Maximizing Value by Managing Mobile Content Risk

Communication providers continue to drive mobile content revenues as part of larger financial and market plans. More specifically, they leverage mobile content as a way to protect average revenue per user (ARPU) performance, compete in the mobile and “quad play” markets, and drive customer lifetime value. In fact, providers and industry analysts both agree that mobile content now constitutes about 20 to 25 percent of ARPU, and is expected to grow to 40 percent of ARPU in the next few years in nearly every region of the world.

As providers scale their operations to support the growth and diversity of mobile content usage, they must simultaneously manage the risk of a unique revenue stream that is central to their financial performance and their ability to please their customers. However, their ability to aggressively compete in today’s market, maximize cash from operations and enhance the customer experience is made more challenging as many of the requisite analytics and controls are not in place.

Mobile Content Is Different – Very Different

Mobile content revenue is significantly different than traditional voice revenue that still composes about 80 percent of ARPU today. Mobile content includes both recurring and transaction-based revenue streams that vary in price, incentives, content type and whether incentives are executed internally or through content partners. They also vary by delivery type, including on-deck content that is programmed into the provider’s price packages and off-deck content that the subscriber transacts on their own.

Mobile content also depends on an extended order-to-cash environment and an associated content settlement environment that include a complex supply chain of content creators, aggregators, providers and resellers. This content supply chain drives at least two new requirements to the provider: content settlement and royalty management. The complexity of mobile content revenue, combined with these greater content and royalty settlement requirements, place new risks on mobile content revenue; risks that go well beyond those of traditional voice services.

So What Are the Risks?

Mobile content complexity drives both new and increased risk to a provider’s financial and operational performance. Further complicating matters, most providers have designed and optimized their order-to-cash controls for voice communications, leaving many of these risks only partially covered. These risks include: