Home News Time to develop a “wallet sharing” business model for mobile converged

Time to develop a “wallet sharing” business model for mobile converged

The survey of 3576 cellular phone owners worldwide revealed that
consumers see absolutely no limits in terms of what services can be offered
via their mobile handsets. It also found that 96 percent of North American
respondents are in possession of a cellular phone, and 24 percent spend an
hour or more each day on their mobile handheld devices.

The report clearly states that simply attempting to use converged
services to generate more revenue from consumers using the traditional
subscription model will not work. Service providers would find themselves
offering upgraded content without necessarily being able to secure the premium
subscription rates for which they would hope. Instead, service providers need
to continue focusing on reducing churn while capitalizing on the appetite for
converged services using revenue earned from new partners. These partners
include marketing organizations that provide subscribers with personalized,
location-based offers and content providers that deliver short-duration
content directly to subscribers’ mobile handheld devices.

Nathalie Bernier, KPMG Canada’s National Industry Leader, Information,
Communications and Entertainment, explained: “Mobile service providers will
need to stop thinking of converged services purely as a revenue booster.
Instead, they should consider them as another churn reduction tool, allowing
them to present a stable, loyal subscriber base which will be attractive to
advertisers and digital commerce partners. In its most basic terms, it’s a
case of moving from a “wallet share” model – aimed at extracting more cash
from each customer – to a “wallet sharing” model. The latter model will allow
service providers to use these enhanced, converged services as a means to
deepen their customer relationships and allow other parties to reach their
customers.”

Survey highlights.
A key driver behind this shift is the typical customer’s reluctance to
pay a premium for converged services. The survey found that in North America:

– 37 percent of consumers maintained they would not pay a premium for
converged services
– 20 percent indicated they would be willing to spend only 10 percent
more than they do now

Considering that this is a generation of consumers raised in the Internet
era, where content is perceived as being free, and the competitive telecom
environment, service providers need to follow the Internet example themselves.
What this report reveals is that the “wallet sharing” model is no different
from what major Internet search engines have been doing for years: providing a
service offering so compelling that it attracts hundreds of thousands of
eyeballs which in turn are attractive to marketing organizations and content
providers.

What does this mean for the Canadian customer?
The survey presents a picture of a North American customer who is very
comfortable with existing converged services such as web surfing, instant
messaging and interactive gaming. Customers also listed the cellular phone as
the means by which they preferred to consume all types of media (except music)
while traveling. This indicates a pre-conditioned comfort level with the
mobile handheld device as an all-purpose multimedia terminal, a positive sign
for convergence service providers. This means there is tremendous opportunity
for North American consumers to benefit from gaming, electronic coupons,
location-based services and the short-duration video content they want, such
as news, movie trailers and short video clips.
According to the report, 90 percent of North American consumers stated a
preference for a single service provider and 89 percent desired a single,
consolidated bill for all the services they use. “Wallet sharing” will allow
the parties involved to generate revenue while providing the unified bill
consumers want without additional cost.
Ms. Bernier concluded: “These are interesting times for mobile service
providers. Our survey respondents exhibited an overwhelming preference for a
single service provider. However, as converged services become an increasing
reality, there may only be room for a few players “owning” the relationship
with the customer. It is likely to become increasingly important to manage
this change of business model correctly in order to earn the right to own
those relationships.”
Service providers will need to complement the traditional subscription
model with a revenue model based on presenting a loyal subscriber base to
marketing organizations and content providers. Marketing organizations will
need to invest further in effective, personalized and location-based mobile
advertising opportunities (which already have a click-through rate that is
four times higher than Internet-based advertising). Finally, content providers
should focus on delivering short-duration content to mobile handheld devices.

KPMG LLP commissioned Taylor Nelson Sofres to undertake a global consumer
convergence survey. A total of 3,576 interviews were conducted in Asia-
Pacific, Europe and North America with consumers who own and use cellular
phones, in order to develop a detailed perspective on the experience base,
attitudes, behaviours and preference associated with various electronic
information and entertainment services, particularly as might be delivered via
mobile handheld devices.

KPMG LLP is the Canadian member firm of KPMG International, the
coordinating entity for a global network of professional services firms,
providing audit, tax, and advisory services, with an industry focus. The aim
of KPMG International member firms is to turn knowledge into value for the
benefit of their clients, people, and the capital markets. With nearly 94,000
people worldwide, member firms provide audit, tax, and advisory services from
717 cities in 148 countries.