Juniper Research’s Study about MNOs Share of Mobile Content Market by 2012

According to the latest report by Juniper Research, non-messaging mobile content revenues (including advertising) will reach $188 billion by 2012.

The question of which category of player will retain the largest portion of this pool of revenues is still very much open to debate.

The focus in the industry is currently on how to generate revenues from non-messaging mobile content, but there is a very poor understanding of why revenues are being shared at all, and what is being paid for. The report explores new business models that will distribute revenues among mobile content providers under three different scenarios, identifying who will retain the greatest proportion of available retail revenues and why.

In the first scenario, mobile network operators (MNOs) themselves are reduced to Dumb Pipe status by aggressive end-user retail revenue-seeking activity by content owners, search engines and other branded service providers. This is the fastest road to bankruptcy for MNOs, since they will only retain a maximum of 24% ($44.7 billion) of the non-messaging mobile content market, while content providers will make 63% ($118.7 billion) and third parties around 13% ($24.5 billion).

The On-Portal scenario suggests that MNOs will continue to attempt to implement the vertically-integrated model currently prevalent in developed North East Asian markets. Although MNOs will retain up to 30% ($57 billion) of revenues, the increased negotiating power of content providers means that the lion’s share of 67% ($126.3 billion) will go to them, while there will be less space in the market for third parties, who will only retain around $4.5 billion.

The Smart Pipe scenario enables new business and revenue models to emerge that support the delivery of flexible, applications-centric value configurations – like search, imaging and information services – based on the core competencies of the various players. Under this scenario, mobile network operators are able to generate a small retained revenue upside (31%, or $58 billion) by making a range of business-to-business services available to a larger number of third parties.

“Mobile network operators have nothing to lose by looking at alternative business and revenue models that enable them to blend a retail strategy with a well-articulated business-to-business and wholesale approach that capitalises on the network- and subscriber management requirements of an increasing array of downstream service providers” says Sue Uglow, report author. “This requires a step-change in the mindsets of most MNOs, but we are beginning to see movement in this direction.”

Sue Uglow maintains that reducing focus on retail revenues will increase profitability for many service providers. “Some providers may need to relinquish the end-user relationship as the costs associated with reaching consumers of non-messaging mobile content will exceed the revenues available. Profitability will become a more important long-term indicator of success than revenue”, she concludes.