SELLING MOBILE APPLICATIONS: THE DIFFERENCE WHAT

PEOPLE BUY AND WHAT PEOPLE TRY

Jazilah Jamaluddin, Reuben Edwards, Paul Coulton

Department of Communication Systems, Lancaster University, UK

Keywords: Mobile content, Mobile phone, Payment methods, Text messages.

Abstract: One of the few devices where people around the world always carry with them is mobile phone. Mobile

phones are not only used to make phone calls but they are also increasingly used to send text messages and

download ringtones, wallpapers, screensavers, video clips and games. Consumers are spending a lot of

money to access different types of mobile content, enabling the mobile industry to gain high revenue every

year. This development has raised the question of what types of content are consumers downloading and to

what extend are they willing to pay for the content. Therefore, this paper analyses the current market of

mobile content by looking at the range of mobile content being offered to consumers and the business

aspects associated with each of them. Then, it evaluates the payment methods of mobile content before

analyzing the survey results. Finally, it concludes by recommending the market to review and evaluate the

current business models to provide a more flexible and better payment method to benefit everyone in the

market.

1 INTRODUCTION

Mobile phone has become an essential item not only

for communication but also for personalization and

entertainment purposes. It enables people to stay

connected in a wide variety of settings – at home, at

work or on the move. The advanced features in

mobile phone mean people not only can make phone

calls but also are able to send text messages and

pictures as well as to download ringtones,

wallpapers, screensavers, video clips and games.

The revolution of mobile games from single-player

to multiplayer games has brought new dimension to

user due to the fact that the games have become

more sophisticated and therefore, offer more thrill

and excitement to the overall experience.

It is expected that the market for mobile services

will grow due to the take up of 3G and will create

niche for digital content worth £1.4 billion by 2010

(Mobile Europe, 2006). It was estimated that over 70

percent of consumers uses mobile phone for text

messaging and resulted in 55 million revenue in

2003 (ChildAlert News, 2006). In 2005, premium

SMS services such as ringtones, wallpapers and

screensavers accounted for two-thirds of mobile

content spend (Mobile Europe, 2006). Games,

music and video downloads are gradually catching

up. The market for mobile games started off in 2003

and concentrated more in Korea and Japan with 80

percent worldwide games download revenues of

Euro 380 million (Screen Digest, 2006). It is

estimated that consumers will spend over £200

million on mobile music and video downloads will

account for 11 percent of mobile content spend in

2010 (Mobile Europe, 2006).

Mobile phone ownership is growing every year

especially among young generation. According to a

research, more than a million 5–9 year old children

have a mobile phone and a total of 5.5 million under

the age of 16 owned a mobile phone in 2005

(Derbyshire, 2005). One of the reasons why

children are having a mobile phone is because

parents are concerned about their safety and

whereabouts. Consequently, children are taking

advantage of the situation by spending money on

texting their friends and downloading personalized

and entertainment contents such as ringtones and

games.

Due to the increasing consumer spending, it has

raised the concern of the willingness of consumer to

pay for mobile content at a premium rate.

Consumers are expecting to get free content in some

point in time especially in the digital era. This has

319

Jamaluddin J., Edwards R. and Coulton P. (2006).

SELLING MOBILE APPLICATIONS: THE DIFFERENCE WHAT PEOPLE BUY AND WHAT PEOPLE TRY.

In Proceedings of the International Conference on e-Business, pages 319-322

DOI: 10.5220/0001428903190322

 SciTePress

driven us to analyze the current market of mobile

content by evaluating the types of mobile

applications and the payment methods. Then, the

paper discusses the survey results and analyzes them

with the current situation.

2 TYPES OF MOBILE

APPLICATIONS

There are four categories of product:

personalization, entertainment, messaging and

community based. Personalization includes

ringtones, wallpapers and ringback tones. It is self-

expression and it enables users to choose and

download their favourite tune as their ringtone.

There is a range of ringtones where consumers can

choose from including polyphonic and real music

tones. Users are paying about £3.00 a week to

subscribe the service that entitles them to download

up to a certain number of tones or graphics as part of

the subscription package. A report predicted that

young people is spending £150 million downloading

music (Thomas, 2005).

Games, audio and video downloads as well as

horoscope are just a few entertainment

subcategories. The development of Java enabled

mobile phone has provided platform for the growth

of mobile gaming. It is becoming more popular with

more rich, animated and 3D characters. In 2004, it

is anticipated that the wireless games download

market is worth around Euro 880 million (Screen

Digest, 2005).

Messaging is the most popular mobile

application with one-in-three or 32 percent of mobile

phone users sending text messages everyday (UK

News, 2005). Messaging involves SMS, MMS and

video messaging. The potential revenue from

messaging is enormous. Many television programs

such as Big Brother and Pop Idol are now offering

an interactive voting element by enabling viewers to

participate in text voting to influence the outcome of

the live program. For example, in January this year,

8.9 million people participated in SMS voting in that

month (Miles, 2006). Big Brother 3 in the UK

received more than 13 million text votes, generating

the mobile operator about £1.3 million in revenue

(Mobile Europe, 2004). It is anticipated that by

2010, data revenue will grow by 78 percent to $52

billion and 65 percent of this will be from messaging

(Oates, 2006).

Community or location based application is

another mobile content that is gradually catching up.

Mobile phone users in Europe and North America

are more interested in information services and

therefore, they demand more access to news and

information such as football results and stock

quotes. Sport results and share prices are types of

interactive content and are time-critical information

that requires constant updates. They will remain

valuable in such society. Because mobile phone is

an interactive device, it can make use of its mobility

and interactivity to alert users of the latest news and

development.

Regardless of the types of mobile application,

whether it would be sending text messages or

downloading games and ringtones, consumers are

being charged a fee to access them. This is because

the mobile industry assumes that people will pay for

content on their mobile phone because of the

provision of convenience, mobility and interactivity.

On the other hand, consumers are questioning

whether they should pay for mobile content

especially for content where they could get them

free and easily available from other media. Some of

them argue that they are not prepared to pay to

watch football match on their mobile phone when

they can watch it for free in the pub on the big wide

screen. Today’s generation of consumers is raised in

the Internet era where content is perceived as being

free. Therefore, they are not willing to pay a

premium for mobile services unless they have got no

other options and there is a clear value associated

with it. Despite this argument, it is predicted that

the demand for wireless services will continue to

grow with an increasing revenue of 13 percent to

$193 billion by 2010 (Oates, 2006).

Personalization, interactive content and time-

critical information such as ringtones, games, sport

results and share prices will sell on mobile phones as

they are more valuable to users. Perhaps, individual

interest and nature of work play important factors in

influencing consumers to access mobile content.

People who are always on the move and like sports

and games will benefit from mobile tv and mobile

gaming. Young men aged between 16 and 21 are the

most ready with cash to lavish on mobile content

like sport and games. According to a report,

consumers are willing to pay more for ringtones or

30-second snippet of a song track than for full song

downloads to mobile phones. However, the

combination of higher bills and the fact that most

consumers are used to getting content on the Internet

for free, consumers are increasingly reluctant to pay

a premium for mobile content. A study revealed that

consumers are willing to consider receiving

advertising content on their mobile phone in

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320

exchange for free or discounted content, provided

there are no hidden costs and that the advertisement

is relevant to their needs and interests. Therefore, it

is crucial for mobile industry to develop a solution

that benefits everyone in the market including

consumers to allow for continuous demand and

success of mobile content. Ideally, the model should

incorporate convenience, low prices and legal action

against violators.

3 PAYMENT MODELS

As mobile content promises greater growth, it is

inevitable to review the existing business models for

mobile services that are currently dominated by the

mobile operators. Mobile operator is handling the

billing by deducting the prepaid credit or for a

contract user, the amount is added to the monthly

bill. The challenge is to reduce the domination of

mobile operators. This gives opportunities for

content providers and other players in the mobile

market to reach customers without having to go

through mobile operators. Most mobile users are

paying for mobile services through subscription and

pay per download. Subscription offers unlimited use

of mobile content at a fixed rate. It is a risk free

proposition as users always know how much they

will pay. On the other hand, pay per download

makes much more sense for a wide number of users.

Consumers can access mobile content and be

charged for it on per use basis.

New payment methods are being implemented

involving a closer relationship between content

owners and mobile users. One of the models

requires users to register their payment information

to a centralized entity. This will allow users to

access mobile content from multiple providers.

Another alternative billing method is the offering of

a separate, prepaid virtual account. Everytime a user

buys a mobile content, the amount will be deducted

from the prepaid account. The revenue sharing

model is another option for mobile services. This

model allows all content providers to offer

SMS/MMS/WAP services to mobile users across all

mobile networks. The revenue is then, shared

between the mobile operator and the content

provider by taking into account the value that the

content provider is contributing with.

4 SURVEY RESULTS

A survey was conducted to identify consumer

behaviour towards mobile content. It focused on

people from different departments in Lancaster

University. About 50 people participated in the

survey ranging from the age of 18 to 30 years old.

From the total number of participants, 96 percent of

them own a mobile phone and the other 4 percent

have not. This figure conformed to the overall

penetration of mobile phone in the UK. When asked

about the age when they first own a mobile phone,

40 percent of the participants owned their first

mobile phone between the age of 13-14, 35 percent

between the age of 15-16 and only 5 percent over

the age of 18. These figures clearly indicated that

mobile phones were increasingly popular among

teenagers. Due to the fact that most participants

started to own mobile phone when they were

teenagers, most of them were on Pay As You Go

with 78 percent and 22 percent were contract users.

As illustrated in Figure 1, the survey also

highlighted that the most popular content

downloaded by the participants for free was ringtone

with 35 percent followed by mobile game 17 percent

and wallpaper 15 percent. The least popular content

was film review video clip with only 1 percent. This

justified that this age group felt that personalizing

the mobile phone based on their preferences was

very important to project their self-identity. In terms

of purchasing mobile content, Figure 2 showed that

ringtone, wallpaper and music top the list with 33

people, 11 people and 9 people respectively.

Perhaps, younger generation was being selective on

what they were able to purchase and download given

the financial constraint as most of them were on Pay

As You Go. They would be better off with free

downloads.

Have you e ver dow nloade d, for fre e, any of the follow ing

content to a mobile phone?

35%

15%

12%

5% 5%

17%

gton

allpape

Screen

Music

sic

o C

Football Video Clip

Film Trailer Video Clip

vie

her Video

/Vid

eo Clip

Mobile Ga

ther

Types of Content

Percentage

Figure 1.

SELLING MOBILE APPLICATIONS: THE DIFFERENCE WHAT PEOPLE BUY AND WHAT PEOPLE TRY

321

Have you ever purchased any of the

following content for a mobile

phone?

Ringtone

Wallpaper

Screensaver

Music

Music Video

Football

Film Trailer

Film Review

Other

Mobile Game

Other

Types of Content

No of People

Figure 2.

When asked about SMS voting, interestingly,

only 35 percent has participated in reality television

series. This was a staggering outcome considering

the revenue earned in such programs was relatively

high. This could be due to the fact that most

participants were students and therefore, they were

less likely to have time to watch television or

perhaps, they cannot afford to spend on things that

they were not benefiting from.

The survey also asked participants whether they

have downloaded content for free to a PC. Most of

them have downloaded music with 32 percent, film

25 percent, games and music video with 23 percent

and 20 percent respectively. They have also bought

CDs, DVDs, video and singles over the Internet.

This indicated that young people were more

attracted to music and film and they were willing to

pay for them.

5 SURVEY ANALYSIS

The survey results showed that the ownership of

mobile phone was high among the participants and

majority of them started to own one since they were

teenagers. This group of consumers has downloaded

all types of content to their mobile phone for free.

Personalize contents such as ringtone, wallpaper,

screensaver were top of the list. When it came to

purchasing the contents, it projected similar trend

with ringtone as the most popular content. Indeed,

the participants have been selective in choosing the

types of content they want to download whether for

free or pay per download. Whatever content they

download for free, it will influence their purchasing

power over mobile content. This may be down to

individual interest and their associated benefits. The

participants were willing to pay for the download if

the content was valuable to them. For example, they

were willing to pay to download their favourite

songs so that they could listen to them repeatedly. It

may be a good idea to allow for free trial when

downloading mobile content. In some cases, people

tend to try anything if it is free although it is not an

interest to them. It maybe a good marketing tool to

attract consumers to try on new products and from

there build their interest to continue subscribing the

product. The recommendation may be able to

increase the take up of mobile content by consumers.

6 CONCLUSION

The mobile industry is offering a wide range of

content services such as text messages, screensavers

and games to consumers. Consumers are spending

more on mobile content and mobile operators are

gaining higher revenue each year. As a result,

mobile users are increasingly reluctant to pay a

premium for mobile content unless it is clearly

valuable and it is not easily available from other

media. The outcome from the survey conducted also

projects similar consumer behaviour towards mobile

content. Therefore, mobile industry should take

initiative to review the business models in order to

encourage consumers to adopt mobile content and

consequently, to provide better services.

REFERENCES

ChildAlert News, Children and the Mobile Phone! An

Addiction, A Necessity or Just Fun?,

http://www.childalert.co.uk, 16/2/06

Derbyshire, D., Average Age for Child to Have First

Mobile is Now 8,

http://www.news.telegraph.co.uk/core/Content,

20/4/05

Miles, S., A Fifth of UK Mobile Phone Users Vote in

Reality TV Shows, 12/3/06

Mobile Europe, That’s Entertainment, 16/2/04

Oates, J., Mobile Users Diss Premium Content,

http://www.theregister.com/2006/03/21/users_wont_p

ay_content/21/3/06

Screen Digest, Mobile Gaming Gets Its Skates On, The

http://www.theregister.co.uk/2005/02/09/mobile_gami

ng_analysis/, 9/2/06

Thomas, K., The Rise and Rise of the Mobile Phone: An

Interview with Josh Dhaliwal, Director, MobileYouth,

NESTA Futurelab, May 2005

UK News, Men Are Biggest Mobile PhoneUsers, 11/5/05

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