LAS VEGAS-Wireless operators will need to establish new business models to address the growing market of off-deck content. And they’ll likely have to take a smaller piece of the pie.
Poorly managed relationships with content providers, a lack of quality customer care and complicated refund policies may be costing carriers millions, according to a new report commissioned by digital commerce software developer Qpass. The survey, conducted by research firm iGR, found that operators are losing more than 50 cents per transaction but are sometimes unaware of such losses.
“In the beginning, the directive for off-portal was simple-get the content into the subscribers’ hands as fast as possible,” iGR founder Iain Gillott said. “But as the market for off-portal content evolves and matures, the goal is proving insufficient. We’ve got to change the way that the mobile space conducts its off-portal business by incorporating a viable business model that utilizes the most effective tools and intelligent financial systems available.”
Failed off-deck transactions often result in a call to operators’ customer-service departments, according to the report, costing more than $2 per minute. And carriers often offer refunds or credits to resolve the situation despite an inability to reverse the charges back to content providers.
But that may not be the most pressing issue facing operators when it comes to the off-deck content market. The ever-increasing number of media companies and other big brands looking to go directly to consumers with ringtones, images and other wireless content is likely to force carriers to take lesser revenue shares.
“Brands will want to see more of the revenue split,” M:Metrics Senior Analyst Seamus McAteer said during a Mecca panel last Tuesday at CTIA Wireless 2006. “(Operators) are going to have to give up a little bit…. I can see them giving up maybe 15 percent.”
McAteer cited the success of NTT DoCoMo Inc.’s generous splits with content providers.
Ted Cohen echoed McAteer’s thoughts during the session. The senior vice president of digital development and distribution for EMI said a restructured revenue-model could motivate content providers to create compelling wares.
“We have to move from repurposing content to creating content” specifically for mobile devices, Cohen said. “The challenge over here is that the splits don’t leave room” for developers to invest in creating compelling offerings.
