How to succeed in content services business

Baris Akkaya, Content Services Manager

How to succeed in Content Services Business

-TR Case Studies-

@

Apr 4th, 2011

Agenda

VAS and Content Services: Global Outlook

About AVEA

GSM Market-Turkey Overview

VAS Turkey-Where is the Golden Mine?

Content Services: Hot Topics

Mobile TV

Music Services

Mobile Game

Mobile Application Stores

Location Based Services

Summary and Conclusions

Global Outlook: VAS

%60 of time spent on Smartphones are new activites and majorly content-based.

Source: AppsFire, Jan 2011

Global Outlook: VAS

Mobile Music

Mobile Gaming

Source: ComScore, Dec 2010

Global Outlook: Content Services

Source: JRC European Commission – Feb 2009

• Mobile Music and Mobile Game to lead the content business in the mid-term.

• Mobile Advertising and Mobile TV to recover, but will not be the main drivers.

Agenda


About AVEA




Mobile TV

Music Services

Mobile Game




June 2004

Merge of 2 different GSM Operators

Privatization of Turk Telekom in 2005

New shareholder structure in 2006

19%

81%

11,6 mio subscribers*

* As of Feb 2011

About Avea

http://images.google.com.tr/imgres?imgurl=http://www.zaman.com/2006/03/28/oger_b.jpg&imgrefurl=http://www.zaman.com/?bl=economy&trh=20060313&alt=&syf=butun&h=175&w=220&sz=24&hl=tr&start=1&tbnid=OKfth8-oUqlLIM:&tbnh=85&tbnw=107&prev=/images?q=Oger+Telecom&svnum=10&hl=tr&lr=

VAS At AVEA

Avea biDünya

Music

LBS Mobile TV

Info & NewsSocial Network

Operator Services

Business Services

Mobile Game

Agenda


About AVEA




Mobile TV

Music Services

Mobile Game




10

Market Overview- GSM and VAS

3 GSM operators in the market: Avea, Turkcell, Vodafone

25% revenue market share in VAS

VAS accounts for 500 M US$, about 6% of all GSM services

66 million GSM subscribers

Mobile Handset Penetration (Sep 2010)

As of Jan 2011

11

Market Overview – Mobile Internet

Number of Mobile Internet

Users

(X 1000)

• Number of 3G users have almost tripled from 2009 to 2010. (7,1% vs. 19,4%)

• Number of Internet-on-your-mobile users have grown from 641 K to 1,448 K.

Source: BTK-Turkey, Q4-2010 report

Agenda


About AVEA




Mobile TV

Music Services

Mobile Game




VAS Turkey-Where is the golden mine?

52 44 32 15 16 11 20 39 28 29 21

8569 72

5140

29

57 61 64 6655

Daily Ever

Mobile

% doing activity

Turkish consumers use mobile particularly for social networking and email.

However; news, interest, multi-media and gaming are secondary to those.


7486

68

25 2919

45

78

65 63

49

55.6 53.7 53.9 54.9 53.147.6

51.654.4 56.1 56.5

59.4

% doing activity daily % highly engaged

Engagement levels are high across most activities. However, engagement is higher for

entertainment based, visual activities such as online gaming, multi-media and also

personal interest.


Global Turkey Male* Female* 16-20* 21-24* 25-34* 35-44* 45-60*

Future increase in activitiesGreater increase on PC Greater increase on mobile*

* Low base for subgroup

Many activities such as social networking are set to grow via mobile, though this is

from a very small base.


Turkey needs:Confident, assured

Recognised, important

Responsible, thoughtful

Turkey needs:Fun, pleasure

Energised, excited

Amused, entertained

Turkey needs:Amused, entertained

Fun, pleasure

Energised, excited

Turkey needs:Amused, entertained

Fun, pleasure

Energised, excited

Personal Admin Social

Online gaming Multi Media

Global needs:Under control, on top

of things

Effective, efficient

Confident, assured

Global needs:Sociable, friendly

Fun, pleasure

In touch, in the loop

Global needs:

Fun, pleasure

Amused, entertained

Energised, excited

Global needs:

Fun, pleasure

Amused, entertained

Energised, excited

For social networking Turkish consumer have a greater need for excitement and

stimulation. This is also reflect in high usage levels of multi-media and online gaming

Agenda


About AVEA




Mobile TV

Music Services

Mobile Game




Evolution of the Content

Static

Centralized

Walled

Expensive

Geeky

Dynamic

Decentralized

Social

Cheap

Mainstream

Mobile TV

- Screen Size

- Resolution Rate

- Handset Prices

- Handset Client

Handset

&

ClientNetwork

Content

- Interesting

- Socializing

Mobile TV to get momentum with interesting and socializing content

Content

• Lower content fees

CONTENT MATTERS

- Screen Size

- Resolution Rate

- Handset Prices

- Handset Client

- Download rates

on-the-go

- Uninterrupted streaming

- Data Fees

Handsets

• Bigger screens

• Higher resolution rates

• Lower priced

Network

• Better coverage

• Higher network capacities

• Lower data fees

- Content Fees

Mobile TV in Turkey

43%

25%

26%

6%

How do you access TV channels?

Antenna

Satellite

Digital or Cable

Antenna and Satellite

As of Oct 2010

60%

46%37%

0%

20%

40%

60%

80%

Laptop Desktop PC Mobile Handset

How do you access TV channels when no TV is around?

As of Oct 2010 55%45%

0%

20%

40%

60%

Yes No

Would you prefer to watch free channels via your

mobile?

29%

71%

0%

50%

100%

Yes No

Would you pay for the content?

As of Oct 2010

As of Oct 2010

Mobile TV : Turkey and AVEA

18 popular national channels live

50 K/mth revenue on average

35% YoY growth in the customer base (~ 160 K customer)

Daily/Monthly Subscription Fee + Free URL

MOBILVIZYON of AVEA

• All three operators have their own Mobile TV multicasting solutions.

• Video on Demand is available only at Turkcell since it has not proved to be

profitable line of business yet.

• The overall market size is estimated to be 3-4 M $ as of Jan 2011.

Music Services

Music Services: Turkey

Aveamuzik.com ttnetmuzik.com.tr

Gncplay.com

• 54% of Aveamuzik.com customer are between 15 and 24 years old.

• 32% of Aveamuzik.com customers are between 25 and 34 years old.

• 56% of youth segment in Turkey finds AVEA brand young and energetic.

• 48% of youth segment in Turkey believes that AVEA invests into music.

Music Services @ AVEA

TARIFFS BEING THE MOST IMPORTANT KEY TO THE SUCCESS AS THE

MUSIC IS CONSUMED BY YOUTH SEGMENT AT A VERY FAST RATE.

• Aveamusic.com has 130 K subscribers as of Mar 2011

• RBT service has 250 K subscribers as of Mar 2011.

• 90% YoY growth in the customer base (2010-2011)

• 40% market share in the mobile music download

Mobile Game: Global Outlook

• In-Stat predicts that in game purchases will reach 7,3 billion US$ in 2011.

• Juniper Research says mobile game revenue will top 11 billion US$ by 2015.

• Juniper Research says ad spend on mobile games will increase tenfold over

the next five years. By 2015, ad spend on this platform will reach 894 million

US$, up from 87 million US$ in 2010.

• Parks Associates in Nov 2010 reported that one in five gamers spends money

on virtual items and microtransactions, which are expected to garner 6 billion

US$ in revenue by 2015.

1.800

165

105102

2010 – Mobile Games Revenue (M US$)

Apple Store

BB App World

Nokia OVI Store

Android Market

Source: IHS ISuppli

Mobile Game: Trends

• Mobile Gaming makes the

biggest chunk of the content

revenues in the U.S. and is

expected to keep its position in

the next few years.

• There is a growing emphasis on

monetizing such content through

downloads, advertising and in-

game purchases, rather than

shipping phones with games

preinstalled.

627,7

849

1028,5

1173,4

1376,7

1514

0

200

400

600

800

1000

1200

1400

1600

US Mobile Game Revenue (M $)

2009

2010

2011

2012

2013

2014

Source: emarketer.com

Mobile Game: Turkey

• Multi Player Online Game launched by Turk Telekom in 2010.

• Has won World Communication Awards in 2010 in Best

Content Service category

Registered Members : 812.000

Mobile Activation : 357.000

Average Length of Visit : 29 minutes

AVEA and Sobee has started the discussions to adapt I Can Football into mobile.

Mobile Game market is estimated to be about 60 M US$ in Turkey in 2011.

ISlash, by Duello Games*, sales has surpassed Angry Birds sales on Turkey app store.

• A slashing puzzle game

• 3 million downloads from App Store (Sep 2010- Mar 2011)

• Priced as 0,99 US$

* Duello Games is a Turkish company.


• Worldwide Mobile Application Store revenue forecast to surpass 15 billion US$ in 2011.

• Revenue between 2010 and 2014 is forecasted to grow 1000% and to reach 58 billion US$.

According to Gartner:

WHY IS THAT SO IMPORTANT FOR CONTENT SERVICES?

Sep 2010

Mobile Applicaton Stores: How can operators get into play?

Walled-Garden Store Open Store SIM Store

Strategy • Offers only in-house built

or outsourced applications

• Targets niche markets or a

specific customer segment

• Limits the play ground to a

specific handset

• Offer access to

external stores in

addition to the closed

storefront features

• Revenue from external

stores are shared

• Selling apps

for featured

phones

Requirements • Very well segmented

customer base

• Building a developer

community

• High-end service

Delivery Platform

• Advanced

SIM Tool Kit

interfaces

Monetization • Instant M-payment

• Mobile Advertising

• Instant M-payment

• Revenue sharing

• M-Payment

Location Based Content Services

• Social Network Services

• Shopping Applications

• Location Enabled Search

• Mobile Advertising• Personal Navigation

According to IEMR report published in Jul 2010;

• The global market for GPS navigation and location based services will

increase to 13,4 Billion US$ in 2014, a compound annual growth rate of

51.3%.

• Location based search and advertising to drive 2 Billion US$ of the

above.

• The adoption of GPS in mobile handsets is largely being driven by

smart phones.

• In 2009, more than 40% of all smartphone owners used their mobile

devices to get turn-by-turn directions, according to data from Compete,

an industry leading web analytics firm. For iPhone users, the figure is

even higher at over 80%.

Registered Foursquare Users

Facebook

Places

launched

Location Based Content Services: Turkey

• All operators in Turkey somewhat

have Location Based Content

Services.

• Market growth is driven by

smartphones, led by Apple Iphone.

• The market size is estimated to be

about 5-6 M US$ as of today,

since location based advertising

has not yet ramped up.

• Facebook Places was launched in

Turkey in Mar 2011.

• Foursquare has 90 K users as of

Feb 2011 in Turkey.

Location Based Content Services: IBB Cep Trafik

• IBB Cep Trafik was first launched in 2005 and was free.

• By May 2008, the number of users have reached 400 K.

• In addition to original Native Java version WME and Iphone

editions have been launched betweeen 2008 and 2009.

• The number of users have dramatically dropped as low as to

10 K users in Dec 2009 due to the subscription fee of 5

TL/month.

• Nowadays IBB is working on an ad-funded model.

Agenda

AVEA



Global Outlook


Mobile TV

Music Services

Mobile Game




Conclusions

Location based services revenue has a big room to grow, mobile advertising seems to be the key

revenue stream.

Content is now more social, decentralized, but cheaper.

Mobile Content revenue will be driven by Music and Gaming services.

Fremium apps with in-game purchases will make more than 50% of overall mobile game revenue.

Digital music is majorly consumed by youth segment, the price sensitivity is high.

Mobile TV revenues will grow in parallel with the handset and network capabilities.

Mobile Apps stores are converting the VAS world quickly into an IP space, operators must

urgently decide the route to take to avoid ending up as a dummy pipe.

AS OF TODAY:

M-Payment solutions must be taken into scope immediately.

DO NOT...

AND

Refine your mobile content strategy over time

QUESTIONS?

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How to succeed in content services business