Monday, February 18, 2008

mmC digital entertainment forum summary at the WMF /former 3GSM

The Explosion of Mobile Entertainment in Emerging Markets

“Content? Users talk about music, photos, videos, songs,… not about the word content”, Grahame Maher – CEO, Vodafone Czech Republic

On 13 February, the third day of the Mobile World Congress in Barcelona, Spain, mmChannel held a forum “The Explosion of Mobile Entertainment in Emerging Markets”. It was a very interesting morning. We had the opportunity to have more than 30 people in the audience and the sun in the sky (although it was cooler than expected).

After Cristobal Alonso’s introductory presentation, we opened it up to the panel. It was a fascinating back and forth among the panelists, and I’d like so share some of their insights:

Cristobal Alonso - CCO of mmChannel, talked about the potential value of emerging markets in mobile entertainment. These are markets where the mobile handset is the essential entertainment hub. While these markets are still not very well-developed, their evolution will reach the pace of more mature markets in the near future, leapfrogging many of the stages seen in western countries. He pointed out that while Apple has create a whole new world in terms of hardware it has not yet created a model where high-quality content can arrive to the mass market (and in fact it has destroyed the former music revenue model without creating a new sustainable one).

Victor Font - Managing Partner at Delta Partners, pointed out the division of operators in the Middle East and Africa in 3 groups in terms of ARPU, customer and technology maturity levels (GCC and South Africa, the rest of the Middle East and North Africa, rest of the African countries), explained his belief in the importance of mobile entertainment development in the near future and his belief that the operators in the region could be the best positioned players to capture this mobile entertainment opportunity. With his investor hat, Victor quoted that right now they are not thinking of investing in mobile content in regions such as the Middle East but they think that qualified partners (such as mmCHANNEL) are necessary in order to help mobile players in this market to improve their capabilities.

Grahame Maher – CEO of Vodafone Czech Republic, thought that we big operators like Vodafone will stop being considered ‘telcos’ as their business will evolve to a service provider model. Grahame believes there will be three segments to which services of all types (both voice and entertainment) would be targeted—first, corporate customers which pay high prices for high quality; second, residential paying customers who have traditional subscription-based services; and finally, residential customers who get mobile services for free in exchange for advertising.

Julio Alonso - Founder and CEO of Weblogs SL, focused on mobile advertising, which he believes will become an important revenue generator. Julio said today operators are hindering the development of these services because they want to find new and different business models that leverage data traffic while keeping control of revenues. He explained that he sees current content aggregators having difficulties adapting to the new environment but pointed out that operators are also too slow to adapt and try new business models. Additionally, he mentioned that new user interfaces (with iphone forcing other handset manufacturers to increase their speed of innovation) are facilitating access to entertainment

Other points that discussed during the forum:

Some players are rushing the enablement of successful online social networks onto mobile phones but they shouldn’t be in such a hurry. These social networks would only capture a user’s attention in the same way they already do, so the focus should be on making the mobile model different.

Customers want interoperable files so once they purchase content they can play it with whatever interface they’d like (iPod, mobile phone, CD player, etc.).

There is a large pool of users that will continue to download multimedia files on P2P platforms and therefore the question is what value can be offered to those customers for them to pay for entertainment? Subscriptions and advertising will probably take the lead in the coming years.

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