Why is everybody in wireless chasing the youth demographic? To steal a line from bank robber Eddie Sutton, that’s where the money is.
Today’s average 10-year-old will spend nearly $30,000 on wireless services over the course of his lifetime, according to new figures from Wireless World Forum. And more than half of that allotment will be spent before the user’s thirty-fifth birthday, the group’s 2006 mobileYouth study reports.
“The mobile industry may not have realized it yet, but this 25-year window is effectively the window of mobile opportunity,” the market research firm claimed. “Early teens are not economically significant for mobile providers (in terms of immediate revenues) but possess the highest potential lifetime market value, so establishing credibility with this consumer segment is crucial for long-term success.”
But companies looking to establish long-term relationships with young consumers shouldn’t push expensive content or flashy, next-generation technology. Instead-surprisingly-the report suggests targeting not early adopters, but everyday users by offering affordable services and practical, community-based applications.
The U.S. market for mobile virtual network operators-while still in its infancy-seems to support those findings. High-profile, content-focused MVNOs such as Helio L.L.C., Mobile ESPN L.L.C. and Amp’d Mobile Inc. have failed to gain traction, according to a recent study from Strategy Analytics, while less flashy offerings from TracFone Wireless Inc., Virgin Mobile USA L.L.C. and Boost Mobile L.L.C. have steadily, if sometimes quietly, gained market share.
“The new wave of MVNOs has failed to learn lessons from its predecessors,” Strategy Analytics analyst Sara Harris said earlier this month. “Most MVNOs seem to have forgotten to recognize the digital youth segment’s preference for prepaid service when planning these product, promotion and distribution strategies.”
One that has listened is Amp’d Mobile, which recently launched a prepaid service to go along with its original postpaid offering.
Analysts expect such trends to become even clearer as new mobile services come to market. Young users are often cited as the most likely consumers of mobile video, for instance, but are more likely to embrace community-based applications such as text and instant messaging.
Even youth-targeted offerings such as full-track download services or mobile games should include a community component, giving users a reason to opt for wireless over PC-based services. Not only do such features take advantage of the phone’s connectivity, they can be integrated easily and inexpensively. And they usually don’t require expensive phones with high-tech bells and whistles.
“Rather than being a handset, a games console, technology or a gadget, think about the mobile phone as a tool to facilitate social interaction,” WWF’s study urges. “For youth, the mobile phone is a tool to connect, to express, reinforce and make new friendships.”
And content owners from outside the wireless industry will need help building offerings for mobile users or risk decreasing revenues from other platforms. Youth spending on wireless services will surpass $100 billion in 2006, the market research firm predicts, but much of that spending will be siphoned from other entertainment industries.
Of course, marketing to users between the ages of 10 and 25 is nearly impossible. While tweens may appreciate branded content from Disney, teens and young adults will seek out edgier offerings such as video clips from “South Park” or ringtones from 50 Cent.
To build brands and applications that resonate, then, operators and developers will need to either lure users with their own offerings or partner with recognized brands from outside wireless to bring new services to market. Those that find success with youngsters will reap the benefits as those users enter adulthood; those that don’t many not survive.
“Through failing to capture the hearts and minds of young consumers by delivering relevant products based on social benefit, the mobile industry is in danger of losing its long-term position with its customers,” according to the WWF report. “The popularity of (the) iPod, the launch of [PlayStation Portable] and the growing relevance of social networking services such as MySpace online all provide long-term opportunities for partnership and threats of significant revenue displacement.” RCR
