone comfort zone", where there are no direct substitutes, and into competing head-to-head with online content service providers as well as traditional retailers. On price, as they are already finding with full-track download, users will be very reluctant to pay a 'mobile premium' over online music-download charges. Instead, wireless operators will need to add value by providing the mobile element of converged fixed/mobile content offerings. And we totally agree that wireless operators need to look towards new business models to boost their revenues going forward. They are too heavily dependent on end-user revenues. They need to pay closer attention to some of their counterparts in the internet and media industries, whose business has always been financed mainly by advertising. |
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