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 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.

Industry exhibition

This week all Telecom industry was in good mood with the help of SvyazExpoCom 2009. Strange and a little bit ugly name but still the oldest telecom exhibition in Russia.

First of all I'd like to mention very tight attention of Government to this exhibition. Russian president attented the exhibition and visited several sites. It brings idea that Government is trying to solve crisis issues by stimulating telecom industry.

One of the most interesting places was pavilion with MNOs: SvyazInvest, MTS, Megafon, Beeline, Tele2.

SvyazInvest had one of the biggest two storey stands. From the early beginning they were visited by very powerfull persons: Medvedev (President), Schegolev (Minister of Communications). Many managers from daughter companies attended this exhibition and could be met at the stand.

MTS stand was joint with AFK Sistema actives. Intellect Telecom, Komstar, Skylink, MTS shared one big stand. MTS was demonstrating several corporate VASes (LBS, Messaging, 3G) and new brand Omlet with video streaming capabilities on mobile and web. Dmitry Medvedev didn't visit AFK Sistema stand despite of presence of AFK Sistema owner Evtushenkov and many top managers like Shamolin (MTS), Pridancev (Komstar). Evtushenkov said that there is 90% possibility that Medvedev will attend AFK Sistema and I thought "Even such powerfil persons couldn't predict future. Hence the more detailed you could predict future the more powerful you are. It is not the matter of money, but it is the matter of analytical skills."
Beeline. They had "Beeline City" stand. First of all Russian president paid attention to Beeline. He looked at Mobile TV (DVB-H standard). Another interesting features on their stand are: IPTV demo (Corbina) which recently commercial launched, Business services and 3G. President interest in Beeline could be thought as Government support to the company with shareholders war. They say that 1/3 of debt to pay in 2009 is already paid but very bad financials will push Beeline further down.

Megafon had similiar big stand with Smarts infront of it. They were quiet and as always green. They didn't show anything special but were presented. There are rumors that there was a message to all big telecom players to be presented at the exhibition in order not to be against Government willing to raise SvyazExpoCom power. Megafons so called MVNO Prosto was presented on different stand and was very popular.

Thanks,
Denis.

MTS bets on content

Recently MTS announced launch of Omlet project.

This project is one of the major events on VAS market in Russia. It is purely convergent service. Subscribers are going to have similiar experience from web and from mobile where they are able to get content: music, video, game, and socialize. MTS made mix of web TV and VOD, mobile TV and VOD, games and social capabilities. Main priority according to Pavel Roytberg is to attract significant subscribers base to this portal - to get them consume service. They plan to attract 500,000 subscribers till the end of 2009 and 1,600,000 one year later. Overall investments are thought to be about $5 mlns. The result could be seen in near future - will Omlet be our legal content shop?

In Russia it is one of the first Mobile TV offerings with such a broad range of content. As example, Megafon Mobile TV still acts similiar to test zone with small amount of subscribers and live channels without any further development (solution is based on proprietary software with no features for enabling video in 2,5G networks). Beeline seems to have such a project in plans but facing huge financial problems at the moment and hence left all development projects on pause. So, MTS is confirming its status of VAS leader as from previous year VAS Conference. Moreover, it is one of the first projects in the world - there are single deployments of convergent web TV and mobile TV under single brand.

There is still a problem with piracy in Russia. Very small portion of content is being sold legally. But all change and this is not an exception. Soon legal content market share will grow and Content Shop projects will gain more popularity and revenue to its owners. And MTS bets on it. Long investments in right direction.

I believe that it could help MTS raise mobile traffic and gain revenue on content sales. I think that Content is one of the main trends in MNO business development aming others such as Mobile Advertising, Mobile Internet (traffic) and Mobile Commerce.

Thanks,
Denis.