Mobile operators and content platforms need to partner

Over-the-top content platforms (OTT) such as WhatsApp, We Chat, Mxit, Viber, Line, Skype, Facebook Messenger and a host of others have over recent years taken a big bite from mobile network operator revenues globally.

At last count the number of on-device installations topped two billion; and even when watered down by the fact that one device may hold two or more active accounts on these platforms, that figure still accounts for a projected $14 billion (Sh1.2 trillion) negative impact on operator revenue this year as released in a Juniper Research report.

The business models for many OTT players are fairly similar, with in-app purchases of virtual goods, yearly subscriptions and cheap off network termination of calls or SMS messages. This focus has been mainly toward monetising the tier one consumers who number in the millions, with a single digit conversion rate deemed acceptable.

Mobile network operators under the GSMA – an industry body that brings together about 800 operators with 250 mobile focused – have attempted to push back on the revenue attrition by releasing a platform called Joyn that has failed, at least thus far, to slow down or reverse operator misfortunes. Operators have instead been moving to sign deals that bundle data to access these hugely popular OTT platforms.

With the success of either intricately intertwined this should not be a zero sum game. Juxtaposed against their user numbers, most OTT platforms can be said to still be struggling with monetisation.

Some have opened up their platforms via basic application programming interfaces (APIs), others offer “official” accounts but most remain walled gardens, locking out perhaps the most lucrative and sustainable revenue stream when looked at from the perspective of brand engagement in emerging markets where subscriptions and virtual goods purchases billed via credit cards do not rouse much interest for tier one consumers.

If holistic value is to be delivered to the end consumer, everyone must play well. Mobile operators must realise that the business models of old need to be retired and new ones that are cognisant of the additional players adopted.

OTT players know that without the scaffolding provided by operators they would not exist, at least not on the scale that mobile technology has catalysed. Both must understand that they cannot possibly cover all possible service permutations in-house and must open up to innovation from trusted partners.

The revenue is after all in the value propositions delivered seamlessly to consumers.

Njihia is CEO of Symbiotic

Twitter - @mbuguanjihia