Wireless Portals to Reach Revenue Turning Point in 2001, Says The Strategis Group - Brief Article

Wireless Internet, July, 2001

While 2000 marked the launch of several new wireless portal services, 2001 will serve as a turning point for revenue generation, as operators load subscribers and hone in on segmenting the market, according to research from The Strategis Group. Demand for wireless portal services currently sits at a low simmer, but the competition is heating up among wireless operators, according to the study, US Wireless Portals: Trends and Outlook.

"As first-to-market, Sprint PCS has bragging rights to the largest number of wireless portal subscribers today," said Cynthia Hswe, senior analyst in wireless research at The Strategis Group. "But as we exit the early adopter phase, subscriber growth won't suffice. Wireless operators will need to report some recurring revenue from their wireless portal products."

To that end, The Strategis Group proposed a tiered pricing model for wireless portals, similar to the cable industry's, where end-users are charged for basic, premium, and per-download services. Basic services would include access to the type of content that exists on most wireless portals today (e.g., headline news, weather updates, sports scores) with a minimal amount of personalization.

Meanwhile, premium services would encompass subscriptions to sites with premium or multimedia content, such as access to the Wall Street Journal's Web site or a subscription to a wireless gaming site. Per-download services would charge for graphics-intensive, high-demand content, such as driving maps or video downloads, similar to pay-per-view cable services.

According to Hswe, this type of pricing plan will revolutionize how end users perceive wireless portals. "2G packet-data service providers like AT&T and Cingular Interactive already offer a type of tiered pricing structure, but it is based on many bytes are transmitted and not on the type of content being accessed," said Hswe. "People can't really predict how many bytes of data they're going to send and receive, but they can predict that they'll access CNN.com or their trading account or a regular basis."

This distinction will put wireless portal users at ease with paying for content and will boost recurring revenues for operators. The Strategis Group foresees premium services comprising the majority of wireless portal revenues by 2007, as wireless portal users begin to accept paying for personalized, premium content.