Monday, October 29, 2007

The Mobile Goldmine?

The predictions are that mobile content - pictures, audio, video and games - will be a massive market within the next few years. What are the opportunities and threats for developers of that content? Mark Brill from Ping Corporation Ltd looks at the issues for mobile content, and what the future may hold.

The Opportunities

All of the research shows that mobile content is going to be massive in the next five years. Screen digest estimated the value of this content to be £5.46bn a year by 2011. A 2006 Gartner Survey estimated that mobile content would be worth a less conservative $78 billion within the next 5 years.

We have already seen a 'first wave' of mobile content, largely dominated by ringtones and backgrounds. However the predicted 'second wave' of mobile content is almost upon us and it is expected to generate greater revenues, with a longer lifespan than the first wave.

What will bring about this second wave?

The growth in mobile content will be driven by improvements in technology such as higher resolution screens, better software and improved data connections, such as 3G.

Handset technology is converging with internet technologies through the introduction of devices such as the I-phone and the impending Google Phone. The line between phone, music or video player and PDA is becoming seamless.

At the same time the mobile phone operators are reviewing their pricing policies for data. Until recently, the cost of downloading was a few pounds per megabyte. This was a major barrier to downloading content. Most of the operators in the UK are now offering a flat rate for data, following a similar model to home broadband.

Premium SMS offers a simple revenue model allowing micro payments to be taken quickly. Identifying a phone number through SMS also allows for easy user and age verification with content restriction to unregistered phones.

The growth of 3rd party developers will continue. Many industry observers regard D2C (direct to consumer) as the most likely area to succeed with the most engaging content and the best user experience.

With over 3 billion phones worldwide, mobile technology is in wider use than PC-based internet access or television. As such it has the potential to become an enormously powerful tool for selling and distributing http://www.blogger.com/img/gl.link.gifcontent. A goldmine for mobile content providers.

Selling onto mobile

Typically the route to market is as follows:

* Content is created - pictures, video or audio
* The content provider sells through a distributor - such as Player-X or direct to the consumer via a platform such as .

Distributors will generally work with operator portals, such as Vodafone Live or T-Mobile's T-Zones. This is always operated on a revenue share - the content is not bought outright, but the revenue from Premium SMS is shared between the portal, distributor and content developer.

A D2C platform, such as immedia24 offers considerably more control over the content and a larger revenue share. Potentially it has a higher audience than the operator portal simply because many operators insist on exclusivity for content. The disadvantage is that there is no existing mobile customer base. D2C works well where there is already an audience through the web or other media, or where there is an advertising budget to see the content.

The Threats

In spite of some great opportunities, there are still many problems with creating and delivering mobile content.

Mobile Internet is accessed by only 23% of mobile users in the UK. Although at over 15m people that is still a considerable market, it is not as ubiquitous as SMS.

Whilst there are many people who can create great mobile content, the route to delivery is problematic. The mobile operators have generally regarded themselves as the key providers of mobile content, assuming that most people will want to download through their portals. However, it has been shown that the mobile users do not regard their operator as a trustworthy content provider. Operator Interference The operators have tried to restrict 3rd party content in many ways. Unlike an internet service provider, the mobile operators' online connections are made via their portals. Not only do they restrict which sites can be accessed, but they often alter the content itself. Ostensibly this has been under the guise of formatting the content for mobile, however there are examples of operators altering the display of 3rd party sites to remove much of the functionality and ruin the user experience.

Poor User Experience

The problems with poor user experience also relates to both the handsets themselves and the route to delivery. Whilst screen resolution, memory and functionality have improved on many handsets, usability can still be poor. The I-phone for example has been plagued with problems - everything from the battery life to high data charges. In the UK the I-phone will be locked to the O2 network. So if you want to change networks you will simply be left with a £400 brick!

At the point of download user experience has been equally poor. For example 3g in the UK is not as fast as broadband and is not always available. Poor pricing policies have compounded these problems. High profile Premium Rate rip-offs combined with confusing charges has resulted in many mobile users steering well clear of anything that may involve a premium rate SMS for downloading. Although flat rate data pricing is common place in the UK, the charges for accessing data abroad are still over £7 per megabyte.

Compatibility

A variety of operating systems, screen sizes and screen ratios make delivery of pictures, video and audio somewhat problematic. This is largely a technical issue for developers rather than the content creator. However the fact that there are few standards in mobile operating systems means that in the end the user will suffer. One poor experience with mobile content can put a user off for a very long time.

Low Premium Rate SMS Payouts

Whilst Premium SMS (PSMS) offers some great opportunities for both micro billing and non-credit card billing systems, the payouts offered by the networks are very low. For a £1.50 PSMS that the user pays (£1.26 after VAT), the operator and aggregator will take over 30p. This figure can be much higher on some networks. This leaves little over 90p for the content provider, creator or developer.

It means that the content provider can be forced into a position of charging considerably more for mobile content than when it is delivered though credit card billing on a web-site.

The Possibilities

With all these draw backs you may be thinking that there is little point in pursuing the Mobile Goldmine. However the potential of the mobile content market clearly exists. The issue, as with any new information technology, is to ensure that the needs of the user are understood and clearly met.

The convergence argument suggests that as we adopt more I-phone style handsets the line between mobile and web will disappear. Simply put, there is no need for developers to worry about mobile content specifically as we will all have the web on our phones.

Looking at the threats outlined above, it is clear that a division will remain between the internet and mobile. Inevitably small screen sizes and keypads will always create a different experience for the user. If I look at my own usage of mobile internet, I will acknowledge an email, but not write a lengthy reply. Whilst I may search for a film showing time or check an address on my web connected phone, I would not use it to book a flight or make a bank transfer. That is, as much as anything else a practical consideration of what it is possible to do with a small keyboard or screen.

Understanding the Technology

The key to accessing the Mobile Goldmine is to understand the relationship between a user and the technology. For example, we relate to our TV quite differently to our PC and the web, even though these days the technologies are similar.

What is the relationship between a user and their phone?

* Primarily it is for SMS (over 4 billion are sent each month in the UK) and phone calls
* It is a means of storing phone numbers - over 60% of people use their mobile as their main, often their only address book
* It is a means of killing time - playing games or sending messages while waiting for a bus, train or friend
* The phone is linked to personal identity

This last point is significant. For many people, the phone that they own, the ringtone or the background are all statements about how they see themselves. It is a highly personal item that is with them almost of the time. We have seen this in our studies with teenage mobile users, where their phone is now more significant to their peers than the clothes or the trainers they wear. Two years ago the Motorola Razor was the best selling phone, even though it performed the worst in usability tests. It was sleek, flat and came in bright pink. These factors were more important than the practical considerations.

Thus the key to successful mobile content is to develop specific content that meets the needs of the user. The first key to success is good usability. It is estimated that for each additional click required to access content, the provider will loose 30% of it's potential audience.

It should then engage the user in a way that supports their identity. In some areas, such as music or sport it is quite straight forward to engage at this level. In sectors such as the film or television, it may prove to be harder requiring more creative skills and ideas. It is also important to view mobile content not as an end in itself, but as a tool to enhance the user's experience across many platforms, such as the web, television or cinema. There are numerous examples where the web has successfully been used to enhance and support more traditional media and mobile may be used in the same way.

Ultimately the best approach to developing mobile content is not to be driven by the capabilities of the technology, but rather to understand the user's relationship with their phone and produce clever and engaging content.

Wednesday, July 25, 2007

Mint's SMS Payment Service

Mint, the credit card company, has launched an SMS alert and payment service for their customers. It works by sending the balance and minimum payment to their customers to coincide with the monthly statement.

They can reply by text giving the amount they wish to pay.

Customers signing up for the mobile service register their debit card and mobile phone details before agreeing a security code word, which is transmitted in all messages.

Mint offered this service after research showed that 27% of UK adults say they are too busy to pay by traditional methods.

Too often SMS based systems, especially for banking and finance are over blown and complex. This is a good example of a simple application that will benefit the customer and reduce costs to the bank.

Tuesday, July 24, 2007

Avoiding SMS and Phone Scandals

With the recent scandals involving phone and text lines in the media, public confidence has been damaged and the reputation of companies providing these services has been tarnished.
Recent scandals were: Richard and Judy Phone-In, Blue Peter Phone In, voting for ITV programmes by SMS.
Inevitably this is a small number from many phone-based transactions that are correctly carried out. However, it has led to a 20% drop in ITV’s revenues and BBC removing these from their programmes.

This paper looks at what the issues are for companies providing these services and how txt4ever and immedia24 systems and service avoid such problems.

Why Has There Been Problems?

Firstly it is important to take a look at why some of these errors occurred:

Richard and Judy Show, Channel 4
The problem was that the winner had been chosen some time before the lines had been closed. In effect people were paying to enter a competition which they could not win.
This problem had occurred because the team at their telecom provider, had made a decision to do this.

The biggest issue with this seems to be one of accountability. Who, at a senior level at the telecoms company or for that matter, Channel 4 was ensuring that the competition was complying with the regulations?

X-Factor, ITV
In this instance viewers were charged 50p rather than the advertised 35p giving a reported £200,000 of additional income.
ITV uncovered the problem during their own audit and responded quickly by making a sizable donation to charity. They were not fined by Ofcom.
The reasons for this error have not been reported, but it is likely to be human error where the systems were set to bill at the wrong price. Each ‘price’ is linked to a specific PSMS number – a 5 digit short code. It is quite possible that operators could have mistakenly chosen the wrong 5 digit number.

The BBC Blue Peter scam was connected to a phone-in, but it was not a telecoms error. The TV producers picked a ‘winner’ from the studio audience, not the voters.

Prevention

Built in Systems
It is important that systems prevent the possibility of human error or fraudulent activity as much as possible.
For example, with the problems at Channel 4, it would have been relatively simple to design the system so that the winner was picked out from the database of entrants. Once this had been done the system would no longer allow entries.
With the incorrect price setting in the X-Factor scenario, it is impossible to do this within immedia24 or txt4ever. All of our premium rate systems work on the basis of replying to an incoming message from a user.
The cost of the reply is clearly shown when it is set by the user, rather than simply showing the 5 digit number used. There is a further confirmation once this has been set.
The system also generates the necessary copy to add to any publicity or announcement (eg texts cost 25p + 1 message at your standard rate).
Thus the only way to make an error with the system is to act either fraudulently or negligently by ignoring the published rates and changing the price shown on the copy.

Open Accounting
Aside from improving systems, the human error or even dishonest side cannot be ignored. To prevent many of these problems there should have been better checking at a more senior level. Better accounting on the side of the TV companies may have helped prevent these problems.
Our systems are designed to give clients complete accounting on a real-time basis. So, for example if an SMS was advertised at 35p but was charging 50p the end client could view the live messages and see that there was an error.
All of our message reports and transaction reports can exported as a data file, which can be used by clients for accounting and further analysis.
On our customer support side, we monitor all of our systems throughout the day and test each new campaign set up by our clients.
Our own back end accounting system will also highlight any anomalies in the billing system. An example of how this has been managed is with fraudulent credit card transactions relating to our personal SMS product. We discovered a number of transactions from non-UK users that were clearly fraudulent in spite of the fact that they passed checks by both the bank and online processor. The system that we designed eradicates the fraud problem by checking the user details along side the username, password and even some message content. This is something that the credit card processing companies have been unable to do.
We are therefore confident that we can initiate other fraud checking and prevention facilities for other areas in our system.

Terms and Conditions Penalties
Along with providing good systems and accountability, we have included penalties in our Terms and Conditions which requires our clients to ensure the good management of their campaigns. Where conditions have been breached, for example a premium SMS campaign where the advertised price is different to the actual price, we would have the right to both suspend and account and to retain outstanding monies to cover any losses. Even though an out-payment to a supplier would be around 90p for a £1.50 premium message, we would retain all of the £1.50 in order to facilitate a refund to the mobile user – something that would be impossible to do via the mobile phone networks.

Conclusion
TV voting and phone-in’s have been seen as the pot of gold at the end of the rainbow by both broadcasters and telecoms providers alike. This gold-rush by some telecoms providers has not necessarily been matched by good technology or accounting systems to manage this. This is not surprising in an industry which is characterised by hidden and expensive charges.
The profits of the last few years from TV-based voting are set to drop. Channel 4 has halved the price of Big Brother Voting and the general decline in viewers to reality TV will see fewer voters.
The focus of our products and our service is very different to this. Our underlying ethos is not about gaining a quick buck from a TV campaign. What we are doing is creating an ongoing and beneficial relationship with our customers and the end mobile user.

Friday, May 25, 2007

Keys Money Fags Phone

A friend of mine bought me a badge from The Design Museum that said 'Keys, Money, Fags, Phone' ... it's highly appropriate because that is me!!!

It also highlights the point about today's living - your phone is as important as your keys or money. Primarily it's a communication device, but for many people it's also an alarm clock, calendar, organiser, camera or music player.
That has an important bareing for those developing applications for mobile or communication to mobile. It's the device that we have with us pretty much all of the time.

Tuesday, May 22, 2007

SEEKING THE INDUSTRY’S OPINION ON MOBILE PUBLISHING

Formation, a leading developer of web and mobile applications, are seeking the opinions of the industry to understand how they feel about mobile music. They have produced an online survey, which is now online at ihttp://www.blogger.com/img/gl.link.gifmmedia24.com

The company would like to enable artist, independent labels and promoters to deliver to music to mobile users. immedia24 was launched in March 2007, and has been used by The Beats – Mike Skinners’ labels.

Marketing Manager Gunvor Overbye says “We have noticed that the industry is not taking advantage of the change in mobile usage and we are interested to find out why that is”

Formation is looking at getting a broad cross section of the industry to answer the survey and will conduct follow-up interview with anyone who has got more to say.

Gunvor Overbye added: We are trying to help the industry to understand what is going on. Many people in the music are often fearful of this new technology. This survey will enable us to get a view of where things are really going.


The survey can be found here.

The results will be published at the end of the summer on the website.

Why people prefer SMS to email ....

The following article appeared in 160characters.org:

84% of users expect a SMS response in five minutes according to an online survey by 160 Characters that looked at how different messaging platforms elicit differing response times.

The survey looked at the messaging habits of end-users across email, instant messaging and SMS in personal and work environments.

The results highlight the ongoing preference for using SMS as a key communication tool, especially when an immediate or near immediate response is required. Most people would respond to a personal SMS (84%) in less than 30 minutes according to the results of the poll while only 56% would respond in that time to a work related message.

WAITING FOR YOUR EMAIL
26% of respondents would take between two and five hours to reply to a personal email and 31% would wait till the next day to reply.

With so many work related emails, one respondent noted that "The important ones get an immediate response; the others take about an hour."

However, 26% said it would take them two to five hours to reply and 22% would keep you waiting till the next day. At least this was better than the response time to personal email with 31% waiting for the next day.
MMS STILL TOO SLOW
No one admitted to not using SMS for personal reasons but 12% still don't use it at work. However this compares to 60% who would never use MMS for work related communications with long delivery times cited as the main reason.
Instant Messaging (IM)
Mobile IM still has some way to go for both business and personal use with 42% not using mobile IM for personal reasons and 54% not using it for business.

This compares to the PC where only 15% don't use PC based IM for personal and 27% not using in business.

For those that do use Mobile IM, 57% expect a reply within 5 minutes for a personal message while only 18% expect a business reply in that time.

IM IN SMS CLOTHING
There seems to be a trend to launch mobile Instant Messaging under the guize of an upgraded SMS.
In reality users will pick the messaging type depending on what it is for:
If you're running late for a meeting you'll send a text
If you want to chat/flirt you'll probably use IM
Announce your new boyfriend/girlfriend - MySpace or Face Book
Quiet chat with the boss - Email

People will tend to use different communication technologies depending on the context, where they are at the time and what they want to communicate.
84% of users expect a SMS response in five minutes according to an online survey by 160 Characters that looked at how different messaging platforms elicit differing response times.

The survey looked at the messaging habits of end-users across email, instant messaging and SMS in personal and work environments.

The results highlight the ongoing preference for using SMS as a key communication tool, especially when an immediate or near immediate response is required. Most people would respond to a personal SMS (84%) in less than 30 minutes according to the results of the poll while only 56% would respond in that time to a work related message.

While it is true as one respondent commented that the response time "depends on the context and the person sending/receiving the mail", differences emerge between the broad context of messages and between business and personal use. For example:
WAITING FOR YOUR EMAIL
26% of respondents would take between two and five hours to reply to a personal email and 31% would wait till the next day to reply.

With so many work related emails, one respondent noted that "The important ones get an immediate response; the others take about an hour."

However, 26% said it would take them two to five hours to reply and 22% would keep you waiting till the next day. At least this was better than the response time to personal email with 31% waiting for the next day.
MMS STILL TOO SLOW
No one admitted to not using SMS for personal reasons but 12% still don't use it at work. However this compares to 60% who would never use MMS for work related communications with long delivery times cited as the main reason.
Instant Messaging (IM)
Mobile IM still has some way to go for both business and personal use with 42% not using mobile IM for personal reasons and 54% not using it for business.

This compares to the PC where only 15% don't use PC based IM for personal and 27% not using in business.

For those that do use Mobile IM, 57% expect a reply within 5 minutes for a personal message while only 18% expect a business reply in that time.
IM IN SMS CLOTHING
There seems to be a trend to launch mobile Instant Messaging under the guize of an upgraded SMS. Mike Grenville, chairman and founder of 160 Characters said: “There is a temptation for Operators to merge messaging types as networks become more sophisticated. These results show that consumers are well aware of the different features of each messaging type and that they are comfortable choosing the message type most suited to the context of the message. “