While adult mobile content presents a potentially lucrative avenue of revenue for operators, regulatory and marketing pressures have so far prevented them from engaging with the market fully, as Tom Erskine explains
With the explosive growth of mobile content, operators expect their revenues also to grow, as the subscriber appetite for content increases. Gaming, search, personal navigation and music markets are booming, and SMS and MMS messaging are now commonplace. Mobile operators now face increased competition as MVNOs enter a saturated marketplace, trying to attract subscribers with their specialised content offerings.
There is one area in which many mobile operators have been reluctant to associate themselves, yet it remains one of the fastest growing areas for revenue: adult mobile content. Content providers are poised and ready to offer this content, but have found markets (especially the United States) tough to penetrate, as mobile operators have worked hard to distance themselves from 'racy' offerings.
The market for mobile adult content is estimated to grow to $90 million in the United States and $1 billion globally by 2008, according to Yankee Group, a Boston-based independent technology research and consulting firm. And recent figures from Jupiter Research predict that mobile adult video is expected to outpace text messaging by 2009, generating nearly $2.7 billion annually.
With such high financial projections, mobile operators can no longer ignore this revenue stream. Rather, they need to consider offering solutions and services to capitalise on the demand for this content without damaging their brand equity.
Historically, adult content on mobiles have carried a stigma from various outside pressures. There is the social and cultural stigma of downloading and viewing this type of content, and there are regulatory bodies placing controls on everything from radio to TV. Now, mobile is no exception.
This content may be more pervasive than originally thought. The latest US government-commissioned study found that about one per cent of web sites indexed by Google and Microsoft are sexually explicit. The study also found that the strictest filters were able to block 91 per cent of sexual explicit web sites in indexes maintained by Google and Microsoft's MSN.
With the evolution of adult mobile content comes increased pressure from outside stakeholders, like government and concerned parents, to control and restrict access. Mobile operators must offer tools for improved access management for the ever-growing mobile teen market (12- to 17-year-olds) and the 'tween' market of 8- to 12-year-olds.
Inbound or outbound, the threat among these age groups is mounting.
• Outbound: Harmful contact and content is available with free browsing and third-party access to illegal or inappropriate sites, including adult content, adult gaming and gambling web sites.
• Inbound: Inappropriate blogging, solicitation, spamming and adult-oriented marketing is pushed to subscribers.
Despite the fact that the access is at the subscriber's discretion, it is usually the network that is deemed the responsible party. The question is no longer when but how to deliver effective, easy-to-use access and content controls that satisfy subscriber and consumer concerns, as well as operators' needs to grow revenue.
Internationally, government bodies have been regulating mobile content on various levels of restrictions with some success.
The United Kingdom has a co-operative 'Code of Conduct' that was introduced in January 2004 for the categorisation and filtering of content.
The International Mobile Classification Body (IMCB) was introduced later in 2004 to set a Classification Framework for commercial mobile picture-based content.
Italy also has a 'Code of Conduct' although entirely voluntary on premium services and children protection, which was signed by major mobile operators in February 2005.
Israel has taken it a step further with the Communications Ministry mandating the use of filtering of mobile content to protect local youths.
In the United States, the Federal Communications Commission (FCC) is requiring solutions on mobile content under an industry security rating initiative, and the Cellular Telecommunications Industry Association (CTIA) developed a set of voluntary guidelines in 2005 around offering mobile adult content. Individual state governments are driving more legislation.
For mobile operators, it's not just a matter of filtering this content. Many filter solutions on the market today aren't dynamic enough to keep up with the development of new adult sites. The technology is available, but operators need to choose their solution provider wisely. Things to consider:
Verification: Age verification and age registration are not easily monitored nor controlled on a prepaid phone. In addition, mobile operators are struggling with administration of a blacklisting service to provide better filtering solutions.
Support: Support is needed across multiple touch points for each subscriber or groups of subscribers. How does the solution handle browsing filtering, SMS, MMS, International Gateways, internal and third-party content servers all at the same time?
Service Quality: Does the solution impede the subscriber experience, slowing down the performance or interaction and preventing subscriber usage, thus decreasing potential mobile operator revenue?
Striking a balance
The answer is to strike a balance among preserving the subscriber experience, minimising operational concerns and adhering to inevitable regulatory controls of government bodies.
Mobile operators have an opportunity to take the lead on addressing the concerns on adult mobile content by providing subscribers with content controls as a value-added service to support subscriber growth and to build loyalty.
Access management creates new market opportunities that can drive subscriber acquisition and revenue growth. Subscribers are able to configure interfaces depending on their preferences for management and reporting purposes. What's more, the marketing opportunities are endless.
How can mobile operators capitalise on such revenues without soiling their reputations with more explicit offerings? Forward-thinking mobile operators and MVNOs are taking advantage of vendor-provided solutions that address this nascent challenge. Meanwhile, content providers looking to profit from adult content continue to rely on subscribers to get it the old fashion way; by digging out their credit cards for impulse buying. This approach leaves operators safely on the sidelines – and out of the revenue loop.
Tom Erskine is Vice President of Product Development and Marketing, bcgi. www.bcgi.net