Mobiletribe » Business models

Why Vegas should embrace mobile gambling

pfhagermark — Tue, 19 Oct 2010 07:41:48 +0000

A quick follow-up on yesterday’s post:

Landbased casions are one of the main reasons online gambling is not allowed in the uS: The lobbying power from the casions is thought to be massive. I think they make a major mistake in stopping online gambling. The reason is simply one of the foundations for any commercial success – trust. Some of the strongest brands in gambling are the land based casinos and they have a huge advantage here in trust and loyalty.

- What about offering guests free downloads of mobile games when they make their reservation?

- Use news ticker in game for offers when they are in town.

- Keep them playing when they are not in town.

- Combine a loyalty system with mobile and you cut costs for producing cards and consumers only have to know their mobile number to have the loyalty ID. Push news and offers in the for-fun and/or gambling games you given them on the phone. Give access to new games and content as they play more.

Endless opportunity here.

2010 predictions part 4: Off portal will rule!

pfhagermark — Thu, 10 Jun 2010 16:02:09 +0000

Off portal changes the game back to a game of cut-throat online marketing. It is a very different game to B2B sales to one customer group, the mobile carrier. It is also slightly quicker and costlier. Sales cycles of 12 months and “free” traffic on a revenue share deal is becoming a thing of the past. Well, it moves from the only channel into a portfolio of channels you need to develop and grow in order to have a business as a content provider.

If we look at the facts the message is clear. A UK study shows the following. In December 2007 57% of unique mobile internet users came from a carrier deck. 12 monts later in December 2008 the same number is 22%. I do not have numbers for 2009, but when I ask around today among carriers and others the reply is in the 10-20% range. So we have clear evidence that we are repeating the web journey from 1995 and onwards. Carriers still a very necessary part of the ecosystem, but now it is a game of online marketing that starts in the mobile. It will be a cut-throat game not for the faint hearted.

The shift now is away from technology lead to marketing lead in order to succeed. The biggest impact of these two is the responsibility and burden of marketing now falling heavily on the content provider. New skill sets and fresh cash to invest in marketing is needed. Many content providers are more geared as product development and product marketing outfits, not D2C powerhouses. This happens at a time then mobile advertising has pretty poor ROi in many channels and other marketing is expensive. CPO deals are not that common at the moment. In the near term it will put a strain on cash flow.

However this is a transition period. It will stabilise and long-term models and pricing in line with performance will prevail. In 24 months’ time we will see media driven models and conditions rule the mobile internet market.
The road to profitability hinges on mastering the challenge with small revenue streams and historical issues with consumer trust.

Revenue: Multi-line models required: Advertising, sponsorships, virtual goods, auction based ad systems etc. Paying for enhanced experience and more convenience for user.

Trust: Scams with everlasting subscriptions for ringtones etc still in peoples mind. Transparency and honest offers will be key for long term survival.

In 5 years we will have a new range of digital media houses/publishers and some of the old media houses will have made it through their cathartic journey from old media to new media. Wanna join the ride? It will be fun!

AT&T chief: Industry moving toward usage-based pricing – FierceWireless

pfhagermark — Thu, 04 Mar 2010 20:13:23 +0000

Check out this website I found at fiercewireless.com

Carrier CEOs voicing usage-based pricing are abundant these days. Implemented the wrong way with a very linear model this could be a serious spanner in the works for the mobile internet. Flat rate data was a main driver to make it take off in the first place. I don’t think this young market (the mobile internet one) can take such a hit. Tread carefully. Keep flat rate packages with a hi-lo user pricing in two brackets only. Anything else will be dangerous, and you know it!

Posted via web from pfhagermark’s posterous

Mobile broadband: When is it profitable? – FierceWireless

pfhagermark — Fri, 29 Jan 2010 12:59:55 +0000

Mobile data plans have started to evolve. U.S. mobile operators, under pressure from exploding traffic volume in their networks and grappling with network congestion, have recently announced new service pricing for voice and data.

Though it is still unclear what the net effect of the new pricing will be on subscribers, the new plans set an important departure in the approach to voice versus data service plans. Subscribers may be able to get cheaper voice, but data pricing shows no comparable decrease.

More importantly, operators have started to require that subscribers have a data plan with some device types–mostly smartphones. Mobile operators seem to acknowledge that they can offer a better deal to their subscribers for voice services, which are substantially more profitable (with the exception of SMS, which on a per-bit basis may give an even better return than voice), but they have chosen not to extend this change to mobile data plans.

Why didn’t data prices go down? Two reasons may explain the new approach to data. Mobile operators want data to become an integral part of subscribers’ service plans. They are willing to charge less for voice, as long as subscribers pay on average more for data. This reflects a more balanced approach in splitting revenues between voice and data–with operators less willing to have voice subsidize data services. As data services become more mature and widely adopted, this is an approach that is no longer sustainable.

The second reason is that mobile operators cannot afford to lower data plans, as they may lead to a downward spiral in ARPU, at a time when they need to deal with an unprecedented growth in individual user traffic.

Initially the bulk of the growth in data traffic was generated by iPhone users, who now use more than 500 MB per month. With the introduction of new devices including Android-based smartphones and the higher number of applications, mobile data is rapidly becoming a mainstream consumer service. In the U.S., smartphones now represent over 30 percent of shipments and the percentage is likely to go further up. Traffic generated by these devices is also quickly catching up with that from iPhones. In Russia, mobile WiMAX operator Yota sees over 1 GB per month data traffic from subscribers using their HTC smartphone. For laptops, this figure is a staggering 13 GB per month. A large–and rapidly growing–portion of this traffic is video. This is what worries operators worldwide: with email and Internet access, traffic growth is bound by the limited requirements of the application; with video or even audio content takes little effort for subscribers to enter in the realm of the GB/month.

Mobile operators are delighted to see that their subscribers love mobile data services–and that are willing to pay for them–but at which point does the growing popularity of data and video affect profitability of the mobile data? It does not take long, as a quick back-of-the-envelope calculation that compared delivery costs and revenues on a per-MB basis.

The revenues per MB can be computed as a function of the monthly fees, for different levels of traffic. Revenues can be compared to the delivery cost per MB, which we estimate at $0.015 for HSPA, $0.005 for LTE and $0.003 for WiMAX on the basis of our analysis of mobile operator and vendor data. The delivery cost per MB depends on many variables that are specific to different operators–and in particular on the network utilization level–and therefore are subject to variability. Our values are therefore only indicative and on the low end in comparison with other estimates we have come across. It has to be kept in mind that these estimates do not include costs such as customer acquisition and support, or network core operations, which are shared with voice.

At the current average traffic levels of 500 MB/month, revenues per MB outstrip delivery costs for HSPA, LTE and WiMAX, for ARPUs starting at $20 per month. As traffic grows, however, the costs per MB rapidly exceed the revenues, especially when charging subscribers low fees. At a 50 percent CAGR, the 500 MB per month will reach 2.5 GB per month in five years. At $20 per month, for instance, mobile operators operate at a loss for subscribers using more than 1 GB per month in an HSPA network, or for subscribers using more than 5 GB per month in an LTE network. At 10 GB per month, data subscribers do not generate any net benefit for mobile operators with HSPA. With LTE or WiMAX, revenues from 10 GB subscribers at best reach the delivery cost…Continued

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via fiercewireless.com

Interesting and well structured discussion on mobile broadband realities. Consumers want flat fees and unlimited use. Operators have a delivery cost per MB whether they like it or not. Technology needs to evolve and make data delivery less costly in wireless networks. Introducing variable pricing for mobile data is not really an option. Because in the end the consumer is always right.

Posted via web from pfhagermark’s posterous

2010 predictions part 1: Dating and gaming takes the BS out of LBS

pfhagermark — Tue, 12 Jan 2010 09:58:14 +0000

Better late than never. It seems that companies these days manage better and better to commercialize LBS by packaging it into services that are of good use. One particular area, or functionality rather, is location awareness. It happens in the background and is an integrated piece of the service. Foursquare use it in their game based friend finder type service. Search is of course another good area. The end-game with online dating is to meet someone in the physical world, so there LBS makes sense as well.

Another large area that use location data is of course augmented reality (AR) services. Layar is probably one of the more prominent ones. It is only with good use of positioning that we unlock one of the most hyped values of the mobile. So sorry for uttering these words that would generate “boo!!” cheers and tomatoes if mentioned from the stage at any mobile conference. “The mobile is always with you”. Well, if the service knows where you and your mobile are, the service can do more for you. Pretty basic stuff. As often with new technology entertainment is the first area of application. Therefore we see gaming and online dating as the first obvious areas of application. Search is the first utility type application and it makes sense. (Try the wikipedia layer in Layar for instance and you will get a good WOW feeling!)

Many express fear of breached personal integrity with LBS services. That is often a misconception, especially with all the services I have mentioned so far. They are all location aware only and are not revealing to anyone else what your location is. As mentioned above, the service you use need to know where you are to deliver real value to you. This is all seamlessly happening in the background.

Take the dating scenario. For the user the end goal is to meet a new person in real life. With location in the matching algorithm you get more value. Now you know the persons on top of the list fits your criteria best and is nearest to you. If you want to send an invite to meet up for a coffee this afternoon it is likely you are near enough to make that possible. Disclaimer: I am the founder of Souldate, a full-blown dating service in your mobile with positioning.

Games and communities with location involved has a large potential. From the location information you can extend that thought to RFID and touch based things to prove you have been at a place or met a person. This opens up for scavenger hunts, detective/mystery games to mention a few. Stand alone titles/services in this area or even more interesting maybe is to extend this into advertising in sponsored games.

There are some impediments of course. The cost of LBS data from providers of the data, be it operators or aggregators. A cost per location request will kill most ideas. Companies building business model on monetising location data sold wholesale are doomed. Way forward via APIs to data from handsets with apps for positioning or GPS. Examples are of course Android, iPhone and Vodafone 360 API. This is also one great example why carriers do not have to become dumb pipes. They can be smart pipes by offering these APIs and others.

What are your thoughts on LBS? Is it still BS or will it really happen in 2010?

Mobile gambling takes a step towards the massmarket

pfhagermark — Wed, 18 Nov 2009 19:59:06 +0000

Yesterday we heard that Pokerstars acquired Cecure Gaming, a producer of mobile gambling products. The most prominent product being their mobile poker product. The general opinion has been that casino games by its simplicity are better suited for mobile than poker. Facts from Cecure beg to differ. They had 80% of their revenues from poker. Guesstimates and some sources makes me think the price tag was around the 1 million GBP mark. Low entry ticket for something that can be a great revenue earner for Pokerstars with its huge distribution power.

From own experience I know that the gambling companies have been pretty uninterested in mobile gambling. In our own efforts with AcePoker, a multiplayer poker for real money play, it took long before we got things moving. Last week we launched our mobile poker with Bet2Go on Orange UK’s mobile portal. It will be very exciting to see what this brings but more so what the industry does after the Pokerstars move. Will we finally have a new mobile success category?

What do you think? Mobile poker – hot or not? Let me know!

Real money with mobile as a real channel

pfhagermark — Tue, 17 Nov 2009 16:26:22 +0000

Here is a fantastic story about a company in the bricks and mortar word making real money with a mobileapp. Pizza Hut opening up a new store. In an iPhone near you. Well, if you are in the US that is.

The claim is that they have sold pizzas for 1 million USD in that app. That is pretty neat facts. The mobile as a retail outlet for core business that has nothing to do with mobile or social media. This should hopefully wet the appetite for others to follow. Hopefully in more channels than the app store. There are more phones out there.

Why mobile cloud computing is not hype

pfhagermark — Thu, 01 Oct 2009 07:15:40 +0000

Mobile cloud computing. Another hype term? Well, lately I have realised I use more services in the Cloud even from my phone. Mail is obvious, but lately also access to all my workfiles in the Cloud. I had a rela life/hard experience of this last Firday when my hard drive on my MacBookPro crashed while installing the Snow Leopard upgrade (interesting coincidence don’t you think? Nice business to sell new harddrives to all who purchase Snow Leopard. I am more then a bit ticked off by this. #applefail in my books). Anyway, thanks to mail and files in the cloud I was pretty ok. I could mail from a laptop in the showroom while waiting for technician to deliver the verdict at local Mac store. Later that day I could read a contract on my iPhone while on a call.

Besides these features there are other compelling reasons for mobile cloud computing. We know it is a stated fact from Google that they are betting on the mobile web. Example of that here. Read Write Web also recently had a good summary of a research paper made by ABI Research on this subject. The authors even dare to saymobile cloud computing will soon be a disruptive force. This is based on a factor that you know your humble blogger supports, the mass market for mobile is not in the smartphone segment. There are 4bn mobile subscriptions in the world. Smartphones have a very small market share of that. So for the masses there is huge potential in a browser based service in the cloud where processing power and data storage is handed over to the server side. The mobile phone takes the role of a thin client. Most most phones today can fill the shoes of that role.

Another interesting point made in the report is that there are far more web developers who are capable of churning out great services than there are experts in mobile apps. With browserbased services, access is also better. You just need a mobile internet connection, not a specific carrier reltionship to reach the specific app store for a specific smartphone. With HTML5 around the corner the prerequisites for mobile cloud computing becoming a distuptive force are improving as well with the caching features covering for glitches in the network service quality.

The coming 24 months will be interesting times for mobile cloud computing. Will we see companies like Netbiscuits compete with Amazon Web Services in this area soon? Will Nokia, a company that looks sadly lost today, regain its stronghold through leadership in mobile cloud computing? Was it all just hype?

Time will tell. I am looking forward to the ride!

How do you price stuff nobody really needs?

pfhagermark — Wed, 16 Sep 2009 16:02:03 +0000

So, confession time: How many services and apps out there do you really need? How many do you really use? I saw some number that the average number of downloaded apps for the iPhone is 10. That’s on what is supposedly the runaway success story for sales of apps and mobile content. In a way the mobile entertainment industry has made a pretty good job in convincing people they need something they hardly knew excisted. On top of that we charge for it in some shape or form.

So how do you set good pricepoints? Mike Speiser at Sutter Hill Ventures has an interesting post about pricing here. So would the expensive outlier help charging for our content? In most markets mobile content is very narrowly priced. Why have we made it that way? If you believe in studies about human behaviour and decisions it seems a poor pricing strategy to price all services/content in one category at the same price point.

Then again, many go free ad-funded hoping to sell a bit of virtual goods or messages on top. But in the current mobile advertising market that is dangerous. Or at least not the optimal pricing strategy for the industry as a whole.

Then again we have the problem with the multiple layers of costs for consumers to buy mobile content and services. The carrier charge for the delivery – the data traffic. Even if it is in a flat fee package the cost is there.

So will the 10 bucks premium ringtone help sell ringtones at higher prices than the average today? I guess you could work with scarcity as a way to push up price. Only sell limited numbers of pieces of content. Then again the content market has gone 9.99 per month for a bundle of content. We finally have the consumer’s attention, we have to handle that with care in this world of fickle consumers.

Communities and other mobile sites are increasingly going free or freemium. That might be the way forward to get the volumes. Still there should be room for some premium pricing in this setting as well. I am curious to hear of any examples of good pricing in our industry that you might have.

LBS is hot!

pfhagermark — Wed, 24 Jun 2009 09:36:07 +0000

Interesting to see the spike in readers yesterday after I posted about Layar and LBS. It shows it is of interest and the time might be ripe for some real LBS apps.

This week I am launching a new section on the site called Expert Articles. The aim is to gather information around a few topics where I think a deeper article that develops over time would add value. The initial topics will be LBS, mobile gambling with a focus on poker and how to monetize mobile social networks. I will write some myself but also invite guests to add their expertise and experiences. Stay tuned!