Driving MMS Demand
By Steve Wallage, Thu Oct 10 00:00:00 GMT 2002
Aggressive pricing is pushing MMS forward but the content and applications need to follow to create meaningful 2003 revenues.
MMS is suddenly very hot. According to EMC, 46
commercial MMS offerings were in operation by October 1 in Europe and
Asia. The 'role model', Japanese operator J-Phone, launched
its Sha-mail service based on terminals which have built-in cameras,
over a year ago. It now has four million subscribers. More then half of
new subscribers now opt for Sha-mail.
In Hong Kong, more than
50% of CSL's customers buying MMS-enabled handsets are using the
service. This might not sound too impressive but compare this with
figures from UK retailer Carphone Warehouse, which recently reported
that less than 1% of customers buying GPRS handsets signed up for GPRS
In Europe, TIM in Italy has sold more than 250,000
MMS-enabled handset. During July and August, when it ran a promotion
offering free MMS messages, more than one million were sent.
Operators are desperately keen to show that the MMS model
'works', and therefore that the mobile data and 3G models
work. For some, this has meant a real drive to create a market this year
and have a 'MMS Xmas'. This has been particularly true in the
UK market with widespread media advertising, and large handset
subsidies. Users taking a yearly MMS contract can already buy
MMS-enabled handsets for under €250. Orange has expressed hopes that it
will be able to offer its cheapest pre-paid MMS handset at around €150
by Christmas. Other operators have tried to move away from such large
subsidies. For example, although TIM will sell six MMS handsets by Xmas,
the cheapest will still be around €500.
The real driver for MMS
will be creating compelling
early MMS users will not have built-in cameras, and will need strong
content availability to encourage the usage of MMS. There are some
promising signs that operators have put thought into this area. For
example, O2 launched MMS with content partners such as Arsenal and Bayer
Leverkusen football clubs, Hallmark, Ringtones Online and Warner
Content partners need to be incentivized, and Orange has
suggested that it will offer up to 80% of revenues to content providers.
The European i-mode model of around 85% to content providers, can set a
strong precedent in encouraging operators not to be too
Of the one million messages sent on the TIM network in
July and August, only 10% were person to person - in fact, early
indicators suggest that users do not see MMS as a replacement for SMS,
which is far more clearly positioned for such communication. Application
to person messages comprised 80% of the total, and 10% were Internet
To drive the development of MMS applications,
Italian operator WIND, for example, has launched a competition among
software developers. The final winners will be announced at the SMAU
telecoms conference and exhibition in October.
has attracted over 300 entrants. WIND has selected a shortlist of 20
finalists, which provide a good indication of the sort of MMS
applications that are and will be developed. Of the twenty, seven are
games, two are viral postcards, two are traffic and weather information,
and two are community applications. A key theme of entrants is around
entertainment and information, although within these categories there is
a very wide array of applications.
Two key concerns for
operators will be DRM (digital rights management) and control of the
value chain. DRM can be a minefield and the boundaries of responsibility
are often unclear – for example, if an operator breaches copyright by
transmitting images from a third party, are they responsible?
The operators are also concerned that the real winners from MMS
content could be third party providers, and potentially virtual
operators and portals. The operators are still very well-placed to
retain a strong position in the market, but need to show far better
understanding of the needs of the non-voice market.
developer competition illustrates some of the directions of the MMS
content market. As the market evolves from simple images, new games and
information services using MMS will become widely available.
Applications will vary by country, not just because of cultural
differences but to reflect differences in tariffs. For example, in
markets where bundled monthly services allow a high number of MMS per
month (such as the UK), then interactive applications can be more
Two other key drivers will be advertisers and the
sex industry. Many advertisers have become wary of the mobile
advertising market given the wider downturn in advertising and its
unproven nature, but MMS is immediately attractive. Although the
advertising industry can wait until there is wider take up of MMS, it is
keen to try new approaches such as interactive games and sponsorship
For the sex industry, MMS offers fairly obvious
attractions. Indeed, some of the entrants into the WIND developer
competition, came from this part of the market.
there is no doubt that MMS will be driven by the youth market and
typical; early adopters, there have been some indications that business
markets could be targetted. Examples include sending maps to
salespeople, images for the medical profession, stock trading charts for
investors, and sending photos for field engineers. One UK housing estate
agency is evaluating equipping all its field personnel with MMS handsets
equipped with cameras. This would enable them to instantly send pictures
of houses back to their offices, and also to send images to suitably
equipped customers. The business case and payback for such applications
are often intangible, but such MMS users can clearly save time and offer
a differentiated service.
Person to person communications
markets need a mass market to develop. As the old joke went, its no use
being the only person with a fax machine. This typically translates into
at least 25% of the market.
MMS does not need a mass market to
work for the operators. The TIM statistics show only 10% of messages
were person to person.
There are signs that MMS is already
having a healthy effect on the handset upgrade market. Scandinavian
retailers reported over the summer that they could have sold twice as
many MMS handsets if stocks were available. UK retailer Carphone
Warehouse recently reported that 56% of mobile handsets sold by the firm
in September were priced over €160, compared with around 27% in April.
Although price hikes and color screens also impacted the figures,
Carphone Warehouse suggested the demand for MMS was also a major
The idea of a MMS Xmas in 2002 is still a bit premature.
However, 2003 is now looking like the time when MMS can make a serious
impact, providing such issues as content, interoperability and handset
availability and prices are resolved. Content developers and partners
are working hard to overcome the first issue. The second issue will be
resolved in 2003 with operator agreements and an acceleration of the
standards work. The third issue is also being overcome, with Nokia
suggesting 50% of its handsets will be MMS-enabled by the end of 2002.
At the recent conference of investment analysts Schroder
Salomon Smith Barney (SSSB), of the mobile operators only Mobistar
believed they would have to wait until 2004 for the revenue impact from
MMS. This was attributed to the banning of handset subsidies in Belgium,
and thus high initial prices deterring early adopters.
be a 2003 phenomenon.
works and writes for the451. Steve has more than 13
years of experience as a technology analyst specializing in