Analysts offer different views on what European mobile industry should do next… 

According to a new analysis from Frost & Sullivan, mobile premium content services are just what operators need, and are just what operators are pursuing, in their collective bid to reverse declining voice/SMS-centric ARPU. But according to Analysys Mason, mobile operators should really stick to their knitting and aim at becoming ‘service enablers’ for the nascent content industries.

In its ‘European Mobile Premium Content Markets’ study Frost & Sullivan probably echoes the majority party line in arguing that, with mobile penetration exceeding 100% in a growing number of Western and Eastern European countries, the regional cell phone industry requires investment in, and commitment to, other services and applications in order to grow effectively. The company reckons mobile premium content services and applications represent a potential source of significant revenues for the mobile industry.

“Content is the new horizon for the European mobile industry,” proposes Frost & Sullivan research analyst Saverio Romeo. “During the last three years, mobile operators have been observing a slow, but continuous decline in the average revenue per user (APRU) due to the decrease of voice and SMS ARPU. New sources of revenues are needed: content is an excellent candidate.”

As you might anticipate, there are some challenges facing this new-ish endeavour. “In order to exploit the variety of revenue-generated business opportunities, the industry has to face some critical challenges,” cautions Romeo. “Consumers will use content on mobile devices if the industry is able to offer high-quality content with an excellent user experience at affordable prices.”

However, Frost & Sullivan is minded that the shift into showbiz and related areas is already happening. The research house estimates that the European market (including revenues from mobile music, mobile games, mobile video/TV and mobile graphics) was worth €2.68bn in 2007 and could reach €11.0bn in 2012.

Showbiz slowbiz?
Not quite so fast argues Analysys Mason in a report announced last month. In ‘Mobile Media and Entertainment in Western Europe: value chains and business models’, Analysys Mason suggests that in the mobile media and entertainment (MME) market, the ‘service enabler’ role appears to hold greater revenue potential for mobile network operators than the role of on-portal content service provider.

“Mobile network operators have focused on becoming successful content service providers during the past five to six years to avoid being marginalised as mere ‘bit pipe’ providers,” points out Yanli Suo-Saunders, lead author of the report. “However, the trend towards unrestricted mobile Internet access, as well as the increasing number of online brands and handset vendors that are entering the mobile market, will pose a significant competitive threat to operators’ portal businesses.”

“Mobile operators are best placed to become service enablers in the content value chain by exploiting their unique assets, which focus on transmission, billing and consumer insight,” adds Mike Grant, co-author of the report. “These assets are essential to the success of content providers in the MME market, and the ‘service enabler’ revenue streams (including traffic, billing and advertising revenue) appear to be the most sustainable for mobile network operators in the long term.”

Other findings from the Analysys Mason report include:
·         the off-portal market accounts for the majority of MME revenue in many Western European countries, and is expected to continue to grow as more major mobile operators adopt flat-rate data plans and an open approach to mobile Internet access
·         handset vendors and established online brands are becoming increasingly significant players in the MME value chain, and pose a competitive threat to mobile operators own-branded content offerings
·         mobile operators will need to closely examine their core assets and identify potential areas for further investment in order to maximise their revenue potential from acting as service enablers
John Williamson