Dogs and demons in telecom

Dogs & Demons

in the Telecom world

Wireless Developer Forum | Beijing | 2007.09

Benjamin Joffe | Managing Director | Plus Eight Star Ltd

is 3G

a dog

or

a demon?

the mobile professionals community

Sometimes the most direct route

to innovation is to look abroad

and translate what you find

Tom Kelley

Author of The Art of Innovation

他山之石，可以攻玉Chinese proverb

Dog or demon?

288 million 3G subscribers

50% in Japan & Korea

Is there any successful

service or business model?

3G Business models

1Sell 3G licenses

2Sell 3G equipment

3Invest and sell a company

with “3G” name

4Organize conferences

about 3G

But users want quality service!

Operators need more capacity!

GSM Association Executive

Still I couldn‟t help but wonder:

Is there no business model for

3G services?


Dogs = innocuous but important

Demons = grandiose but useless

Demons?

Video phone

Mobile payment

Contactless(and networkless)

Mobile TV

Terrestrial or

Satellite Broadcast

Most talked-about services

don‟t need 3G

We are sorry for telecom operators

who made the mistake of 3G,

but it‟s not our fault!

Martin Varsavsky

CEO, FON

(world‟s largest WiFi network operator)

For operators, 3G is essentially a

waste of money.

Top executive at one of the most innovative European Telecom operators

(Very familiar with Asian markets)

Unfortunately, there is no

coming back

Alternate definition

Games

Girls

Gambling3G

Games

Girls

Gambling3G

China

Fairy Tale?...

Horror Story.

China Mobile changes

VAS regulations

Opaque

&

unpredictable

Chinese regulation change

hits MonsterMob11th July 2006

The news sent MonsterMob's

share price crashing own 58.9% on

the London Stock Exchange.

Besides the major music labels, I haven't seen

any foreign content companies make any

significant revenues in the WVAS space in China.

APAC General Manager for a leading foreign WVAS provider

Ex-VP with a leading WVAS SP in China

Much better to focus on the rest of Asia Pacific.

I am often still asked if I believe the wireless value-

added service sector in China has good short-term

prospects.

Perry Wu, ChinaTechNews Editor

“Chinese Mobile Business Model Is Suicide”, June 22, 2007

My answer is still, "No. Absolutely not."

Though I work in mobile VAS in China,

I would rather invest in ventures focusing on

alternative energies than the mobile industry

Executive at one of the top 3 VAS providers in China

Dogs.

Where is the money?

Carriers

content

Carriers

content

Official content

Carriers

content

Official content

Mobile content

Carriers

content

Official content

Mobile content

PC content

Carriers

content

Official content

Mobile content

PC content

Blue ocean of offline world“lifestyle infrastructure”

The pie issue

Pie = mobile content fees

(e.g. China = 1bln USD)

Let’s get a bigger share!

Content fees + Data fees

(e.g. China = 13 bln USD)

Content fees

KDDI‟s mobile music

[100 million full songs]



Direct effects

Content revenues 400 mln USD



Direct effects

Content revenues 400 mln USD

KDDI share (10%) 40 mln USD



Indirect effects

Data fees 500 mln USD



Indirect effects

Data fees 500 mln USD

Subscribers boost 500 mln USD



Factor 20!

Direct effects = 40 mln USD

Indirect effects = 1 bln USD

(hire consultants)

Cyworld Mobile

Cyworld Mobile

3 million users (2006.6)

Revenues 2006 from mobile: US$30 million

First screen Photo album Guest book My neighbors

Data ARPU

Most it is results from the continuous

growth of new services such as MelOn

(music service) and Mobile Cyworld‟,

as well as increased usage of the data

flat rate plans.

SK Telecom‟s wireless Internet revenue

saw a 21% year-on-year increase

(now 30% of ARPU)

Shin Bae KIM

CEO, SK Telecom

South Korea‟s #1 mobile carrier

Mobile Game Town (DeNA)

Attract user

with free games

Build communities

with matching games

Chat

BBS Journal Clubs

Avatars

Get new users with

Word-of-mouth

3 million members (Feb 07)

6.7 billion monthly pageviews!

Ad partnerships

Mobile Game Town

We started without a real business plan. We just

thought “there are millions of people paying for

games, so if we give games for free we should get

millions of users”

Shogo KAWADA

COO, DeNA

(Japan‟s largest mobile SNS)

We thought we could always find out later what to

do with them.

Moba-Oku (DeNA)

Mobile Auctions

1. Take pic

2. Select category

3. Enter info

4. Check

5. Done!

800,000 paying members

2.8 million products

Seller Buyer

Payment

Agent

Post ATM

Convenience store

Credit cardPayment

noticePayment

Payment notice

Payment notice

“Mice Love Rice”

“Mice Love Rice” revenues

• From free Internet to mobile

• 6 million RBT in one month at peak

(equivalent to 700,000 CDs)

• iTunes Global Top 10

• Over 20 million US$ in copyright fees

As a conclusion

Change in carriers’ policies

Difficult environment

+

Talent

+

Venture capital

=

Innovation!

No traditional media legacy to protect

Leapfrog to a digital economy


Thanks!

[email protected]

Inside Cyworld

Inside QQ

Published research

Free sample | www.plus8star.com

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Managing Director | Benjamin Joffe

• 8 years in Internet & mobile in Japan, Korea and China

• Selected as China‟s Top 100 mobile influencers in 2007

• Monthly column on Asian innovation in the magazine

“Asian Business Leaders”

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The future has already arrived. It is just not evenly distributed yet.

William Gibson

Science fiction author & father of the cyberpunk genre

Coined the term "cyberspace" in 1982

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