You can be forgiven the thought that the race to deliver content via the smartphone has already been “won” by social media and search giants. Yes, Facebook, Google, Twitter, Snapchat and all the rest certainly deliver content, for better or for worse. Sure, Facebook and Google dominate the market and will continue to do so. The others? Perhaps not as much, but they all still have the opportunity to become hugely profitable thanks to new mechanisms of digital advertising. But there are so many apple carts involved. There will always be new market forces out there to cause disruption.
Streaming services are an example. They certainly have caused their fair share of disruption and have become a dominant force in the delivery of content. They provide more opportunities to deliver similar content than is found on television today, at the form, time and place that fit the user. For mobile carriers, it won’t be much of a differentiator. There still is a void for talented individuals or smaller firms that create their own unique content. They deserve the opportunity to make that content available for profit for themselves (and partners in the delivery chain) while utilizing the ubiquitous endpoint that the mobile smartphone has become and, in most cases, is operators’ best bet at standing out to users. The question is — how does one make it happen? What are the obstacles?
Mobile operators would appear to be in the cat-bird seat and can pick and choose. They have the networks that transfer the information to the palms of every human being they could possibly serve. But, in truth, the operator neither has the know-how nor the team experience to develop, acquire or distribute content. Their focus, naturally, is on the pipe and the speed and quality of what is transmitted through it. Hence, the large amount of attention paid to mergers and/or proposed mergers between telecom operators and major content providers. But mega-mergers, in and of themselves, still won’t get the job completely done, as the major telecom operators in the U.S. and EU will soon learn.
Remember, the smartphone is a worldwide phenomenon and business is global, yet mobile carriers operate primarily in specific countries or regions. Each territory has its own rules and regulations and each and every content service needs to be licensed and adhere to local laws. Content providers are best served by selling subscriptions but management of the services involved in subscriptions is expensive, especially the marketing aspect of it. It requires an expertise in media buying, ad network familiarity, etc. In many cases, it requires a whole new operation. The processing of payment and revenue allocation for content is also tricky. There are so many different methods of service one is required to integrate with — usually all third-party. And, to add on top of it all, fraud control tools need to be put in place; after all, it is people’s finances and personal data we deal with here. It’s the age-old problem for business: too many players in the chain, all doing their part but also taking their cut. The end result means there is a lot less left for the operator. It’s all complicated enough to make operators wonder if it’s worth it.
The good news is whenever there is a business vacuum caused by a lack of knowledge and know-how, it usually gets filled. It involves mobile operators striking partnerships to grow the delivery of content. The very idea of such partnerships has been recently validated by the tech behemoth Amazon. Reports suggest Amazon is creating an entirely new unit for the transmission of entertainment services, including audio and video content, over the internet and mobile networks. It will be interesting to see if or how Amazon will incorporate ALL of the components of the delivery chain into this new unit.
You also may be surprised to know that right now, mobile operators from 29 countries have chosen to work with a comprehensive, multi-functional solution consisting of a cloud-based platform for payment aggregation and content subscription management. In the past year alone, deals have been struck in Asia, Russia and the Middle East. This trend is now moving across Western Europe as Swiss telecommunications provider Sunrise Communications AG, the second largest telecommunications company in Switzerland, is working with RGK Mobile to provide its 3 million customers with exclusive, high-quality content on a subscription basis, all through direct carrier billing.
All market disruptions start with a need and a smart technology the addresses it: smart in the sense of targeting and reaching users, being transparent to the mobile operators, streamlining processes, supporting its users, etc. When applied to the five major players in content delivery — mobile carriers, payment aggregators, content providers, content distributors and media buying channels — it will convey a significantly improved bottom line for all, especially when all five are handled for the operators by one entity.
For competing mobile operators, the smooth and hassle-free delivery of fresh, engaging and exciting content could become their single most important business. It adds not only VAS subscriptions, but also an immense amount of new advertising space. The technology of the “pipe” generally becomes co-opted and mastered across the board; all carriers will eventually have 5G capabilities if they want to stay in the game. But give mobile operators control of content, and their status as nothing more than the “dumb pipe” changes forever.
Roman Taranov is the CEO of RGK Mobile.