Apps are taking mobile operator direct revenues, but app payments will shore up mobile carriers' falling content marketshare
According to the latest forecasts, operators will see their share of mobile content and commerce revenue drop from 44% in 2011 to 31% in 2016 globally. Operators' market share will shrink in areas such as mobile music, mobile games, mobile TV and video, mobile messaging, location based services plus chat and social networking over the next five years, as these services go increasingly 'over the top', stated from Informa Telecoms & Media.
However, Informa Telecoms & Media stated that the growing role that operators will play in mobile app payments is saving the industry from a worse revenue drop. The firm noted that while app stores have unseated the operators from their former dominance in the mobile content space, carrier billing including app-download and in-app payments charged to mobile phone bills, will allow operators to claim an increasing share of revenues over the coming years.
Although operators have been firmly shut out of Apple's game changing mobile apps ecosystem, all the other players that have jumped on the mobile apps bandwagon, including Google, Microsoft, Nokia, RIM and Samsung, need carrier billing to get paid for downloads from their app stores. Only Apple benefited from the precedent, through iTunes, of having a direct billing relationship with millions of digital media users, Informa Telecoms & Media remarked.
'But operators could miss out on the opportunity afforded by carrier billing if they don't make it more affordable and accessible to app-store owners and developers, and if they do not introduce more efficient and flexible systems than the clunky and unreliable PSMS,' said Guillermo Escofet, senior analyst at the research company. 'More compelling alternatives are already appearing in countries such as Russia, where instant payment terminals in streets allow users to turn cash into e-money to spend on digital goods.'
The slice of app revenues going to operators will grow from 10% in 2011 to 17% in 2016. 'Not because operators will increasingly act as a direct retail channel for apps, but because they will increasingly act as enablers of paid-app downloads on third party stores,' added Escofet.
The need for carrier billing is becoming all the more pressing as app stores push further into emerging markets, where bank accounts and plastic money are rare, and premium SMS is for most the only means of paying for digital goods on phones.
Emerging markets make up the lion's share of mobile subscribers globally, and that proportion is constantly growing. And the app stores that that have embraced carrier billing are the most relevant to emerging markets, such as Nokia Store, Google Play (formerly Android Market) and BlackBerry App World.
Informa predicts mobile content revenues (total data revenues minus internet access and P2P messaging) will grow from $40.7 billion in 2011 to $131 billion in 2016. Informa's forecasts only take into account direct end user revenues, such as money paid by users for content and services, and do not include indirect revenue sources, such as advertising.