Mobile content market in Finland 2012-2016

MOBILE CONTENT MARKET

IN FINLAND 2012–2016

NOVEMBER 2013

2

Preface

This report looks at the mobile content services market in Finland with a broad scope. The market size and drivers for mobile content services, mobile marketing and mobile device base are studied in the report. Market size for mobile content services is presented mainly for the years 2010–2016; some statistics may also cover earlier years. /�i��>À�iÌ�`>Ì>�v�À�Ì�i�Þi>ÀÃ�ÓäänqÓä£Ó�>Ài�>VÌÕ>��w}ÕÀiÃ�based on data gathered for this and earlier reports. Years 2013–2016 are forecasts based on market analysis and up-to-date information available on the market. All the �>À�iÌ�w}ÕÀiÃ�>�`��Ì�iÀ�V��Ìi�Ì��Ì��Ã�Ài«�ÀÌ�>Ài�L>Ãi`�on analysis by Idean’s consultants and represent their views and opinions.

The report is commissioned by Teleforum ry and funded by Tekes. This report is part of a larger project in which Teleforum is looking for ways to help the Finnish mobile ecosystem to create the next mobile success stories.

The purpose of the report is to provide an overall view of the mobile content market dynamics in Finland. The report aims to help players in the mobile content market to de-velop services based on up-to-date market data. The focus of the report is in mobile consumer services.

The report is carried out as a combination of desktop and interview study between August and October 2013. The re-«�ÀÌ½Ã�w�`��}Ã�>Ài�L>Ãi`��ì«Ì��ÌiÀÛ�iÜÃ�Ü�Ì��«�>Þ-ers in the mobile content market and other market experts as well as Idean’s database on mobile content services. A steering group was formed to bring industry expert input and feedback to the report. The members of the steering group included leading Finnish experts working in global and national companies. All this data has been comple-mented with publicly available sources. The author of the report is Kalle Snellman, Senior Strategist at Idean. Idean’s designer Lauri Lankinen has done the editorial work and created the visual layout.

The author would like to thank all the interviewees and steering group members for devoting their time and effort in contribution to this report.

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4 Introduction6 Summary10 Key trends and observations14 Total market17 View on the global market20 Application stores26 Installed apps27 Application stores & device bases28 SMS Services30 Premium rate calls32 Device base36 Smartphone penetration38 Mobile marketing

Contents

4

Introduction

Mobile services have been topical since the late 1990’s. �ÕÀ��}�Ì�i�wÀÃÌ�Ìi��Þi>ÀÃ��L��i�V��iÀVi�Ü>Ã�`��>Ìi`�by a handful of players specialized in mobile content. Now the situation has changed, as an increasing amount of the total online consumption is moving into mobile devices. This trend affects practically all organizations from different industries. Many of the companies and authorities that �>Ûi��}��Ài`��À�Ì>�i��Þ��>��ÃÌi«Ã��Ì�i�wÀÃÌ�«�>Ãi�of mobile services, have now implemented mobile services or have serious plans for implementations. In fact, all or-ganizations have become more or less technology oriented and dependent.

The current media coverage on mobile issues draws a pic-ture of mobile application dominated mobile commerce. Mobile applications, however, represent only a small share of the total mobile originated content revenue. The major-ity of the revenue is still delivered by premium rate calls and SMS based services. On the other hand, only a part of the mobile services are expected to bring direct revenues.

The author of this report has acknowledged that mobile is ��VÀi>Ã��}�Þ�`�vwVÕ�Ì�Ì��ìw�i°�/�i�`�ÃÌ��VÌ��LiÌÜii��-bile and desktop usage and services used to be rather clear as there used to be separate SMS based services and mo-bile sites for mobile devices. Today an increasing number of online services are designed for both mobile and desktop. Moreover, a growing number of services and interfaces are LiV��}��>À`�Ì��ìw�i�>Ã�i�Ì�iÀ��v�Ì�iÃi]��>��}��Ì�`�v-wVÕ�Ì�Ì��`À>Ü�>��i�LiÌÜii��L��i�>�`�ìÃ�Ì�«°

Consequently the report looks at those aspects of mobility that are possible to measure. The focus of the report is on the mobile content service revenue in Finland. Addition-ally the mobile device base is covered in the report. These aspects will give an overall picture of the mobile market in Finland. The aim of the report is to give service providers relevant, up-to-date and consistent information regarding the mobile market so that they can make solid and well-reasoned business plans and decisions.

5

Mobile content market value Represents end-user spending on mobile services within the addressed distribution channels. The spending is divided into domestic and export markets. The domestic market is further divided into four main cat-egories; SMS based content services, premium rate calls, application stores and other. All of these categories are then analysed separately. Also media spending on mobile marketing chan-nels is included in the market value.

Mobile advertising market value The market value of mobile advertis-ing consists of expenditure on mobile media. In other words, the money Ã«i�Ì��-�-�ÌÀ>vwV]�Ãi>ÀV��>�`�banners in a mobile media space. Mobile site design and other similar costs related to mobile marketing are excluded from the market value.

Smartphone A smartphone is a mobile phone built on a mobile computing platform with more advanced computing abili-ties and connectivity than a feature «��i��>Ã°�"�i��v�Ì�i��ÃÌ�Ã�}��w-cant differences is that the advanced application programming interfaces (APIs) on smartphones for running third-party applications can allow those applications to have better integration with the phone’s OS and hardware than typical feature phones. Currently smartphones include devices with the following operat-ing systems: iOS, Android, Windows Phone, Symbian, BlackBerry OS, Bada and Meego.

Feature phone Ƃ�vi>ÌÕÀi�«��i��Ã�ìw�i`�Ì��V�ÛiÀ�all other mobile phones than smart-phones in this report.

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6

Summary

The mobile content services market revenue is booming in Finland, when looking at the combined revenue from domestic market and export. The total market for mobile content grew 31 % in 2012 to 404 million euros. In 2013 the market growth is anticipated to accelerate and the total revenue to exceed one billion euros, which is a 154 % up-swing over 2012. The majority of the growth in 2013 is gen-erated by mobile content export. During the past couple years and in the near future the growth has been and will be dependent on a couple of leading mobile companies in Finland. For example, the growth in 2013 was almost solely due to Supercell’s spectacular revenue growth.

The mobile content export grew from couple of million is 2010 to 164 million euros in 2012. In 2013 the revenue is forecast to reach 790 million. Concurrently the domestic market sales reached 240 million euros in 2012 and is fore-cast to decrease couple of percent to 234 million euros. The revenue trends in the domestic market vary sharply by mobile content category. The overall market is shrinking due to declining sales of premium SMS and premium rate calls. At the same time the mobile application, marketing and other mobile services are growing sharply. Together these three categories will surpass the combined domestic SMS and premium rate call revenue in 2015. The total do-mestic market revenue starts to grow again in 2014 despite the decreasing SMS and premium rate call revenue.

Current media attention seems to focus on the competing ��L��i�«�>Ìv�À�Ã�>�`�Ì�i�w}�Ì�LiÌÜii��L��i�>««��V>Ì��stores. All this leaves an impression that mobile application stores are huge revenue generators. This is not the case at least yet and in Finland. Mobile application store revenue represented approximately 4 % of the total domestic mo-bile content market revenue. SMS and premium rate calls bring vast majority of the domestic revenue today.

Another interesting trend is that a growing share of the mobile application spending is going through alternative channels to application store billing. For example most

7

2008

2008

256 252

–1 %

262

4 %

308

18 %

404

31 %

154 %

20 %13 % 14 %

2009

2009

2010

2010

2011

2011

2012

2012

2013

2013

2014

2014

2015

2015

2016

2016

1 025

1 233

1 399

1 596

Mobile marketing

Other mobile services

Application stores

Premium SMS

Premium rate calls

9 11 13 14 17 23 35 48 62– – 1 3 8 16 32 51 75– – 2 4 10 16 25 35 36

69 69 70 70 63 55 46 39 34177 172 172 172 143 124 107 89 82256 252 257 263 240 234 245 262 290

Figure 1.

Total mobile content revenue in Finland

2008–2016 (M€), including mobile

content export

The mobile content services market

revenue is booming in Finland, when

looking at the combined revenue from

domestic market and export. The Majority

of the growth in 2013 is generated by

mobile content export, which has been

exploding due to Supercell’s spectacular

success.

Figure 2.

Domestic mobile content market revenue

by service category 2008–2016 (M€)

Mobile content demand is strongly shifting

to new forms of services. Other mobile

services category is showing the strongest

growth in the coming years. It consists of

estimated mobile spending on various

services, including subscription services

ÃÕV��>Ã�-«�Ì�vÞ��À� iÌy�Ý°

Source: Idean, 2013

Source: Idean, 2013

8

of the leading subscription services, such as Spotify and iÌy�Ý]�>Ài��Û��V��}�VÕÃÌ��iÀÃ�`�ÀiVÌ�Þ�Û�>�VÀi`�Ì�V>À`°�This revenue is considered in the “other mobile services” category.

The mobile device user base is changing rapidly in Finland. The majority of mobile phone users have smartphone and a tablet device was in every fourth household in Finland in the fall of 2013. This trend is projected to continue as smartphones and tablets dominate the sales charts. In 2013 there will be three smartphones sold per one feature phone and it seems likely that soon the smartphones will be the only option available in stores. Tablet devices ex-Viiì`��>«Ì�«�Õ��Ì�Ã>�iÃ��Ì�i�wÀÃÌ��>�v��v�Óä£Î��>�`°�At the same time there are several new device categories emerging, such as smartwatches, different smart wrist-bands, glasses and other wearable computing devices.

9

2010 2011

Tablets

Smartphones

Feature Phones

Figure 3.

Smartphone, tablet device and feature

phone population in Finland 2010-2016

(in thousands)

Feature phones are gradually disappearing from stores and our everyday life. Tablets and

smartphones are becoming consumers’ primary internet devices.

2014 201620152012 2013

13

1 991

5 010

4 402

3 703

2 905

1 940

2 598

3 297

4 095

5 060

5 599

6 029

143

429

885

1 237

1 453

971

1 570

Source: Idean, 2013

10

Key

tre

nds

and

ob

serv

atio

ns

In Idean’s opinion biometric authentication

Ü��Li�Ì�i��ÃÌ�Ã�}��wV>�Ì�`�ÃÀÕ«Ì��

the foreseeable future. Our everyday life

is full of physical practices where personal

access is required in one way or another. For

example we have car and house keys, bank

accounts, credit cards, concert tickets not to

mention all the online and mobile services

that require a username and password. A bio

authentication could change all of these cur-

rent practices. Take for example usernames

and passwords. We could forget all the

hassle with dozens of passwords if we could

have bio authentication. As a sign of this

ìÛi��«�i�Ì�Ƃ««�i��ÌÀ�`ÕVi`�>�w�}iÀ«À��Ì�

authentication in its latest iPhone. Even

more interesting developments are bubbling

under. It seems likely that one practical way

of executing authentication would involve

dedicated devices. For example, a Canadian

company called Bionym is developing a

wristband named Nymi that makes an au-

thentication based on the user’s heart wave.

The wristband is then connected to one’s

device and app to complete the intended

task. It will take a while before these solu-

tions are integrated into our front door locks

and bank accounts. But once they start to

spread, we might be surprised by the speed.

Mobile app ecosystems by Apple, Google,

Microsoft and other likes, try to lock their

customers in walled gardens, where all the

data transfer and monetary transactions

occur inside the same ecosystem. A cus-

tomer would rather not let move between

iV�ÃÞÃÌi�Ã°�/��Ã��Ã��Ì�Ì�i�wÀÃÌ�Ì��i�Üi�>Ài�

living a walled garden era in mobile content.

Operators had a similar attempt a good

decade ago. However, nothing seems to be

Ã�>��}�Ì�i�}À�Ü��}��yÕi�Vi��v�Ì�i�VÕÀÀi�Ì�

ecosystems.

Nevertheless, the history has proven that

there will always be a new disruption that

shakes the current status quo. What this will

be and when it will happen is not clear. How-

ever, there seems to be a growing sentiment

against the currently leading ecosystems.

Mobile game providers are perhaps the

happiest with the current ecosystems, but

many others are discontent on for example

their visibility in the stores, customer data

processes and the revenue sharing policies.

Bio authentication is growing mainstream

Walled gardens rule the current world, but the future is open

11

Successful services are concentrated in

select business area. For example Spotify

is dominating music subscription services,

iÌy�Ý��Ã�`��>Ì��}�Û�ì�]��Ì>�->��>Ì�

and Iltalehti command media and Facebook

rules social media. The other players in the

same business areas are defenders. In the

long run the list of dominating players might

change, but the general set-up remains.

On the other hand, some business areas

are more inclined to this kind of set-up than

others. Moreover, the consumer services

market seems to live in 5 to 7 year cycles,

where new practices appear and replace the

existing ones. For example, currently the

most successful business model in mobile

gaming is free to play combined with in-app

purchases, whereas a couple of years ago

the best selling games were paid ones.

Consequently the only goal in these kinds of

markets is the pole position.

The fundamental problem with online, and

especially mobile services, is how to success-

fully introduce a new service for the target

audience. Many users are typically following

the masses and using the services that are

already popular.

Mobile technologies provide a potential to

change legacy business processes and they

certainly have done it. Take for example

Uber, which is changing the way we use

Ì>Ý��ÃiÀÛ�ViÃ��À� iÌy�Ý�Ì�>Ì��Ã�ÌÀ>�Ãv�À��}�

the way we use TV. All this raises concerns

regarding traditional companies’ ability to

respond to these new challenges. Quite

often the traditional companies rely on a

legacy business model and introducing a

mobile service would potentially cannibal-

ize its current revenue streams. Changing

completely to a new business model would

be risky and could probably lead to decreas-

ing revenue. At the same time there are

newcomers in the market that apply new

business models and decrease the legacy

company’s market share. Many traditional

companies are stuck on this kind of di-

lemma. Which is better, to maintain legacy

business with decreasing revenue or to jump

into a new business model with high risks

and decreasing revenue? Additionally there

is a competence gap for developing new

services in traditional companies. All this

leads to cautious service development and

traditional companies seem to lag behind in

the service development.

Despite the array of choices there are only few dominating services per business area

Can legacy businesses keep up with the mobile development?

12

Key trends and observations

Today’s most successful global mobile rev-

enue generators are gaming companies that

provide free-of-charge downloadable games

with premium priced in-app purchases.

The gaming experience is continuously

developed and adjusted according to the

gathered customer data and analytics tools.

This seems to be the current secret sauce of

success, at least for the mobile games.

Open API (Application Programming

Interface) has been the key enabler in

application stores’ and leading social

media platforms’ success. This model

is being copied into other industries in

an accelerating pace. Most notably the

governments are providing access to many

of their data assets.

There has been an on-going debate on the

so-called “second screen”, which typically

refers to the use of a mobile device while

watching television. So far the traditional TV

manufacturers have failed to provide solid

experiences that would combine TV set and

other appliances in a manner that would

appeal to large masses. Instead the mobile

devices have become the primary screen

for many users and the TV set is seen as the

“second screen”. The primary attention is fo-

cused on the more interactive device, which

is at this moment a smartphone or a tablet.

Adjust home heating, lightning. See who

is ringing your doorbell. Control your car.

Monitor your sleeping baby. Follow your

�i>�Ì�°��>�i�wÌ�iÃÃ�«�>�Ã°�-i�Ã�ÀÃ�Ü��

enable many of these actions, whether

they are stand-alone or embedded into

our devices. Today the sensors are not

mainstream in our homes and other

environments, but they will most likely

quietly sneak into our everyday life. All of a

sudden the next lamp we purchase may have

a motion sensor or our insurance company

requires a moisture meter into our bathroom

for getting discount in insurance fee.

Sensors accelerating the mobile revolution

TV set has become the second screen

Business models favor subscriptions and in-app purchases accompanied with analytics

Open API is becoming an increasingly critical asset for digital services

13

Key trends and observations

Smartphone and tablets are with us at

homes, workplaces, bus stops, cafes and

other places. In the long run these physical

devices will be less visible as wearable

computing and various kinds of sensors de-

velop and spread. The services will become

more automated and they serve us without

having a device in our hands. Moreover, the

service design in general is moving towards

services that anticipate our intentions and

thus making many of the current practices

unnecessary.

Big data has been well represented in vari-

ous keynotes and press articles. It is said to

be the vital for today’s marketing, sales and

other business. In the reality there are only

a handful of companies that utilize big data

in a large scale for driving their business

operations. However, companies are increas-

��}�Þ�>Ü>Ài��Ì�i�Li�iwÌÃ��v�>�>�ÞÌ�VÃ�

and the general know-how is increasing in

companies.

Smartwatches are available in the stores

and smart glasses are expected to hit the

market soon. There are many who are more

or less suspicious about the success of these

product categories. Equally there are strong

believers for their future success. Either

way, it seems inevitable that the number of

smart devices and sensors around our bod-

ies will grow whether they are embedded

in our clothing or separate devices. The

V��ÃiµÕi�ViÃ��>Þ�Li�`�vwVÕ�Ì�Ì��«Ài`�VÌ]�

but they surely have many, even dramatic

effects on interfaces, business models and

our everyday life.

Mobile services provide another extension

for gathering more information about us

and whether we like it or not, our ability to

control privacy is diminishing. All sorts of

personal and other customer information are

aggregated from different sources in order

to offer us personalized services. There are

two sides in this coin. At its best we will be

better served. At worst our personal data

is misused. At the same time people are

increasingly aware how much their personal

data there is out in the services. The demand

for accessing their personal data is increas-

ing. This is a major political and legal issue

that cannot be solved by individual country

legislation, which complicates the potential

resolution to this problem.

In the foreseeable future it will become

harder and harder to create and keep a

customer relationship without some kind of

digital aid, whether it is mobile app, some

sort of analytics and big data. This concerns

all sorts of industries and size of businesses.

The need for analytics and data collection is

one of the corner stones in the design of the

modern mobile services today.

Wearable computing is taking its ƂTUV�UVGRU�VQ�OCUUGU

The services will know an increasing amount of facts about you

Devices will be less visible in everyday life

Analog customer will disappear Big data hype has peaked

The average screen size of the smartphones

is closing the smallest tablets. These devices

are sometimes called “phablets” and they

have experienced phenomenal growth in

Ã��«�i�ÌÃ�>VÀ�ÃÃ�Ì�i�ƂÃ�>�*>V�wV�Ài}��°�

This trend is expected to hit also Finland.

Phablets are about to break through

14

Total market

The future projections for the years 2014-2016 are specula-Ì�Ûi�V��Ã�ìÀ��}�Ì�i��i>ÛÞ��yÕi�Vi��v�>�viÜ��`�Û�`Õ>��companies and the unpredictable nature of their business environment. Here we have predicted rather stable market growth, but in practice the export market may prove to be rather volatile. The domestic market development has proven to be less volatile.

Finland has had the fortune to host a couple of the most successful mobile gaming companies. Their impact in the total market revenue is substantial. Without Rovio and Supercell the growth rate of the total market would not have been so rapid.

Media attention is practically fully focused on mobile applications as far as mobile content is concerned. Still, premium rate calls and premium SMS services bring the vast majority of the domestic industry revenue today.

The mobile content service market in Finland roots back to the early 1990’s, when premium rate calls emerged. The wÀÃÌ�-�-�L>Ãi`��}�Ã�>�`�À��}Ì��iÃ�ÜiÀi�ì��ÛiÀi`��ÛiÀ�the mobile networks in the latter part of 1990’s. Approxi-mately ten years later application stores for smartphones appeared. All these markets co-exist today and will con-tinue to do so in the near future.

The demand for premium rate calls and premium SMS services has saturated and is gradually declining. At the same time the overall usage of mobile services is growing strongly. Mobile applications and browsing are among the fastest growing mobile services. This doesn’t necessarily translate to revenue since a major share of the applica-tions and browsing are free of charge, except for the data ÌÀ>�ÃviÀ�V�ÃÌÃ�L��i`�LÞ��L��i��«iÀ>Ì�ÀÃ°��Ài�Ã«iV�wV>��Þ]�an increasing number of services apply business models that are not aimed at bringing direct revenue.

At the same time as the application stores grow at the expense of SMS and premium rate call revenue, the focus

The mobile content services market revenue is booming in Finland, when looking at the combined revenue from domestic market and export. The total market for mobile content grew 31 % in 2012 to 404 million eu-ros. In 2013 the market growth is an-ticipated to accelerate and the total revenue to exceed one billion euros, which is a 154 % upswing over 2012. The Majority of the growth in 2013 is generated by mobile content export. During the past couple years and in the near future the growth has been and will be dependent on a couple of leading mobile companies in Finland. For example, the growth in 2013 was almost solely due to Supercell’s spectacular revenue growth.

15

Figure 4.

Total mobile content revenue in Finland

2008-2016 (M€), including mobile

content export

The mobile content services market

revenue is booming in Finland, when

looking at the combined revenue from

domestic market and export. The Majority

of the growth in 2013 is generated by

mobile content export, which has been

exploding due to Supercell’s spectacular

success.

Figure 5.

Total market divided into domestic and

export revenue in Finland 2008-2016 (M€)

Mobile content export has exploded

recently and is going to overtake domestic

market revenue in 2013. However, the

domestic market development seems far

more predictable than the volatile export.

2008 2009 2010 2011 2012 2013 2014 2015 2016

Domestic Export

2008

256

256 252 257 263240

790

988

1 136

1 307

234

290262

245164

45510

252

–1 %

262

4 %

308

18 %

404

31 %

154 %

20 %13 % 14 %

2009 2010 2011 2012 2013 2014 2015 2016

1 025

1 233

1 399

1 596

Source: Idean, 2013

Source: Idean, 2013

16

of the whole business is moving from national to global. Traditional SMS and premium rate call payments have been and still are very much locally controlled by domestic operators. Application stores are global and have hardly any operations on a country level. This doesn’t mean that it would be impossible to make a successful service with a national single country focus. Great opportunities lie in the global market, however.

On the other hand, the best selling mobile services with a domestic focus in Finland beat Rovio’s or Supercell’s domestic revenue. Take for example Fonecta’s SMS and premium rate call based directory services that are still bringing tens of millions in revenue annually. At the same time Supercell’s and Rovio’s combined revenue in Finland is a couple of million euros. The vast majority of their revenue is global.

There have been several global success stories in the mobile application market, but Rovio and Supercell have ìw��Ìi�Þ�Lii��>��}�Ì�i��ÃÌ�Ã«iVÌ>VÕ�>À�ÃÕVViÃÃ�ÃÌ�-À�iÃ°�,�Û��>�`��ÌÃ�Ƃ�}ÀÞ��À`Ã�Ü>Ã��i��v�Ì�i�wÀÃÌ�}>�iÃ�Ì�>Ì��>ì�>�Ã�}��wV>�Ì�LÀi>�Ì�À�Õ}��Ì�i�Ƃ««�i�Ƃ««�Store. Supercell is the most successful application provider using free-to-play model so far.

Differences between Rovio’s and Supercell’s business mod-els illustrate the fast pace of the changes in the market. Angry Birds’ revenue model was originally predominantly based on paid downloads. This was the secret sauce for success in 2009–2011 in mobile apps. Supercell’s games are based on a free-to-play model, meaning the game is free to download but the user can make in-app-purchases to speed up progress in the game.

TOTAL MARKET

17

VIEW ON THE GLOBAL MARKET

Mobile applications have made the world smaller for mo-bile service providers. Today it is possible to reach global masses with just one contract with an application store. This certainly differs from the SMS based mobile business i�Û�À��i�Ì]�Ü�iÀi��Ì�Ü>Ã�V�ÃÌ�Þ]�À�Ã�Þ�>�`�`�vwVÕ�Ì�Ì��`��business internationally. The SMS based mobile business was more national in its nature. Another difference is the selection of competing services. In the SMS era there were roughly a dozen of ringtone service providers. These same players also dominated the mobile games and logo busi-ness. In today’s application stores there are almost endless numbers of competing services and service providers in the most popular application categories.

New success stories appear constantly in the application market and hardly any of them have a legacy in SMS based mobile services. The list of the most successful mobile application players include companies such as Supercell, Electronic Arts, King, Kabam, Gameloft and Rovio. Many of Ì�iÃi�V��«>��iÃ��>Ûi�LiV��i�Ã�}��wV>�Ì��Ì�i�À��`ÕÃÌÀÞ�in a matter of a couple of years. On the other hand, it should be remembered, without undermining their success that the scale of their revenues hardly bring them anywhere close to global fortune 500 company lists.

The mobile application market is highly volatile and the winners may quickly turn into losers. It resembles billboard charts in the music industry, where hit songs typically climb quickly to the top but fall down equally fast.

On the other hand there have been signs of opposing developments. A couple of the current top revenue gen-erating services in Apple’s App Store have remained at the top for a surprisingly long period. For example Supercell, the publisher of Clash of Clans and Hay Day has had two games among the top ten best selling applications in the App Store for over 12 consecutive months in many coun-tries. King, the publisher of Candy Crush Saga, has also been at the top in multiple countries since 2013. Both of these companies are applying a free-to-play –model.

18

VIEW ON THE GLOBAL MARKET

The application stores publish top chart lists on a national level. The list of the top 5 grossing applications in Finland and in the US looks similar. the Same applications top the charts in both countries with a few exceptions.

Global application stores typically take a 30 % revenue share from the purchases made in the stores. Typically the purchases are made with a credit card. Google Play and Windows store allow also purchases through the mobile phone bill.

Apple’s App Store takes 30 % revenue share from all the application purchases in the store. The App Store is the globally leading application store in terms of revenue. Apple has not published the App Store’s revenue, but it has sporadically stated how much developers have been paid. For example, according to a press release in May 2013 Apple had paid developers 9 billion dollars (6,8 billion euros) since the launch of the App Store. Based on the earlier announcements one can calculate that in 2012 the total App Store revenue was approximately 4,3 billion dollars (3,2 billion euros). Apple’s 30 % cut of this sum was roughly 1,3 billion dollars (1 billion euros) in 2012. In 2013 the total revenue is forecast to exceed 7 billion dollars (5,3 billion euros). Apple has also other mobile revenue, such as mobile advertising and iTunes, not included in this report.

Supercell is the fastest growing company among the ones ÃÌÕ`�i`��w}ÕÀi�È°��v>VÌ��Ì��}�Ì�Li�>��}�Ì�i�v>ÃÌiÃÌ�growing companies ever globally, especially when consid-iÀ��}�«À�wÌ>L��ÌÞ°��Ì��Ã�«À�L>L�Þ�>�Ã��Ì�i�Ì�«�Ãi��}��L��i�company in the App Store in 2013. In October 2013 the company released Clash of Clans for Android, which will likely bring another revenue stream for the company. King is probably the second best selling company in mobile >««Ã��>À�iÌ°�ƂVV�À`��}�Ì��«ÀiÃÃ�>ÀÌ�V�iÃ��Ì��>Ã�w�i`�>��*"�in the US. Emerging growth companies such as King can use a secretive IPO registration process in the U.S. and the w�>�V�>��ìÌ>��Ã�ÜiÀi�Õ�`�ÃV��Ãi`�>Ì�Ì�i�Ì��i�Ì��Ã�Ài«�ÀÌ�was written.

19

Figure 6.

Estimated global mobile revenue of

selected companies (M€)

Companies’ mobile revenue has been extracted from their total revenue, and their mobile revenue for 2013 has been estimated. Facebook’s revenue is mainly from mobile advertising and Apple’s App Store stands for Apple’s cut on the total App Store revenue. Other companies in the chart are gaming companies.

Facebook

Apple App Store

(Apple’s 30% cut)

Supercell

Electronic Arts

Kabam

Gameloft

Zynga

Glu Mobile

Rovio

552

974

391

78

196

113

76

106

175

43

82

63

84

100M 300M 500M 1 000M 1 500M 2 000 M€

53

56

2013 forecast20122011

Sources: Facebook, Supercell, Electronic Arts, Zynga, Rovio, 2011 & 2012; Estimates by Idean, 2013

20

The growth was due to an increased smartphone user base as well as greater supply of applications. There is also a growing amount of Finnish applications available, which has been followed by increasing marketing activity related to them. In the following years the growth rate is forecast to slow down despite the on-going growth of installed base of smartphone and tablet devices. The future user base growth is anticipated to come from less active mobile service user segments as the most active early adopters already have smartphones and tablets. Moreover, many of the major content players are expected to introduce servic-es based on alternative billing mechanisms for application stores. For example browser-based services, where service providers can choose between a large selection of different billing methods. In 2016 the total application store revenue is forecast to be approximately 36 million euros.

Apple’s App Store is the largest application store in Finland, when considering the combined iPhone and iPad revenue. In 2012 Apple App Store sales represented 81% of the total application store revenue. Google’s application store has as of yet failed to generate considerable revenue. �Ì��>Ã�Lii��iÃÃ�ivwV�i�Ì��>ÌÌÀ>VÌ��}�ÕÃiÀÃ�Ì��LÕÞ�Ì�>��Ƃ«-ple’s. However, Google Play is forecast to show the fastest growth in the coming years and to bypass Apple’s revenue in Finland. This is mainly due to Android’s growing domi-nance in the device population and consequently service providers growing interest around Android. On the other hand, iOS also remains attractive due to its solid device range compared to high fragmentation of Android devices.

Recently the growing Windows Phone device user base has attracted Finnish mobile service providers to create ser-vices for Windows Phones. Finland probably has en excep-tionally wide selection of Windows applications dedicated to the domestic market when compared internationally. Now the situation might change after the Nokia-Microsoft deal, if the Nokia brand disappears from Windows devices. Part of the success of Windows Phones has certainly been based on patriotism and the strength of the Nokia brand in Finland.

Ƃ««�i��>Ã��>ì��Ì�`�vwVÕ�Ì�v�À�>««��V>Ì��«À�Û�ìÀÃ�Ì��ÕÃi�any other billing channel than App Store’s own channel for

The mobile applications market value in Finland was ten million euros in 2012, including revenue from App Store, Google Play, Windows Mar-ketplace and Nokia Store. Apple’s App Store was the largest in revenue among the ones mentioned, with approximately 80 % share of the total revenue in 2012. Due to application stores’ global nature only a small portion of the domestic revenue was generated by Finnish companies and remained in Finland.

Application stores

21

2016201520142013201220112010

2016201520142013201220112010

4

2

10

16

25

3536

5 %

37 %

57 %60 %

130 %

184 %Figure 7.

Total application store revenue in Finland

2010-2016 (M€)

Application store revenue is forecast to

show healthy growth in the coming years.

However, the growth could be even greater

if some of the leading subscription service

«À�Û�ìÀÃ]�ÃÕV��>Ã�-«�Ì�vÞ��À� iÌy�Ý�Ü�Õ�`�

charge their services via application stores.

Figure 8.

Application store revenue by platform in

Finland 2010-2016 (M€)

Apple’s App Store has dominated the

application store revenue in Finland and

globally. Google Play will challenge its pole

position in the future thanks to fast growing

Android device population. The growing

installed base of Android devices will be

followed by increased developer interest.

Windows devices are well represented

in the Finnish market. However, their

application sales suffers from smaller

developer interest and application range.

Windows Marketplace

Google Play

Apple App Store

Other

– – 0,6 1,6 3,4 4,9 4,4– 0,3 0,9 3,5 8,2 14,8 17,1

0,9 3,5 8,1 10,6 13,3 14,7 14,70,6 0,6 0,5 0,4 0,2 0,1 0,11,5 4,4 10,0 16,0 25,1 34,6 44,0

Source: Idean, 2013

Source: Idean, 2013

22

APPLICATION STORES

paid downloads or in-app purchases. However, not all suc-cessful mobile application providers are invoicing through application stores. For example international publishers Ì�>Ì��>Ûi�>�ÃÌÀ��}�«ÀiÃi�Vi��>�`]�ÃÕV��>Ã� iÌy�Ý��À�Spotify, invoice their customers via other channels. These services are mainly billed via credit cards. In addition companies in the traditional media business are often utilizing alternative billing channels. The reasoning for using alternative channels is in the revenue share models; application stores take a 30 % cut of the sales compared with credit card companies’ couple of percent cut.

Global application stores should be put into context in order to understand their current magnitude. For example iÌy�Ý½Ã�}��L>��ÀiÛi�Õi��Óä£Ó�Ü>Ã�fÎ]È�L��Ó]Ç�L��euros) and Apple’s App Store’s total revenue approximately f{]Î��Î]Ó�L��iÕÀ�Ã®�>VV�À`��}�Ì��ì>�½Ã�iÃÌ�-mate. Apple’s 30 % cut of the revenue in 2012 was roughly f£]Î�L��£�L��iÕÀ�Ã®°��Ì�iÀ�Ü�À`Ã]� iÌy�Ý½Ã�revenue was almost three times Apple’s cut.

Top Finnish application publishers

Application stores publish top charts by country and the lists are further divided into different application catego-ries. In this report Idean has looked at the overall category for the top 100 grossing iPhone apps in Finland and in the U.S. Both lists identify Finnish publishers to illustrate where they in the ranking. The lists in this report represent only one day from each year. Moreover, only the apps for iPhone have been reviewed. The aim of this particular exercise is to give an overview of the state of the market, not to provide a full analysis of all stores.

��Ã��«ÕL��Ã�iÀÃ��>Ûi�Lii��ì�Ì�wi`�Ü�Ì��Ì�i�Ì�«�£ää�charts in order to understand the effect and scale of the Finnish mobile business. Interestingly, there are many ap-plications in the Finnish language, which are not published by Finnish players and are thus excluded from the Finnish application publisher lists.

The distribution of applications by nationality of publisher reveals the global nature of the application store channel. Finnish companies or organizations publish only a minority

23

5 Angry Birds - Rovio

Entertainment Ltd

8 Tvkaista - Delta Vee

10 Sieniopas - Mobiteos

15 ReittiGPS (Reittiopas

iPhonelle) - Essentia

Solutions Oy

17 Viiniopas - Monkey

Experience Oy

25 ForecaWeather

- Foreca Ltd.

46 Karttaselain - AccelBit

54 Finnish-English Translate

Dictionary - Kangas Bros.

Innovations

78 FinnBirds - Kari Kulmala


4 booxTV - Booxmedia Ltd



Entertainment Ltd

15 Angry Birds Seasons - Rovio

Entertainment Ltd



Solutions Oy

31 Angry Birds Rio - Rovio

Entertainment Ltd

80 TVkaista - Delta Vee

85 Älypää - Sanoma

Entertainment

86 Fatcat Rush

- Tomodomo Oy

95 HS - Helsingin Sanomat -

Sanoma News

98 Finnish-English Translate

Dictionary - Kangas Bros.

Innovations

1 Clash of Clans - Supercell



9 Hay Day - Supercell

20 RainMan (Ilmatieteen laitos)

- Ilmatieteen laitos



Solutions Oy




Entertainment Ltd

41 Amazing Alex - Rovio

Entertainment Ltd

{n� ƂÕÌ�Ài��ÃÌiÀ�°w�

- Nelumbo Oy


Entertainment Ltd

92 Rasmus Nalle - Egmont

Kustannus







21 HS - Helsingin Sanomat

- Sanoma News



Solutions Oy

26 Nautics Sailmate - Nautics

{ä� ��Ì>�Ì�°w��-Õ��i��

suurin deittisivusto sinkuille

- Intodate International AB

92 Angry Birds Friends - Rovio

Entertainment Ltd

App Store Finland 28.8.2010 App Store Finland 28.8.2011 App Store Finland 28.8.2012 App Store Finland 28.8.2013


Entertainment Ltd


Entertainment Ltd


Entertainment Ltd

38 Angry Birds Rio - Rovio

Entertainment Ltd



46 Angry Birds Space - Rovio

Entertainment Ltd


Entertainment Ltd



36 Hill Climb Racing

- Fingersoft

App Store U.S. 28.8.2010 App Store U.S. 28.8.2011 App Store U.S. 28.8.2012 App Store U.S. 28.8.2013

Figure 9.

Finnish publishers in the Top 100 grossing

iPhone apps in Finland and in the U.S.

Ƃ««Ã�LÞ��Ã��V��«>��iÃ�>�`��À}>��â>Ì��Ã��>Ûi�Lii��ì�Ì�wi`�vÀ��L�Ì��Ã��>�`�

U.S. top charts. The number of Finnish apps in the Top 100 has remained rather stabile

over the years with an average of 9 and 13 apps by Finnish publishers. A couple of Finnish

apps have made it to the U.S. Top 100—great achievement in such an important market.

Sources: AppAnnie; Idean, 2013

24

APPLICATION STORES

of the top 100 grossing applications in Finland. Without Rovio and Supercell, the share of Finnish publishers would be even smaller, especially in the top 10 charts. The total number of domestic publishers in the Finnish iPhone App Store has varied between 9 and 13 during the period discussed here.

The U.S. market is a good reference market. It is among the most challenging markets to break into the top 100. Within the timeframe of the reviewed dates there has been only Rovio and Supercell in the top 100 charts with the ex-ception of Fingersoft in 2013. There may have been other Finnish apps in the top 100 had we reviewed the entire history of the App Store.

Average number of applications in different countries

Figure 12 illustrates the installed number of mobile ap-plications and usage in smartphones in selected countries. The data is provided by Google is based on smartphone user interviews in different countries. Approximately 1000 interviews were carried out in each country annually. Smart-phone users were asked how many applications they cur-rently have in their mobile, how many of them are paid and how many applications have they used in the past 30 days.

Finns are among the least active application downloaders and users among the benchmarked countries. On average, there were 20 apps installed per smartphone in Finland, of which four were paid applications. A total of eight applica-tions were used within the past 30 days. These numbers are rather modest compared to other Nordic countries. For iÝ>�«�i��-Üiì�]�Ì�i�V�ÀÀiÃ«��`��}�w}ÕÀiÃ�ÜiÀi�>«-proximately double in each of the viewed metrics.

There could be several explanations for this. Perhaps the ��ÃÌ�Ã�}��wV>�Ì�iÝ«�>�>Ì��Ã�Ì�i�`�vviÀi�Vi��Ã�>ÀÌ«��i�device population. Symbian is still strongly represented in the Finnish smartphone market and Symbian users are on average less active in application downloading. There are fewer applications available for Symbian devices and the marketplace has not become as popular as those for iPhones and Androids.

25

Figure 10.

Top 5 grossing iPhone apps in the U.S.

in 2013

/�i�w}ÕÀi��ÕÃÌÀ>ÌiÃ�Ì�i�Ì�«�wÛi�V�>ÀÌ�

��Ì�i�1°-°�`ÕÀ��}�i>V��Ì�½Ã�wÀÃÌ�`>Þ°�

Apps that occur more than twice have

been highlighted. A handful of apps are

dominating the top 5 lists. Clash of Clans

and Candy Crush Saga head the lists in

both countries illustrating how international

the trends are in the application market. 3

1

2

5

4

Jan Feb Mar Apr May Jun Jul Aug Sep

1

2

3

5

4

Jan Feb Mar Apr May Jun Jul Aug Sep


Clash of ClansMinecraftCandy Crush SagaHay DayPandora RadioMLB.com at BatModern war

Figure 11.

Top 5 grossing iPhone apps in Finland

in 2013

A total of 15 different applications have

Lii��Ì�i�Ì�«�wÛi��Ì�i�}�Ûi��`>ÌiÃ��

both countries. The top three chart has been

stable; only 6 apps have made it to the top

in Finland compared to 8 apps in the U.S.

top three, suggesting that the top positions

are less windy than previously. Or more

Ã«iV�wV>��Þ]�Ì�i�Ì�«�«�>ÞiÀÃ��>Ûi��i>À�i`�

how to remain longer in the top.


Clash of ClansCandy Crush SagaHay DayWhatsapp messengerThe Simpsons

26

INSTALLED APPS

Figure 12.

Mobile application usage metrics

in selected countries, Q1 2013

Finns are among the least active application downloaders and users among the viewed

countries. On average, Finns had twenty apps installed in their smartphones, of which four

ÜiÀi�«>�`�>««Ã°�*iÀ�>«Ã�Ì�i��ÃÌ�Ã�}��wV>�Ì�iÝ«�>�>Ì��Ã�Ì�i�`�vviÀi�Vi��Ã�>ÀÌ«��i�

ìÛ�Vi�«�«Õ�>Ì��>�`��Ài�Ã«iV�wV>��Þ]�-Þ�L�>�½Ã�ÃÌÀ��}�«�Ã�Ì��Ì�i��Ã��>À�iÌ°

0

7 apps used

in the last

30 days

BRA

8IND

9HUN

11GER

12AUSRUS

9GBR

10DEN

13JPN

8FIN

8ITA

9CAN

12NOR

12SWE

13ESP

8CHN

10FRA

12USA

12KOR

11

10

20

30

40

Free Apps

Paid Apps

Source: Google, 2013; Illustration by Idean

27

Windows Phone 2012 2013 2014 2015 2016ARPU per device and year (€) Windows Marketplace 1,3 Windows Marketplace 2,0 Windows Marketplace 3,0 Windows Marketplace 4,5 Windows Marketplace 6,7

Windows Phone device base (‘000) Windows Smartphone 455 Windows Smartphone 933 Windows Smartphone 1 259 Windows Smartphone 1 196 Windows Smartphone 1 136

Windows Tablet 0 Windows Tablet 10 Windows Tablet 41 Windows Tablet 80 Windows Tablet 119Total units 455 Total units 943 Total units 1 300 Total units 1 276 Total units 1 256

Google Android 2012 2013 2014 2015 2016ARPU per device and year (€) Google Play 0,9 Google Play 2,3 Google Play 3,4 Google Play 4,4 Google Play 5,7

Android device base (‘000) Android Smartphone 875 Android Smartphone 1 488 Android Smartphone 2 306 Android Smartphone 3 113 Android Smartphone 3 735

Android Tablet 84 Android Tablet 258 Android Tablet 464 Android Tablet 720 Android Tablet 914

Total units 959 Total units 1 746 Total units 2 770 Total units 3 883 Total units 4 649

Apple iOS 2012 2013 2014 2015 2016ARPU per device and year (€) App Store 12,0 App Store 15,0 App Store 15,8 App Store 16,5 App Store 17,4

iOS Device Base (‘000) iPhone 497 iPhone 646 iPhone 775 iPhone 930 iPhone 977

iPad 345 iPad 617 iPad 732 iPad 653 iPad 537

Total units 842 Total units 1 263 Total units 1 508 Total units 1 583 Total units 1 153

APPLICATION STORES & DEVICE BASES

Platform total revenue

17,1 M€

14,8 M€

8,2 M€

3,5 M€0,9 M€

0,6 M€1,6 M€

3,4 M€4,9 M€ 4,4 M€

14,7 M€ 14,7 M€ 13,3 M€

10,6 M€ 8,1 M€

Source: Idean, 2013

28

201620152014201320122011

0 %1 % 1 %

-11 %

-12 %

-17 %

-14 %

-13 %

Figure 13.

Premium SMS services revenue in Finland

2008–2016 (M€) SMS revenue has gradually started to

decrease. The total market revenue in 2016

will represent only half of the revenue in

2011. Many of the current SMS services

will migrate to application based services.

Some of the current services will cease

to exist. There are hardly any new mobile

service providers that would take SMS as

their selected technology.

The only growth areas left in SMS services are public transport and vehicle registry inquiries; all of the other cat-egories are facing decreasing demand. Some of the service categories have disappeared of which some have been replaced by corresponding mobile applications. Ringtones, which once were the king of premium mobile services, have melted away almost entirely as a business. Directory services in turn, are shifting to mobile apps and a different business model. SMS loans are no longer available due to new legislation. At the same time hardly any new premium SMS services have been developed.

The SMS market is dominated by a few large players and followed by dozens of other service providers. Operators’ role is mainly in the delivery and billing services, less in ser-vice provision. Fonecta continued as the largest service pro-vider by revenue in 2012, followed by HSL. Together these two players represented close to a half of the total market revenue. Most of the remaining revenue is going through aggregators that host a number of service providers.

SMS SERVICES

2008

69

2009

69

2010

70 70

63

55

46

39

34

Source: Idean, 2013

The premium SMS market value is gradually decreasing while facing growing pressure from mobile apps. Two major forces are causing the shift; users have smartphones and are choosing more versatile application services. At the same time service providers prefer to invest in mobile applications, sometimes even at the expense of currently lucrative SMS services. Moreover, the mobile op-erators have adopted tighter policies in accepting current and new services and cleaned the SMS market from unwanted services. All these factors together have caused a sharp drop in total market revenue.

29

Figure 14.

Premium SMS revenue in Finland by major

service category, 2008–2016 (M€)

2008 2009 2010 2011 2012 2013 2014 2015 2016

Directory services

Others

Ringtones

Chat & communities

Weather

�>ÃÃ�wi`ÃInteractive TV services

Vehicle registry inquiries

Public transportation

Almost all the SMS service areas are facing decreasing revenue trend. The only exceptions

are public transportation services and vehicle registry inquiries that have been resistant for

the trend and will stand out as the leading SMS services in 2016.

Others

Ringtones

Chat & communities

Weather

�>ÃÃ�wi`Ã

Interactive TV services

Vehicle registry inquiries

Public transportation

Directory services

22,4 22,7 26,7 30,4 25,5 21,5 18 15,1 12,78,3 7,1 4,6 3,5 2,1 0,9 0,3 0,1 0,05,0 3,1 2,5 2,2 2,0 1,8 1,3 0,8 0,42,0 2,0 2,1 2,1 2,0 1,5 1,4 1,2 1,12,6 3,3 3,3 3,0 2,1 1,9 1,7 1,5 1,42,7 2,7 2,4 2,2 0,7 0,8 0,8 0,7 0,63,5 3,7 3,8 3,8 4,1 4,2 4,2 4,3 4,36,4 6,7 6,9 6,9 7,3 7,6 8,0 8,4 8,816,5 17,9 17,2 16,3 16,8 15,0 10,5 7,3 5,169 69 70 70 63 55 46 39 34

Source: Idean, 2013

30

Figure 15.

Premium rate call revenue in Finland

2008–2016 (M€)

Premium rate call market revenue is

gradually declining after a 15 years of

strong performance. The development

resembles premium SMS market

development. The developer interest on

both of these platforms has dramatically

decreased. The current smartphone

application platforms and browsers have

replaced the need of these traditional

platforms.

201620152014201320122011

-3 %0 % 0 %

-17 %

-13 %

-9 %

The market for premium rate calls has a long and successful history, which has been unfairly overshadowed by the more hyped markets, such as SMS based and mobile applica-tion market. Premium rate calls is currently and is forecast to remain the leading mobile content service category throughout the forecast period in this report. The total market revenue is highly dependent on the success of two leading services, directory services and taxi orders. Their revenue is forecast to decline in the coming years and the total market revenue trend will follow.

The market consists of a large variety of services. In addi-tion to directory services to taxi orders there are for exam-ple TV show voting, horoscopes and mobile payments for soft drink and snack vending machines. The two leading services represented together almost three quarters of the total revenue in 2012. All of the premium rate call service categories are expected to face decreasing demand in the coming years.

PREMIUM RATE CALLS

2008

177

2009

172

2010

172 172

143

124

107

8982

-14 %

-16 %

The premium rate call revenue dropped 17 % in 2012 to 143 million euros. Still, the premium rate call revenue represents over half of the total domestic revenue in Finland. The market is forecast to decrease steadily in the coming years. Most notably the demand for the two leading service categories, directory services and taxi orders is decreas-ing. The directory services due to shift in business models and migra-tion to other channels. The shrinking taxi service revenue is mainly due to slowing demand for taxi services in general followed by the current economic recession.

Source: Idean, 2013

31

Figure 16.

Premium rate call service revenue in

Finland by category 2008–2016 (M€)

2008 2009 2010 2011 2012 2013 2014 2015 2016

Directory services

Other

Taxi

EntertainmentAdult entertainment


Customer care

Mobile payments

All of the premium call rate service categories are facing declining demand. The dropping

ÕÃi��v�`�ÀiVÌ�ÀÞ�>�`�Ì>Ý��ÃiÀÛ�ViÃ��Ã�«>ÀÌ�VÕ�>À�Þ��yÕi�Ì�>��v�À�Ì�i�Ì�Ì>��>À�iÌ�Û>�Õi°��L��i�

payments and customer care service categories are least affected by the current trend.

Other

Entertainment

Adult entertainment


Mobile payments

Customer care

Taxi

Directory services

12,5 11,8 11,2 10,7 10,1 9,6 9,2 8,7 8,36,0 6,0 5,5 5,1 4,7 4,0 3,4 2,9 2,46,0 6,0 5,9 5,3 4,8 4,3 3,9 3,5 3.14,7 4,7 5,1 5,5 3,3 3,6 3,1 2,6 2,26,4 6,4 6,6 7,9 7,7 7,4 7,2 7,0 6,89,0 9,0 9,4 9,2 9,3 9,4 9,3 9,2 9,131,5 28,9 30,3 31,3 27,2 25,0 24,0 23,1 22,1100,8 98,8 97,8 96,9 75,5 60,4 46,5 32,6 27,7177 172 172 172 143 124 107 89 82

Source: Idean, 2013

32

Device base

2010 2011 2012 2013 2014 2015 2016

Others

Nokia OS

S40

Symbian

iPhone

Windows Phone

Android

The mobile device user base is rapidly changing in Finland. The majority of mobile phone users have a smartphone, and a tablet device was in every fourth household in Finland in the fall of 2013. This trend is projected to continue as smartphones and tablets dominate the sales charts. In 2013 there will be three smartphones sold per one feature phone and it seems likely that soon the smartphones will be the only option available in stores. Tablet devices ex-Viiì`��>«Ì�«�Õ��Ì�Ã>�iÃ��Ì�i�wÀÃÌ��>�v�

of 2013 in Finland. At the same time there are several new device catego-ries emerging, such as smartwatches, different wristbands, glasses and other wearable computing devices.

Figure 17.

Mobile phone population in Finland by

platform 2010–2016 (in thousands)

Smartphones will outnumber feature phones

in 2013. Windows Phone is forecast to be

the fastest growing platform in Finland in

2013; the device base is estimated to double

in 2013 against previous year. S40 is the

leading platform overall and Android among

smartphones. In 2016 Android is forecast

to represent approximately half of the total

mobile phone population in Finland.

Others

Nokia OS

S40

Symbian

iPhoneWindows Phone

Android

865 622 693 647 422 446 36512,4 % 8,9 % 9,9 % 9,2 % 6 % 6,4 % 5,2 %875 680 420 315 158 71 3212,5 % 9,7 % 6 % 4,5 % 2,3 % 1 % 0,5 %3 270 3 100 2 590 1 943 1 360 884 57446,7 % 44,3 % 37 % 27,8 % 19,4 % 12,6 % 8,2 %1 820 1 800 1 470 1 029 720 360 18026 % 25,7 % 21 % 14,7 % 10,3 % 5,1 % 2,6 %94 282 497 646 775 930 9771,3 % 4 % 7,1 % 9,2 % 11,1 % 13,3 % 14 %17 55 455 933 1 259 1 196 1 1360,2 % 0,8 % 6,5 % 13,3 % 18 % 17,1 % 16,2 %61 462 875 1 488 2 306 3 113 3 7350,9 % 6,6 % 12,5 % 21,3 % 32,9 % 44,5 % 53,4 %

Source: Idean, 2013

33

2010 2011 2012 2013 2014 2015 2016

Others

iPad

Android Tablet

The mobile device user base has a ÃÌÀ��}��yÕi�Vi��L��i�V��Ìi�Ì�ÃiÀ-vice uptake and development. Currently Ì�i��ÃÌ��ÌiÀiÃÌ��}�>�`�Ã�}��wV>�Ì�`>Ì>�is the device population of smartphones and tablets and their market shares by platform. The total installed base of smartphones in Finland is forecast to grow to four million devices by the end of 2013 and to represent 59 % of the total of seven million mobile devices in Finland. Tablet device sales has contin-ued strongly in 2013 and the total device

population is forecast to climb to close to 900 000 tablets at the end of 2013.

By the end of 2013 Android is forecast to be the leading platform when look-ing at the combined device population of smartphones and tablets in Finland excluding the Symbian platform. Android is forecast to take 44 % of the market share, followed by iOS with 32 % and Windows with the remaining 24 %. iOS remains as the most lucrative platform for application developers

despite the fact that it is not the lead-ing platform by the number of devices. There are several explanations for this. Practically all iOS device users have downloaded their credit card informa-tion into the devices, unlike users on other platforms. Moreover, iOS devices are higher priced than devices on other platforms on average and presumably the users are also wealthier than users on other platforms. These are among the factors that make iOS superior in commercializing its application store.

Figure 18.

Tablet device population in Finland by

platform 2010–2016 (in thousands)

Installed base of tablets is growing fast and it

is forecast to double in 2013. Apple has been

unchallenged leader in the market so far.

Now the competitors are challenging Apple’s

market share. Competitors challenge Apple

especially in the lower price categories where

Apple has no supply.

– – – 10 41 81 1191,1 % 3,3 % 5,5 % 7,6 %

12 130 345 617 732 653 53792 % 91,1 % 80,4 % 69,7 % 59,2 % 45 % 34,2 %1 13 84 258 464 720 9148 % 8,9 % 19,6 % 29,2 % 37,5 % 49,5 % 58,2 %13 143 429 885 1 237 1 453 1 570

Source: Idean, 2013

34

The new emerging device categories, such as smart-watches, different wristbands, glasses and other wearable computing devices provide an interesting opportunity for service providers. There are already some products available in these categories, but they have not made a breakthrough yet. Opinions regarding the future com-mercial success of these categories is divided,: there are many believers and many who are skeptical. So far there have been no commercial breakthroughs for smartwatches although several models have been available in stores for some time. Google has been developing Google Glass concept.

The handset population in Finland is very fragmented; there were hundreds of different handset models identi-wi`��Ã��L��i��iÌÜ�À�Ã��Óä£Ó°�/�i�vÀ>}�i�Ì>-tion of the mobile device population was increasing until 2008, but has stabilized since then. Yet when compared internationally the Finnish handset base is solid due to Nokia’s strong market share – even though Nokia’s market share has dropped somewhat over the past years. Some 70 % of the active handsets on Finnish mobile networks were Nokias in the fall of 2012. The top 10 handset models represented approximately 25 % of the total handset base.

Rapidly changing device population

Smartphones and tablet devices are currently making their way to the masses. Over half of the Finnish mobile phone population consisted of smartphones in mid 2013 and Ì�Àii��ÕÌ��v�v�ÕÀ��L��i�«��iÃ�Ã��`��Ì�i�wÀÃÌ��>�v��v�2013 were smartphones. Lately the leading mobile phone operators have indicated that smartphones represent over two thirds of their total mobile phone sales.

Smartphone penetration grew in all of the studied countries between 2011 and 2013. According to the same source, the differences between most of the countries in Q1 2011 were rather marginal. Smartphone penetration was around 30% in most of the benchmarked Western European coun-tries in 2011. The change within the following 24 months suggests to tremendously strong smartphone sales and migration in some these countries in 2011 and 2012.

DEVICE BASE

35

2008

Desktop computers

Laptops

TabletsSmartphones

Feature phones

Tablets

Laptops

Smartphones

Feature Phones

80 972

11 731

337 146

404 714

62 861

581 582

629 394

1 883 063

434 458

1 557 181

2009 2010 2011 2012

H1 H2 H1

55 %

45 %

44 %

56 %

36 %

64 %

32 %

68 %

27 %

73 %

57 %

43 %

73 %

27 %

H2 H1 H2 H1

2011 2012 2013 20102010

H1 H2 H1

99 %85 %

15 %

77 %

23 %

63 %

37 %

54 %

46 %

44 %

56 %

95 %

H2 H1 H2 H1

2011 2012 2013

2013

Figure 19.

Annual device sales in Finland 2008–2013

(units), and bi-annual distribution of sales

between selected devices 2010–2013

Smartphone sales exceeded feature phones in 2010 and tablets laptops in 2013. It seems

likely that soon smartphones will be the only option available in stores. Tablet has become

the choice for both consumer and business users. So far tablets and laptops have been used

in tandem, but in many cases tablets may replace the need for a laptop in the coming years.

Sources: Kotek; Idean, 2013

36

Android

Symbian

Windows Phone

iOS

Blackberry OS

Other

Android 26 %

15 %

44 %

14 %

1 %

0 %

Symbian

Windows Phone

iOS

Blackberry OS

Other

47 %

57 %

SMARTPHONE PENETRATION

50 %

20 %

15 %

7 %

5 %

3 %

Figure 20.

Smartphone penetration in EU5 and

Finland in 2012

Finland lags behind in smartphone penetration in couple of ways. First, the overall

penetration of smartphones is smaller in Finland than in for example combined average of

EU5. Secondly, the structure of the smartphone base is less optimal for the new services as

there is still a considerable amount of Symbian phones in the market.

EU5

Finland

France Germany Italy Spain UK

Sources: Comscore; Idean, 2013

37

Korea

Norway

Australia

Sweden

United Kingdom

Denmark

United States

Canada

Spain

Austria

China

Finland

France

Italy

Germany

Russia

Hungary

Belgium

Brazil

Japan

73 %

68 %

33 %

65 %

37 %

63 %

62 %

56 %

56 %

55 %

48 %

47 %

47 %38 %

29 %

18 %

24 %

27 %

42 %

41 %

40 %

36 %

34 %

34 %

26 %

25 %

6 %

33 %

21 %

59 %

54 %

52 %

29 %

22 %

28 %

22 %

20 %

14 %

38 %

33 %

44 %

36 %

19 %

45 %

44 %

33 %

51 %

51 %

30 %

30 %

30 %

31 %

Figure 21.

Smartphone penetration in selected

countries Jan 2011 — Jan 2013

Finland is used to top many IT-related global benchmarks. However, in smartphone

penetration Finland doesn’t perform better than the average. This maybe due to Nokia’s

strong position in Finland combined with the stumbling smartphone strategy over the past

years.

Jan 2013Jan 2012Jan 2011

Sources: Google; Idean, 2013

38

Figure 22.

Mobile marketing revenue in Finland

2008–2016 (M€)

Mobile marketing is growing in a healthy

speed. One could say, that the promises

>Ài�w�>��Þ�Àiìi�i`°�Ƃ�V��Ã�ìÀ>L�i�Ã�>Ài�

of overall online consumption has moved to

mobile devices and the share of mobile is

expected to increase further in the forecast

period.

201620152014201320122011

In this report, mobile marketing has been divided into mobile advertising and customer relationship communica-tion. Mobile advertising consists mainly of SMS based advertisement messaging, mobile banners, mobile search and in-app advertising. Other forms of mobile advertising >Ài�iÃÌ��>Ìi`�Ì��>Ûi��Ü�Ã�}��wV>�Vi�Ì�`>Þ�>�`�>Ài�Ì�ÕÃ�excluded from the scope. These forms include mobile mar-keting via MMS, Bluetooth, infrared and marketing within games, and video clips. Also QR Codes are excluded.

Display and search marketing spend are driving the fast growth in mobile marketing. The major driver behind these is the growing mobile consumption and development of more sophisticated mobile marketing methods and tools. In recent years both desktop and mobile usage have been growing simultaneously. In coming years mobile usage will increase at the expense of desktop usage. A growing part of the ad spend in Finland goes through international play-ers, such as Google and Facebook.

MOBILE MARKETING

2008

9

2009

11

2010

1314

15

21

28

33

36

16 %

21 %

5 %

11 %

36 %

10 %

36 %

18 %

Source: Idean, 2013

Mobile marketing is growing steadily. In 2012 the total marketing spend was close to 16 million euros, which represents a 21 % increase over the previous year. SMS based forms of mobile marketing brought in the majority of the revenue in 2012, but combined spending on display and search marketing are forecast to exceed SMS based forms in 2013. The total mobile marketing spending is forecast to reach 23 million euros in 2013, which is well above earlier expectations. Customer relationship communications is the largest catego-ry within mobile marketing. Currently its share is over 60 % and in 2015 it is still forecast to represent over 40 % of total mobile marketing spending.

39

Figure 23.

Mobile marketing revenue in Finland by

category 2008–2016 (M€)

2008 2009 2010 2011 2012 2013 2014 2015 2016

Display and search are the fastest growing mobile marketing categories throughout the

v�ÀiV>ÃÌ�«iÀ��`°�ÕÃÌ��iÀ�Ài�>Ì��Ã��«�V��Õ��V>Ì��Ài�>��Ã�>Ã�>�Ã�}��wV>�Ì�V>Ìi}�ÀÞ�>Ã�

well.

Customer communication

Messaging

Display

Search

6,9 7,6 8,5 8,9 9,2 9,6 10,1 9,8 9,51,8 2,1 2,4 1,9 1,0 0,4 0,2 0,1 0,00,1 0,2 0,5 0,8 2,8 6,3 12,3 19,0 25,70,4 0,8 1,7 2,1 3,7 6,8 12,6 19,5 26,79,3 10,8 13,0 13,7 16,6 23,1 35,2 48,4 61,9

Search

Messaging

Customer communication

Display

Source: Idean, 2013

40

Interviews

Henrik Laine – Vice President at MTV Oy

Ilkka Lehto – Lakiasiainpäällikkö, Teleforum ry.

Jan Ketonen – Advisor & Innovator, Mobile Advertising at Sanoma Finland

Jari Hyvönen – Product Manager, Elisa Oyj

Jouni Hytönen – tuottaja, Fonecta Oy

Juhani Kivikangas – Toimitusjohtaja, Teleforum ry.

Juho Huopaniemi – Director, Elisa Oyj

Jukka Sintonen – CEO, Booxmedia Oy

KooPee Hiltunen – Director, Neogames Finland

Miko Stratos – Director Service Development, Fonecta Oy

Pasi Eronen – VAS Offering Manager

Riku Salminen – CEO, JonglaTeliaSonera Finland Oyj

Tero Kalsta – Johtaja, Avainasiakkaat, Steam Communications Oy

Timo Ketonen – Project Manager at EDGE research group, Åbo Akademi University

Tommi Kankare – Liiketoiminnan kehityspäällikkö, Fonecta Oy

41

Steering Group

Christian Lindholm – Start-Up (Koru) in residence at EIT ICT Labs

Henry Nieminen – Vice President, Enterprise Markets Finland, CGI

��>�6��«��>�q��i�iÀ>��>�>}iÀ]��/iV��}Þ�"vwVi]�Wärtsilä

Ismo Kosonen – Senior Adviser, Ministry of Transport and Communications

Janne Aaltonen – CEO, HYKSin

Kari Systa – Professor, Software Engineering at Tampere University of Technology

Mika Okkola – Director, Developer and Platform Evangelism | Microsoft Oy

Mikael Stendahl – Head of Partner & Developer Relations at Nokia, North Europe

Mikko Terho – CTO Mobile Software, Site Manager, Huawei Technologies Oy (Finland) Co.Ltd

Pekka Sivonen – Head of App Campus, Aalto University ACE

Peter Klenberg – Director, ICT and Business Development at Tuko Logistics Oy

Tiina Zilliacus – Founder and CEO at Gajatri Studios OyVesa Kurki – Director, FMI

Viitasaari Jukka – Director, Information Technology Industries, The Federation of Finnish Technology Industries

Ville Peltola – Innovation Director, IBM Finland. CTO "vwVi� ÕÀ�«i