Mobile Content’s Two Big Questions Are Platforms And Payments

fiona black and white

Fiona Gellatly, MEF North America General Manager, explores the fundamental issues facing companies trying to crack the mobile conundrum, and gives a sneak preview of a new forum for MEF North America members to share knowledge and exchange solutions to real-world challenges, coming in Fall 2013.

No one who’s paid attention to entertainment industry trends is surprised by the rocketing consumption of digital entertainment on mobile devices. Just under six years from the introduction of the first mass-market mobile-connected media device (Apple’s iPhone), consumption of digital content on mobile is the fastest growing segment of the market. Ooyala’s widely cited Video Index for Q1 2013 shows mobile consumption share grew 33% in the quarter, after growing almost 100% in 2012.

Seeing this kind of potential, content companies and distributor/retailers should be rushing to get digital content to mobile. Many have mobile distribution and payment in place, but even the early players are still tweaking their offerings. There are lots of moving parts to mobile (excuse the lousy pun) and most of the parts are changing while they’re being assembled.

Companies with mobile strategies in place have wrestled with a couple of major issues.

smartphones-and-tabletsFirst, whether to go it alone, partner with a platform (iTunes, Amazon, Hulu, Google, and others), or do both. Going mobile typically means adding mobile consumption and payment to an existing web commerce infrastructure. Not many content companies or distributor/retailers have web commerce sites that outperform the platforms (in terms of sales/rentals), but the brand value and leverage for future negotiations makes a stand-alone commerce site worthwhile for many. Most major content companies are doing both for now and keeping their future options open.

Going mobile creates infrastructure challenges involving front-end and back-end technologies—Flash, Silverlight, Java, HTML5, content management systems, transcoding, maintaining viewer apps for multiple devices, authentication, security, DRM, monitoring distribution network performance, and the like. It requires extension of payment solutions to the mobile device environment. There may also be rights issues for the content involved. But the main advantage is the direct connection to the consumer and the collection of metadata associated with the purchase and consumption of content. That will be valuable to any company interested in direct contact with the consumer whether through content delivery or a commerce activity.

Platforms have business and technology models that may be attractive or not to your content company, but their primary value is their direct access to a huge share of the mobile audience and the revenue-generation potential that represents. Even with the typical 30% revenue retention, the revenue contribution from platform partnership is too good for content companies to ignore. Right now, the issue creating the most contention between content companies and platform companies is the lack of data sharing about purchase and consumption. It’s like Nielsen refusing to let TV producers see ratings data, or consumer products companies not getting per-store demographic data from retailers. It’s an untenable barrier within the digital media ecosystem and needs to come down.

The second major issue is payment.

mobile banking

The platform companies have already built mobile extensions for their commerce systems. If your company has a stand-alone commerce site, you have to adopt your own mobile payment strategy, and there are four options trying to gain traction in the market today. The three main contenders in the payments industry:

  • Operator-centric (telecoms carriers provide the buying and billing components),
  • Bank-centric (banks and their credit card partners like Visa and Mastercard provide the buying and billing components), and
  • Peer-to-peer (non-bank payment players like PayPal and Square).

A fourth option, dubbed a collaboration model, represents attempts by the major contenders to create standards that will allow cross-platform transactions between their systems and within new kinds of wallet solutions from Google and others.

Monthly MEF Mindshare sessions, beginning Fall 2013, will highlight trends and opportunities discussing the latest on mobile content and payments

All contenders are focusing on leading-edge capabilities like loyalty card systems in use at movie theaters, restaurants, and other retailers, and near-field communications (NFC) that can link mobile payment to the physical retail environment. Most companies with a stand-alone strategy have chosen one of the contenders and are watching the collaboration efforts closely.

MEF supports its members on up-to-the-minute on issues just like this one, that has high business impact. Monthly MEF Mindshare sessions, beginning Fall 2013, will highlight trends and opportunities discussing the latest on mobile content and payments. You’ll hear from experts, solutions providers, and member executives in lively, interactive teleconference sessions. Members benefit from knowledge sharing, new contacts, and new perspectives on your key issues. MEF Mindshare sessions will help shape mobile content and commerce, so watch for schedule information coming to you soon.

Fiona Gellatly is MEF’s North America General Manager and you can follow her on Twitter @PrepaidTweet

Comments

  1. Reblogged this on SHRINIVAS GANESAN and commented:
    The challenge to extend payment solutions to mobile devices with multiple platforms.

  2. Reblogged this on Jari65 Blog.

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