Network operators make concessions, raising shared profits with CPs

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VietnamNet English - 74 month(s) ago 7 readings

Network operators make concessions, raising shared profits with CPs

VietNamNet Bridge – Two or three years ago, network operators always held the upper hand in the cooperation deals with content service providers (CPs) with 60-70 percent of profits falling into the pocket of network operators, while CPs get only 30-40 percent. However, the proportions have changed rapidly.

Payment through SMS just accounts for 50 percent

Do Tuan Anh, an administrator of GSM forum, said that he can see the clear shifting from making payment through SMS to other channels such as scratch cards or e-wallets. The payment through SMS now just accounts for 50 percent of the total payment transactions.

Sharing the same view with Tuan Anh, an expert in mobile apps has also said that in buying a web-based social game, only 30 percent of buyers make payment through SMS, while the other 70 percent use other payment channels.

As for the mobile environment-based apps, the percentage of making payment through SMS is higher, about 50 percent. However, the proportion is expected to decrease in the time to come.

“SMS once was the major payment channel. However, this was the story of two or three years ago,” he said.

Anh has explained the shifting by the fact that when using SMS, the profit sharing between network operators and CPS is up to 70 percent, while the remaining 30 percent is not high enough for developers to exist.

In order to exist, developers only have two choices, either to develop swindling, lottery and gambling contents, or shift to other payment channels, such as scratch cards or ATM. Of course, they need to spend money and time to encourage people to use the payment channels.

As for the apps valued at 60,000 dong, CPs would get 20,000 dong only with SMS, while they would get 40,000 dong with scratch cards.

If CPs only accept the payment via cards, users will have to make payment via cards, or they will not get the apps.

“Therefore, users have got more familiar to scratch cards and other payment channels,” Anh said.

Meanwhile, Nguyen Manh Ha, General Director of VMG, believes that the changes in the market are the biggest reason behind the changes of the payment channels.

The payment for the apps with the values higher than the value of an SMS message (15,000 dong at maximum), for example, the payment for the game valued at 100,000 dong, if being paid through scratch cards, will bring more value to the developers (who would get some 90,000 dong) than paid by 6.7 SMS messages (which bring 40,000 dong).

The gap of 50,000 dong would be given by developers as bonus to clients, thus making clients prefer scratch cards.

But the proportion would drop to 20 percent

When asked about the benefits of the shifting in payment channels, Tuan Anh said that this will force develop to work seriously in order to bring profits to themselves and benefits to users.

Meanwhile, according to Ha, the existence of more payment channels will help developers have more choices to optimize their business instead of relying on SMS as the only channel. However, he has warned that mobile phone users will still use SMS as the main payment channel for buying simple and low cost apps.

When asked why other payment channels were not applied sooner, analysts said that the market now has the number of users big enough to develop other payment channels, while developers have also grown up enough, and the apps on mobile phones have become diversified enough.

“When the quantity develops to a certain level, the changes in the quality will occur,” Tuan Anh said.

Both Tuan Anh and Ha believes that the changes in the payment channels will be even bigger in the time to come, when scratch cards will be the main payment method. Meanwhile, network operators will have to “rethink” about the profit sharing.

“By early 2012, when the payment though SMS just accounts for 50 percent, network operators will have to change their viewpoints about the profit sharing ratio, before the proportion reduces to 20 percent by the end of 2012,” Tuan Anh said.

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