Telcos face threat of evolving mobile content ecosystem: Ovum

Telcos face threat of evolving mobile content ecosystem: Ovum

Says role of MNOs in providing value-added services in emerging markets is unlikely to last

The role of mobile network operators (MNOs) in providing value-added services (VAS) for emerging markets is unlikely to last, according to independent research firm, Ovum.

In its new report, the future of mobile content and apps in emerging markets, it said changing consumption patterns around mobile content and apps means that VAS business models will be disrupted in an environment with 3G and LTE services and smartphones.

Ovum claimed the winning approach to work around that prediction is to leverage assets and adopt a more collaborative approach with developers and original equipment manufacturers (OEMs).

Ovum emerging markets principal analyst, Shiv Putcha, said the biggest driver of change is the rise of affordable smart devices and data access plans, which drive consumers to the mobile Internet and “beyond the walled-garden offerings of the operators”.

“As a result, developers are also shifting away from the MNO orbit as they see greater opportunities through apps stores driven by device OEMs,” he said.

Ovum’s study suggests that instead of attempting to combat these threats by investing in their own app stores and building developer communities themselves, MNOs should instead collaborate with developers and device OEMs in particular segments.

Putcha said the biggest opportunity for operators lies within mobile entertainment services.

“The high costs involved in the purchase of PCs, fixed broadband and gaming consoles will drive less affluent consumers in emerging markets to opt for the mobile device as the primary screen for entertainment, creating an opportunity for telcos to grow their subscriber base with the lure of new content services,” he said.

However, he also mentioned that the MNOs will face monetisation hurdles due to users’ low ability to pay and piracy, especially for content categories such as music.

He proposed they should create effective pricing strategies and offer localised content to make the most of the growing consumption of video, music, and gaming services, as well as engage with emerging market subscribers, offering them access to practical content and services.

“From an MNO perspective, these services and applications will serve to bolster the business case and ROI of improving network coverage and expanding to rural areas, but MNOs will need to tailor services accordingly to maximise the revenue opportunity,” Putcha said.

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