Mobile content market_in_finland_2012-2016


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Mobile content market in Finland report, including mobile app, SMS, premium rate call, mobile marketing other mobile content market value. Additionally the report looks at the installed base of devices by OS.

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Mobile content market_in_finland_2012-2016

  2. 2. Preface This report looks at the mobile content services market in Finland with a broad scope. The market size and drivers for mobile content services, mobile marketing and mobile device base are studied in the report. Market size for mobile content services is presented mainly for the years 2010–2016; some statistics may also cover earlier years. The market data for the years 2008–2012 are actual figures based on data gathered for this and earlier reports. Years 2013–2016 are forecasts based on market analysis and up-to-date information available on the market. All the market figures and other content in this report are based on analysis by Idean’s consultants and represent their views and opinions. The report is commissioned by Teleforum ry and funded by Tekes. This report is part of a larger project in which Teleforum is looking for ways to help the Finnish mobile ecosystem to create the next mobile success stories. The purpose of the report is to provide an overall view of the mobile content market dynamics in Finland. The report aims to help players in the mobile content market to develop services based on up-to-date market data. The focus of the report is in mobile consumer services. The report is carried out as a combination of desktop and interview study between August and October 2013. The report’s findings are based on in-depth interviews with players in the mobile content market and other market experts as well as Idean’s database on mobile content services. A steering group was formed to bring industry expert input and feedback to the report. The members of the steering group included leading Finnish experts working in global and national companies. All this data has been complemented with publicly available sources. The author of the report is Kalle Snellman, Senior Strategist at Idean. Idean’s designer Lauri Lankinen has done the editorial work and created the visual layout. The author would like to thank all the interviewees and steering group members for devoting their time and effort in contribution to this report. 2
  3. 3. Contents 4 Introduction 6 Summary 10 Key trends and observations 14 Total market 17 View on the global market 20 Application stores 26 Installed apps 27 Application stores & device bases 28 SMS Services 30 Premium rate calls 32 Device base 36 Smartphone penetration 38 Mobile marketing 3
  4. 4. Introduction Mobile services have been topical since the late 1990’s. During the first ten years mobile commerce was dominated by a handful of players specialized in mobile content. Now the situation has changed, as an increasing amount of the total online consumption is moving into mobile devices. This trend affects practically all organizations from different industries. Many of the companies and authorities that have ignored or taken only minimal steps in the first phase of mobile services, have now implemented mobile services or have serious plans for implementations. In fact, all organizations have become more or less technology oriented and dependent. The current media coverage on mobile issues draws a picture of mobile application dominated mobile commerce. Mobile applications, however, represent only a small share of the total mobile originated content revenue. The majority of the revenue is still delivered by premium rate calls and SMS based services. On the other hand, only a part of the mobile services are expected to bring direct revenues. The author of this report has acknowledged that mobile is increasingly difficult to define. The distinction between mobile and desktop usage and services used to be rather clear as there used to be separate SMS based services and mobile sites for mobile devices. Today an increasing number of online services are designed for both mobile and desktop. Moreover, a growing number of services and interfaces are becoming hard to define as either of these, making it difficult to draw a line between mobile and desktop. Consequently the report looks at those aspects of mobility that are possible to measure. The focus of the report is on the mobile content service revenue in Finland. Additionally the mobile device base is covered in the report. These aspects will give an overall picture of the mobile market in Finland. The aim of the report is to give service providers relevant, up-to-date and consistent information regarding the mobile market so that they can make solid and wellreasoned business plans and decisions. 4
  5. 5. Definitions Mobile content market value Represents end-user spending on mobile services within the addressed distribution channels. The spending is divided into domestic and export markets. The domestic market is further divided into four main categories; SMS based content services, premium rate calls, application stores and other. All of these categories are then analysed separately. Also media spending on mobile marketing channels is included in the market value. Mobile advertising market value The market value of mobile advertising consists of expenditure on mobile media. In other words, the money spent on SMS traffic, search and banners in a mobile media space. Mobile site design and other similar costs related to mobile marketing are excluded from the market value. Smartphone A smartphone is a mobile phone built on a mobile computing platform with more advanced computing abilities and connectivity than a feature phone has. One of the most significant differences is that the advanced application programming interfaces (APIs) on smartphones for running third-party applications can allow those applications to have better integration with the phone’s OS and hardware than typical feature phones. Currently smartphones include devices with the following operating systems: iOS, Android, Windows Phone, Symbian, BlackBerry OS, Bada and Meego. Feature phone A feature phone is defined to cover all other mobile phones than smartphones in this report. 5
  6. 6. Summary The mobile content services market revenue is booming in Finland, when looking at the combined revenue from domestic market and export. The total market for mobile content grew 31 % in 2012 to 404 million euros. In 2013 the market growth is anticipated to accelerate and the total revenue to exceed one billion euros, which is a 154 % upswing over 2012. The majority of the growth in 2013 is generated by mobile content export. During the past couple years and in the near future the growth has been and will be dependent on a couple of leading mobile companies in Finland. For example, the growth in 2013 was almost solely due to Supercell’s spectacular revenue growth. The mobile content export grew from couple of million is 2010 to 164 million euros in 2012. In 2013 the revenue is forecast to reach 790 million. Concurrently the domestic market sales reached 240 million euros in 2012 and is forecast to decrease couple of percent to 234 million euros. The revenue trends in the domestic market vary sharply by mobile content category. The overall market is shrinking due to declining sales of premium SMS and premium rate calls. At the same time the mobile application, marketing and other mobile services are growing sharply. Together these three categories will surpass the combined domestic SMS and premium rate call revenue in 2015. The total domestic market revenue starts to grow again in 2014 despite the decreasing SMS and premium rate call revenue. Current media attention seems to focus on the competing mobile platforms and the fight between mobile application stores. All this leaves an impression that mobile application stores are huge revenue generators. This is not the case at least yet and in Finland. Mobile application store revenue represented approximately 4 % of the total domestic mobile content market revenue. SMS and premium rate calls bring vast majority of the domestic revenue today. Another interesting trend is that a growing share of the mobile application spending is going through alternative channels to application store billing. For example most 6
  7. 7. Figure 1. Total mobile content revenue in Finland 1 596 2008–2016 (M€), including mobile content export 1 399 The mobile content services market 1 233 revenue is booming in Finland, when looking at the combined revenue from 1 025 domestic market and export. The Majority of the growth in 2013 is generated by mobile content export, which has been exploding due to Supercell’s spectacular 154 % success. Source: Idean, 2013 404 308 31 % 252 262 –1 % 4 % 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 Mobile marketing 9 11 13 14 Other mobile services – – 1 3 Application stores – – 2 69 69 177 172 256 20 % 13 % 14 % 2014 2015 2016 2013 2014 2015 2016 17 23 35 48 62 8 16 32 51 75 4 10 16 25 35 36 70 70 63 55 46 39 34 172 172 143 124 107 89 18 % Figure 2. Domestic mobile content market revenue by service category 2008–2016 (M€) Mobile content demand is strongly shifting to new forms of services. Other mobile services category is showing the strongest growth in the coming years. It consists of estimated mobile spending on various services, including subscription services such as Spotify or Netflix. Source: Idean, 2013 Premium SMS Premium rate calls 256 252 257 263 240 234 245 262 82 290 7
  8. 8. of the leading subscription services, such as Spotify and Netflix, are invoicing customers directly via credit card. This revenue is considered in the “other mobile services” category. The mobile device user base is changing rapidly in Finland. The majority of mobile phone users have smartphone and a tablet device was in every fourth household in Finland in the fall of 2013. This trend is projected to continue as smartphones and tablets dominate the sales charts. In 2013 there will be three smartphones sold per one feature phone and it seems likely that soon the smartphones will be the only option available in stores. Tablet devices exceeded laptop unit sales in the first half of 2013 in Finland. At the same time there are several new device categories emerging, such as smartwatches, different smart wristbands, glasses and other wearable computing devices. 8
  9. 9. 6 029 5 599 5 060 5 010 Feature Phones 4 402 4 095 3 703 3 297 2 905 2 598 1 991 1 940 1 570 1 453 Smartphones 1 237 971 885 429 Tablets 143 13 2010 2011 2012 2013 2014 2015 2016 Source: Idean, 2013 Figure 3. Smartphone, tablet device and feature Feature phones are gradually disappearing from stores and our everyday life. Tablets and smartphones are becoming consumers’ primary internet devices. phone population in Finland 2010-2016 (in thousands) 9
  10. 10. Mobile app ecosystems by Apple, Google, will be the most significant disruption in Microsoft and other likes, try to lock their the foreseeable future. Our everyday life customers in walled gardens, where all the is full of physical practices where personal data transfer and monetary transactions access is required in one way or another. For occur inside the same ecosystem. A cus- example we have car and house keys, bank tomer would rather not let move between accounts, credit cards, concert tickets not to 10 Walled gardens rule the current world, but the future is open In Idean’s opinion biometric authentication Key trends and observations Bio authentication is growing mainstream ecosystems. This is not the first time we are mention all the online and mobile services living a walled garden era in mobile content. that require a username and password. A bio Operators had a similar attempt a good authentication could change all of these cur- decade ago. However, nothing seems to be rent practices. Take for example usernames shaking the growing influence of the current and passwords. We could forget all the ecosystems. hassle with dozens of passwords if we could have bio authentication. As a sign of this Nevertheless, the history has proven that development Apple introduced a fingerprint there will always be a new disruption that authentication in its latest iPhone. Even shakes the current status quo. What this will more interesting developments are bubbling be and when it will happen is not clear. How- under. It seems likely that one practical way ever, there seems to be a growing sentiment of executing authentication would involve against the currently leading ecosystems. dedicated devices. For example, a Canadian Mobile game providers are perhaps the company called Bionym is developing a happiest with the current ecosystems, but wristband named Nymi that makes an au- many others are discontent on for example thentication based on the user’s heart wave. their visibility in the stores, customer data The wristband is then connected to one’s processes and the revenue sharing policies. device and app to complete the intended task. It will take a while before these solutions are integrated into our front door locks and bank accounts. But once they start to spread, we might be surprised by the speed.
  11. 11. Despite the array of choices there are only few dominating services per business area Can legacy businesses keep up with the mobile development? Successful services are concentrated in Mobile technologies provide a potential to select business area. For example Spotify change legacy business processes and they is dominating music subscription services, certainly have done it. Take for example Netflix is dominating video, Ilta-Sanomat Uber, which is changing the way we use and Iltalehti command media and Facebook taxi services or Netflix that is transforming rules social media. The other players in the the way we use TV. All this raises concerns same business areas are defenders. In the regarding traditional companies’ ability to long run the list of dominating players might respond to these new challenges. Quite change, but the general set-up remains. often the traditional companies rely on a On the other hand, some business areas legacy business model and introducing a are more inclined to this kind of set-up than mobile service would potentially cannibal- others. Moreover, the consumer services ize its current revenue streams. Changing market seems to live in 5 to 7 year cycles, completely to a new business model would where new practices appear and replace the be risky and could probably lead to decreas- existing ones. For example, currently the ing revenue. At the same time there are most successful business model in mobile newcomers in the market that apply new gaming is free to play combined with in-app business models and decrease the legacy purchases, whereas a couple of years ago company’s market share. Many traditional the best selling games were paid ones. companies are stuck on this kind of di- Consequently the only goal in these kinds of lemma. Which is better, to maintain legacy markets is the pole position. business with decreasing revenue or to jump into a new business model with high risks The fundamental problem with online, and and decreasing revenue? Additionally there especially mobile services, is how to success- is a competence gap for developing new fully introduce a new service for the target services in traditional companies. All this audience. Many users are typically following leads to cautious service development and the masses and using the services that are traditional companies seem to lag behind in already popular. the service development. 11
  12. 12. Sensors accelerating the mobile revolution TV set has become the second screen Adjust home heating, lightning. See who There has been an on-going debate on the is ringing your doorbell. Control your car. so-called “second screen”, which typically Monitor your sleeping baby. Follow your refers to the use of a mobile device while health. Make fitness plans. Sensors will watching television. So far the traditional TV enable many of these actions, whether manufacturers have failed to provide solid they are stand-alone or embedded into experiences that would combine TV set and our devices. Today the sensors are not other appliances in a manner that would mainstream in our homes and other appeal to large masses. Instead the mobile environments, but they will most likely devices have become the primary screen quietly sneak into our everyday life. All of a for many users and the TV set is seen as the sudden the next lamp we purchase may have “second screen”. The primary attention is fo- a motion sensor or our insurance company cused on the more interactive device, which requires a moisture meter into our bathroom is at this moment a smartphone or a tablet. for getting discount in insurance fee. Key trends and observations Business models favor subscriptions and in-app purchases accompanied with analytics Open API is becoming an increasingly critical asset for digital services Today’s most successful global mobile rev- Open API (Application Programming enue generators are gaming companies that Interface) has been the key enabler in provide free-of-charge downloadable games application stores’ and leading social with premium priced in-app purchases. media platforms’ success. This model The gaming experience is continuously is being copied into other industries in developed and adjusted according to the an accelerating pace. Most notably the gathered customer data and analytics tools. governments are providing access to many This seems to be the current secret sauce of of their data assets. success, at least for the mobile games. 12
  13. 13. Wearable computing is taking its first steps to masses Analog customer will disappear Big data hype has peaked Smartwatches are available in the stores In the foreseeable future it will become Big data has been well represented in vari- and smart glasses are expected to hit the harder and harder to create and keep a ous keynotes and press articles. It is said to market soon. There are many who are more customer relationship without some kind of be the vital for today’s marketing, sales and or less suspicious about the success of these digital aid, whether it is mobile app, some other business. In the reality there are only product categories. Equally there are strong sort of analytics and big data. This concerns a handful of companies that utilize big data believers for their future success. Either all sorts of industries and size of businesses. in a large scale for driving their business way, it seems inevitable that the number of The need for analytics and data collection is operations. However, companies are increas- smart devices and sensors around our bod- one of the corner stones in the design of the ingly aware on the benefits of analytics ies will grow whether they are embedded modern mobile services today. and the general know-how is increasing in in our clothing or separate devices. The companies. consequences may be difficult to predict, but they surely have many, even dramatic effects on interfaces, business models and our everyday life. Phablets are about to break through The services will know an increasing amount of facts about you Devices will be less visible in everyday life The average screen size of the smartphones Mobile services provide another extension Smartphone and tablets are with us at is closing the smallest tablets. These devices for gathering more information about us homes, workplaces, bus stops, cafes and are sometimes called “phablets” and they and whether we like it or not, our ability to other places. In the long run these physical have experienced phenomenal growth in control privacy is diminishing. All sorts of devices will be less visible as wearable shipments across the Asia-Pacific region. personal and other customer information are computing and various kinds of sensors de- This trend is expected to hit also Finland. aggregated from different sources in order velop and spread. The services will become to offer us personalized services. There are more automated and they serve us without two sides in this coin. At its best we will be having a device in our hands. Moreover, the better served. At worst our personal data service design in general is moving towards is misused. At the same time people are services that anticipate our intentions and increasingly aware how much their personal thus making many of the current practices data there is out in the services. The demand unnecessary. for accessing their personal data is increasing. This is a major political and legal issue that cannot be solved by individual country legislation, which complicates the potential resolution to this problem. 13
  14. 14. Total market The mobile content services market revenue is booming in Finland, when looking at the combined revenue from domestic market and export. The total market for mobile content grew 31 % in 2012 to 404 million euros. In 2013 the market growth is anticipated to accelerate and the total revenue to exceed one billion euros, which is a 154 % upswing over 2012. The Majority of the growth in 2013 is generated by mobile content export. During the past couple years and in the near future the growth has been and will be dependent on a couple of leading mobile companies in Finland. For example, the growth in 2013 was almost solely due to Supercell’s spectacular revenue growth. The future projections for the years 2014-2016 are speculative considering the heavy influence of a few individual companies and the unpredictable nature of their business environment. Here we have predicted rather stable market growth, but in practice the export market may prove to be rather volatile. The domestic market development has proven to be less volatile. Finland has had the fortune to host a couple of the most successful mobile gaming companies. Their impact in the total market revenue is substantial. Without Rovio and Supercell the growth rate of the total market would not have been so rapid. Media attention is practically fully focused on mobile applications as far as mobile content is concerned. Still, premium rate calls and premium SMS services bring the vast majority of the domestic industry revenue today. The mobile content service market in Finland roots back to the early 1990’s, when premium rate calls emerged. The first SMS based logos and ringtones were delivered over the mobile networks in the latter part of 1990’s. Approximately ten years later application stores for smartphones appeared. All these markets co-exist today and will continue to do so in the near future. The demand for premium rate calls and premium SMS services has saturated and is gradually declining. At the same time the overall usage of mobile services is growing strongly. Mobile applications and browsing are among the fastest growing mobile services. This doesn’t necessarily translate to revenue since a major share of the applications and browsing are free of charge, except for the data transfer costs billed by mobile operators. More specifically, an increasing number of services apply business models that are not aimed at bringing direct revenue. At the same time as the application stores grow at the expense of SMS and premium rate call revenue, the focus 14
  15. 15. Figure 4. Total mobile content revenue in Finland 1 596 2008-2016 (M€), including mobile content export 1 399 The mobile content services market 1 233 revenue is booming in Finland, when looking at the combined revenue from 1 025 domestic market and export. The Majority of the growth in 2013 is generated by mobile content export, which has been exploding due to Supercell’s spectacular 154 % success. Source: Idean, 2013 404 2008 Figure 5. 252 262 –1 % 256 4 % 2009 2010 Domestic 308 31 % 20 % 18 % 2011 2012 2013 2014 13 % 14 % 2015 2016 Export Total market divided into domestic and export revenue in Finland 2008-2016 (M€) Mobile content export has exploded 1 307 recently and is going to overtake domestic market revenue in 2013. However, the 1 136 domestic market development seems far 988 more predictable than the volatile export. 790 Source: Idean, 2013 256 263 257 252 0 1 5 2008 2009 2010 240 164 234 245 262 290 45 2011 2012 2013 2014 2015 2016 15
  16. 16. TOTAL MARKET of the whole business is moving from national to global. Traditional SMS and premium rate call payments have been and still are very much locally controlled by domestic operators. Application stores are global and have hardly any operations on a country level. This doesn’t mean that it would be impossible to make a successful service with a national single country focus. Great opportunities lie in the global market, however. On the other hand, the best selling mobile services with a domestic focus in Finland beat Rovio’s or Supercell’s domestic revenue. Take for example Fonecta’s SMS and premium rate call based directory services that are still bringing tens of millions in revenue annually. At the same time Supercell’s and Rovio’s combined revenue in Finland is a couple of million euros. The vast majority of their revenue is global. There have been several global success stories in the mobile application market, but Rovio and Supercell have definitely been among the most spectacular success stories. Rovio and its Angry Birds was one of the first games that made a significant breakthrough in the Apple App Store. Supercell is the most successful application provider using free-to-play model so far. Differences between Rovio’s and Supercell’s business models illustrate the fast pace of the changes in the market. Angry Birds’ revenue model was originally predominantly based on paid downloads. This was the secret sauce for success in 2009–2011 in mobile apps. Supercell’s games are based on a free-to-play model, meaning the game is free to download but the user can make in-app-purchases to speed up progress in the game. 16
  17. 17. VIEW ON THE GLOBAL MARKET Mobile applications have made the world smaller for mobile service providers. Today it is possible to reach global masses with just one contract with an application store. This certainly differs from the SMS based mobile business environment, where it was costly, risky and difficult to do business internationally. The SMS based mobile business was more national in its nature. Another difference is the selection of competing services. In the SMS era there were roughly a dozen of ringtone service providers. These same players also dominated the mobile games and logo business. In today’s application stores there are almost endless numbers of competing services and service providers in the most popular application categories. New success stories appear constantly in the application market and hardly any of them have a legacy in SMS based mobile services. The list of the most successful mobile application players include companies such as Supercell, Electronic Arts, King, Kabam, Gameloft and Rovio. Many of these companies have become significant in their industry in a matter of a couple of years. On the other hand, it should be remembered, without undermining their success that the scale of their revenues hardly bring them anywhere close to global fortune 500 company lists. The mobile application market is highly volatile and the winners may quickly turn into losers. It resembles billboard charts in the music industry, where hit songs typically climb quickly to the top but fall down equally fast. On the other hand there have been signs of opposing developments. A couple of the current top revenue generating services in Apple’s App Store have remained at the top for a surprisingly long period. For example Supercell, the publisher of Clash of Clans and Hay Day has had two games among the top ten best selling applications in the App Store for over 12 consecutive months in many countries. King, the publisher of Candy Crush Saga, has also been at the top in multiple countries since 2013. Both of these companies are applying a free-to-play –model. 17
  18. 18. VIEW ON THE GLOBAL MARKET The application stores publish top chart lists on a national level. The list of the top 5 grossing applications in Finland and in the US looks similar. the Same applications top the charts in both countries with a few exceptions. Global application stores typically take a 30 % revenue share from the purchases made in the stores. Typically the purchases are made with a credit card. Google Play and Windows store allow also purchases through the mobile phone bill. Apple’s App Store takes 30 % revenue share from all the application purchases in the store. The App Store is the globally leading application store in terms of revenue. Apple has not published the App Store’s revenue, but it has sporadically stated how much developers have been paid. For example, according to a press release in May 2013 Apple had paid developers 9 billion dollars (6,8 billion euros) since the launch of the App Store. Based on the earlier announcements one can calculate that in 2012 the total App Store revenue was approximately 4,3 billion dollars (3,2 billion euros). Apple’s 30 % cut of this sum was roughly 1,3 billion dollars (1 billion euros) in 2012. In 2013 the total revenue is forecast to exceed 7 billion dollars (5,3 billion euros). Apple has also other mobile revenue, such as mobile advertising and iTunes, not included in this report. Supercell is the fastest growing company among the ones studied in figure 6. In fact it might be among the fastest growing companies ever globally, especially when considering profitability. It is probably also the top selling mobile company in the App Store in 2013. In October 2013 the company released Clash of Clans for Android, which will likely bring another revenue stream for the company. King is probably the second best selling company in mobile apps market. According to press articles it has filed an IPO in the US. Emerging growth companies such as King can use a secretive IPO registration process in the U.S. and the financial details were undisclosed at the time this report was written. 18
  19. 19. 391 Facebook 974 Apple App Store 552 (Apple’s 30% cut) Supercell 78 196 Electronic Arts 113 Kabam 76 106 Gameloft 56 175 Zynga 43 Glu Mobile 82 63 Rovio 2013 forecast 2012 2011 84 53 100M 300M 500M 1 000M 1 500M 2 000 M€ Sources: Facebook, Supercell, Electronic Arts, Zynga, Rovio, 2011 & 2012; Estimates by Idean, 2013 Figure 6. Estimated global mobile revenue of selected companies (M€) Companies’ mobile revenue has been extracted from their total revenue, and their mobile revenue for 2013 has been estimated. Facebook’s revenue is mainly from mobile advertising and Apple’s App Store stands for Apple’s cut on the total App Store revenue. Other companies in the chart are gaming companies. 19
  20. 20. Application stores The mobile applications market value in Finland was ten million euros in 2012, including revenue from App Store, Google Play, Windows Marketplace and Nokia Store. Apple’s App Store was the largest in revenue among the ones mentioned, with approximately 80 % share of the total revenue in 2012. Due to application stores’ global nature only a small portion of the domestic revenue was generated by Finnish companies and remained in Finland. The growth was due to an increased smartphone user base as well as greater supply of applications. There is also a growing amount of Finnish applications available, which has been followed by increasing marketing activity related to them. In the following years the growth rate is forecast to slow down despite the on-going growth of installed base of smartphone and tablet devices. The future user base growth is anticipated to come from less active mobile service user segments as the most active early adopters already have smartphones and tablets. Moreover, many of the major content players are expected to introduce services based on alternative billing mechanisms for application stores. For example browser-based services, where service providers can choose between a large selection of different billing methods. In 2016 the total application store revenue is forecast to be approximately 36 million euros. Apple’s App Store is the largest application store in Finland, when considering the combined iPhone and iPad revenue. In 2012 Apple App Store sales represented 81% of the total application store revenue. Google’s application store has as of yet failed to generate considerable revenue. It has been less efficient in attracting users to buy than Apple’s. However, Google Play is forecast to show the fastest growth in the coming years and to bypass Apple’s revenue in Finland. This is mainly due to Android’s growing dominance in the device population and consequently service providers growing interest around Android. On the other hand, iOS also remains attractive due to its solid device range compared to high fragmentation of Android devices. Recently the growing Windows Phone device user base has attracted Finnish mobile service providers to create services for Windows Phones. Finland probably has en exceptionally wide selection of Windows applications dedicated to the domestic market when compared internationally. Now the situation might change after the Nokia-Microsoft deal, if the Nokia brand disappears from Windows devices. Part of the success of Windows Phones has certainly been based on patriotism and the strength of the Nokia brand in Finland. Apple has made it difficult for application providers to use any other billing channel than App Store’s own channel for 20
  21. 21. Figure 7. 184 % Total application store revenue in Finland 2010-2016 (M€) Application store revenue is forecast to 36 show healthy growth in the coming years. 35 However, the growth could be even greater if some of the leading subscription service providers, such as Spotify or Netflix would 25 charge their services via application stores. 130 % Source: Idean, 2013 16 10 60 % 57 % 4 37 % 2 5 % 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 Figure 8. Application store revenue by platform in Finland 2010-2016 (M€) Apple’s App Store has dominated the application store revenue in Finland and globally. Google Play will challenge its pole position in the future thanks to fast growing Android device population. The growing installed base of Android devices will be followed by increased developer interest. Windows devices are well represented in the Finnish market. However, their application sales suffers from smaller developer interest and application range. Source: Idean, 2013 Windows Marketplace – – 0,6 1,6 3,4 4,9 4,4 Google Play – 0,3 0,9 3,5 8,2 14,8 17,1 Apple App Store 0,9 3,5 8,1 10,6 13,3 14,7 14,7 Other 0,6 0,6 0,5 0,4 0,2 0,1 1,5 4,4 10,0 16,0 25,1 34,6 0,1 44,0 21
  22. 22. APPLICATION STORES paid downloads or in-app purchases. However, not all successful mobile application providers are invoicing through application stores. For example international publishers that have a strong presence in Finland, such as Netflix or Spotify, invoice their customers via other channels. These services are mainly billed via credit cards. In addition companies in the traditional media business are often utilizing alternative billing channels. The reasoning for using alternative channels is in the revenue share models; application stores take a 30 % cut of the sales compared with credit card companies’ couple of percent cut. Global application stores should be put into context in order to understand their current magnitude. For example Netflix’s global revenue in 2012 was $3,6 billion (2,7 billion euros) and Apple’s App Store’s total revenue approximately $4,3 million (3,2 billion euros) according to Idean’s estimate. Apple’s 30 % cut of the revenue in 2012 was roughly $1,3 billion (1 billion euros). In other words, Netflix’s revenue was almost three times Apple’s cut. Top Finnish application publishers Application stores publish top charts by country and the lists are further divided into different application categories. In this report Idean has looked at the overall category for the top 100 grossing iPhone apps in Finland and in the U.S. Both lists identify Finnish publishers to illustrate where they in the ranking. The lists in this report represent only one day from each year. Moreover, only the apps for iPhone have been reviewed. The aim of this particular exercise is to give an overview of the state of the market, not to provide a full analysis of all stores. Finnish publishers have been identified within the top 100 charts in order to understand the effect and scale of the Finnish mobile business. Interestingly, there are many applications in the Finnish language, which are not published by Finnish players and are thus excluded from the Finnish application publisher lists. The distribution of applications by nationality of publisher reveals the global nature of the application store channel. Finnish companies or organizations publish only a minority 22
  23. 23. App Store Finland 28.8.2010 App Store Finland 28.8.2011 App Store Finland 28.8.2012 App Store Finland 28.8.2013 5 Angry Birds - Rovio 1 Sieniopas - Mobiteos 1 Clash of Clans - Supercell 1 Clash of Clans - Supercell 4 booxTV - Booxmedia Ltd 3 booxTV - Booxmedia Ltd 2 TVkaista - Delta Vee 8 Tvkaista - Delta Vee 5 Karttaselain - AccelBit 7 Karttaselain - AccelBit 5 Karttaselain - AccelBit 10 Sieniopas - Mobiteos 10 Angry Birds - Rovio 9 Hay Day - Supercell 6 Hay Day - Supercell Entertainment Ltd Entertainment Ltd 15 ReittiGPS (Reittiopas 15 Angry Birds Seasons - Rovio iPhonelle) - Essentia Solutions Oy Entertainment Ltd iPhonelle) - Essentia iPhonelle) - Essentia Solutions Oy 21 HS - Helsingin Sanomat - Sanoma News 22 ReittiGPS (Reittiopas iPhonelle) - Essentia 26 TVkaista - Delta Vee Entertainment Ltd 30 Sieniopas - Mobiteos 26 Nautics Sailmate - Nautics 39 Angry Birds - Rovio 40 - Suomen 46 Karttaselain - AccelBit 80 TVkaista - Delta Vee 85 Älypää - Sanoma Dictionary - Kangas Bros. Entertainment 86 Fatcat Rush - Tomodomo Oy 78 FinnBirds - Kari Kulmala Solutions Oy 18 Sieniopas - Mobiteos 31 Angry Birds Rio - Rovio - Foreca Ltd. Innovations - Ilmatieteen laitos 22 ReittiGPS (Reittiopas Experience Oy 54 Finnish-English Translate 20 RainMan (Ilmatieteen laitos) 18 ReittiGPS (Reittiopas 17 Viiniopas - Monkey 25 ForecaWeather 7 booxTV - Booxmedia Ltd Solutions Oy Entertainment Ltd suurin deittisivusto sinkuille 41 Amazing Alex - Rovio - Intodate International AB Entertainment Ltd 48 - Nelumbo Oy 92 Angry Birds Friends - Rovio Entertainment Ltd 95 HS - Helsingin Sanomat Sanoma News 98 Finnish-English Translate Dictionary - Kangas Bros. Innovations App Store U.S. 28.8.2010 App Store U.S. 28.8.2011 1 Angry Birds - Rovio 73 Angry Birds Seasons - Rovio Entertainment Ltd 92 Rasmus Nalle - Egmont Kustannus 5 Angry Birds - Rovio Entertainment Ltd App Store U.S. 28.8.2012 3 Clash of Clans - Supercell Entertainment Ltd 17 Angry Birds Seasons - Rovio Entertainment Ltd 38 Angry Birds Rio - Rovio Entertainment Ltd App Store U.S. 28.8.2013 4 Hay Day - Supercell 12 Clash of Clans - Supercell 42 Hay Day - Supercell 36 Hill Climb Racing - Fingersoft 46 Angry Birds Space - Rovio Entertainment Ltd 57 Angry Birds - Rovio Entertainment Ltd Sources: AppAnnie; Idean, 2013 Figure 9. Finnish publishers in the Top 100 grossing iPhone apps in Finland and in the U.S. Apps by Finnish companies and organizations have been identified from both Finnish and U.S. top charts. The number of Finnish apps in the Top 100 has remained rather stabile over the years with an average of 9 and 13 apps by Finnish publishers. A couple of Finnish apps have made it to the U.S. Top 100—great achievement in such an important market. 23
  24. 24. APPLICATION STORES of the top 100 grossing applications in Finland. Without Rovio and Supercell, the share of Finnish publishers would be even smaller, especially in the top 10 charts. The total number of domestic publishers in the Finnish iPhone App Store has varied between 9 and 13 during the period discussed here. The U.S. market is a good reference market. It is among the most challenging markets to break into the top 100. Within the timeframe of the reviewed dates there has been only Rovio and Supercell in the top 100 charts with the exception of Fingersoft in 2013. There may have been other Finnish apps in the top 100 had we reviewed the entire history of the App Store. Average number of applications in different countries Figure 12 illustrates the installed number of mobile applications and usage in smartphones in selected countries. The data is provided by Google is based on smartphone user interviews in different countries. Approximately 1000 interviews were carried out in each country annually. Smartphone users were asked how many applications they currently have in their mobile, how many of them are paid and how many applications have they used in the past 30 days. Finns are among the least active application downloaders and users among the benchmarked countries. On average, there were 20 apps installed per smartphone in Finland, of which four were paid applications. A total of eight applications were used within the past 30 days. These numbers are rather modest compared to other Nordic countries. For example in Sweden, the corresponding figures were approximately double in each of the viewed metrics. There could be several explanations for this. Perhaps the most significant explanation is the difference in smartphone device population. Symbian is still strongly represented in the Finnish smartphone market and Symbian users are on average less active in application downloading. There are fewer applications available for Symbian devices and the marketplace has not become as popular as those for iPhones and Androids. 24
  25. 25. Jan Feb Mar Apr May Jun Jul Aug Sep Figure 10. Top 5 grossing iPhone apps in the U.S. 1 in 2013 The figure illustrates the top five chart in the U.S. during each month’s first day. Apps that occur more than twice have 2 been highlighted. A handful of apps are dominating the top 5 lists. Clash of Clans and Candy Crush Saga head the lists in both countries illustrating how international 3 the trends are in the application market. Sources: AppAnnie; Idean, 2013 4 Clash of Clans Minecraft Candy Crush Saga Hay Day Pandora Radio at Bat Modern war 5 Jan 1 Feb Mar Apr May Jun Jul Aug Sep Figure 11. Top 5 grossing iPhone apps in Finland in 2013 A total of 15 different applications have been in the top five in the given dates in 2 both countries. The top three chart has been stable; only 6 apps have made it to the top in Finland compared to 8 apps in the U.S. top three, suggesting that the top positions 3 are less windy than previously. Or more specifically, the top players have learned how to remain longer in the top. 4 5 Sources: AppAnnie; Idean, 2013 Clash of Clans Candy Crush Saga Hay Day Whatsapp messenger The Simpsons 25
  26. 26. INSTALLED APPS 40 Free Apps Paid Apps 30 20 10 0 BRA IND FIN ESP HUN RUS ITA CHN GER GBR CAN FRA AUS DEN NOR USA JPN SWE KOR 7 apps used 8 8 8 9 9 9 10 11 10 12 12 12 13 12 12 8 13 11 in the last 30 days Source: Google, 2013; Illustration by Idean Figure 12. Mobile application usage metrics in selected countries, Q1 2013 Finns are among the least active application downloaders and users among the viewed countries. On average, Finns had twenty apps installed in their smartphones, of which four were paid apps. Perhaps the most significant explanation is the difference in smartphone device population and more specifically, Symbian’s strong position in the Finnish market. 26
  27. 27. APPLICATION STORES & DEVICE BASES Source: Idean, 2013 Apple iOS ARPU per device and year (€) Platform total revenue 13,3 M€ 14,7 M€ 14,7 M€ 10,6 M€ 8,1 M€ 2012 2013 2014 2015 2016 12,0 App Store 15,0 App Store 15,8 App Store 16,5 App Store 17,4 iPhone 497 iPhone 646 iPhone 775 iPhone 930 iPhone 977 iPad 345 iPad 617 iPad 732 iPad 653 iPad Total units iOS Device Base (‘000) App Store 842 Total units Total units 1 263 1 508 Total units 1 583 Total units 537 1 153 17,1 M€ 14,8 M€ 8,2 M€ 3,5 M€ 0,9 M€ Google Android ARPU per device and year (€) Android device base (‘000) 2012 2013 Google Play 0,9 Google Play Android Smartphone 875 Android Smartphone Android Tablet Total units 84 959 Android Tablet Total units ARPU per device and year (€) Windows Phone device base (‘000) 2012 258 1 746 Android Smartphone Android Tablet Total units 2015 3,4 2013 Google Play Android Smartphone 2 306 Android Tablet 464 2 770 Total units 2016 4,4 Android Smartphone 3 113 Android Tablet 720 3 883 Total units 5,7 3 735 914 4 649 4,9 M€ 3,4 M€ 2014 Google Play 2015 4,4 M€ 2016 Windows Marketplace 1,3 Windows Marketplace 2,0 Windows Marketplace 3,0 Windows Marketplace 4,5 Windows Marketplace 6,7 Windows Smartphone 455 Windows Smartphone 933 Windows Smartphone 1 259 Windows Smartphone 1 196 Windows Smartphone 1 136 Windows Tablet Total units 27 1 488 Google Play 1,6 M€ 0,6 M€ Windows Phone 2014 2,3 0 455 Windows Tablet Total units 10 943 Windows Tablet Total units 41 1 300 Windows Tablet Total units 80 1 276 Windows Tablet Total units 119 1 256
  28. 28. SMS SERVICES 69 69 0 % 70 1 % 70 1 % 63 55 46 Figure 13. Premium SMS services revenue in Finland 39 2008–2016 (M€) 34 SMS revenue has gradually started to decrease. The total market revenue in 2016 -11 % will represent only half of the revenue in -12 % 2011. Many of the current SMS services will migrate to application based services. -13 % Some of the current services will cease -14 % to exist. There are hardly any new mobile -17 % service providers that would take SMS as their selected technology. Source: Idean, 2013 The premium SMS market value is gradually decreasing while facing growing pressure from mobile apps. Two major forces are causing the shift; users have smartphones and are choosing more versatile application services. At the same time service providers prefer to invest in mobile applications, sometimes even at the expense of currently lucrative SMS services. Moreover, the mobile operators have adopted tighter policies in accepting current and new services and cleaned the SMS market from unwanted services. All these factors together have caused a sharp drop in total market revenue. 28 2008 2009 2010 2011 2012 2013 2014 The only growth areas left in SMS services are public transport and vehicle registry inquiries; all of the other categories are facing decreasing demand. Some of the service categories have disappeared of which some have been replaced by corresponding mobile applications. Ringtones, which once were the king of premium mobile services, have melted away almost entirely as a business. Directory services in turn, are shifting to mobile apps and a different business model. SMS loans are no longer available due to new legislation. At the same time hardly any new premium SMS services have been developed. The SMS market is dominated by a few large players and followed by dozens of other service providers. Operators’ role is mainly in the delivery and billing services, less in service provision. Fonecta continued as the largest service provider by revenue in 2012, followed by HSL. Together these two players represented close to a half of the total market revenue. Most of the remaining revenue is going through aggregators that host a number of service providers. 2015 2016
  29. 29. Others Chat & communities Weather Ringtones Classifieds Interactive TV services Vehicle registry inquiries Public transportation Directory services 2008 2009 2010 2011 2012 2013 2014 2015 2016 Others 22,4 22,7 26,7 30,4 25,5 Ringtones 8,3 7,1 4,6 3,5 2,1 21,5 18 15,1 12,7 0,9 0,3 0,1 Chat & communities 5,0 3,1 2,5 2,2 0,0 2,0 1,8 1,3 0,8 Weather 2,0 2,0 2,1 0,4 2,1 2,0 1,5 1,4 1,2 Classifieds 2,6 3,3 1,1 3,3 3,0 2,1 1,9 1,7 1,5 Interactive TV services 2,7 1,4 2,7 2,4 2,2 0,7 0,8 0,8 0,7 Vehicle registry inquiries 0,6 3,5 3,7 3,8 3,8 4,1 4,2 4,2 4,3 4,3 Public transportation 6,4 6,7 6,9 6,9 7,3 7,6 8,0 8,4 8,8 Directory services 16,5 17,9 17,2 16,3 16,8 15,0 10,5 7,3 5,1 69 69 70 70 63 55 46 39 34 Source: Idean, 2013 Figure 14. Premium SMS revenue in Finland by major service category, 2008–2016 (M€) Almost all the SMS service areas are facing decreasing revenue trend. The only exceptions are public transportation services and vehicle registry inquiries that have been resistant for the trend and will stand out as the leading SMS services in 2016. 29
  30. 30. PREMIUM RATE CALLS 177 172 -3 % 172 172 0 % 0 % 143 124 107 Figure 15. Premium rate call revenue in Finland 89 2008–2016 (M€) Premium rate call market revenue is 82 -9 % gradually declining after a 15 years of strong performance. The development resembles premium SMS market -13 % development. The developer interest on both of these platforms has dramatically -14 % -16 % -17 % decreased. The current smartphone application platforms and browsers have replaced the need of these traditional platforms. Source: Idean, 2013 The premium rate call revenue dropped 17 % in 2012 to 143 million euros. Still, the premium rate call revenue represents over half of the total domestic revenue in Finland. The market is forecast to decrease steadily in the coming years. Most notably the demand for the two leading service categories, directory services and taxi orders is decreasing. The directory services due to shift in business models and migration to other channels. The shrinking taxi service revenue is mainly due to slowing demand for taxi services in general followed by the current economic recession. 30 2008 2009 2010 2011 2012 2013 2014 The market for premium rate calls has a long and successful history, which has been unfairly overshadowed by the more hyped markets, such as SMS based and mobile application market. Premium rate calls is currently and is forecast to remain the leading mobile content service category throughout the forecast period in this report. The total market revenue is highly dependent on the success of two leading services, directory services and taxi orders. Their revenue is forecast to decline in the coming years and the total market revenue trend will follow. The market consists of a large variety of services. In addition to directory services to taxi orders there are for example TV show voting, horoscopes and mobile payments for soft drink and snack vending machines. The two leading services represented together almost three quarters of the total revenue in 2012. All of the premium rate call service categories are expected to face decreasing demand in the coming years. 2015 2016
  31. 31. Other Entertainment Adult entertainment Interactive TV services Mobile payments Customer care Taxi Directory services 2008 2009 2010 2011 2012 2013 2014 2015 2016 Other 12,5 11,8 11,2 10,7 10,1 9,6 9,2 8,7 8,3 Entertainment 6,0 6,0 5,5 5,1 4,7 4,0 3,4 2,9 2,4 Adult entertainment 6,0 6,0 5,9 5,3 4,8 4,3 3,9 3,5 3.1 Interactive TV services 4,7 4,7 5,1 5,5 3,3 3,6 3,1 2,6 2,2 Mobile payments 6,4 6,4 6,6 7,9 7,7 7,4 7,2 7,0 6,8 Customer care 9,0 9,0 9,4 9,2 9,3 9,4 9,3 9,2 9,1 Taxi 31,5 28,9 30,3 31,3 27,2 25,0 24,0 23,1 22,1 Directory services 100,8 98,8 97,8 96,9 75,5 60,4 46,5 32,6 27,7 177 172 172 172 143 124 107 89 82 Source: Idean, 2013 Figure 16. Premium rate call service revenue in Finland by category 2008–2016 (M€) All of the premium call rate service categories are facing declining demand. The dropping use of directory and taxi services is particularly influential for the total market value. Mobile payments and customer care service categories are least affected by the current trend. 31
  32. 32. Device base The mobile device user base is rapidly changing in Finland. The majority of mobile phone users have a smartphone, and a tablet device was in every fourth household in Finland in the fall of 2013. This trend is projected to continue as smartphones and tablets dominate the sales charts. In 2013 there will be three smartphones sold per one feature phone and it seems likely that soon the smartphones will be the only option available in stores. Tablet devices exceeded laptop unit sales in the first half Figure 17. of 2013 in Finland. At the same time there are several new device categories emerging, such as smartwatches, different wristbands, glasses and other wearable computing devices. Others Mobile phone population in Finland by Nokia OS platform 2010–2016 (in thousands) Smartphones will outnumber feature phones in 2013. Windows Phone is forecast to be the fastest growing platform in Finland in S40 2013; the device base is estimated to double in 2013 against previous year. S40 is the leading platform overall and Android among smartphones. In 2016 Android is forecast to represent approximately half of the total Symbian mobile phone population in Finland. Source: Idean, 2013 iPhone Windows Phone Android 32 647 422 446 365 9,9 % 9,2 % 6 % 6,4 % 5,2 % 875 680 420 315 158 71 32 9,7 % 6 % 4,5 % 2,3 % 1 % 0,5 % 3 270 3 100 2 590 1 943 1 360 884 574 44,3 % 37 % 27,8 % 19,4 % 12,6 % 8,2 % 1 820 1 800 1 470 1 029 720 360 180 25,7 % 21 % 14,7 % 10,3 % 5,1 % 2,6 % 94 282 497 646 775 930 977 4 % 7,1 % 9,2 % 11,1 % 13,3 % 14 % 17 55 455 933 1 259 1 196 1 136 0,8 % 6,5 % 13,3 % 18 % 17,1 % 16,2 % 61 462 875 1 488 2 306 3 113 3 735 0,9 % Android 693 0,2 % Windows Phone 622 8,9 % 1,3 % iPhone 865 26 % Symbian 2013 46,7 % S40 2012 12,5 % Nokia OS 2011 12,4 % Others 2010 2014 2015 2016 6,6 % 12,5 % 21,3 % 32,9 % 44,5 % 53,4 %
  33. 33. The mobile device user base has a strong influence on mobile content service uptake and development. Currently the most interesting and significant data is the device population of smartphones and tablets and their market shares by platform. The total installed base of smartphones in Finland is forecast to grow to four million devices by the end of 2013 and to represent 59 % of the total of seven million mobile devices in Finland. Tablet device sales has continued strongly in 2013 and the total device population is forecast to climb to close to 900 000 tablets at the end of 2013. By the end of 2013 Android is forecast to be the leading platform when looking at the combined device population of smartphones and tablets in Finland excluding the Symbian platform. Android is forecast to take 44 % of the market share, followed by iOS with 32 % and Windows with the remaining 24 %. iOS remains as the most lucrative platform for application developers despite the fact that it is not the leading platform by the number of devices. There are several explanations for this. Practically all iOS device users have downloaded their credit card information into the devices, unlike users on other platforms. Moreover, iOS devices are higher priced than devices on other platforms on average and presumably the users are also wealthier than users on other platforms. These are among the factors that make iOS superior in commercializing its application store. Figure 18. Tablet device population in Finland by platform 2010–2016 (in thousands) Installed base of tablets is growing fast and it is forecast to double in 2013. Apple has been unchallenged leader in the market so far. Now the competitors are challenging Apple’s market share. Competitors challenge Apple especially in the lower price categories where Apple has no supply. Source: Idean, 2013 2010 2012 – – 2013 2014 2015 2016 10 41 81 119 1,1 % Others – 2011 3,3 % 5,5 % 7,6 % Android Tablet 12 130 345 617 732 653 537 92 % iPad 91,1  % 80,4 % 69,7 % 59,2 % 45 % 34,2 % 1 13 84 258 464 720 914 8 % 8,9 % 19,6 % 29,2 % 37,5 % 49,5 % 58,2 % 13 143 429 885 1 237 1 453 1 570 33
  34. 34. DEVICE BASE The new emerging device categories, such as smartwatches, different wristbands, glasses and other wearable computing devices provide an interesting opportunity for service providers. There are already some products available in these categories, but they have not made a breakthrough yet. Opinions regarding the future commercial success of these categories is divided,: there are many believers and many who are skeptical. So far there have been no commercial breakthroughs for smartwatches although several models have been available in stores for some time. Google has been developing Google Glass concept. The handset population in Finland is very fragmented; there were hundreds of different handset models identified in Finnish mobile networks in 2012. The fragmentation of the mobile device population was increasing until 2008, but has stabilized since then. Yet when compared internationally the Finnish handset base is solid due to Nokia’s strong market share – even though Nokia’s market share has dropped somewhat over the past years. Some 70 % of the active handsets on Finnish mobile networks were Nokias in the fall of 2012. The top 10 handset models represented approximately 25 % of the total handset base. Rapidly changing device population Smartphones and tablet devices are currently making their way to the masses. Over half of the Finnish mobile phone population consisted of smartphones in mid 2013 and three out of four mobile phones sold in the first half of 2013 were smartphones. Lately the leading mobile phone operators have indicated that smartphones represent over two thirds of their total mobile phone sales. Smartphone penetration grew in all of the studied countries between 2011 and 2013. According to the same source, the differences between most of the countries in Q1 2011 were rather marginal. Smartphone penetration was around 30% in most of the benchmarked Western European countries in 2011. The change within the following 24 months suggests to tremendously strong smartphone sales and migration in some these countries in 2011 and 2012. 34
  35. 35. 1 883 063 Feature Phones 1 557 181 629 394 581 582 Smartphones 434 458 404 714 337 146 Laptops Desktop computers 80 972 62 861 11 731 2008 2009 Tablets 2010 2011 Smartphones 2012 Tablets 15 % 27 % 43 % 45 % 64 % 68 % H1 H2 2010 55 % 99 % 95 % H1 85 % H2 2011 36 % 32 % H1 H2 2012 56 % 77 % 63 % 44 % 46 % 73 % 73 % 57 % 23 % 37 % 56 % Laptops Feature phones 2013 54 % 44 % 27 % H1 2013 H1 H2 2010 H1 H2 2011 H1 H2 2012 H1 2013 Sources: Kotek; Idean, 2013 Figure 19. Annual device sales in Finland 2008–2013 (units), and bi-annual distribution of sales between selected devices 2010–2013 Smartphone sales exceeded feature phones in 2010 and tablets laptops in 2013. It seems likely that soon smartphones will be the only option available in stores. Tablet has become the choice for both consumer and business users. So far tablets and laptops have been used in tandem, but in many cases tablets may replace the need for a laptop in the coming years. 35
  36. 36. SMARTPHONE PENETRATION EU5 Android 50 % iOS 20 % Symbian 57 % 15 % Blackberry OS 7 % Windows Phone 5 % Other France Germany Italy Spain 3 % UK Finland Android 26 % iOS 47 % 15 % Symbian Blackberry OS 44 % 0 % Windows Phone Other 14 % 1 % Sources: Comscore; Idean, 2013 Figure 20. Smartphone penetration in EU5 and Finland in 2012 Finland lags behind in smartphone penetration in couple of ways. First, the overall penetration of smartphones is smaller in Finland than in for example combined average of EU5. Secondly, the structure of the smartphone base is less optimal for the new services as there is still a considerable amount of Symbian phones in the market. 36
  37. 37. 73 % Korea Norway Australia Sweden United Kingdom Denmark United States 56 % 44 % 31 % 56 % 33 % Spain 44 % 33 % 47 % 33 % 29 % France 27 % Italy 24 % Russia Hungary Belgium 22 % Japan 6 % 40 % 34 % 26 % 20 % 41 % 34 % 22 % 14 % 42 % 36 % 19 % Brazil 38 % 29 % 18 % 47 % 38 % 28 % Germany 55 % 48 % 36 % Finland 59 % 45 % 30 % China 62 % 51 % 30 % 21 % 63 % 51 % 30 % Austria 65 % 52 % 37 % Canada 68 % 54 % 33 % Jan 2013 Jan 2012 Jan 2011 25 % Sources: Google; Idean, 2013 Figure 21. Smartphone penetration in selected countries Jan 2011 — Jan 2013 Finland is used to top many IT-related global benchmarks. However, in smartphone penetration Finland doesn’t perform better than the average. This maybe due to Nokia’s strong position in Finland combined with the stumbling smartphone strategy over the past years. 37
  38. 38. MOBILE MARKETING 36 33 28 21 Figure 22. 36 % Mobile marketing revenue in Finland 2008–2016 (M€) 13 Mobile marketing is growing in a healthy speed. One could say, that the promises are finally redeemed. A considerable share 36 % 15 11 9 of overall online consumption has moved to 11 % 21 % 16 % mobile devices and the share of mobile is 14 18 % 10 % 5 % expected to increase further in the forecast period. Source: Idean, 2013 Mobile marketing is growing steadily. In 2012 the total marketing spend was close to 16 million euros, which represents a 21 % increase over the previous year. SMS based forms of mobile marketing brought in the majority of the revenue in 2012, but combined spending on display and search marketing are forecast to exceed SMS based forms in 2013. The total mobile marketing spending is forecast to reach 23 million euros in 2013, which is well above earlier expectations. Customer relationship communications is the largest category within mobile marketing. Currently its share is over 60 % and in 2015 it is still forecast to represent over 40 % of total mobile marketing spending. 38 2008 2009 2010 2011 2012 2013 2014 In this report, mobile marketing has been divided into mobile advertising and customer relationship communication. Mobile advertising consists mainly of SMS based advertisement messaging, mobile banners, mobile search and in-app advertising. Other forms of mobile advertising are estimated to have low significance today and are thus excluded from the scope. These forms include mobile marketing via MMS, Bluetooth, infrared and marketing within games, and video clips. Also QR Codes are excluded. Display and search marketing spend are driving the fast growth in mobile marketing. The major driver behind these is the growing mobile consumption and development of more sophisticated mobile marketing methods and tools. In recent years both desktop and mobile usage have been growing simultaneously. In coming years mobile usage will increase at the expense of desktop usage. A growing part of the ad spend in Finland goes through international players, such as Google and Facebook. 2015 2016
  39. 39. Customer communication Messaging Display Search 2008 2009 2010 2011 2012 2013 2014 2015 2016 Customer communication 6,9 7,6 8,5 8,9 9,2 9,6 10,1 9,8 9,5 Messaging 1,8 2,1 2,4 1,9 1,0 0,4 0,2 0,1 0,0 Display 0,1 0,2 0,5 0,8 2,8 6,3 12,3 19,0 25,7 Search 0,4 9,3 0,8 10,8 1,7 13,0 2,1 13,7 3,7 16,6 6,8 23,1 12,6 35,2 19,5 48,4 26,7 61,9 Source: Idean, 2013 Figure 23. Mobile marketing revenue in Finland by category 2008–2016 (M€) Display and search are the fastest growing mobile marketing categories throughout the forecast period. Customer relationship communication remains as a significant category as well. 39
  40. 40. Interviews Henrik Laine – Vice President at MTV Oy Ilkka Lehto – Lakiasiainpäällikkö, Teleforum ry. Jan Ketonen – Advisor & Innovator, Mobile Advertising at Sanoma Finland Jari Hyvönen – Product Manager, Elisa Oyj Jouni Hytönen – tuottaja, Fonecta Oy Juhani Kivikangas – Toimitusjohtaja, Teleforum ry. Juho Huopaniemi – Director, Elisa Oyj Jukka Sintonen – CEO, Booxmedia Oy KooPee Hiltunen – Director, Neogames Finland Miko Stratos – Director Service Development, Fonecta Oy Pasi Eronen – VAS Offering Manager Riku Salminen – CEO, Jongla TeliaSonera Finland Oyj Tero Kalsta – Johtaja, Avainasiakkaat, Steam Communications Oy Timo Ketonen – Project Manager at EDGE research group, Åbo Akademi University Tommi Kankare – Liiketoiminnan kehityspäällikkö, Fonecta Oy 40
  41. 41. Steering Group Christian Lindholm – Start-Up (Koru) in residence at EIT ICT Labs Henry Nieminen – Vice President, Enterprise Markets Finland, CGI Viitasaari Jukka – Director, Information Technology Industries, The Federation of Finnish Technology Industries Ville Peltola – Innovation Director, IBM Finland. CTO Office Europe Inka Vilpola – General Manager, IM Technology Office, Wärtsilä Ismo Kosonen – Senior Adviser, Ministry of Transport and Communications Janne Aaltonen – CEO, HYKSin Kari Systa – Professor, Software Engineering at Tampere University of Technology Mika Okkola – Director, Developer and Platform Evangelism | Microsoft Oy Mikael Stendahl – Head of Partner & Developer Relations at Nokia, North Europe Mikko Terho – CTO Mobile Software, Site Manager, Huawei Technologies Oy (Finland) Co.Ltd Pekka Sivonen – Head of App Campus, Aalto University ACE Peter Klenberg – Director, ICT and Business Development at Tuko Logistics Oy Tiina Zilliacus – Founder and CEO at Gajatri Studios Oy Vesa Kurki – Director, FMI 41