This blog is by Leslie Shannon at Nokia Siemens Networks.
The Wall Street Journal caused a bit of a flurry in North America a couple months ago with its report that ESPN was in talks with “a major operator” about the possibility of subsidizing its customers’ mobile data. Nothing is official or commercial yet, but this is just the latest round in the discussion, and follows comments by AT&T and Verizon earlier this year, about “toll-free data.” In this model, content providers rather than end users would pay for the data delivery cost of selected content, much as the sponsoring organization picks up the tab for 1-800 numbers in the US today.
What’s changed now is that it’s not the operator talking about what’s theoretically possible, but a content provider talking about what makes business sense to them. ESPN has noticed that when people run over their monthly mobile data quota, they stop streaming ESPN’s sports services (surprise!). And that means that ESPN loses this customer – and the advertising revenue that they generate – until their data quota kicks in again. The best way around this, ESPN is thinking, might be for them to pick up the data charges of people watching their streaming sports videos. This way, people can continue watching ESPN even after they use up their monthly data quota.
The ESPN discussion is a concrete sign that mobile channels are becoming important enough for content providers to invest in them to ensure an uninterrupted stream of mobile advertising revenue. Where do operators fit into this picture – do they have a trump card they could play? What if they could offer even more? What if, for example, they had implemented something like our Liquid Applications and could go beyond pure content delivery? In the ESPN case, say, operators could build an application that uses past ESPN viewing location and time patterns to predict when and where a particular user is likely to view the next game. They could then move the appropriate content close to the customer at the right point in the network and at the right time. Look, no more buffering! Spectacular video quality for the championship match. If ESPN is considering paying operators for the pure delivery of content, might they consider paying operators more for higher quality delivery of content, targeted at particular customers?
Or even better, if through Liquid Applications ESPN knows when and where their viewers are watching and who they are, they could feed that information to their advertisers and match the mobile advertising stream with subscriber interests and preferences– thus giving ESPN the opportunity to increase their advertising revenues, and even more incentive to pay operators for that mobile data delivery. Ooooh, I think we might be onto something here.
It’s early days yet, but these are the very first signs that the “two-sided business model” we’ve all been talking about for years might actually come to pass. Watch this space.