More Ways to Make Money: Mobile VAS, QoE and Advertising

Jim Machi : Industry Insight
Jim Machi

More Ways to Make Money: Mobile VAS, QoE and Advertising

In my last two blogs, I talked about ways that service providers can monetize their mobile networks.  In this blog, I’ll explore a few more: mobile value-added services, quality of experience and advertising.

Mobile Value-Added Services

Mobile value-added services are a key element in optimizing networks. According to Infonetics, mobile operators now get 66% of their revenue from voice and 20% from SMS/MMS, with broadband services making up the rest.  Just a few years ago that was 78% for voice and 16% for SMS/MMS.   In APAC, voice is now just 61% of revenue and SMS/MMS has stayed consistent at 27%.  Remember that this is only for SMS/MMS, so when adding in other mobile revenue producing value-added services such as CRBT, video ring-tones, speech portals, voice-enabling social networking, and voice and video conferencing, mobile value-added services can certainly account for at least 33% of service revenues.  IDC also forecasts that multimedia services for APEJ (Asia/Pacific excluding Japan) will increase with a CAGR of 22% for the next 5 years to reach US$40 billion in 2014.  Clearly, mobile value-added services are a key component in monetizing mobile networks.

Going forward, video mobile value-added services will play an even bigger role.  As smartphones increase in popularity, with their larger screens, more computing power, and complex operating systems, video will definitely be utilized.  Video-enablement of existing mobile value-added services, such as video SMS, video conferencing, video chat, or video ring-tones are a key part of this. 

Mobile Commerce is also expected to play a greater role in generating revenue for service providers.  Using a mobile phone to make payments or to do mobile banking such as transferring money are also becoming important value-added services.

Quality of Experience

But video-streaming services, such as user generated content that you see on YouTube, or maybe some news channels, or paying to watch professional video content streamed to your phone, are now and will continue to be increasingly important.  According to a March 2011 Nielsen report, 25 million people in the US watched video on their mobile devices in 2010, spending an average of almost 4 and half hours per month watching.    

As subscribers watch and pay for professional content, they will start to not care about the device they watch it on, and will expect great quality of experience no matter what that device may be.  So whether it’s watching the game on HDTV, or a laptop, or a tablet, or a mobile phone, the subscribers will expect a great experience.  As such, the networks will need to be context-aware, so they “know” what kind of device is being used, what the quality of the video is at the source and the ultimate quality at the endpoint.  This “quality of experience” mapping and tracking, and the ability of the service provider to make improvements, will help monetize the networks as well.

If the user experience is good, then subscribers will be willing to pay to be able to watch the World Cup no matter where they are, and no matter what device is in front of them.



Finally, if you think about the mobile network as a mobile broadband network, then some cues from the internet regarding monetization can come into play.  Monetization of the internet is via advertising – that is, the portal, say Google, can charge for advertising depending on how many people are seeing the portal.  This was the similar model for TV as well.  So for the mobile internet, it stands to reason that advertising can help monetize the mobile network.  Advertising on SMS/MMS, advertising on the mobile video streams, and location based advertising, say for Starbucks.  In fact, Starbucks was named the Mobile Marketer of the year in 2010.  And one of Dialogic’s customers in Rome helped Dunkin’ Donuts increase sales by 20% via an SMS-location based advertising campaign.  That’s pretty cool!

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