After a long and exciting week for our team at Mobile World Congress, we are now finally back in office and able to reflect on what happened at the industry’s standout event.
For consumer media, the most exciting news story was surprisingly the relaunch of classic Nokia feature phones. But during meetings with our carrier and digital merchant partners another, a much more significant trend confirmed itself - the shift from a focus on hardware to a focus on digital services.
Carriers are in a tough position to grow their revenue. The recent launch of a new carrier Reliance Jio in India showed that pricing wars can have a quick impact on profit. This can very well happen in any other market and forces carriers to rethink what value they can provide to customers who currently switch from one prepaid SIM card to another one purely based on the price.
On the other side, we have digital service providers who are feeling an increasing pressure to expand their business internationally. Western markets have reached “peak smartphone” and future growth is likely to come from countries that merchants have not previously considered attractive from a revenue perspective.
It is then no surprise that Netflix was the company giving the keynote at Mobile World Congress and bundling together with payments is becoming an increasingly common strategy for both carriers and service providers to grow their user base and revenue.
With all of the big digital companies having embraced carrier billing and mobile operator partnerships, the race for which digital companies will dominate in the growing emerging markets is off to a start. As we have pointed out previously, it’s not necessarily the biggest companies who win out in new markets, but those who are able to expand rapidly and cater to the local audience.
Digital merchants thus need to find an answer to the question: “How can we strike as many carrier partnerships as quickly as possible, before our competitors are able to do so?”. And for carriers, conversely: “How many digital merchants can we bring on board to differentiate from our competitors?”.
One digital service across all of one carrier’s service packs is not enough because people have different tastes in the online content they consume. Bundling alone is not enough, because users churn out after their free trial runs out. Payments alone are not also enough because in a world of freemium, people need to be hooked in with something extra on top.
Our view is that the customer lifecycle needs to be managed from the beginning to the end: from influencing their SIM card purchase decision at the retail location, to when they sign up for a trial up until they decide to become a paying customer for both the digital service and the carrier. We are excited to see that carriers and digital merchants are taking the strategy of working together on a more integrated level than before. This gives us confidence that the platforms and solutions we have been building to help both parties manage their partnerships effectively are going to get used to their full capacity.
I hope everyone had a productive week at the Mobile World Congress and if you are interested in discussing how we can help your company support your emerging markets strategy, get in touch.