An overlooked and potentially huge segment of the mobile-phone market is eagerly following the exploits of Britney Spears and the Backstreet Boys. This segment watches PG-13 movies and, in general, must be dragged kicking and screaming to middle and high school.
This segment is the teen market, and, according to a newly released study, it could be a gold mine for market savvy wireless carriers.
According to the Yankee Group study, the youth and teen market has been largely overlooked by the nation’s wireless carriers, which are more intent on marketing to travelers and young professionals. This isn’t where the mother lode lies, the report says.
“These user bases are very highly penetrated and do not offer the expansion opportunities in terms of net adds or additional ARPU (average revenue per unit) that carriers are looking for,” said Knox Bricken, an analyst with The Yankee Group’s wireless mobile services division and author of the report.
Instead, carriers need to turn their attention to, like, a cooler-and more profitable-market segment.
The teen market offers “opportunities for the carriers for both the growth and the lifetime profitability perspectives and are where The Yankee Group believes that the wireless carriers should focus their expansionary efforts,” Bricken said.
Passing notes in class could be replaced by short message services; the latest Britney gossip could be gleaned from the wireless Internet; and the mobile phone could replace the scooter-or whatever the new hip thing is-as the must-have teen fashion accessory. Carriers could reap the benefits of, well, being cool.
“Children and teens have a need to feel as if they belong-wireless devices can enable this need,” Bricken said. “Wireless devices allow teens to stay in touch with their friends and family members on a constant basis. In addition, as the teen market becomes more penetrated, the need to have a wireless phone and be like one’s friends becomes an increasing driver of wireless penetration rates among the youth market.”
And while it may seem strange to market a $20- to $50-a-month service to a group who traditionally relies on a parental allowance for spending money, there is a profit to be made, The Yankee Group states.
“Market estimates conclude that the youth market will spend more than $170 billion and influence even a greater spending amount of total household spending potential for next year,” Bricken said.
According to The Yankee Group’s 1999 mobile user survey, 25 percent of 10- to 19-year-old respondents owned a mobile phone.
“We predict that wireless phone use among this age group will grow to 35 percent by the year 2001, and continue to grow even more rapidly in the years to follow, with wireless penetration reaching 68 percent in the youth/teen population, and surpassing total market penetration levels by the year 2005,” Bricken said.
However, in order to tap into this market carriers are going to have to change their attitudes.
“Wireless operators must alter not only their marketing approach but their entire product suite to cater to the youth market,” Bricken said. “If your phone or your service is seen as cool among this user group, then the selling process is much easier. However, if for some reason this group turns on you, the sale process becomes extremely difficult quickly.”
Which is potentially bad news for Jamie Lee Curtis. But carriers will not only benefit from increased airtime usage-with teens tenaciously chatting with one another-they’ll also gain revenues from traditionally underused services such as SMS and the wireless Internet.
“Experiences in Europe have led carriers to believe there will be a tremendous opportunity for growth in this area,” Bricken said.
The explosion of SMS in Europe is largely due to the teen market, Bricken said. But this isn’t because European teens are smarter or have better phones-it’s because the carriers advertised the service.
“Carriers have not done a good job of marketing the messaging and instant messaging and SMS services and capabilities that are available to teens” in the United States, Bricken said. Once this changes, the teen market will rapidly drive up not only SMS usage but a wide variety of other types of wireless services, including wireless games and enhanced services.
“We believe these applications will drive about $1.2 billion in revenue by the year 2005,” Bricken said, a number which accounts for the entire wireless entertainment value chain.
“This user group is very interested in trying new things,” she said.
