The Operator Value Proposition: More Risk than Reward?
Mobile operators have long been able to exist in a self-contained ecosystem with little need for revenue share. However, as the market shifted to an emphasis on value-added data services, operators have had to increasingly work with third parties to provide content such as ringtones, games, music, and video. Initially, the operator retained the upper hand in the relationship, since many of the companies providing content were reliant on the operator for access to subscribers. Now, as consumers increasingly demand music, games, and TV on a mobile handset, operators have had to share more revenue with entities such as record labels, console game developers, and broadcasters for access to sought-after content.
Broadcast Mobile TV is a prime example (see Exhibit). With operators forced to work with content providers such as TV channels and movie studios for content, and with the ceiling for monthly subscriber spend on the service potentially no greater than US$10 per month, the operator may be in a situation where margins are somewhere between slim and nonexistent.
Exhibit: Operator Margin Scenarios for Broadcast Mobile TV
