New Business

Some time ago I have founded company and past half a year I was 200% busy with its development. It works :-) It is really interesting.

I believe I will manage to continue this blog as my primary area of interest is still Mobile communications. But now I'm interested in more entertainment of mobiles. My company DENIVIP Media is TV everywhere oriented - we develop TV portals for Internet/Mobiles/TV STB. We are focused on all needs of complex interactive portals, especially TV portals:

• Web development (video players, CMS, Flash Media Servers clusters, etc)
• Web analytics
• Content Delivery Networks

Feel free to contact me and discuss our experience. Probably we could be interesting for you ;-)

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.

Mobile Video in Russia

Mobile Video is one of the main nowadays trends in Mobile Communications. Video is one of the most important growth drivers for broadband networks. That's why almost all operators are trying to launch content projects - to generate demand for the traffic and attract subscriber to entertainment on MNO portal.

Mobile Video projects are launched almost in all big MNOs worldwide. It is one of the most entertaining parts of the mobile portal.

Mobile TV offering from Marketing point of view

Typical mobile video services are:

Mobile Video channels - standard live video channels. Often they are packaged in basic pack and premium pack. Standard rule is to have simple sport, news, kids, music and entertainment channels in basic package. Special upgrade to premium package could give more channels: more interesting music channels and of course adult.

Another way was chosen by T-Mobile UK where TV packages are formed on content type basis: News&Sports, Entertainment, Music - all of them having same price.

It should be mentioned that live channels should be selected for Mobile TV based on their content - it should be short running and often rotating. There shouldn't be long stories, movies because it is hard to watch 1 hour and a half TV programme on a small screen. Short TV episodes are popular because people are able to spend several free minutes effectively.
In order to maintain profitability MNO could limit maximum viewing time.

The most common way of selling Mobile TV service is to couple it with unlimited broadband package in order to make subscriber confident in his spendings.

Mobile VOD - the best way is having a lot of from 3 minutes till 10 minutes video clips. VOD content for mobiles often has similiar structure: adult, sport, music, UGC. Key to success here is high level of rotation content on portal (weekly or even daily) in order to attract subscribers to visit it as often as possible. Another thing is that portal shouldn't contain many items in every category because it becomes hard to navigate them. Price is often made per click or as packages for unlimited access (may be with some limitations - no more than 50 items per month). To sum up: the key to success is to keep it simple.

UGC virtual channels - it becomes popular to create UGC channels. UGC content published on operators portal could be collected into one live channel and presented to subscribers.

I'd like to point out requirement to deploy business analytics as initial part of Mobile TV in order to be able to develop marketing strategy for the content because content is the key success factor for Mobile TV offering.

Freemium - it is a set of content VOD and maybe even live channels available for free. It is used to get subscribers aware of service and its value.

World experience

Many world analytics and agenices forecast bright future for the service. According to In-Stat research:

Mobile TV subscribers are forecast to reach 42 mln in 2012.

In 2007 there were 6 million Mobile TV subscribers.

$5 billion revenue from Mobile TV in 2012.

So, I believe it worth deploying such a service in MNO network.

According to Ericsson typical usage of Mobile TV is 3-35 minutes per day and 30-40% of sessions last less than 5 minutes.

Several links on European deployments:

T-Mobile UK

Three UK

Situation in Russia

Megafon launched its Mobile TV in 2004 first among all MNOs. Currently its Mobile TV subscribers base is estimated at 100k with price at 240 rubles. Service based on wap portal (without branded player) and lacks of Dynamic Bitrate Adaptation. Absence of DBRA causes continuous bufferings in EDGE networks. As it was mentioned before penetration of Mobile TV is really small.

Yota is a mobile WiMax operator. They are offering mobile TV package for free (included in basic Internet subscription). But there is small amount of interesting channels. Wey aiMax technology gives better performance for their TV streams and hence better quality.

Beeline DVB-H based TV. Demonstrated to Russian President Dmitry Medvedev during exhibition service. I don't believe in its development because of high costs of building new radio infrastructure.

MTS launched Omlet project which has mobile version. As it was mentioned before I think MTS has very good strategy of going to the market through the right content. They have right content, they are building attractive portal, users will be interesting in getting access from mobiles.

BWC EDGE based proposal. Built on Huawei solution.
It could be usefull to propose new partnerships to MNOs in video content area because content is a key to success in mobile TV offering. Could Russian MNO develop Italian success story? Or at least USA success? Will see...

Thanks,

Denis.

The era of convergence

It is becoming well known of MNOs trying to achieve convergence. Megafon top managers pointed during their 2008 financial results presentation that all operators are moving to convergent business one or another way. In this post I'll try to describe current situation and trends in Russia related to this theme.
The first global attemp of achieving convergence in Russia was Golden Telecom purchase by Vimpelcom. It is clear (at least for me) that one of main reasons for that was desire to get extra money from owned company. Altimo got approximatelly $1,128 billion income on this deal. Vimpelcom top managers are still concerned with economic effect of this merge, they confirm that it still didn't achieved. During development projects for new services Vimpelcom managers seldom think about convergent effect. At the moment corporate structures continue to merge and the only effect is in the single procurement and problems with areas of interests dividing among managers.But I'm pretty sure that Vimpelcom will manage to build effective mechanism of joint effective business.
MTS approached this theme in more practical way. There is a convergence department and business marketing department that more or less coordinate decisions with Komstar. Today there are a lot of publications and information regarding close merge of MTS and Komstar. Again there is a big desire for this not only because of getting convergence effect but for getting extra money from MTS (AFK Sistema owning Komstar needs extra funds).
Megafon is famous for its inhouse development (as you could see from retail structure development, a lot of development projects) and I think they will make something on their own basis. But during strategy presentation Megafon CEO told that they plan to invest $500 mlns on convergence and maybe we will see aquisition. At the moment Komstar and Megafon discuss buying Synterra.
I'd like to point out new directions for business development after convergence for MNO.
First of all fixed network operators (Komstar and GT) own widespread networks and magisterial licences - it could bring additional cost saving opportunities for MNO. Vimpelcom is already trying to transmit long distance calls through GT networks (frankly speaking it is additional point of failures because GT magisterial channels are not broad and reliable enough).
Second opportunity is in aligned distribution of services (cross sales) - corporate subscribers of fixed operator could be offered with cost savvy proposals from MNO. Thats why in St. Petersburg MTS is partnering with Severo Zapadniy Telecom (SvyazInvest subsidiary in North West region). In case of deep integration and special IT solutions corporate subscribers could be offered with broad range of integrated services like corporate PBX (with mobiles on special short numbers), mobile offices and so on. Homeowners could be offered with single package of broadband Internet, IPTV and mobile services. IPTV is very interesting for MNOs because it could provide content and hence heavy load for 3G networks. It is very nice surprise of mobile Internet popularity despite of hard financial situation but MNO being the tube isn't a dream for "Great Three".
MNO and fixed operator could use single ISP infrastructure for Internet services and offer similiar services in web: web advertising, policy managing, acceleration.
Another significant issue is in integration of fixed operator VoIP infrastructure and MNOs mobility. I belive that soon we will see extremly new proposals on the basis of mobile IP telephony - WiMax competitors continue development and testing of such services - and MNOs will have to make answering proposals.
To sum up: it is good time to offer or at least begin activities for promotion of convergent solutions and new services (MTS continue to invest in new services, there are rumors that GT projects in Vimpelcom still have budgets). Main convergent solutions are:

• WEB advertising (MTS and Vimpelcom have such projects in development)
• WEB policy management
• Internet acceleration
• Mobile PBX
• IP telephony for mobiles
• Three screens solutions (IPTV, WEB TV, Mobile TV)

Thanks,
Denis.

Mobile Advertising in Russia

Dear guests, in this post I'd like to bring Mobile Ads in Russia to light.

Mobile Advertising is not an extremly new idea in telecom world. Significant experience is summarized. There are success stories and big failures. One of the most dedicated to this theme resources is Telco 2.0 initiative with big amount of related articles in their blog. From economic point of view it is very attractive to monetize MNOs Subscriber base which is often very big. 50 mlns Subscribers is more than many TV channels have. This service represents new stream of revenue from media agencies, new market free of competitors now but very attentively looked for.

Foreign experience
Mobile Advertising is a special VAS for insertion of advertisement into channels owned by MNO: SMS/MMS/GPRS,EDGE,3G and so on. The most common ways of advertising are:

• SMS/MMS broadcasted messages with advertisements inside.
• SMS/MMS ad injection in P2P messages.
• WAP/WEB banners insertion - ad injection during Internet surfing.

Response ratio is significantly higher in telecom rather than in standard web advertisements mainly due to very effective targeting not only based on Subscriber profile but on his behaviour too.

The most common parameters of targeting are:

• Demographic
• Behaviour
• Context
• Geographic

List of mobile ad deployments.

• Blyk UK, Orange UK based MVNO with ad sponsored services. 2007. Push SMS, Push MMS, SMS Intercept. Airwide (First Hope). 6 incoming messages per day give 43 minutes of calling and 217 SMS per month.
• Airtel India, Mobile Ad. 2007. Airtel Live!, Push-SMS. Openwave.
• Virgin Mobile USA. Mobile ad campaign SugarMama. 2006. Push SMS, WEB banners.
• China Mobile, Mobile Ad. 2008. WAP banners, Ad insertion into RingBackTone, Weather Forecast ad insertion, Missed Call ad insertion, MMS magazine.
• Wind Greece, Mobile Ad. 2007. Idle screen advertising. Velti.
• Vodafone Italy, Spain, Greece, Czech Republic. Mobile Ad. 2008 Vodafone Live! Banners, P2P SMS Intercept, idle-screen. Amobee.
• TIM Italy, Mobile Ad. 2007. P2P SMS, P2P MMS Intercept, WAP-banners. Mobixell.

Mobile Advertising still represent small amount of income. Operators are trying to find the most effective ways of interaction with Subscribers. Gartner supposes 1% of income of MNOs are related to Mobile Advertising and in 2012 this share should grow up to 2%-7%.

The current moment is very good for mobile advertising because all media agencies and advertisers are looking for new ways of advertising. Mobile advertising is very effective and very cheap same time. World experience tells that it is very significant to give relevant bonuses to Subscribers and perform opt in before feeding them with advertising.

Russian situation
In Russia almost all MNOs are thinking of Mobile Advertising. Megafon has many ad sites and launched several campaigns already. They perform this project on HQ level. Not sure whether it will lead to centralized carrier grade platform deployment but they are evaluating such possibilities. Some projections from Megafon Commercial Director Larisa Tkachuk could be found here.

Beeline is going to start a tender for this project for carrier grade ad platform. They already have good experience in Mobile Advertising (USSD tails in balance reports and several more). I think they will launch something in the end of this year, not sooner. Main problem is absence of even small amount of money in Vimpelcom. But Mobile Advertising is one of projects which could be simply started on revenue sharing basis (at least in the beginning).

MTS launched several ad campaigns too and preparing requirements to production platform. I heard that they are going to start this project in several months. At the moment they have MMS magazine and several more projects. You may find more detailed information here. It is a good time to offer a trial to them, I think.

So, mainstream of Mobile Advertising in Russia is SMS/MMS broadcasts and intercepts, WAP/WEB banners insertion in third party portals. At the end of last year MNOs performed attempt to align forces in this area but nothing serious appeared. Currently problem is not in deploying new system but in discovering huge potential of advertisements - this is extremly new channels and advertisers afraid of investing in a new channel while MNOs afraid of loosing loyalty of its Subscribers. The story just begins. Have a good time watching it and may be participating ;-)

Thanks,
Denis.