CONTENT STRATEGIES IN THE SOUTH AFRICAN

Abstract

The ability to distribute and share rich media content across mobile networks represents a commercial opportunity for firms in such diverse industries as telecommunications, information technology, media and consumer electronics. Drawing on expert interviews with industry executives, this study categorises the various participants in the nascent South African mobile entertainment industry and explores the underlying sources of each category’s relative bargaining power. It also provides an analysis of the content delivery strategies available to industry participants and the key success factors associated with each strategy. The research reveals a fast-evolving industry characterised by constantly shifting patterns of competition and collaboration. A general blurring of industry boundaries occurs as participants pursue opportunities in, and face threats from, hitherto unrelated quarters. Mobile network operators currently enjoy formidable bargaining power due to the strength and volumes of their customer relationships. However, their dominance is under threat as handset manufacturers and media companies, among others, establish competitive advantages by leveraging their own entertainment brands, content assets and influence over the end-user operating environment. Customers are also exerting bargaining power by venturing beyond the “walled gardens” of operator portals, demanding more predictable data pricing options and embracing disruptive services such as instant messaging and “off deck” social networks. Against this backdrop, the researcher identifies four generic content delivery strategies: channel provision, direct distribution, syndication and business-to-business aggregation. Key success factors common to all strategies include business model selection, partnership skills and an entrepreneurial spirit of innovation and experimentation. Among the strategy-specific success factors: Channel owners and content providers need to select content appropriate to the medium and contextualise it according to the circumstances of consumption; rapid product development and the ability to achieve audience and content scale ahead of competitors is a key success factor for B2B aggregators; and targeting advertising and content based on deep customer knowledge is essential for both channel providers and direct distributors. Environment factors key to the success of the industry as a whole include flat-rate data billing by MNOs; proliferation of affordable, multimedia-capable handsets; viable business models for rich media content; iii lower MNO billing commissions; improved user experience and user education; standardisation of operating environments; and a favourable legislative environment. The report concludes with recommendations to specific industry participants premised on the outcome of the research. Among these: • Mobile network operators should leverage their customer relationships to serve targeted advertising and earn billing commissions wherever the entertainment experience occurs. As billing and data connectivity are ultimately volume-driven, operators should stimulate mobile entertainment usage by introducing flat-rate data plans and trading their “walled garden” portals for open gateways to the mobile internet. • Handset manufacturers should build sustainable competitive advantage and counteract their dependence on network operators for handset distribution by developing specialised entertainment brands and acquiring strategic content assets. Rather than resisting platform interoperability, they should position themselves for an era of more open standards in which content and application developers can thrive, thereby driving demand for more capable handsets. • The influence of content owners will depend on their ability to embrace mobile-friendly forms of content, including user-generated content, and devise appropriate channel strategies. While print and online publishers are well positioned to create their own mobile internet channels, music companies and film studios should seek aggregator channels that meet consumer demand for breadth of content. More flexible business models, including advertiser-supported music and video content, will help combat the serious threat posed by illegal file sharing and piracy. • Content aggregators and service integrators will succeed by establishing systems and processes to manage and protect intellectual property rights, and by optimising services for mobile platforms. These skills will become more sought-after in a broadband environment characterised by the proliferation of rights-protected rich media content.