Etude PwC sur le rôle des opérateurs de réseaux mobiles dans les pays émergents (2013)


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Avec l’arrivée de smartphones à bas coût, les terminaux connectés s’imposent progressivement dans les pays émergents et la demande en transfert de données s’accroît.
Cette situation rappelle celle des Etats-Unis ou de l’Europe occidentale il y a cinq ans. Dans les pays développés, les opérateurs de réseaux mobiles (MNO) se sont fait doubler par les fabricants de mobiles et autres « devices », ainsi que par les acteurs du software. Mais les opportunités restent intactes dans les pays émergents.
Selon PwC, envisager les marchés numériques des pays émergents comme des réseaux interdépendants permet aux MNO à la fois d’accroître leur revenu grâce à la hausse de l’usage de données, et d’améliorer leur position dans la chaîne de valeur afin de générer de la croissance. Ils doivent notamment se positionner sur des niches comme la proposition de contenu local ou musical, et prendre une place sur le marché de la publicité mobile.

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Etude PwC sur le rôle des opérateurs de réseaux mobiles dans les pays émergents (2013)

  1. 1. Navigating the digital media ecosystemin emerging marketsIn developed markets, mobile operators have largelymissed the digital gold rush that device manufacturersand software players have captured. But in emergingeconomies, the opportunity for capturing these newrevenue streams remains. Historically, mobile networkoperators (MNOs) have looked at the digital marketsimplistically, as a collection of distinct products thatinteract with and affect each other. The digital market,though, really is more of an interdependent andevolving ecosystem.In our view, by looking at digital markets in emergingeconomies as inter-reliant networks, MNOs can fuelgreater revenues with increased data usage and can putthemselves in a better position in the wider value chainto find new revenue opportunities. Because the growth ofMNOs’ traditional revenues (voice and SMS) is slowing,and because emerging economies increasingly areadopting Internet-enabled devices, revenue from data aswell as from new sources is becoming more important andmore accessible. An environment is developing that sharesmany of the characteristics seen in the US and WesternEurope three to five years ago. by Brian Potterill and Henri Tran Brian Potterill is a director and Henri Tran is a manager in PwC’s Technology, Media and Telecoms Strategy practice. For more information, contact Brian by phone at [44] 7973 111 527 or by email at; or contact Henri by phone at [44] 7730 146 625 or by email at The authors wish to thank Huw Thomas for his contributions to this article.30 Navigating the digital media ecosystem in emerging markets
  2. 2. Iguazu Falls, Brazil. The advent of the smartphone in applications, music, games, videos and The symbiotic relationship of digital developed economies has shown us web browsing. media to other products and services that mobile devices are evolving. Once at work: simply a tool for communicating, Figure 1 illustrates how digital media they now are personal computers depends on other products and • The emergence of data access that encompass communication, services. First, it relies on the ability and smartphones has created a social activities, work and more. of the devices (notably smartphones platform for customers to consume For smartphone users, basic and tablets) to support consumption digital media. communication is no longer the core by letting customers connect to the function. In the UK, for example, Internet and access data through • Digital media engages customers, smartphone customers spend on mobile broadband coverage. Second, which means that indirectly it average only about 16% of their device digital media on the whole depends supports further demand for devices time phoning and texting, and the on each of its various forms being and data access which support it. remaining 84% on web browsing, social economically viable. Application media, music and games.1 developers, musicians, publishers and • The economic success of digital other owners of mobile content require media depends on generating This increasingly dominant interaction revenue streams sufficient for them revenues, so developers are with digital media spearheads to continue providing these products. making the most of consumers’ customers’ engagement with the Revenue tends to come either directly, engagement with digital media to mobile digital ecosystem more broadly through consumers purchasing content create new revenue streams, such as (see Figure 1). In the context of this (making payments upfront or through a mobile advertising. article, digital media refers to the ‘freemium’ model), through advertising broad range of digital information that revenues or through a combination of consumers can engage with through the two. their smartphone or tablet, including Communications Review 31
  3. 3. Figure 1: Digital media spearheads customer engagement but is highly dependent Customer engagement Route to customer Digital media represents one of the pivotal interfaces with the customer. Digital media De Economic enablers pe Digital media requires an economic foundation to support its nd Mobile Direct en sustainability. Revenues generally come from advertising or advertising revenues cy through direct purchase. Technical enablers Device capability and access to mobile broadband are the key technical facilitators for customers to access Device Data digital media. capability accessSource: PwC’s analysis.We believe that a similar model is likely services such as M-PESA in Africa The next wave of development isto develop in emerging economies and GCASH in the Philippines have coming from the transition fromtoo. In the past ten years, mobile helped add security to transactions in traditional (voice) mobile devicesdevices have become pivotal to the countries that have a predominantly to Internet-enabled devices, namelybusiness and personal lives of those unbanked population. smartphones. In emerging markets,in emerging economies. According to the growth in mobile versus fixed-the World Bank, mobile subscription Making connectivity and broadband penetration – combinedpenetration across Sub-Saharan Africa, communication more affordable to with the decreasing cost and thefor example, rose from 2% in 2001 to individual citizens has brought huge increasing processing power (and53% in 2011; and the Middle East and economic benefits. The World Bank hence capability) of devices – isNorth Africa saw a rise from 5% to 99% estimates that when low- to middle- fuelling the transition. The result is ain the same period. Mobile phones income economies increase their leapfrogging of the personal computerhave been used in novel ways, such as Internet penetration by 10%, they can era, in which smartphones and tabletsthe basis for rudimentary banking and expect a 1.4% increase in the country’s are becoming the predominantfinancial transactions. More formalised gross domestic product per capita.2 computing platform in these markets. The World Bank estimates that when low- to middle-income economies increase their Internet penetration by 10%, they can expect a 1.4% increase in the country’s gross domestic product per capita.232 Navigating the digital media ecosystem in emerging markets
  4. 4. The higher comparative costs of becoming the primary method of device.8 In emerging markets, whereinstalling fixed-line versus mobile Internet access for these nations in the average revenue per user alreadybroadband further discourages the coming years. is low, the potential data revenues canoperators from investing in fixed-line help increase per-customer spendingbroadband. So mobile broadband Finding revenue opportunities in (see Figure 3) in two phases. In theis vastly outpacing fixed-Internet latent demand for digital media first phase, more existing customerssubscriptions in the developing nations Mobile network operators (MNOs) and will adopt data bundles. In the second(see Figure 2). In Kenya, for example, device manufacturers, in particular, phase, increasing their use of data will99% of Internet subscriptions are find digital media of interest because inspire customers to buy larger bundles.on mobile phones.3 And the World of the secondary revenues it creates.Economic Forum projects mobile The model for delivering For the MNO, the more individualsbroadband to represent 84% of total content: short-term vs. engage with and download content, theInternet connections in emerging long-term effectiveness more data they use (smartphones canregions by 2016.4 generate up to 35 times the level of data Many MNOs in both developed traffic that a basic-feature phone would and emerging markets have triedDeclining prices – apparent in use). For the device manufacturer, to stimulate consumption throughsmartphone handsets selling for less the content available can be a pivotal selling content to consumers. That’sthan US$100 – are making mobile reason why a consumer purchases a understandable in an environmentdevices increasingly accessible to specific handset.6 A recent study of where smartphone and mobile-customers in developing markets. In consumers in Russia, India and Brazil broadband penetration are yet to take2015, for example, it’s expected that suggests that better Internet access a significant share of subscribers.340m Android devices priced under and the ability to use applications are Without mobile broadband, gettingUS$150 will be shipped globally.5 the two primary reasons for buying content to customers is mostly aboutThe result is subscribers switching from smartphones, and this is contributing the network, as customers rely on voicelegacy mobile devices to smartphones. to increased data usage.7 or SMS to receive updates or content.For example, in South Africa thesmartphone penetration rate is 15%, Smartphones are inducing new Similarly, for a lot of emergingin Brazil, 12%; and in Russia, 11%. habits among users with, on average, economies, a large percentage of the 20% starting to use data-intensive population remains unbanked. WithCollectively, these trends are applications related to video, TV, maps mobile penetration considerably highercontributing to the smartphone and navigation since purchasing their than banking penetration, MNOs have a unique economic relationship with subscribers that can be used to sell content. Delivering content, though, isFigure 2: Mobile broadband connections to dominate Internet access in a relatively small revenue opportunity.emerging economies by 2016 Revenue from value-added services, which include ringtones, ringback Number of broadband connections in emerging economies, 2011 vs. 2016 (millions) tones, wallpapers and other 100% information-based services, across n Fixed n Mobile all emerging markets totalled only 90% 460 approximately US$11bn in 2011.9 80% 261 70% As the movement towards consuming 60% more varied and complex digital media takes off, fuelled by smartphone and 50% mobile-broadband penetration, the 40% 2,366 MNO’s position of strength becomes 415 30% increasingly eroded. Mobile Internet 20% has shifted the intelligence from 10% the network, where connectivity is king, to the software and the device, 0% 2011 2016 where delivering content is critical – and where the manufacturersSource: Bold and Davidson, “Mobile Broadband: Redefining Internet Access and Empowering Individuals,” are better placed to improve theGlobal Information Technology Report 2012, World Economic Forum. customer’s experience. The increasing Communications Review 33
  5. 5. store due to limited take-up caused by aDespite more than 10bn downloads of lack of scale and content expertise.applications and more than a 50% share Despite more than 10bn downloads of applications and more than a 50%of the paid applications revenue globally, the share of the paid applications revenueApple App Store is not a major profit centre. globally, the Apple App Store is not a major profit centre. In 2012, Apple announced it had cumulative revenues since inception of approximately US$5.7bn and had paid US$4.0bn toconsumption of digital media puts A couple examples of how content developers, leaving a gross margin ofpressure on pricing models and delivery has evolved in developed US$1.7bn over four years. Given theerodes the significance of an MNO’s markets offer lessons for emerging running and development costs, it’s nobilling relationship. The business markets. For instance, online content surprise that as Apple Chief Financialmodel of content developers will is a mature market in the UK and two Officer Peter Oppenheimer admittedevolve from a simple, traditional operators had ambitions of capturing in 2011, “We run the App Store justpoint-of-sale purchase to a reliance the demand there but have since a little over breakeven.” Still, Appleon mobile advertising for the majority withdrawn partially or fully from the represents one of the leaders in termsof revenue. So having direct contact market. One operator planned to offer a of monetising its offering.with consumers when they’re making branded applications store, compatiblepayments is likely to diminish. across most handsets. It promoted its In emerging markets, pricing pressuresUltimately, MNOs risk becoming own media services and third-party are likely to be even more acute. Lowerirrelevant as other players in the value applications. However, the company disposable incomes, a high numberchain become better placed to offer closed the store just two years after of unbanked individuals, limitedcontent to consumers. opening it. The other operator has been regulatory enforcement and piracy gradually reducing the offerings in its further undermine the opportunity to sell content to a large audience. The direct financial gains for the vendor of content are likely to be very limited.Figure 3: Data consumption in emerging markets is expected to growvery strongly A new content strategy and implications for emerging Indexed monthly data traffic growth forecast, 2011-2016 economies This is not to suggest there is no position for MNOs in delivering Monthly data traffic indexed at 2011 levels 104% 78% 77% CAGR CAGR CAGR content. What we’re suggesting is that 460 their primary focus for stimulating consumer demand should be elsewhere. For any content strategy an MNO undertakes, we see two critical considerations emerging: 2,366 Content strategy must be flexible, and potentially reversible. MNOs should understand that they’ll cease to be the best-placed player to deliver content when delivery by SMS begins 2011 2012 2013 2014 2015 2016 to fade and content through mobile Latin America Middle East and Africa Rest of the world broadband begins to dominate. So MNOs need to be prepared with aSource: Cisco, “Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2011-2016” (2012). reversible strategy for delivering34 Navigating the digital media ecosystem in emerging markets
  6. 6. Figure 4: The mobile content value chain is becoming increasingly congested, particularly for aggregation and delivery10 Operate ad Create and publish Aggregate and Connectivity/ Consumer device platform content deliver transport interface Content creators Moving into delivery Device Offering platforms manufacturers and services Limited entry via MNOs acquisition e.g. SingTel Entering into content delivery Portals/app stores Move into content development Ad networks OTT providersSource: PwC’s analysis.content to their subscribers. Content Moving elsewhere in the may be another step removed fromaggregation and delivery are obvious digital ecosystem an MNO’s core aim of increasing datapoints of contact with consumers revenues, but it’s foundational to the We see participating in mobileand will quickly become a congested viability of content. And it’s more advertising as the best way for MNOs tosegment (see Figure 4). MNOs need likely to offer a substantial stand-alone strengthen their position in the widerto think of their business model for revenue opportunity too. value chain – and to stimulate growthdelivering content to their customers as of the digital ecosystem Let’s explore the demand for mobile Particularly in emerging markets, advertising – and our understanding given the pressure on pricing theyContent offering should have a of how MNOs should approach this experience, mobile advertising hasspecific theme. The best hope for opportunity. huge potential to be an essentialMNOs to retain a degree of relevance economic support to content. MNOs The growth of disposable income isin content delivery is to have a specific can stimulate the mobile advertising causing the middle class of emergingniche or theme. Specialising in, for market by helping to provide the economies to expand at the sameexample, delivering local content can technical platform needed for content time that the youth segments ofhelp maintain relevance and inspire development and for growth through those populations – who representbrand affinity with specific social investing and sharing resources. Mobile an important target for advertisers –groups. Several operators either have advertising relies predominantly on the are expanding. These macro trendssigned deals with major music labels reach and depth of information about are drawing significant advertisingor have sponsored regional sporting customers. So MNOs are much better investment as brands begin to targetevents in order to offer exclusive placed to offer the core requirements the opportunities these increasinglycontent (e.g. Orange sponsored the – access to customer data, proximity wealthy and connected societiesAfrican Cup of Nations in 2012 and to network equipment – than they are offer. Even with global spending onoffered SMS alerts and rich content to to deliver content. Mobile advertising advertising having grown at only 3%their customers). We see participating in mobile advertising as the best way for MNOs to strengthen their position in the wider value chain – and to stimulate growth of the digital ecosystem simultaneously. Communications Review 35
  7. 7. in 2011, it grew strongly in emerging In emerging economies where intelligent services that send ads to markets. In Latin America advertising smartphone penetration (although users who have opted-in to receive grew 9%, and in the Middle East and growing quickly) is still quite low, messages based on dialogue about Africa it grew an impressive 23% year- MNOs should look initially at their interests. The company lets the on-year.11 capitalising on their unique ability advertisers use Vodacom’s customer to dominate SMS advertising, which database to run intelligent profiling and Within this advertising boom, the inherently centres on networks (see matches the customers’ interests with rapidly increasing penetration of Figure 5). The SMS/MMS channel is relevant advertisers’ messages. mobile devices is making the mobile a strong asset that an MNO can make channel a popular route to consumers. good use of by developing targeted The device and network evolution, Mobile advertising revenues are messaging campaigns. The MNO’s though, will mean MNOs won’t be able expected to grow at an annual pace knowledge of its customer base to rely on their strength in connectivity of around 65-70% until 2015 across represents a strength it can monetise to maintain their position in advertising. Latin America, Africa and the Middle when advertisers want to target The growing complexity of advertising East.12 Through 2011, the mobile ad certain demographics. Vodacom in through mobile broadband is a double- network InMobi saw the number of ad South Africa, for example, has had edged sword. impressions it served in Africa alone success predominantly through bulk grow at almost 10% per month.13 SMS campaigns, and through more Figure 5: The evolution of mobile advertising Network centric Device centric Application centric Messaging Others Mobile browsing/WAP In-content Games, SMS MMS IVR/voice etc. Idle screen ads Search Display Mobile apps music, video etc. Customers can opt in or out Audio ads Ads that appear Ads can either Display of Advertising or Generally of receiving texts advertising broadcast as a phone’s be banners banners on pop-ups that advertisingDescription products. These can require a before a call screen saver or or sponsored websites. are displayed with games, reply from the customer, or be connects. background. links sold and on apps, or and audio or purely push. delivered on appear during video clips the basis of app usage. before a music key words. or video clip. Generally bulk purchase of a Bulk purchase Bulk purchase CPM is still most common, Generally only Bulk purchasePricing model certain number of text messages. of advertising of advertising  but CPC and CPA are now CPM. of advertising, time. space. being used. and CPM. Legacy Future state CPC = Cost per click CPM = Cost per 1,000 views CPA = Cost per (pre-agreed) action Source: PwC’s analysis. 36 Navigating the digital media ecosystem in emerging markets
  8. 8. Figure 6: Examples of how global MNOs have positioned themselves to enter the mobile ad network market Operator Type of deal Territory reach Approach SingTel Acquisition Global Singapore-based operator SingTel announced in March 2012 it would buy Amobee to expand its mobile advertising business in a deal worth US$321m. Amobee, a mobile advertising company, owns an ad-serving platform that covers banner and rich-media ads. Amobee is serving 12bn monthly mobile ad impressions, 35m opt-in users on SMS/ MMS and 18m daily messages. Project Oscar Partnership UK (initially) O2, Vodafone and EE created the Project Oscar partnership to achieve the scale necessary to offer a credible alternative to the online payments and advertising platforms the large Internet players have established. The major operators in the UK have partnered to generate the scale to develop an ad network that can offer advertisers the opportunity to reach the vast majority of mobile subscribers in the UK through one entity. Orange Acquisition UK /Global Orange France Telecom acquired the UK digital-marketing company Unanimis in August 2009 to develop its advertising business and offer new services. Unanimis sells advertising to media and advertising agencies and to direct advertisers that are looking to reach a relevant audience through the Internet and mobile. Since summer 2011, Orange integrated Unanimis into its Digital Media entity, under a single chief executive officer.Source: PwC’s analysis based on companies’ website information.On one hand, mobile advertising On the other hand, advertisers will MNOs should consider how they canwill become increasingly centred on expect the targeting of customers develop a strong offering in mobile-devices, and the complexity attached to improve based on the volume of broadband advertising by eitherto physically delivering ads, recording consumer information that can be developing, acquiring or partneringtheir effectiveness and developing collected, and MNOs hold unique with a mobile advertising network. Themarket-based pricing will require and valuable information about a most appropriate approach will dependsophisticated platforms to push ads customer’s location, billing habits entirely on the size of an MNO’s marketto customers. That, in turn, will and so on. On top of this, in emerging and its competitive position, scale ofdraw advertising further away from markets, where airtime is at more of a operations and current capabilities.MNOs’ capabilities. premium than in developed economies, Figure 6 shows some examples of how exchanging free minutes or data for several operators have approached accepting ads can bring MNOs back this challenge. into the fold. Communications Review 37
  9. 9. Understanding the right quality and the depth of data 3. Developing the platform. Thisbusiness model and the they receive ultimately dictate approach will consider variousright approach how well advertisers can target dimensions, such as technical, consumer groups and, in turn, financial and regulatory. While mostThe challenge for MNOs is to the financial value of the ads. operators have the technical teamsunderstand the right business model Both the complexity and the large to undertake large information-for the economy they’re operating volume of customer information technology or platform projects,in. We see three areas as essential for make excelling in data analytics a they may not be ready to investany mobile advertising platform to be real challenge. a large sum in an advertisingeffective for advertisers: (1) the depth platform. So the operators needand quality of consumer information 2. Reaching appropriate scale. to clearly assess the best options:that can be provided to advertisers, (2) This approach will differ make, buy or partner. And they’llthe number of consumers accessible depending on each operator’s need to evaluate risks relatedthrough the network and (3) the specific circumstances. Those with to customer privacy and localeffectiveness of the software platform significant market share may have regulations, which will raisethat delivers the ads. the scale and reach suitable to make uncertainty and complexity. developing their own advertisingWhen deciding how to play in this network viable. For others to In a time when traditional voicemarket, MNOs should focus on these achieve the scale required for the and SMS offerings are becomingthree approaches and translate them proposition to be commercially commoditised services, PwC believesinto the main tasks they must get right: viable, they’ll need to either partner that mobile operators in emerging1. Analysing data. MNOs need with other operators or ad networks markets must define a pro-active to make sure that their data on or buy into established ad networks. strategy for digital media services customers is usable and meaningful. Some operators want to have a and develop the right partnerships. To be able to give advertisers high- ‘closed’ network, or to look at a By not taking action now, operators quality, real-time data – and to broader, regional footprint as the risk losing out on the promise of new communicate the data’s uniqueness market grows. Others will look for data revenues. (such as location information) an open model. Understanding the to advertisers – MNOs must have criteria and when to choose the data-analytics capabilities. The relevant model are critical for a strategy to succeed.Footnotes1 O2 press release, “Making calls has become fifth most frequent use for a Smartphone for newly-networked generation of users,” 29/06/12.2 Qiang and Rossotto, with Kimura, “Economic Impacts of Broadband”, in Information and Communications for Development (2009), World Bank.3 The Economist, “Upwardly mobile”, 25/08/12; International Telecommunications Union website (2012).4 Bold and Davidson, “Mobile Broadband: Redefining Internet Access and Empowering Individuals”, in Global Information Technology Report 2012, World Economic Forum.5, Feb 6, 2013.6 Cisco, “Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2011-2016” (2012).7 Ericsson ConsumerLab, Emerging App Culture (2012).8 Ericsson ConsumerLab, Emerging App Culture (2012).9 Ovum, “Big changes ahead for mobile content in emerging markets” (2012).10 Based on analysis in World Economic Forum, “Digital Ecosystem Convergence between IT, Telecoms, Media and Entertainment” (2007).11 Nielsen, “Global AdView Pulse Q1 2012.”12 Informa Telecoms & Media Mobile marketing report (07/06/2011).13 InMobi network research publications (2011).38 Navigating the digital media ecosystem in emerging markets