From a position of strength

Nathan Burley, Ovum
11 Mar 2010

Few emerging operators have given the nascent mobile content market the attention in deserves. As a result, they have ignored their potential to dominate the sector, which has the potential to drive operator revenues in Asia's emerging markets.

Ovum believes that creating a content value chain is crucial for the future development of the market for mobile content and applications in such markets.
Emerging market mobile operators are prevalent in the value chain, dominating content delivery and the user retail environment for purchasing content and applications. Many are now seeking to expand their role into content aggregation and application stores.

Non-operator players will seek an expanded role in the content value chain, but unlike their counterparts in developed markets, operators in emerging markets are typically in a stronger bargaining position. This is due to a number of often overlapping factors.

There is a higher level of mobile penetration compared to fixed broadband/PC penetration, so the markets are often dominated by mobile. Likewise, there is lower penetration of banking and payment services, which puts greater value on operator billing capabilities. Expansion of mobile money services will strengthen mobile operators' competence in this area.

Operators in emerging markets also typically have powerful brands that have far more resonance with mass-market consumers than the brands of online players and device vendors. The lack of fixed broadband/PC penetration, particularly in rural areas, means that Google and the like will be little known to most people.
Brand status and power is important in the content value chain for building a powerful retail channel, particularly for application stores. It can also play an important role in negotiating content revenue-sharing agreements.

Operators dominate the consumer retail channels for purchasing content in the form of operator portals that typically function on walled-garden principals - a closed model that has almost disappeared in developed markets.

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