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-«�À̽Ã�w�`��}Ã�>Ài�L>Ãi`�������`i«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.
3
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��`iw�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��`iw�i�>Ã�i�Ì�iÀ��v�Ì�iÃi]��>���}��Ì�`�v-wVÕ�Ì�Ì��`À>Ü�>����i�LiÌÜii����L��i�>�`�`iÃ�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 ëi�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��>ð�"�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�`iw�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-Vii`i`��>«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
`iÛi��«�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�ð�/��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�`i�]���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�«�>�ð�-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�`iÀ��}�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�`i��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�Àð���Ài�ëiV�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 `iw��Ìi�Þ�Lii��>���}�Ì�i���ÃÌ�ëiVÌ>VÕ�>À�ÃÕVViÃÃ�ÃÌ�-À�ið�,�Û���>�`��ÌÃ�Ƃ�}ÀÞ��À`Ã�Ü>Ã���i��v�Ì�i�wÀÃÌ�}>�iÃ�Ì�>Ì��>`i�>�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�>��`iÌ>��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.
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��>`i��Ì�`�vwVÕ�Ì�v�À�>««��V>Ì����«À�Û�`iÀÃ�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�`iÀÃ]�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�ݽÃ�}��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�î�>VV�À`��}�Ì���`i>�½Ã�iÃÌ�-mate. Apple’s 30 % cut of the revenue in 2012 was roughly f£]Î�L�������£�L�������iÕÀ�î°�����Ì�iÀ�Ü�À`Ã]� iÌy�ݽÃ�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���`i�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
1 Sieniopas - Mobiteos
4 booxTV - Booxmedia Ltd
5 Karttaselain - AccelBit
10 Angry Birds - Rovio
Entertainment Ltd
15 Angry Birds Seasons - Rovio
Entertainment Ltd
18 ReittiGPS (Reittiopas
iPhonelle) - Essentia
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
3 booxTV - Booxmedia Ltd
7 Karttaselain - AccelBit
9 Hay Day - Supercell
20 RainMan (Ilmatieteen laitos)
- Ilmatieteen laitos
22 ReittiGPS (Reittiopas
iPhonelle) - Essentia
Solutions Oy
26 TVkaista - Delta Vee
30 Sieniopas - Mobiteos
39 Angry Birds - Rovio
Entertainment Ltd
41 Amazing Alex - Rovio
Entertainment Ltd
{n� ƂÕÌ�Ài��ÃÌiÀ�°w�
- Nelumbo Oy
73 Angry Birds Seasons - Rovio
Entertainment Ltd
92 Rasmus Nalle - Egmont
Kustannus
1 Clash of Clans - Supercell
2 TVkaista - Delta Vee
5 Karttaselain - AccelBit
6 Hay Day - Supercell
7 booxTV - Booxmedia Ltd
18 Sieniopas - Mobiteos
21 HS - Helsingin Sanomat
- Sanoma News
22 ReittiGPS (Reittiopas
iPhonelle) - Essentia
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
1 Angry Birds - Rovio
Entertainment Ltd
5 Angry Birds - Rovio
Entertainment Ltd
17 Angry Birds Seasons - Rovio
Entertainment Ltd
38 Angry Birds Rio - Rovio
Entertainment Ltd
12 Clash of Clans - Supercell
42 Hay Day - Supercell
46 Angry Birds Space - Rovio
Entertainment Ltd
57 Angry Birds - Rovio
Entertainment Ltd
3 Clash of Clans - Supercell
4 Hay Day - Supercell
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���`i�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����-Üi`i�]�Ì�i�V�ÀÀië��`��}�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
Sources: AppAnnie; Idean, 2013
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
ëiV�wV>��Þ]�Ì�i�Ì�«�«�>ÞiÀÃ��>Ûi��i>À�i`�
how to remain longer in the top.
Sources: AppAnnie; Idean, 2013
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�
`iÛ�Vi�«�«Õ�>Ì����>�`���Ài�ëiV�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
Interactive TV services
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
Interactive TV services
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-Vii`i`��>«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�Ài`ii�i`°�Ƃ�V��Ã�`iÀ>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