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Mobile MediaMobile MediaMaking the app market payRonan de RenesseSenior Analyst IHS Screen DigestSenior Analyst, IHS Screen Digest
June, 2011
Application store/smartphone combination revolutionised mobile media
• Smartphones offer better tech for rich media consumption on mobile (WiFi, ed a co su pt o o ob e ( ,memory, processing, power, screen size)
Applications stores have broken• Applications stores have broken operators’ walled-gardens and fuelled innovation
• Improved browsing experience has brought online and mobile together
Remaining issues:Android Market
• Remaining issues:• Addressable market still small• Monetisation can be difficult• Over crowded market place
Copyright © 2011 IHS Inc. All Rights Reserved.
Over crowded market place• Device fragmentation
2
UK leads European smartphone market
iOS installed base by country (m)EU5: Smartphone installed base (m)
14
16
18
20
140
160
180
8
10
12
14
80
100
120
0
2
4
6
40
60
80
0
2011 2014
0
20
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
France Germany Italy Spain UK
Copyright © 2011 IHS Inc. All Rights Reserved.
2011 2014
3
France Germany Italy Spain UK
Smartphone market was a three-horse race
Europe: 2010 smartphone installed base market share by OS (%)
Europe: 2015 smartphone installed base market share by OS (%)
22.9%
4.0% 3.7%
base market share by OS (%)
0.3%7.9%
5.1%
base market share by OS (%)
32.7%6.0%
20.2%
38.3%
11.0%
iPhone Android BlackBerrySymbian Windows Others
47.9%
iPhone Android BlackBerrySymbian Windows Others
Copyright © 2011 IHS Inc. All Rights Reserved.
Symbian Windows Others
4
Symbian Windows Others
Apple dominates 2010 app revenues
2010: leading application stores' share of revenues (%) total €1 6bn • Apple’s App Store took 82.5% of
5 0%
4.9%
7.6%
of revenues (%) - total €1.6bn pp pprevenues from the four leading stores in 2010 with revenues of €1.3bn. Apple will maintain its lead with around 60% market share among 5.0% gleading stores to 2014.
• In January 2011, Apple passed 10bn total downloads By May 2011
82.5%
total downloads. By May 2011, Google had served 4.5bn – with Nokia and RIM some distance behind.
Apple: App StoreGoogle: Android MarketNokia: Ovi Store
• Despite growth in downloads, Google has so far struggled to monetise many Android Market users. But
Copyright © 2011 IHS Inc. All Rights Reserved. 5
Nokia: Ovi StoreRIM: BlackBerry App World
yimprovements are on the way.
…but Android Market will catch-up fairly quicklyq y
Application stores revenue forecast (€bn)
6
7
4
5
Blackberry App WorldNokia Ovi Store
2
3Nokia Ovi StoreGoogle Android MarketApple App Store
0
1
2008 2009 2010 2011 2012 2013 2014
Copyright © 2011 IHS Inc. All Rights Reserved.
2008 2009 2010 2011 2012 2013 2014
6
What about others?
Copyright © 2011 IHS Inc. All Rights Reserved. 7
Games is the leading app category
10
World App Store downloads (bn)Q1 2011: major publishers’ iOS
releases
8
9
Capcom
EA Mobile
releases
5
6
7
Gameloft
Glu Mobile
2
3
4
Hands-On Mobile
Namco
Digital Chocolate
0
1
2
2008 2009 2010 2011 2012 2013 2014THQ Wireless
Disney Mobile
Copyright © 2011 IHS Inc. All Rights Reserved.
Games Others0 2 4 6 8 10
The application market goes beyond distributing repurposed content to mobile g p p
• For TV companies, mobile applications offer the t it t
Number of apps by TV network (total = 78)
opportunity to:• increase the length of the relationship with
consumers by making content accessible anywhere at anytime
NBCMTV
• create a more intimate contact with the audience with interactive features evolving around key TV programmes
• improve brand image by creating ‘cool’ apps
Disney
CBS
Fox
Number of apps by genrep g y g pp• increase viewership and address an audience
unreachable on any other platforms• generate additional revenues through paid
downloads/subscriptions and/or advertising GamesNews
SportsTravel
pp y g
downloads/subscriptions and/or advertising• Popular applications tend to be more innovative
by taking advantage of the mobile experience to bring another dimension to existing services.
Entertainment
Finance
Lifestyle
Copyright © 2011 IHS Inc. All Rights Reserved. 9
Others
Online freemium music providers see mobile as a way to improve their business casecase
• Spotify, Deezer both launched mobile applications on Androidmobile applications on Android and iPhone/iPod Touch in 2009
• Spotify: 1m paying subs from 6.7m active users in a region
i t t t i f ig
resistant to paying for music
• Deezer: 800,000 paying subscribers
• Mobile operators embrace the unlimited music on-demand craze
• 3UK bundled a Spotify premium subscription with its latest Androidsubscription with its latest Android handset
• Orange made a strategic investment in Deezer in 2010 and also bundles it with some of its services
Copyright © 2011 IHS Inc. All Rights Reserved. 10
But, rich media is still only a small subset of mobile content and data revenues
14%
Rich media as % of data & content revenues
12%
14%
8%
10%
4%
6%
0%
2%
Copyright © 2011 IHS Inc. All Rights Reserved. 11
0%2006 2007 2008 2009 2010 2011 2012 2013 2014
Music Games TV & Video Application stores
Mobile won’t offset decline in traditional media revenue streams unless bundled
PiracyTop-tier customer migration
Core media services Blended
Over-the-top
Increased competition
Increased ARPU
Customer ownership
Core media services
Core mediaservices
ARPU ARPUp
Tougher regulation
Reduced churn
Added value
ARPUmedia servicesARPU
Mobile ARPUDifferentiation
Mobile ARPU
Mobile ARPU
Copyright © 2011 IHS Inc. All Rights Reserved. 12
The mobile data crunch. Who will pay for data?
• Smartphones, mobile broadband and M2M are set to drive exponential
UK mobile data marketM2M are set to drive exponential mobile data traffic growth
• Increasing competition and heavy subsidies on data/smartphone 10
12
14
700
800
900
subsidies on data/smartphonebundles will endanger mobile data monetisation
• There are three options for operators: 6
8
10
400
500
600
ue p
er G
B (£
)
affic
(PB
)
• There are three options for operators:• Add extra capacity on the network and
increase prices• Content delivery optimisation (IMB,
throttling, QoS, WiFi)Ch id ( bil d 2
4
6
200
300
400
Rev
enu
Tra
• Charge content providers (mobile data termination fees)
• Video is set to contribute to more than half of mobile data traffic by
0
2
0
100
2010 2011 2012 2013 2014
Smart phones Mobile Broadband Revenue per GB
Copyright © 2011 IHS Inc. All Rights Reserved.
than half of mobile data traffic by 2015
13
Smart phones Mobile Broadband Revenue per GB
Tablets: similar apps but better monetisation - US case study y
1% 2% 1%1% 1% 2%
US: top grossing iPad apps US: average price per paid game ($)1%
4%
3%
0.3% 3%4%
0.3% 3%1%
4%
2%
3.5
4
63%
2%1%
1%4%
2.5
3
63%
Books Business Education
1.5
2
Entertainment Games Healthcare & FitnessLifestyle Medical MusicNavigation News PhotographyProductivity Reference Social NetworkingS t T l Utiliti 0
0.5
1
Copyright © 2011 IHS Inc. All Rights Reserved. 14
Sports Travel UtilitiesWeather
0iPhone iPad
Thanks
[email protected] l 44 207 424 2865Tel: +44 207 424 2865Twitter: @Ronan_SD