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The future of mobiLe entertainment
13 September 2001
TABLE OF CONTENTS
Akumiitti's Market Vision 2001-2006 2
The Business Model. 2
ContentIs King 5
Handset Manufacturer Alliances 6
End User Billing 7
Conclusion '" 8
About Akumiitti 9
WHEN MOBILITY AND ENTERTAINMENT COLLIDE
There are two major elements to people's lives today, entertainment and mobile technology. The
amalgamation of the two is no longer a concept, but a revolution born to succeed. Wireless portable
devices such as PDA's, CO players, Televisions, digital cameras and video recorders has meant people can
consume their favourite forms of entertainment on the go, but no device has had greater impact and
transformed the way people live, work and interact more than the mobile handset or terminal.
FASTEST GROWING SECTOR
The entertainment industry has realised that mobility is another excellent opportunity to reach mass
markets and make more money. Mobile entertainment is one of the fastest growing sectors in the world
today, with an estimated 700 million subscribers anticipated by the year 2005, making Mobile value
added services the profit making business of today and tomorrow.
The big revenue earners are the value added content and services which appeal to the mass market, are
fun to use and provide entertainment. Since the inception of the first ringtone, subscriber demands as
have subscriber numbers continued to escalate at an overwhelming pace. Where ringtones, icons and
picture messages provide the current staple mobile entertainment diet for subscribers. upcoming
technological advances will see a greater variety of content and services available. providing increased
interactivity and richer entertainment, a veritable plethora of fun on the runo
FOUR STEPS TO SUCCESS
In an increasingly competitive market there can now be defined four essential elements that are set to
shape the future industry of mobile entertainment:
1. Optimal Business Model
2. Desirable Content and Services
3. Handset Manufacturer Alliances
4. Ability to End user Bill
Copyright © Akumiitti Ltd. 2001 1
Figure 1. Mobile Content Market
AKUMIIm's MARKET VISION
As market leader in mobile entertainment software
solutions, Akumiitti is involved in the most important
trends in this sector. For us, in the period 2001-2006 this
means we will see significant movement in subscriber
demands from simple to more sophisticated content and
services. AkumiiUi will continue to provide its state-of
the-art Entertainment Service Center (ESC) total software
solution for these applications, and further develop within
its research and development department cutting-edge
concepts for mass market appeal.
Mobile Content Markets
40 % -:- - - - -- - - - -- -
35% :-- -- -- -- - -- - - - - - -" -
30% ,-_.- -
25% :.- -I -------_ ..---.
20%-;- -- ----------
15% ~ - . - - - - ~ - ----1-:::1
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The change in trends ofsubscdberdemands between 2001 and
2006 is attdbuted to the new services and content available. These
are made possible by the combination ofthe new underlying
network techno(ogies ond handsetfeatures.
Akumiitti will exploit all the technological benefits that hit the market. First mover advantage has long
been a long tradition with Akumiitti ever since the launch of the company in 1993, and this advantage
will also be a defining character for the company into the next five years.
Breaking barriers with greater bandwidth enabling technology, such as GPRS, will enable us to provide
richer content and better service for all those using Akumiitti's ESC software. The evolution to the next
generation of mobile entertainment will be defined by Akumiitti, bigger packets of data delivering
greater content. transferred over faster and more reliable connections to an increasing mobile world.
With the expected evolution in mobile data and entertainment usage over 3G networks, Akumiitti will
provide advanced streamed and downloadable content that will use full colour, interactivity, video and
high quality audio capabilities ofthe third generation handsets. There will be a significant increase in the
amount of content and services available, providing greater interactivity between subscriber and service.
SMS games, chats and biorhythms will require sustained input and communication between subscriber
and handset or terminal, resulting in a prolonged entertainment experience and increased subscriber
buy-in, whilst comics and animated screen savers provide a more in-depth entertainment experience.
Advanced audio quality and new video streami ng will follow inli ne with the underlying technologies.
As mobile entertainment content starts to resemble traditionaI broadcasting content, the value and
importance of branded offerings will increase. Akumiitti's partnerships with the leading media companies
means that we can continue to deliver COSMO, the most desirable, professionally created and b-anded
content packages for service providers and mobile operators in the period 2001-2006 and beyond.
THE BUSINESS MODEL
"The Akumiitti value chain, providing the means for profitable distribution of the most desired
entertainment content - to every subscriber."
Akumiitti's ESC Entertainment Service Center forms the basis of the value chain, providing network
operators with a software solution that makes it possible for them to deliver mobile entertainment
content and services to subscribers.
Figure 2. Akumiitti's Business Model
Copyright © Akumiitti Ltd. 2001 2
CONllNUOUS REVENUE STREAM
Akumiitti's business model was created in recagnition af the mobile entertainment industry need for
professional partnerships af industry specialists. With technology giants worldwide now joining
campetencies, continued growth and success would be assured for those industry players who join in a
value chain that supports a continuous revenue stream, capturing the mass market in an increasingly
competitive climate. Akumiitti's optimal value chain makes this possible, giving members the ability ta
concentrate on their care business, smoothing the whole process from cantent capyright and brand
owner ta handset or terminal manufacturers and finally to subscribers in the mass market.
Market research has shown that content quality; professionally created and branded are the primary
purchasing deciders for subscribers. In order ta obtain this desirable content, it is dependent upon three
fundamental components; technology, device or handset and content suppliers. Akumiitti utilises and
promotes this business model as it facilitates close co-operation with these professionals resulting in
content and services that really sello
Subscribers choose content quality before anything else
Akumiitti has developed a series of programs and alliances' which facilitates the flow from content
production ta subscriber sales. The Mobile Industry Device Alliance involves the ongoing co-operation
with major handset manufacturers, resulting in the timely availability af new content formats utilising
new handset features upon market release. Working with the top content providers and capyright owners
in the field, Akumiitti produces COSMO, a centralised content source for delivery, updates and
management for mobile operators and portals. As channel managers for this business model it means we
can also provide feedback and market analysis to content providers, Service Providers and Operators as
required. This combined with other initiatives such as the VAR Partner Program provides for extensive
global reach, ensuring ongoing profitable returns ta our value chain participants.
In the entertainment business the key to real success is high quality content, and so accordingly, content
owners guard their copyrights and commissions vigorously. The issue of forwarding content and services
is an area of the mobile entertainment industry under careful inspection, with the market growing so
rapidly the industry cannot afford to simply rely on honesty and integrity.
Professionally managed business channels such as Akumiitti's which sources content globally for COSMO
is protected and copyrighted. Correspondingly ESC software addresses copyright management, providing
transaction details and reporting, a copyright database and fee payments accardingly ta our content
providers, providing a secure environment forthem to do business.
Illegal content is a threat ta the core af the industry, in order ta protect and sustain standards in the
future, Digital Rights Management (DRM) will become an industry standard combined with new
technologies restricting misuse af downloaded content.
ALTERNATIVE BUSINESS MODELS
Where this model succeeds, many others fail. Professionally created content is the number one discerning
factor for subscribers. With this in mind it becomes imperative to create a business model that facilitates
the product and information stream from provider ta subscriber. An alternative ta Akumiitti's business
Copyright © Akumiitti Ltd. 2001 3
model was to exclude content providers, where subscribers create content like ringtones and icons,
uploading it to the network operator website for the availability of other subscribers. Problems arise with
poor quality content and naming conventions, making it difficult for subscribers to locate desired
content. Here too, copyright issues are the responsibility of the network operator to check all
compositions and pay fees accordingly. and Service Providers may also encounter problems with
Asecond alternative included the content provider but omitted the software provider. Here, operators
implemented their own tailor-made software solution but outsourced the contents of the service.
Network operators are then often penalised with lengthy time to market and the lack of capacity to serve
all subscribers, having to engage the services of many content providers to guarantee best possible
offerings for their subscribers.
VALUE (HAIN PLAYERS AND BENEmS
COPYRIGHT AND BRAND OWNERS - THE TALENT BEHIND THE CONTENT
Co-operation with Akumiitti opens a totally new marketing channel for brand owners. Brand owners'
content can be transformed into mobile formats, with Akumiitti providing a professionally managed
revenue source, ensuring that the correct copyright fees are paid and that the brand is used in a
legitimate and commercially advantageous manner. The potential also exists for renewed interest in back
catalogues. Copyright or brand owner can be assured of a lucrative and continuous new revenue stream.
Due to content demand far surpassing supply. there is a constant need for content material to be sourced
and collaborated. Here the content provider acts as the go-between for content or brand owners and
Akumiitti. Content Providers gain revenue by supplying desirable. professionally created content for
COSMO, which is then distributed globally through our VARs and mobile operators.
AKUMIITTI - SOFTWAREjPLATFORM PROVIDER PROVIDES THE TECHNOLOGICAL FOUNDATION FOR CONTENT.
First mover advantage means Akumiitti is a Arm believer in technological progress, with each new
technology comes a new and exciting range of mobile entertainment possibilities. We look with
anticipation to the progression to third generation networks. however understanding the technology
adoption cycle means that Akumiitti will continue to ensure that our ESC Entertainment Service Center
software continues to accommodate all popular network software. and SMS will remain integral as a
technology standard. By spreading our content over a wider range of platforms we support the industry
and we can assure our handset manufacturers of compatibility and our subscribers of continued
availability of content and services.
SERVICE PROVIDER - PACKAGED UP AND READYTO GO
Akumiitti provides the means for Service Providers to offer value added content and services to their own
or customer operator networks. Akumiitti supplies ESC total software solution on which these content
and services are delivered. with the option to additionally purchase COSMO content package. COSMO
supplies an extensive range of professionally created. branded. copyrighted content from our pool of
skilled providers. providing updates and centralised content management with mass market appeal for
Copyright © Akumiitti Ltd. 2001 4
Escalating subscriber numbers represents more network traffic and increased revenue for Network
Operators. With such sizeable financial investment in the industry, it proves more viable for the operator
to outsource their content for subscriber services. More com petition for content providers produces
greater variety of more desirable content, appealing to mass markets, producing increased traffic and
revenue through increased demand.
Subscriber demands are escalating, the desire for greater personalisation, richer content and Person-to
Person messaging services is continuing to expand. Ringtones, icons, logos, SMS text messages are
already commonplace and future content and services will be dictated by a combination of the
technology on which they reside and new handset or terminal features. Second generation entertainment
will include enhanced music with polyphonic sounds, enhanced graphics such as photo's, pictures,
postcards and games, animated images and short downloadable video clips, ultimately giving the
subscriber extra pleasure and mobile entertainment.
HANDSET MANUFACTURERS -- EXCITING CONTENTIS DEVICE DEPENDENT
Subscribers are now basing their handset purchasing decisions on content service availability. It is then
clearly obvious that in order to continue increased sales, it is advantageous to join a value chain that
promotes close co-operation between content providers and handset manufacturers, so hot new content
is available for new handsets as they hit the market, Akumiitti's Mobile Industry Device Alliance program
makes this possible.
Akumiitti also co-operates with other industry leaders in creating proposal specifications for the ongoing
development and establishment of new industry standards.
CONTENT IS KING
Killer applications are those mobile content and services which provide entertainment and have mass
market appeal, money makers of today and tomorrow, offering subscribers real added value at premium
Content and services can be defined as 3 major
terminologies, Personalisation, Content
Consumption and Person-to-Person messaging.
Personalisation means the ability to change the
mood of your phone, from an inanimate object to
something alive and real, distinguishing your phone
from everyone else's and allowing the subscriber to
express their individualism with ringtones, icons,
logos and screensavers. Content Consumption
involves those services which provide immediate
entertainment: jokes, horoscopes, biorhythms,
'thought of the day, online diaries, pictures and so
forth. Lastly, Person-to-Person messaging which
currently includes picture postcards, chain letters,
chat. ASCII graphics and SMS text, gifts of
entertainment and fun.
l\1ulti-player games .
__ ) __ _
Rin,gtofles i games
5tHI pidures i Chat
, Logos"'. i 8iorhytms
. Jokes. Screensavers:
ASCII graphics i
Figure 3. Mobile Entertainment Outlook
Copyright © Akumiitti Ltd. 2001 5
Subscriber demands have historically seen ringtones as the most popular content selected, closely
followed by logos, icons and picture messages. Statistically the biggest content sellers are those that are
professionally created andjor branded. With this in mind it is imperative to have content providers with
extensive experience and know-how, and as more markets open up internationally the need for locally
produced demographically specific content also becomes apparent. Companies such as Akumiitti with
international co-operatives and alliances has the advantage of being able to fill both sets of content
criteria, professionalism and mass market appeal.
SECOND WAVE ENTERTAINMENT
Akumiitti envisages that the definition of content and services will grow dramatically in the future. The
subscriber of tomorrow will have the complete package of audio and visual pleasure, further interactivity
and a more comprehensive source of content and services. Reliant on the union of underlying
technologies and handset capabilities, the end of 2001 will see the introduction of Enhanced Messaging
Service or EMS. Whilst not too dissimilar from the existing Short Message Service (SMS) new subscriber
benefits include enhanced graphical display for logos and icons, colour screens, complete animation, and
better quality ringtones.
The market which currently sees ringtones as the biggest seller, will then have the possibility to employ
the same audio files in a variety of ways, for example, being added to a picture and sent via Person-to
Person messaging, giving more life and character to an otherwise standard message.
EMS will mark the smooth transition as we progress towards 3G technologies like Multi Media Messaging
(MMS), GPRS and I-mode. MMS groundbreaking technology commercially available towards the end of
2002, will then allow the sending of larger size data like short video clips and real audio music, the
second step in audio file use, with improved sound definition and polyphonics, samples and loops, pieces
of actual music performed by real and original artists.
This new technology provides the framework for the move from simple to richer content, resulting in
colour, animated screensavers, comics, picture postcards, SMS games, and chats. These forms of content,
with increased subscriber involvement, create greater levels of entertainment satisfaction promoting
continued use and consumer buy-in.
The most revolutionary component of future mobile entertainment will be the imminent introduction of
Video. Animation eventually followed by short video clips and photos will predominate subscriber
download selections. Sent to friends on special occasions or just for fun, informational ar educational
they will transform the way subscribers behave and present a whole new range of profitable
HANDSET MANUFACTURER ALLIANCES
CONTENTIS DEVlCE DEPENDENT
Consumer decisions will continue to be based more on the services and content available incorporating
and fully utilising the features af the handset or terminal, and notjust on the handset itself. Statistics
show that 95% of handset sales are from manufacturers who have committed to encompassing subscriber
services such as ringtones.
Copyright © Akumiitti Ltd. 2001 6
The primary ability to supply subscribers of tomorrow with richer and more interactive content and
services relies on the amalgamation of underlying technologies and the device or handset.
In order for the industry to be prepared, close alliances with major industry players will be imperative to
provide timely support of these content and services as they hit the market, providing a mutually
beneficial exchange of specifications and information. Those industry players that continue to succeed
will be those that recognise the market demands of the future and start preparing today.
AKUMIITTI'S MOBILE INDUSTRY DEVICE ALLIANCE
In recognition of this, Akumiitti has developed the Mobile Industry Device Alliance, working in a
preferential and trusted relationship with all major handset manufacturers. By receiving new model
specifications prior to release, we then have the advantage of ensuring our professional content
providers can deliver new content in time to support the handset as it hits the market, fully utilising all
the features to produce richer content and provide real added and marketable value to the new handset.
Statistics show that 95% of handset sales are from
manufacturers who have committed to encompassing
subscriber services, such as ringtones.
ENO USER BILLING
The ability to end user bill has been a fundamental issue to the many mobile operators and portals
worldwide who supply content to subscribers. The inability to do so has also meant the unfortunate
demise of a few big name companies in the process.
In countries with advanced market areas such as Finland and Norway, service providers and portals
already possess the ability for flexible end user billing, incorporated into their existing software
platform. The future of end user billing will be undertaken in a two-step process. First. as the mobile
entertainment industry continues to rapidly expand, the potential revenue gain to all mobile operators
and portals is clearly obvious. As mobile entertainment becomes an industry standard for these service
providers, so to will their networks ability to automatically incorporate end user billing or alternatively
work in conjunction with software such as ESe.
The second step will see multiple service providers utilising the same network for business, where one
acts as a bill clearing service, not only gaining revenue returns from their own content offerings to
suppliers but also from subsequent service providers.
Flexible end user billing models will eventually be an industry standard, whereby all subscribers can be
charged premium prices for services.
Copyright © Akumiitti Ltd. 2001 7
Mabile entertainment af tomorrow will be dependent upon the eritical components, a good business
model, desirable content, handset manufacturer alliances and the ability ta end user bill. Together these
form the framework and the blueprint af success for the mobile entertai nment industry.
Today's SMS based content provides simple but effective entertainment services; ringtones, logos,
pictures, proving both popular and significantly profitable. In the future subscribers will have the
complete package af audio and visual mobile entertainment. The effective business model actively fulfils
the supply, demand flow from content provider ta subscriber, proving invaluable for facilitating a
continuous revenue stream ta all industry players.
Strong commitment and support af the value chain will also mean creating alliances with both Handset
manufacturers and content providers. This managed channel results in the ability ta supply mass market
desirable content on demand utilising new features and fully exploiting new technologies, ta produce
richer and "hotter" entertainment. Handset sales are then increased through the ability ta support the
delivery af content that subscribers really want thus also creating more network traffic, an ongoing and
profitable revenue stream, from content owner ta subscriber.
In order ta generate the profits for mobile operators and portals, end user billing tao will have ta become
an industry standard, initially billing SMS at premium services, then onto EMS and eventually MMS.
Akumiitti sees the vision af the future as an exciting advance into total subscriber mobile entertainment.
We are committed ta providing the state-of-the-art total software solution ESC and content package
COSMO, making it possible for mobile operators and service providers ta deliver the money making
content ta subscribers today and tomorrow, on a global scale.
Capyright © Akumiitti Ltd. 2001 8
Akumiitti specializes in entertainment software solutions for mobile operators, service providers and
portals globally, enabling them to target the fast growing market for mobile value-added services.
Privately owned by employees, management and international venture capitalist companies, with 20
Million EUR financing round was finalized in June 2000. Akumiitti Ltd. was founded in 1993, is based in
Helsinki, Finland and employs 110 people, with an additional sales office in Singapore.
ESC ENTERTAINMENT SERVICE CENTRE
Ese mobile entertainment software solution enables mobile operators to provide innovative
entertainment value-added services to their subscribers via SMS, Web and WAP.
As a market leader we will take advantage of new technologies, however as a commitment to handset
manufacturers and operators, Ese will be assured to continue to run on all widely accepted network
COSMO CONTENT STREAM FOR MOBILES
eOSMO service product provides a central source of content, management, delivery and updates of mobile
entertainment. Assembled from our global content providers, creating professionally made, branded, fun
to use, international and local flavoured desirable content with mass-market appeal.
Copyright © Akumiitti Ltd. 2001 9
Tammasaarenkatu 5 B
Telephone: +358 (0)201500500
Facsimile: +358 (0)201500 501
Akumiitti APAC Pte Ltd
7500A Beach Road #07-310/311
The Plaza, Singapore 199591
Republic of Singapore
Telephone: +65 297 0021
Facsimile: +65297 3032
WAP: wap.akumiitti .com
No part of this publication may be copied, distributed, transcribed, or translated without the prior written permission of
Akumiitti. Akumiitti has made every effort to ensure that the information contained in this document is adequate and free of
errors and omissions. If necessary, Akumiitti will explain issues that may not be covered by the documents. Akumiitti's liability
for any errors in the documents is limited to the correction of enors and the aforementioned advisory services. Akumiitti
welcomes customer comments as part of process of continual development and improvement of our documentation. Please
submit your comments to the Akumiitti support organization at email@example.com. Any trademarks mentioned in this
docu ment are properties of their respective owners
Copyright © Akumiitti Ltd. 2001 10