Content: the key to loyalty in the mobile industry – Mobile World Live

Content: the key to loyalty in the mobile industry

15 JUL 2011

One of the key attributes that everyone in the mobile industry is focused on is “stickiness.” This essential, yet indefinable, quality is make-or-break in generating customer loyalty, whether for subscription-based valued added services, or to generate an engaged user base to appeal to potential advertisers. It is also a key tool in combating churn, which can have a direct effect on a company’s bottom line.

According to a Deutsche Bank report cited by Apple Insider, the average iPhone customer has US$100 worth of content on their device. The cost of replacing this, and the complexity of moving data from one platform to another, means that customers are far more likely to remain within the same “family” when upgrading. This creates “unparalleled” levels of customer loyalty, which, unsurprisingly, rivals are keen to replicate.

Of course, Apple has long been recognised as a leader in locking customers into its ecosystem, and it has been argued that its tight control of its end-to-end proposition enables it to deliver an unrivalled user experience. But with Google also increasing the amount of content it offers Android customers, to include books and movies as well as apps, the content proposition of a platform is becoming increasingly important as a way to attract and retain subscribers.

With the low-hanging fruit in the smartphone market having already been reaped, there is a significant role for content to play in attracting new subscribers, who can then be converted to loyal customers as their consumption of products and services increases. Even if content is not seen as a massive money-spinner in its own right, its ability to play a key role in attracting and retaining customers should not be underestimated.

Companies from outside the core mobile industry have also seen ways of exploiting the value of their content. US book retailer Barnes & Noble is a good example, having decided to launch its own-brand ebook reader (the Nook), before extending the functionality of this device to that of a fully-fledged tablet. And Amazon is reported to be planning something similar, offering a tablet intended to drive consumption of the music, apps, video and ebook content it retails.

When it comes to achieving customer lock-in, the momentum is clearly outside of the operator community. Through its tight integration with many handsets running the Android platform, Google has been able to increase the reach and lock-in of its services. Apple has a tight control over the iPhone ecosystem, with operators largely restricted to the (much disliked) role of pipes to deliver other people’s content. And even vendors such as HTC have begun moving into the mobile content services market.

The key question is whether operators can – and should – do anything about this. While these players have undoubtedly seen success in some of their content ventures, this was generally while still operating in a “walled garden” environment. As soon as customers were free to go elsewhere, it was the familiar internet brands who were the biggest winners.

Building a content portfolio is a complex, costly and time-consuming process. Deals have to be done with numerous content providers, to ensure that customers have access to the material they want. That material then needs to be delivered to consumers, a process which is clearly not without its own challenges. And the rewards for doing this are often meagre, due to the competitive nature of the consumer entertainment market.

But on the flipside, it is Apple and Google that are benefiting from customer stickiness, in line with their central positions in the mobile content ecosystem. As customers become loyal to their content providers, the concern is that the role of the operator is reduced to that of a connectivity provider – leading to the danger of a market characterised by pricing competition, and increased churn levels.

Steve Costello

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members

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Mobile World Live

Mobile World Live is the online service dedicated to providing the mobile industry with daily news coverage & analysis of the biggest global market developments.

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