Americas Market Perspective

Transcription

1 Americas Market Perspective V O L. 8 I S S U E 26 A U G U S T 2008 Latin American Mobile Operators Spurring Data Revenue via SMS- and MMS-Based Social Communities Analyst: DEREK MEDLIN Senior Analyst dmedlin@pyr.com As voice revenue for mobile services slows, Latin American operators look to data services such as SMS and MMS to maintain overall growth figures. To encourage increased usage of SMS and MMS, mobile operators across the region are offering access to social communities, where users share messages, photos, audio messages and/or videos via SMS/MMS, though some communities are operator-specific. Looking ahead, Pyramid Research foresees that the adoption of SMS and MMS will continue to climb, yielding US$15.5bn in revenue by Pyramid Research While every effort has been taken to verify the accuracy of this information, Pyramid Research cannot accept any responsibility or liability for reliance by any person on this information. ID# 246 Pyramid Research Locations Worldwide World Headquarters 58 Charles Street Cambridge, MA USA Tel: Fax: Latin America Waterford Business Park 5201 Blue Lagoon Drive Suite 971 Miami, FL USA Tel: Fax: Asia-Pacific Suites 2701/2801, Floor 11 AXA Centre 151 Gloucester Road Wanchai, Hong Kong SAR Tel: Fax: Europe Bloomsbury House, Suites 17/18 London, WC1A 2RP United Kingdom Tel: Fax:

2 2 EVENT SPOTLIGHT Pyramid Research forecasts that Latin America, on a regional level, will begin to see a significant slowdown in the growth of total voice revenue from mobile services starting in With data being the clear pathway to revenue growth, the challenge for mobile operators is to develop easy-to-adopt data services. One key strategy to increase mobile data revenue and encourage mobile data adoption is to incentivize the use of the widely available SMS and MMS mediums as a method for mobile communication and data transfer. Pyramid Research notes that the formation of social networking services, leveraging messaging services, for the mass mobile market is one method that operators already use to spur on mobile data revenue. We estimate overall SMS/MMS traffic will grow at a CAGR of 23% from 2007 to 2013, contributing to double-digit growth in mobile data revenue for at least the next five years. BEHIND THE HEADLINE As voice revenue for mobile services slows, Latin American operators look to data services such as SMS and MMS to maintain overall growth figures. As a region, Latin America is seeing solid adoption rates for mobile telephony, rising from a 45% penetration of population (regional) in 2005 to an estimated 79% penetration at the close of Pyramid Research forecasts that with several countries superseding 100% penetration over the next few years, regional penetration will approach 100% by 2013 (see Exhibit 1). Regional saturation gives rise to a slowdown in voice revenue due to the following: With the high end of the demand being met, low-usage segments become targets to increase the subscriber base. These segments usually have limited consumption and low voice ARPS. Competition puts downward pressure on voice pricing and encourages flat rates. Slowing from its double-digit year-over-year growth over the past few years, voice revenue will begin to flatten out in 2009, pushing mobile operators to find new sources of revenue (see Exhibit 1). As a result, forecasts show that the region s CAGR for voice revenue will be a meager 3% for

3 Revenue (USD$m) VOLUME 8 ISSUE 26 3 Exhibit 1: Latin American regional mobile voice revenue, , US$m $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Mobile voice revenue Source: Pyramid Research Mobile Data Forecasts, Q Though SMS and MMS are not new to the marketplace, they are the most readily available mobile data service, given they do not require an advanced network and most handsets currently support their operation. SMS and MMS are also a solid introduction into mobile data, beginning as an alternative form of communication and evolving into more advanced services for information sharing, leisure activities and productive applications. To encourage increased usage of SMS and MMS, mobile operators across the region are offering access to social communities where users share messages, photos, audio messages and/or videos via SMS/MMS, though some communities are operatorspecific. In order to rouse usage of SMS and MMS services, mobile operators in Latin America began offering a wide portfolio of messaging-based services. Subscribers can receive message alerts for news, sports, gossip, etc., via SMS, send messages to find businesses, addresses, public transportation or for directions, and much more. While some of these services are useful, they do not result in heavy usage of the messaging platforms. In addition, most have widespread substitutes, such as Internet/ -based feeds, mapping, etc. To increase ongoing user interaction via SMS and MMS, mobile operators in Latin America have embraced the idea of social communities. Founded in the US and other Western markets, social communities began as fixed Internet-based networking sites. These Internet-based social communities, such as MySpace, Orkut, Facebook and Sonico, have a huge footprint worldwide and millions of users in Latin America. Young people are engaging in all types of social communities all the time, so by offering the service to the mobile device, operators can give subscribers a way to be connected constantly. As a result, most Latin American operators already offer a mobile social community (see Exhibit 2). These communities utilize SMS for leaving comments about content (photos, videos, etc.) or for sending messages. MMS is used to upload content directly to the user s profile.

4 4 Exhibit 2: SMS- and MMS-based mobile social communities, selected Latin American markets, June 2008 Country Operator SMS/MMS Community Proprietar y? Yes/No Photos Audio Recordings Videos Argentina Claro BlogClaro Yes X X Argentina Movistar Fotolog No X Argentina Movistar BlogMovistar Yes X Argentina Personal PersonalBlog Yes X Brazil Claro ClaroCupido Yes X Brazil Claro Orkut No X Brazil Oi Oi Fotos Yes X Brazil Oi Oi Flog Yes X X X Brazil TIM TIM Studio Yes X X Brazil Vivo Moblog Yes X Brazil Vivo VivoCupido Yes X Chile Entel EntelAlbum Yes X Chile Entel Facebook (for BlackBerry) No X X Chile Movistar Moblog Yes X X Chile Movistar VideoPlay Yes X Chile Movistar Fotolog No X Colombia Comcel Foto Album Comcel Yes X Colombia Movistar FotoBlog Yes X Colombia Movistar Album MMS Yes X Colombia Tigo Album Fotos Yes X Mexico Telcel Mi Album Ideas Yes X X X Mexico Telcel Youtube No X X Mexico Movistar FotoAlbum Movistar Yes X X X Peru Claro Flickr No X Peru Claro Blogger No X Peru Movistar MMS Mural Yes X X Venezuela Digitel GSM Tu Video 412 Yes X Source: Pyramid Research, operator websites, June 2008 Most of these websites are proprietary, in that they are closed communities for users of that particular mobile operator in that country. Given that millions of users are already members of global or regional social networking websites, such as Flickr, Blogger, Fotolog, Facebook, Orkut, MySpace or Youtube, Pyramid Research believes that partnering with these major players can ease users transition into using the mobile device to access their social community.

5 5 Looking ahead, Pyramid Research foresees that the adoption of SMS and MMS will continue to climb yielding $15.5bn in revenue by With the launch of new SMS- and MMS-based services, Pyramid Research expects the overall revenue from SMS and MMS services to continue their upward trend due to a larger base of users and a higher number of messages sent per user. As a result, we expect the following for the region: An increase in the number of SMS and MMS users, resulting in a boost in SMS users from approximately 32.3m in 2007 to more than 130m by 2013 and MMS users from 12.5m to 83m over the same period. A jump in the number of average monthly messages, with SMS increasing from 37 per month in 2007 to 57 per month by MMS will rise from an average of 0.2 per month to 0.9 per month over the same period. Revenue from SMS and MMS messaging is slated to nearly double from 2007 to 2013, increasing from $8.5bn to $15.5bn. Despite the rise of other mobile data services, such as remote access, music, etc., messaging revenue will represent nearly 60% of mobile data revenue in CLIENT RECOMMENDATIONS Mobile operators Look for opportunities to incentivize the usage of social communities. The more developed these are, the more SMS and MMS will be transferred. In addition, the community could be a future source of advertising revenue. In any case, consider alliances with non-proprietary social communities to bring fixed Internet users into the mobile space. Handset vendors Look for opportunities to integrate social communities into handset software in order to facilitate data service adoption. The more advanced users become, the more likely they will look for multimedia handsets in the future.

6 6 Recent reports and other products from Pyramid Research In Uruguay, Operators Leverage SMS Traffic to Promote 3G Services Regional Perspective published March 2008 Uruguay is the global leader in SMS usage with more than 1m messages sent every month. Even with such an impressive usage pattern, however, SMS has not turned out to be the Holy Grail for mobile operators with such low prices, it has crimped revenue. This Perspective examines how operators in Uruguay and in the region will try to compensate for the loss of voice revenue with new 3G technology. iphone Arrival to Expand the Vibrant Smartphone Market in Latin America Regional Perspective published July 2008 The iphone launched in Latin America in July, in Mexico, by mobile operator America Móvil. But both America Móvil and Telefónica are expected to compete head-to-head this year with iphone plans in 10 overlapping markets in the region, of the 14 Latin American countries where the iphone will be launched. Operators are drawn to offering iphones and expanding their smartphone base as a way to drive data usage, ultimately raising ARPS. This Perspective explores how the introduction of the iphone will fuel the growth of the smartphone market. Vendor Investments in Latin America Speed Up to Satisfy Demand for Telecom Services Regional Perspective published July 2008 Japanese company Furukawa recently announced a US$3m investment to produce fiber-optic cable for Latin American carriers. The region s fiber-optic market is characterized by strong current and future growth, thanks to increases in broadband and IPTV penetration. Meanwhile, Latin America s telecom market is positioned to surpass other regions as a result of upcoming regulatory changes expected to foster competition and investment. This Perspective examines the regional trend of investing in telecom equipment and infrastructure in light of expected demand in the coming years. Yahoo Opens Regional Portal Offerings to Improve Its Presence in Latin America Regional Perspective published July 2008 Latin America is an important market for Yahoo as Internet and data usage keep growing throughout the region, and Yahoo recently added local platforms in four more countries. These platforms aim to draw more traffic to their site and combat Google s dominance. This Perspective examines these new operations and agreements with local mobile operators to determine if these steps will improve Yahoo s presence in the region. Latin America Mobile Data Forecasts, Q Forecasts published June 2008 Updated on a quarterly basis, our Mobile Data Forecast products provide complete pictures of demand trends for 18 geographical markets in Latin America. The Excel output includes five years of historical data and five years of market projections for metrics such as penetration, mobile subscriptions (by type of package, by operator or MVNO and by network technology), users of specific data services (SMS, music, etc.), MOU, ARPS (by operator, by subscription type, by service, by application) and revenue (by messaging and non-messaging applications). The Forecasts are based on extensive field research and use a consistent methodology, aiming to capture the total spending on mobile data services in each market. Additional Products Forecasts Updated on a quarterly basis, our Forecast products provide a complete picture of demand trends affecting each geographical market covered. The Excel output includes five years of historical data and five years of market projections, providing complete macroeconomic and market-sizing information. Available for: Mobile Communications, Fixed Communications, Mobile Data, Mobile Enterprise, Mobile Handsets, Mobile CAPEX, Internet and Media, Network OPEX. Country Intelligence Reports Country Intelligence Reports offer insightful analysis of a country's communications, media, and technology industries, including regulatory pressures and overall competitive landscapes. These data-intensive reports are published annually for 64 countries worldwide, and illustrate key trends within given markets, making them an excellent complement to our Forecast products. For more information or to purchase, contact Pyramid Research at: or sales@pyr.com or