Mobile Content

Mobile content becomes one of the most interesting areas for MNOs. Many MNOs in Russia are considering ways for their portals improvement in order to distribute multimedia content. Initially it was a niche piece of Internet market. At the moment that initial players are leaders in this area but all could change very rapidly as MNOs are invading this market. Fidel.ru and Soundkey at the moment have about 70% of the market. Other players are imobilko.ru, muz.ru, stereokiller.ru.

MTS Omlet was launched about half a year ago and rapidly increases its popularity by massive advertisement and comfortable payment schemes. MTS anounced its big interest in this new area: multimedia content for PC and Mobiles. Mobile Content is one of the biggest trends now and stands among Mobile Advertisement and Mobile Commerce. While Mobile Ads and m-Commerce are still very immature markets, Mobile Content has already achieved senior level of maturity. Hence it gets more interest from MNOs. They have to develop their business and in the current downtime there are no many ways to do that.

Main drivers for Contet market growth:
1. Growing Russian Internet base.
2. Growing erudition and device capabilities awareness.
3. Growing legal content market share and Government pressure in content legalization.
4. MNOs become broadband ISPs and they are interested in getting money not only from access.

I think it is really good time for getting into this business with small investments (the crisis made all thing cheaper) and protect future incomes. It is clear that MNOs income could be increased not from big increase in penetration but from new services (Mobile Internet, Content, Advertisement, Commerce). And this becomes very important strategic task to take place in the markets of new trends in order to be able to have quick win there later.

Recently Megafon anounced it's plans to launch multimedia Content Portal Trava (like Grass). It seems that they chose the similiar to MTS business model. I think we will see interesting competition soon. Beeline is taking a long pause regarding its plans in this area but it seems they simply don't have resources for a new business direction development. Government held SvyazInvest should think about this area too - they have really big Internet subscribers base and many of them are buying content through Internet. Why not to earn that money too?

MNOs and Internet companies are not the only competitors here. The major players in this competition are handset and devices vendors. Just look at Apple iTunes, Nokia OVI store and you will see many more interested in Content business.

So, Internet companies, MNOs, ISPs, Vendors will be developing Content Portals and compete for the End Users. All of them have their pros and cons. Probably, the winner will be some partnered project. It could decrease investments and risks and increase end user value (and hence revenue for parties involved).

Some estimations of this area:
Fidel turnover is $400k in 2008, 2009 estimated at $570k, 2010 estimated at $1 mln
Fidel and Soundkey both have about 70% market share
MTS investments in Omlet are estimated at $5 mlns
Digital content market size is estimated at $2,4 blns (J'Son & Partners)

Additional information (in Russian) could be found in this Vedomosti issue http://www.vedomosti.ru/newspaper/article.shtml?2009/09/01/212300, http://ruformator.ru/news/article05950/default.asp and here http://hostinfo.ru/articles/business/rubric160/1540/.

Thanks,
Denis.