This interview is cross-posted from the Online Community Report.
This month’s Expert Interview is with Christine Perey, Analyst and freelance associate of Informa Telecoms & Media. Christine has a truly global view of the topic of mobile social networking as a former Bay Area resident who now resides in Switzerland. Christine was kind enough to spend time answering several questions about mobile-based social networking below and expands on some of the findings published in the new Informa Telecoms and Media report, Mobile Social Networking: Communities and Content on the Move.
Christine’s Bio:
Christine Perey is an analyst with over 15 years experience in new and emerging multimedia communications markets. She is a freelance associate of Informa Telecoms & Media and a regular contributor to Informa’s Mobile Media information service.
Christine was the publisher and editor of The QuickTime Forum from 1991-1993 and the founder of The QuickTime Movie Festival. Christine is an invited speaker at industry events and serves on boards, panels and committees dedicated to the advancement of rich media experiences in business and consumer markets. In 2008 Informa Telecoms & Media published Mobile Social Networking: Community and Content on the Move, the most comprehensive market research report on mobile communities, researched and written by Christine. Previously, she authored the Personal Mobile Video Communications market research report published by Wainhouse Research in 2006.
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Q: What are the key differences you see in the mobile market in the states vs. Europe and Asia? Specifically, what are the key barriers to innovation in the US?
A: As far as the general topic of mobile services for consumers and businesses is concerned, there are dramatic regional differences. For example, in the US, most (somewhere over 90%) subscribers are under contract, meaning that they receive a bill every month for the services they used in the prior 30 days. When a service provider has a guaranteed revenue stream, they are less likely to innovate than when people are changing operators every week or month. Also, until relatively recently, both in-bound and out-bound calls were charged and the consumer or business contracted for a flat rate monthly plan based on the “block” of minutes. This affects how people use the phone service (it lowers the tendency to give out the mobile number, for example). By contrast, in European and Asian markets, pre-paid services and dialing party pays are the rules, not the exceptions. People “top up” the phone cards in their phones and can change carriers any day of the week. Many have two phones (with two different carriers). There’s a good article on the US cellular market performance with some of Analysis Research’s recent report findings. Here’s a snippet:
Analysis Research predicts that total annual subscriber growth in the US nationwide could fall to 2 percent a year by 2012, compared with the 11 percent to 14 percent growth posted by the three wireless carriers, AT&T, Verizon Wireless and T-Mobile USA. But add in Sprint Nextel, which posted two consecutive quarters of subscriber losses, and the total annual subscriber growth last year for the top four carriers dropped to 9 percent – the slowest growth in a decade.
Technologies for mobile networks are not the same around the world. In the US and most of Latin and South America, the technology is based primarily (with the exception of AT&T Wirless/Cingular network and T-Mobile which are GSM/UMTS) on CDMA2000 which is a different radio technology than what was adopted and deployed in Western (and most of the Eastern block) Europe and Japan. In Europe and in many other parts of the world where advanced mobile services are offered, the technology is GSM which is the predecessor of WCDMA and the step up (to UMTS-3G) is relatively easy. There are proponents of these different technologies in each camp, for sure, but the bottom line is that due to the fact that these differences exist today, some mobile services are easier to build or deploy and will advance/develop more rapidly in some regions than others. In Europe, the UK and Italy are very advanced markets for mobile but for different reasons.
In Japan and Korea, mobile network services are the most advanced in the world, although the UK is not far behind. The competition among carriers and the penetration is high (exceeding one handset per person). Let’s look at Japan to compare and contrast the drivers of innovation, getting to your question about possible barriers to innovation in the US market. In Japan, NTT DoCoMo had the foresight in the mid- or late1990s to create an environment where a rich ecosystem for application developers could develop. In addition to having developer APIs and other tools, they provided a strong financial incentive for developers who created new services on their network. The developers in the i-Mode ecosystem would receive 20-30% of the revenues charged by the mobile operator for the services. The economic reward system is an important driver of innovation but the mobile network operators in the US market have adopted a strong “walled garden” approach where they and only they choose the services offered and if the successful services are provided by a third party, even then the “cut” of the action (revenues) which returns to the application developer is much lower (5-10%).
Despite the regional differences in regulation, markets, technologies and revenue sharing strategies, mobile communities are rapidly expanding in all parts of the world! I don’t have hard statistics to provide about on-deck and off-deck community tendency, but my impression is that mobile communities are making themselves easy to find and people are looking for them on their mobiles. Subscribers are looking for community services on the mobile operator’s deck as well as on the Mobile Web.
One of the barriers to subscribers using mobile communities is the cost of the data traffic. We’ve all heard and many have experienced the sticker shock when you download large files to a mobile handset or do a lot of surfing. In countries, such as Japan, Korea, UK and a few other European markets, there are flat-rate, all-you-can-eat data tariffs offered, which really reduce the barrier to using the mobile data services such as mobile communities. These are catching on and where available, User-Generated Content and mobile community services are high on the list of compelling reasons to take a flat rate data plan with your contract.
In addition to the mobile operator related regional differences, it is clear that there are also economic and societal differences which influence the rate of mobile community adoption. I’ll just look at a few of these non-operator factors to make my point. In many (most) economically less well developed regions of the world (outside the Western and Japanese economies), the mobile handset will be people’s first and only access to the Internet. The number of mobile phones has already exceeded the number of Web connected PCs. Increasingly these mobile phones are capable of accessing data services such as mobile communities. It’s not a question of choice, there just aren’t broadband Internet services available at affordable prices, or the PC in the home or office is shared among an entire family or group of people and you don’t want to have your community experience to be shared by your parents or siblings! The mobile handset personal experience is private and personalized and for some services, dating, for example—a very popular mobile community service—it’s not the type of experience you want to be doing in a living room with people around.
Like in web communities, there are strong cultural drivers which influence the appeal of communities and the feature popularity. In Asian markets, digital gifting is very popular. In Japan, people love to view UGC on their mobile, but are more conservative than Americans when creating their own content. In the US market, more subscribers are exhibitionists with their camera phones.
Q: Why doesn’t having international players like T-Mobile help spur innovation and openness in the domestic US market?
A: T-Mobile has operated a very innovative service in the US market called MyFaves and after over a year of success it has expanded this service to Germany, the UK and elsewhere. Please read about this.
Mobile network operator groups, such as Hutchison Whampoa, Telefonica, Orange and Vodafone are very actively pursuing mobile community partnerships and view these services as important to their differentiation and competitive advantage both within a country and between geographies. Mobile communities, like their web cousins, need critical mass to continue growing. Having the ability to reach people on other networks in other regions is very valuable as some of the larger chat communities (e.g. Jumbuck and AirG) have shown.
One of the things we know that users are against is being in a walled garden in their community. Since mobile network operators can prevent the subscribers of other operator networks from joining a community, this can reduce the viral effect. If I’m an Orange customer and you are an O2 subscriber, we should still be able to be friends in the community. This is one of the great appeals to being off-deck or at the very least to join communities which are independently operated.
Q: What are the most interesting trends you are seeing in the mobile social networking space, and where (geographically) are they happening?
A: Mobile communities that offer people the ability to find others with like interests or to meet the numerous other human needs they have over the course of their days and lives, are blossoming. They are not copycats of web communities. Rather they are evolving in their own unique directions because people are taking risks and experimenting.
One of the things that we see increasingly is the desire on the part of community participants to take part in the mobile economy. In other words, those who are driving a lot of traffic for advertising or downloads want to get a fraction of the community host’s revenues. The systems which reward users with points or internal currencies are quickly going to link with recommendations. If I recommend that you go see or purchase something within our community and you trust me and follow that advice, then I should get a reward. Consumers will, over time, become the purveyors of micro-advertising campaigns. If I like a brand of hair product, computer or a sports team, and your transaction is influenced by my preferences, the community will track these social shopping patterns. This isn’t unique to the mobile communities. It is likely to be implemented and adopted well in mobile because the identity of the users is known to the platform provider based on a unique relationship they have with their phone and the mobile network operator.
In parallel with the evolution of communities, community features will be integrated to many if not all digital experiences both mobile and online. In the future, a social networking service will struggle to survive and attract new users simply by providing a social networking functionality as a core service. Instead, the features and functions will be offered as part of other services helping to drive personalization (through the data gathered), drive loyalty and to drive sales. At least this will be possible when a set of universally accepted community user feature-centered standards are developed, ratified and integrated into all future platforms.
Q: What key trends should online community and social media professionals pay attention to?
A: There is a great deal of uncertainty in this market, but the dimensions of the opportunity and the number and types of companies participating in the industry indicate that Mobile Social Networking is going to improve quickly and the service themes at its core – meeting the needs of people to stay in touch and feel that they belong to a group, to be entertained, to increase their productivity, to make a difference or have an impact – will persist over time.
In the future, entertainment will be very different as a result of mobile devices that enable sharing of digital content. According to Nokia’s research entitled A Glimpse of the Next Episode, published in December 2007, approximately 25% of the entertainment consumed by people in 2012 will have been created, edited and shared within ‘peer circles’ rather than produced and distributed by professional firms and studios. As a result of the popularity of online and mobile services like Mobile Social Networking, people will be accustomed to sharing their ‘instant’ social media with people they know as well as with people they have just met. In parallel, they will be learning to use the new tools at their disposal and developing collaborative media skills that will prove more rewarding and engaging than passively watching, reading or hearing the entertainment media produced by the impersonal entertainment powerhouses.
Future mobile devices will have better microphones, perhaps even microphone arrays combining multiple mobile devices into ad hoc sensor networks, for superior capture of sound, such as music and speech. In addition to sound and video, the mobile device will detect other users in the vicinity and, if they are known and part of a user’s community, applications will automatically embed tags associating faces and voices with names.
In some high-end devices, continuous measuring and monitoring of a user’s surroundings will detect when to begin and end a capture sequence, automatically zooming and focusing on items of interest. Since social media is rarely visible from inside a pocket or purse, mobile devices for social media capture will more likely be wearable, mounted on the user’s glasses or hat.
Systems in the mobile handset will permit the manual or automatic annotation of social media with information such as the place, the date and time, the objects in a scene and possibly more ‘human factor’ data such as the emotion of the user. By associating metadata at the time of the capture, the social media blending tools will have the ability to identify whose media was used in an edited composition, as well as to remove or hide people who do not wish to be identified or heard.
Q: What are your recommendations to those hosting and operating online communities?
A: Providers of community services aimed at the broadband-connected PC users are already using three of the four strategies available to them to expand the reach and use of their platforms to include mobile devices. The first strategy is to build a WAP version of the online services. Many add some value to the user by offering the option of receiving alerts when the platform detects community-relevant events via MT SMS and permit message management and viewing using the handset. Orkut and Facebook have used this strategy to date. MySpace also offers a WAP portal interface among its other strategies.
The benefit of this strategy is that it gets a rudimentary level of service deployed, so that the early adopters can at least browse and check their communities when mobile. So far, few of the online community providers using this strategy have enabled the rich social media features which the users of mobile handsets would most like to see. This is because the level of investment necessary for re-architecting the service platform for correct display and formatting is high, given the online community operator’s lack of historical concern with device management, and difficult to justify based on their existing banner ad revenue models. In the future, this strategy should persist and improve as online communities acquire the expertise necessary to build robust mobile community platforms or gateways to their existing services.
The second strategy is to port the online service features to a mobile operator’s proprietary service environment. This is essentially what MySpace did with Helio and, to a far lesser extent, with Vodafone. The service is offered on-deck and is easy for the user to log in, especially if an application or applet is installed. This strategy will also persist and involve pre-loaded applications on feature-rich handsets for mobile community services and social media.
The third strategy is partnering with a mobile community platform provider, such as InterCasting. Bebo and Piczo are among those choosing this strategy for their mobile service access. By using a mobile community platform and aggregation service, the online community reaches the largest number of potential registrants. As long as the community keeps its service brand and feature set, this is a sound strategy and significantly reduces the time-to-market. Other online communities are likely to follow this route when it is proven both from a technology integration and business model perspective.
The final strategy that has yet to be tested is for an online community provider to partner directly with a popular independent mobile community operator. The technologies for creating the gateway between the two will need to be proprietary but need not depend on a third party developer and could evolve at the speed that the two partners require. One of the reasons that this has not been properly explored yet is that mobile community service providers have not, to date, seen much advantage in this. However, as more broadband-connected PC users seek to access via mobile, the overlap between the two access types will drive the dialogue around potential partnerships.
To be successful with a mobile strategy, online communities will need to make a more significant investment to understand and meet the needs of mobile community participants than they have to date. Well-designed surveys, free trials such as that conducted by Sulake, the provider of Habbo Hotel, and the engagement with mobile community industry experts will all contribute to the education of the online community operator.
The most challenging domain for online community service providers to tackle will be in the area of revenue. As community participants have become accustomed to having access at no cost, they are reluctant to begin paying for equivalent or inferior services. As the mobile advertising market heats up and brands feel more comfortable with their community campaigns, this obstacle will gradually decline.
About PEREY Research & Consulting
PEREY Research & Consulting builds and leads senior management teams conducting and applying market research. Component and systems vendors, network operators and value added service providers rely on Perey Research to tap emerging multimedia technology trends, and to devise and implement new business development strategies in light of these trends.
More good stuff to highlight and announce soon.
