Thursday, March 20, 2008

D2C mobile content: Consumers obtain content from various sources (ABI Research)

D2C mobile content
Just as I was answering a LinkedIn question: "What will it take to create a significant revenue stream from advertising supported products and services on mobile phones and mobile services in a market that is fragmented and tightly controlled by mobile operators?" with the straight answer, Direct to consumer content and services, led by big brands who want to get closer to their audience will drive operator rev share deals, I came to read this post on ABI research's report.

ABI research ran a consumer survey and found pretty compelling D2C findings:
"today’s mobile consumer is more likely to watch a video from YouTube on his or her phone than a video from the carrier’s own service, but is more than twice as likely to get ringtones from the carrier than from any other source."
"(ABI's Michael Wolf:)...despite the strong control most carriers retain over the network, their control over the mobile content ecosystem remains limited. The consumer will see more and more options for obtaining rich media in the future."

Here's several interesting numbers:
  • Video consumption (13% of all survey)
    • YouTube 35%
    • Operator 31%
    • Other 24%
  • Music
    • Sideloaded 48% (Don't ignore the big P2P elephant in the room!)
    • Operator 35%
"We expect to see increased content acquisition directly to the phone from the Web. And despite a loosening of control over content delivery to consumers, we believe the carriers will ultimately benefit as they open up their networks and handset platforms and look into taking advantage of increased advertising-supported content delivery.

Wow. I could not have said it better.

Couple of my observations on the numbers above:
  • YouTube 35%, Operator 31%: That's very compelling. I heard UK kids are hooked on YouTube on mobile, but didn't realize it was now and that big. I relate the video story being bigger success D2C than it is on-deck in that operators can best leverage the introduction of video to let D2C players sweat it, while they harvest the rev share and data plans, and increase user satisfaction on their network
  • Music stats
    • Don't ignore the P2P elephant: 48% sideloading music from you-know-where is not something one can ignore and pretend its going to go away. I don't even think legislation can make P2P go away but some think so. No, I think we're looking at a vanishing consumer wallet and people will not pay (much, if anything) for music. We need to figure out alternative revenue channels for the operator, content owner, retailer etc.
    • Operator 35% means that there's not a huge D2C music play. why? probably because on deck music was first before anyone thought D2C and the operators are heavily promoting their stores. But I think that's going away: operators are beginning to feel the tiny margins grinding them and they will reverse the model. Instead of managing the store themselves (very costly), they will endorse 2-3 D2C players for their "on deck recommendations", allow D2C to happen on their network and harvest the rev share+data plans.

Anyway, I found this ABI research summary very encouraging. Interested in your thoughts.

As a side note, you may know Groove Mobile sold to LiveWire earlier this week. One outcome is that I'm on the market. Feel free to contact me if you have any needs for a wireless guy. I know something about lots of things (codes, content, D2C, LBS,...) and can make coffee :-)


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