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European M-Commerce Strategy
Leipzig Graduate School of Management, March 18th, 2002
André Aldejohann
Stefan Wriggers
3PowerPoint_Guideline_Beamer_08.ppt
Agenda
1. M-Commerce market trends – just another hype?
2. Bertelsmann – what assets are key?
3. Strategic options – which strategy fits best?
4. M-Commerce services today – some examples.
5. Outlook – perspectives for the future.
4PowerPoint_Guideline_Beamer_08.ppt
Agenda
1. M-Commerce market trends – just another hype?
2. Bertelsmann – what assets are key?
3. Strategic options – which strategy fits best?
4. M-Commerce services today – some examples.
5. Outlook – perspectives for the future.
5PowerPoint_Guideline_Beamer_08.ppt
Electronic Business
Mobile
Business
Background: Understanding of M-Commerce
• Non-voice-transactions in public telecommunication networks
• Using wireless devices (cell. phones, PDA‘s)
• For information, deal-making, fulfillment (distribution/payment)
Electronic Business
Electronic
CommerceMobile
Commerce
Source: Prof. Wirtz 1999, Petersmann 2001
6PowerPoint_Guideline_Beamer_08.ppt
M-Commerce drives the Growth of the European Mobile Telecommunications Market
89112 117 113 106 94
7
1220 30 47 76
2000 2001 2002 2003 2004 2005
Source: Durlacher 2001
Total revenues in € Bn.
Non-Voice
(M-Commerce)
Voice
(incl. sub-scriptions)
96
124136 143
153171
7PowerPoint_Guideline_Beamer_08.ppt
The Growth is fueled by innovative Services enabled by new Technologies...
20022000 2003/4
GPRS-enabled
• Music• Photo messages• Location based
services• E-mail
• Video telephony• Movie previews• Live links• Multimedia
archives
• Plain text SMS• Small characters
UMTSGPRSGSM/WAPTechnology
8PowerPoint_Guideline_Beamer_08.ppt
• Color display
• Camera
• Multimedia Messaging
• Stereo Sound
• GSM, GPRS, UMTS (Motorola)
...and supported by new DevicesExample: Nokia 6750 and Motorola A 820
9PowerPoint_Guideline_Beamer_08.ppt
Operators need to recoup their huge Investments...
Source: IDC; OVUM; Financial Times Deutschland; BCG analysis
€30 additional revenues nee-ded for UMTS (Germany)
Average revenueper user/month (€)
0
10
20
30
40
50
60
70
2001 2002 2003 2004 2005
Voice
Data
"The UMTS value gap"
Investments to be recouped in Western Europe: €300B
10PowerPoint_Guideline_Beamer_08.ppt
... facing a fierce Competition for Customers...
Players in the
M-Commerce Market
Mobile Operators
+ Existing wireless end user reach
- Content business not core compe- tency
Media Companies
+ Promotion power and brands
- No wireless net-work access
Internet Portals/ISP‘s
Wireless start-ups
11PowerPoint_Guideline_Beamer_08.ppt
... and Consumer Dissatisfaction with the first mobile Services
Current M-Commerce Services are...
• Too expensive
• Too slow
• Too complicated
• Not reliable enough etc.
Source: BCG 2000
12PowerPoint_Guideline_Beamer_08.ppt
M-Commerce is not a Hype, but a considerable Growth Market
Relevance of M-Commerce
• High growth-market
• Substantial value creation potential (although forecasted market size and growth rates have to be reduced)
• Outstanding opportunities for media companies
13PowerPoint_Guideline_Beamer_08.ppt
Agenda
1. M-Commerce market trends – just another hype?
2. Bertelsmann – what assets are key?
3. Strategic options – which strategy fits best?
4. M-Commerce services today – some examples.
5. Outlook – perspectives for the future.
14PowerPoint_Guideline_Beamer_08.ppt
Bertelsmann is an integrated Media Company . . .
Bertelsmann AG
Media Services Direct-to-CustomerContent
Random House
BMG
Gruner + Jahr
RTL Group
BertelsmannSpringer
Services
Storage Media
IT
Clubs
Media eCommerce
15PowerPoint_Guideline_Beamer_08.ppt
Europe’s leading Broadcaster and TV Producer
Reach
• 24 TV channels• 17 Radio stations• 10 European countries
Content
• Largest non-US TV producer• European leader in sport rights
Brands
• Sport (Formula 1, Ski jumping)• Soaps (Gute Zeiten schlechte Zeiten)• Shows (Who wants to be a millionair)
Online activities
• Entertainment Internet portal• Interactive and mobile services
16PowerPoint_Guideline_Beamer_08.ppt
One of the five Music Majors worldwide
BMG: regional market share (in %)
North America 12%
Latin America 15%
Europe 11%
Reach• 200 labels• 54 countries worldwide
Content & Brands• World famous artist like Whitney
Houston, Toni Braxton, Carlos Santana, Alicia Keys, Dido, Usher and Christina Aguilera
Online activities• Napster (independent company)• Music Net
17PowerPoint_Guideline_Beamer_08.ppt
Europe’s Leading Magazine Publisher...
#1 in Austria
#1 in Poland
Italy
#2 in France
#4 in Spain
#1 in Germany
Leading European Magazine Publisher
Reach• Broadest reach in Europe• #5 in the US
Content• Different segments such as business,
current affairs, women, nature/popular sience, family
Online activities• Internet portals for magazines (one
brand all media)• Mobile services via handy.de in
Germany
Brands• Well known brands like GEO or Stern
18PowerPoint_Guideline_Beamer_08.ppt
Bertelsmann disposes of key M-Commerce Assets
Content
Customerbase
Brands
Crossmarketing
• Entertainment• Information
• Established brands• Leading content brands
• Existing mobile customer• Reach/Mass market• Right target group
• Promotion power• One brand all media
InternetPortals
• Supplement for Internet• Convergence of platform• Transition of ex. customer
Strong
Strong
Medium/Low
Strong
Medium/Low
Good starting position of
Bertelsmann
19PowerPoint_Guideline_Beamer_08.ppt
Agenda
1. M-Commerce market trends – just another hype?
2. Bertelsmann – what assets are key?
3. Strategic options – which strategy fits best?
4. M-Commerce services today – some examples.
5. Outlook – perspectives for the future.
20PowerPoint_Guideline_Beamer_08.ppt
Three Business Models are relevant for Bertelsmann
Content Provider Portal MVNO
• Content aggregation, Content management, Content syndication
• Exclusive content• Branded content• Customized content
• Mobile portal content application and com-munication services
• Single services• Vertical portal• Horizontal portal
• Mobile operator without network infrastructure
B2B B2C B2C
• Handset and SIM card• Mobile voice services• Mobile portal services
21PowerPoint_Guideline_Beamer_08.ppt
Example: Napster as vertical Music Portal or MVNO
22PowerPoint_Guideline_Beamer_08.ppt
Each Model covers different Parts of the Value Chain ...
Transport/Access
SIM-Card Devices Content Billing NavigationCustomer
Care
Content Provider
Portal
MVNO
23PowerPoint_Guideline_Beamer_08.ppt
... with specific Strengths and Weaknesses
Options with operator involvements
Independentoptions
MVNO
Portal
Content provider
Airtimerevenues
shares
Core com-petency
Customerownership
Broadness of distr-ibution
Risk/investment
24PowerPoint_Guideline_Beamer_08.ppt
Bertelsmann‘s M-Commerce strategy
• Approach: Use promotion power and strong brands to drive traffic
• Competitive advantage: Sell content exclusively
• Organization: Integrate all current mobile assets into one unit
• Platform: Set up a technical mobile standard
• Co-operation: Build strategic partnerships with operators
• Geographic roll out: Focus on Europe first, then US
Start as content provider and consider strategic options of portal or MVNO later
25PowerPoint_Guideline_Beamer_08.ppt
Agenda
1. M-Commerce market trends – just another hype?
2. Bertelsmann – what assets are key?
3. Strategic options – which strategy fits best?
4. M-Commerce services today – some examples.
5. Outlook – perspectives for the future.
26PowerPoint_Guideline_Beamer_08.ppt
I-mode Service of Financial Times Germany: one Pilar of the „One Brand – All Media“-Strategy
• Free: Headlines and summary of articles
• Full article to be paid
• Content revenue split:• 86% FT• 14% I-mode (operator E-Plus)
• Breaking news: background of news per call (Euro 1,24/ minute)
27PowerPoint_Guideline_Beamer_08.ppt
Handy.de – Customized Entertainment Content for the Youth Market
28PowerPoint_Guideline_Beamer_08.ppt
The „Anywhere“-Concept of RTL – increasingly mobile
29PowerPoint_Guideline_Beamer_08.ppt
The RTL Mobile Portal – 300 Pages with Top Content (Formula 1, Soccer) plus SMS-based Info Channels
30PowerPoint_Guideline_Beamer_08.ppt
Extension of Brands and Formats in the mobile Space
31PowerPoint_Guideline_Beamer_08.ppt
Agenda
1. M-Commerce market trends – just another hype?
2. Bertelsmann – what assets are key?
3. Strategic options – which strategy fits best?
4. M-Commerce services today –some examples.
5. Outlook – perspectives for the future.
32PowerPoint_Guideline_Beamer_08.ppt
Relevance of M-Commerce for Bertelsmann
M-Commerce
1. Is a further distribution channel for media content
• Leverage existing content and brands
• Retain customers
2. Creates new business opportunities
• New mobile services: dating, voting
• New value creation potential
• Cross promotion
Let‘s go for the
mobile future!