IISIn - A model for analyzing ICT Intensive Service Innovations in n-sided
Markets
Virpi Kristiina Tuunainen
Aalto University School of Economics
virpi.tuunainen@aalto.fi
Abstract
In this paper, we introduce the ICT Intensive
Service Innovations in many-sided, or n-sided, markets
(IISIn) model for understanding ICT intensive service
innovations. Our model is built on earlier research on
services, service innovations and economics of two-
sided markets. A significant share of mobile
applications and services are those that are offered on
platform-mediated networks for users on many-sided
markets. In platform-mediated networks the users
access a common platform that facilitates their
interactions. Platforms are, essentially, subsets of
components and rules employed by users in most of
their transactions. Hence, in this paper we build a
research agenda to guide the future research of mobile
services and service innovations.
1. Introduction
The growth of service activities across industries is
now widely recognized [1], and it has been argued that
the ICT (information and communication technology)
powered evolution of services is the prime driver of
modern economic growth [2]. In contrast to earlier
product-dominant logic of business, the researchers
into services are now talking about service-dominant
logic. According to service-dominant logic, services
are conceptualized as a process, (rather than a unit of
output), the focus is on dynamic resources, such as
knowledge and skills, (rather than static resources,
such as natural resources), and most importantly, value
is understood as a collaborative process between
providers and customers, (rather than what producers
create and subsequently deliver to customers) [3].
Theory of innovation in services is largely based
upon the development of new markets that exploit the
powers of ICT to coordinate service production and
delivery [2]. What are particularly interesting are the
two-sided networks [4-7], where ICT supported
platforms provide services to two or more distinct
groups of users. Heterogeneous matched consumers
with interdependent demands distinguish these many-
sided markets coupled with network externalities from
other market types. Products and services that bring
Tuure Tuunanen
University of Oulu
tuure@tuunanen.fi
together groups of users in two-sided networks are
platforms, that provide infrastructure and rules that
facilitate the two groups’ transactions [5]. Examples of
many-sided, platform mediated networks include, for
instance, video games, where the users groups for the
gaming console platform are consumers (gamers), the
game developers, and game distributors; or
multichannel TV with consumers, advertisers, and
programming networks as the user groups.
The purpose of our study is to introduce the IISIn –
ICT Intensive Service Innovations in Many-sided
markets - model, and to show its usefulness in
analyzing new mobile services for consumers. We will
illustrate the use of the model with case studies in the
field of Mobile TV and IPTV pilot that exemplifies of
an ICT intensive platform mediated service innovation
in two and many-sided markets.
The structure of this paper is as follows: We will
first introduce the relevant literature, after which we
will introduce the IISI2 model. Then, the model is used
to analyze two case studies in Finland and New
Zealand. We will then discuss the findings and propose
a research agenda to guide the future research in the
area.
2. Literature review
As a background for the IISIn, we will review in the
following the related literature on service innovations
in general and ICT intensive service innovation, and
platform based or mediated services that is followed by
a review of service development.
2.1. Service innovations
Services are typically distinguished from products
by four distinct characteristics: intangibility,
perishability, inseparability, and heterogeneity (see,
e.g. [8]. The nature of services can be understood
through the characteristics of the service act, type of
the customer relationship, customizability of the
service, nature of demand, delivery mechanism, and
attributes of the service product [9]. Services can be
described through two set attributes, intrinsic, that is,
the service itself, and extrinsic, that is, the networks
[10]. The intrinsic attributes are though associated with
accessibility related to time and space; “being
personal”; usefulness (accessibility and functionality);
enjoyment; and technical specifications (speed and
capacity). The extrinsic attributes are those related to
direct and indirect network effects; network size;
complementary service variety; speed of development;
and quality.
A number of classifications of service innovations
can be found in the literature. Avlonitis et al. [11]
categorize them as new-to-the-market, new-to-the-
company, new delivery process, service modifications,
service line extensions, and service repositioning types
of service innovations. In general terms, services
innovation can be expected to either improve services
productivity or to develop new service models.
Paswan et al. [12] posit that the type of service
innovation can be characterized on the dimensions of
perceived environmental uncertainty (high or low),
service firm’s strategic orientation (cost control or
differentiation), and managers’ market orientation
(market or firm focus). Service innovations can also be
viewed in terms of the type of benefit offered and
degree of service “separability” [13]. The type of
benefit offered refers to the fact that businesses can
innovate by offering an important new core benefit or a
new delivery benefit that revolutionizes customers’
access to the core benefit, whereas the degree of
service “separability” addresses the question of
whether the services must be produced and consumed
simultaneously [13]. Regardless of the categories
innovations have been classified by (e.g. type, degree,
impact, competence and ownership), a common
element in most classifications is the element of
novelty that adds commercial value. [14].
2.2. ICT intensive service innovations
ICT capital has become the dominant source of
investment in services [15]. Widely accepted definition
of service innovation includes a combination of
technology innovation, business model innovation,
social-organizational innovation and demand
innovation with the objective to improve existing
service systems (incremental innovation) or to create
new value propositions (offerings) or create new
service systems (radical innovation) [1].
The convergence of computation and
telecommunications is seen as the central enabling
technology, production platform and market
opportunity for the evolution and growth of the modern
service economy. [2] Service innovations are often
technology-based: either the introduction of a new
technology or a different use of existing technology
[16, 17]. Services innovation is not directly based on
R&D, but on investments in and the adoption of new
(ICT) platforms and the subsequent adaptation of these
in order to produce new products and services or
improved business processes [2]. However, although
the role of ICT in facilitating service innovation is
paramount, ICT is neither a sufficient nor a necessary
condition [15].
2.3. Platform based services
During the last two decades, mobile phones have
diffused all over the western countries and become like
commodities, with about 2.4 billion mobile phones in
the world today [18]. Mobile devices have been the
fastest adopted consumer products of all the times with
more mobile phones shipped annually than
automobiles and personal computers combined [19,
20]. Furthermore, mobile information and
communication technology has long ago past the point
where technologically it is a form of “telephone”.
Instead, it has become a platform upon which many
complementary innovations have been developed [21].
Platforms are subsets of components and rules
employed by users in most of their transactions. A
platform can also be defined as a bundle of functions,
which can serve as the basis of certain of certain
services whose value changes over time [22], These
platform oriented services can include, for example,
mobile Internet, e-mail and other personal productivity
tools, and a host of entertainment services, such as,
games, music and mobile TV.
However, although this paper’s focus is specifically
on ICT enabled service innovation, we do not infer that
service platforms should be only analyzed from a
technological point of view. Moreover, we recognize
the findings by the NSD (new service development)
literature that concludes that the success of a new
service depends upon four categories of internal and
external factors: market related, product related, NSD
process related and organization related [8]. These are
summarized in Figure 1 on the following page.
More specifically, these factors include the
following. Organizational factors include the
organization and management of the company, as well
as it financial structure, including the cost structure and
profit potential [23] of the service. Technology factors
define the type of ICT used, while market
environment includes the demand (i.e. the customers),
as well as the competition (both the direct competitors
offering similar services, and the companies offering
substitute services).
 Technology

Market
Organization
environment

Service
innovation

Figure 1. Categories of factors affecting service innovation

ICT intensive service innovation

Service
Client interface Delivery system
concept

Figure 2. Dimensions of ICT intensive service innovation

Den Hertog et al. [15] proposed a
multidimensional innovation model for the service
sector. Their model includes the investment in ICT as
the technological dimension, and the introduction of a
new service concept, a new client interface, and a
new service delivery system in terms of a new
working routine, organizational concept, or back-
office setup as the non-technological dimensions. As
we are interested in ICT intensive service
innovations, technology is embedded in our
understanding (see Figure 2 in above.)
The service concept refers to a service concept, a
new value proposition, which is new to its particular
market. While some service innovations involve
fairly intangible characteristics of the service, others
involve new ways of organizing solutions to
problems, new or existing. The Client Interface
refers here to the innovation in the interface between
the service provider and its customers, not to the user
interface of a system or software application. Clients
are often highly involved in service production, and
changes in the way in which they play their roles and
are related to suppliers can be major innovations for
many services. The Service Delivery System also
often relates to the linkage between the service
provider and its client, since delivery does involve an
interaction across this interface. In many cases, this
concerns the electronic delivery of services.
3. The IISIn –model
ICT intensive service innovations are often based
on platforms, that is, products and services that bring
together groups of users in two- or n-sided, networks
[4-7]. These platforms provide infrastructure and
rules that facilitate the groups’ transactions [6, 7]. In
two- or n-sided markets, the dimensions of service
innovation – the service concept, the client interface,
and the delivery system – are most often different for
the different sides of users, and must hence be
designed separately for all different groups (see
Figure 3.)
Due to network effects, successful platforms
enjoy increasing returns to scale [7]. Users will pay
more for access to a bigger network, so margins
improve as user bases grow. [6]. Furthermore, a
many sided model has the advantage of suggesting
new approaches for estimating network effects [5].
Network externalities are those positive or negative
effects that one economic agent’s actions have on
another’s welfare that are not regulated by the system
of prices [24]. In other words, when the value of
membership to one user is positively affected when
another user joins and enlarges the network, such
markets are said to exhibit “network effects” or
“network externalities [25].
With n-sided network effects, the platform’s value
to any given user largely depends on the number of
users on the network’s other side(s), and the value
grows as the platform matches demand from different
sides [4, 6]. Even though they are not directly
designable by the platform provider, it is crucial to
understand and take into account both same-side (i.e.,
how valuable is the growth of the network for the
users in the same side of the market) and the cross-
side network effects (i.e, how valuable is the growth
of the network on the other side), as well as different
types of costs related to adoption and use of the
platform for users on both sides.
There are also additional design issues to be
considered by the platform provider, that is, the
service innovation provided, especially the pricing
strategy [5]. For two-sided networks, pricing is
complicated, as the platform provides have to choose
a price for each side, factoring in the impact of the
other side’s growth and willingness to pay [6]. The
platform incurs costs in serving both groups of users
and can collect revenue from each, although one side
is often subsidized (Eisenmann, Parker et al. 2006). A
key issue in n-sided networks is to determine which
side receives a discount, and different firms choose
different beneficiaries [4, 5]. Often, either distinct
user network can be a candidate for discounting or
even free distribution; In streaming video, for
example, the industry norm is to subsidize content
consumers and charge content developers. Deciding
which market side to subsidize depends on the
relative network externality benefits: at a high level
of externality benefits, the market side that contribute
more to demand for its complement is the side to
provide with a free goods. At lower levels, firms may
charge positive process in both market sides but keep
one price artificially low [4, 5, 7].
4. Research Methodology
In the following, we analyze the two studies. . We
take an interpretive, but at the same time critical
approach [26]. We followed the guidelines of Klein
and Myers [27] and adapted qualitative research as a
means of trying to understand this complex IS
research topic. We turned to the interpretive case
study approach that Wynn [28] has advocated as the
most appropriate qualitative method in studying
social processes, which many-sided markets
eventually are. In the case descriptions we adapted
the principles of interpretive case studies presented
by Walsham [1995]. These principles are: reporting
details of the selected research sites, the reasons why
these sites were chosen, the number of people
interviewed, the interviewees’ hierarchical or
professional position, secondary sources of data, data
gathering period, how field interviews and other data
were recorded, the description of the analysis
process, and finally, how the iterative process
between field data and theory took place and evolved
over time.
The first case study is “Elisa Mobile TV” for
which we study utilizes secondary case data from a
pilot study ‘Finnish Mobile Television’, which in turn
was a part of Forum Virium Helsinki Mobile TV
research project [29] The study tested mobile
television services in DVB-H network in the Capital
area of Finland. A panel of 27 users tested mobile
television services with Nokia N77 phones from July
2007 to February 2008. Forum Virium Helsinki
research team using web surveys and interviews
collected the case data.
The second case study reports the results of a
research project we conducted in New Zealand. The
case organization, The National Television
Broadcasting Company (NTBC), offers and plans to
offer, consumer-oriented IPTV/Internet TV services.
The case organization was selected with theoretical
sampling from all three of the firms offering IPTV
services in New Zealand at the time. NTBC is
primarily involved in the terrestrial television
business. At the moment, the company mostly offers
linear video products over its free-to-air TV stations.
Advertising on the company’s TV channels mainly
generates the income. The presented case was the
most advanced firm in the sample in terms of
implementing a full length IPTV service for
consumers in New Zealand.
The selection of the case studies was done in
order to provide a comparative analysis of two
similar problem domains in a different technological
and innovation culture environment. The Finnish case
study reports a major development and research
effort by the local television and broadband
broadcasting companies. The New Zealand case
study, in turn, reports how a local broadcasting
company implemented an IPTV environment with a
customized package software solution and how they
develop a business model around this solution.
 n
Figure 3. The IISI model: Model for ICT Intensive Service Innovations in Many-sided Markets

5. Elisa Mobile TV The channel included four different interactive

services; Jukebox, Quiz, Chat and a competition to
5.1. As a Service Innovation Platform win a Nokia N77 DVB-H mobile phone [29].

5.1.2. Technology. Elisa Mobile TV used DVB-H as

5.1.1. Organization The Forum Virium. mobile
the core broadcasting technology. DVB-H technology
television pilot [29] included several. different
technical pilots and two N N DVB-T (Digital
is a superset of the widely used
mainstream television
E their regular digital Video Broadcasting - Terrestrial)E system for digital
broadcasters that provided
terrestrial television, with additional features to meet
television content to pilotEusers. In this study, we
the specific requirements of handheld, battery-
focus on the Elisa Mobile T Television pilot that powered receivers.
included some interactive service trials.
W
Elisa is a Finnish Telecom provider that also has
The mobile phone platform was a combination of
cable television operationsO in several locations in Nokia’s high-end smart phone with a DVB-H
receiver (Nokia N77) that operates over Symbian
Finland. In 2008 it had a R EUR 1.5 billion turnover.
v9.1 and uses Nokia S60 3rd ed. mobile user interface.
Elisa’s main market is Finland, but it also has
The operating system enables both JAVAtm MIDP
operations in Estonia. Currently, Elisa offers mobile
v2.0 and native C++ applications. In addition S60 3rd
television services through its mobile telecom
Ed. provides support for Flash Litetm applications.
network to its customers. These services include the
The device provides 3G data access and 2.4” QVGA
main public and commercial television channels.
(320x240 pixels) screen. Data input is done through a
The DVB-H Mobile TV pilot consisted of an
typical mobile phone keyboard.
“Elisa TV” that was a mobile television broadcast
channel, which aired from 25th-31st October 2007.
5.1.3. Market environment. In Finland, mobile
television broadcasting has been in a piloting phase
now already for a while, and none of the commercial
broadcaster have expressed a significant interest in
the market. Currently, some of the television
broadcasters, such as, MTV3 provide this service to
its users for free. Competitors of the mobile
television providers are the traditional digital
television (DVB-T/S) and the IPTV television
services offered by television broadcasters on on-
demand basis.
5.2. Elisa Mobile TV for Consumers
5.2.1. Service concept. According to Kaasinen et
al. [29] the Jukebox service was a prototype of a
music store similar to Apple’s iTunes, where the
users can search for songs according to albums,
artists, and so on, and then purchase them. However,
during the pilot, the Jukebox service only provided
browsing through the music store pages and neither
buying nor download features were implemented.
The application was installed on the mobile phone
when the user requested the service for the first time.
The actual service was broadcasted over the DVB-H
television network.
The Chat service was implemented with text and
multimedia message services (SMS and MMS) with
pre-filled templates for messages. The chat service
functioned so that when a user sent a message, it
appeared on the rolling text feature of the channel,
together with an attached picture or video. The user
could also register a nickname with an SMS message
or be given one automatically by the system. The
Quiz service worked similarly to the Chat service,
that is, the questions were broadcasted on the mobile
television channel and the answering options were in
the service menu as pre-filled text message templates.
Both Chat and Quiz services had not extra cost
attached except the normal rate charged by their
telecom operator.
5.2.2. Client interface. The S60 Platform is a mobile
user interface and application platform that runs on
Symbian operating systems’ different versions.
Widely adapted by Nokia, it is perhaps the most
common smart phone interface standard in the world,
excluding the U.S. markets where Apple and RIM
dominate the markets.
5.2.3. Delivery system. In the Elisa pilot, DVB-H
digital television network was used for television
program broadcasting and 3G mobile Internet for add
on services and interactivity. The mobile phone
platform was limited to one terminal, Nokia N77,
which is based on S60 user interface platform and
Symbian operating system.
5.3. Elisa Mobile TV for Content Providers
5.3.1. Service concept. In the pilot two mainstream
Finnish television broadcasters, MTV3 and Nelonen,
provided their digital television channel content for
the pilot users. Finland completed a transition from
analog broadcasts to digital only network 31st August
2007. The content broadcasted through mobile
television pilot consisted of regular television
broadcasts, including advertisements with the
commercial television channels.
The underlying service concept for Elisa Mobile
TV pilot services was the pay-per-use scheme. Both
chat and quiz service follow de facto standard pricing
of interactive services in Finland, which is based on a
premium fee for the messages sent to the service.
Typically these services work on terrestrial or
satellite television network and provide interactivity
function to real time television shows or then provide
way to participate to a real time television event.
In the Jukebox music store (also currently
available on the Internet), the pricing of the music is
designed to be a song based. Buying whole albums is
not made possible, but the users need to download
each song separately. In the pilot service, however, it
was only possible to browse the site and not actually
make any downloads or purchases. In the pilot, the
song price was set to EUR 0.95, while the current
price is to EUR 1.60.
Elisa Mobile TV pilot did not include any mobile
specific advertisers, but the advertisements were
aired through broadcaster in the normal digital
television content stream. [29]
5.3.2. Client interface. The pilot service did not
enable the users to communicate directly with the
service providers. We assume that the client interface
is organized through Elisa retail shops around the
capital area and through telephone help lines and
Internet web sites. This is, at least, the case with the
current Elisa TV offering.
5.3.3. Delivery system. The development of Elisa
mobile television services was outsourced to a
Finnish digital television software platform
developer, Sofia Digital. The available case material
[29] does not describe in detail the technical solution
Sofia Digital used for developing Elisa Mobile
Television services. However, Digita [30] has later
announced that they are doing co-operation with
Sofia Digital with their DVB-H services. The chosen
platform is based on a product called “Sofia
Backstage®”, which is based on Nokia Mobile
Broadcast Solution. Nokia’s solution provides the
mobile TV delivery system for server-side and it
enables content streams between service providers
and users, provides means for purchasing and
charging for services [31]. The Nokia Mobile
Broadcast Solution is based on IP datacasting over
DVB-H.
6. NTBC IPTV Service
6.1. As a Service Innovation Platform
6.1.1. Organization. The case company builds
around one thousand full time employees, of which
around one hundred work in the technology
department. Even though the technology department
has also been offering traditional IT services to the
organization, its mission has changed recently when
new technologies, such as digital terrestrial television
and IPTV, have come on the market.
To support the service development, NTBC has a
portfolio and project management oriented structure.
This followed a waterfall style structured
development approach, which requires formal
communication within the organization. They had
also adopted agile service development process,
which enables quick turn-around time for projects.
Furthermore, they utilized outsourcing, both with
technological parts of the project, as well as with
project management.
6.1.2. Technology. The technology platform is a
combination of traditional analog and digital
production and broadcasting equipment and new
IPTV software based systems. The IPTV system
currently in use is based on NTBC’s web content
management system, which is based on open source
Web 2.0 technology; Apache Cocoon. Credit card
payment, video delivery, and digital rights
management systems are all outsourced to third party
vendors. Similarly, the advertising system is
outsourced to an Internet advertising company,
DoubleClick. The core development and integration
of systems was, however, kept within the
organization.
6.1.3. Market environment. NTBC is typical to a
government owned broadcasting company. There are
two commercial national television networks, which
NTBC thinks of as direct competitors. There is also a
satellite-based television (Sky), which operates in a
similar way to the traditional cable companies in, for
example, the USA.
The main competitors in the IPTV sector are the
Internet service providers and the telecom operators.
NTBC believes that it has leverage over other players
in the field because of their relative size and deeper
understanding of the television broadcasting business.
However, all of our interviewees considered the
market environment to be very turbulent, which has
also led to recent restructuring of the NTBC
organization with a new Chief Executive Officer
coming on board. What is interesting is how IPTV is
changing the way the customer is defined within the
organization. Previously, it was always considered to
be the advertisers, media offices, and such. Now,
however, the emphasis is turning towards consumers.
6.2. NTBC IPTV Service for Consumers
6.2.1. Service concept. NTBC’s service offering to
the consumers relies on web interface based Video-
on-Demand (VoD) services. The value proposition is
in many ways similar to that of the television
broadcasters in the USA, where service providers
offer an option to watch episodes of television shows
after their original broadcast. This enables the
consumers to follow their favorite shows without
having PVR devices, or similar. However, how
NTBC wants to differentiate from their local
competitors by providing access to their archive of
thirty years of New Zealand television. This is in line
with the trend that NTCB has noticed with their
current IPTV service offering. The biggest hit so far
has been a video clip of “The Good Night Kiwi”1,
which still gets some 25.000, downloads monthly.
This clip was shown at the end of each day when
New Zealand used to have just one television
channel.
In considering what future options the IPTV
service might have, all interviewees saw great
potential in allowing users to tag the content they
provide. For example, if a consumer watches the
“The Good Night Kiwi” clip, he or she could then tag
it to his or her favorite social networking site, such as
Facebook, comment on it, and read other people’s
comments. This would be a start for interaction
between consumers of IPTV service, and it would
also strengthen the network effects for the use of the
service. Similarly, different kinds of service
extensions were discussed which would be
customized to the IPTV content. These could be
screensavers, puzzle games, and so on, which in turn
would create further network effects within the
1
http://www.youtube.com/watch?v=2H2BOGGUbm4
consumer user base. This would also enable
consumer-to-consumer interactions.
Finally, it was pointed out that the whole prime
time value proposition might be changing with IPTV.
If consumers are no longer tied to certain program
time slots for their viewing, but instead can select
when to view their favorite shows, it will change the
television consumption patterns. Furthermore, he
mentioned that television service offering would most
likely become more fragmented, creating new value
propositions for the consumer. Instead of being tied
to certain channel for their favorite documentary,
such as History or Discover channel, they can
handpick what they want to watch.
6.2.2. Client interface. At time, the client interface
was at the crossroads. The traditional view at the
NTBC has been the advertiser focus. “..It's a
consumer-led change. Consumer behavior is what
causes us to change.” NTBC does not seem to
systematically collect and analyze consumer
requirements for the IPTV services, rather, the
development has been technology driven. During the
interviews, there was no mention of interactions with
the actual users, that is, the consumers.
6.2.3. Delivery system. The current IPTV service
offering for the consumers consists of a personal
computer and a Java enabled Internet browser.
However, what is interesting is the idea of multi-
channel view to IPTV. This means that instead of
offering just web based IPTV broadcasting, the
service starts to evolve toward provisioning it when-
needed/when-desired by the consumers. All of the
interviewees emphasized the challenges with
providing a high quality video stream to consumer
customers in New Zealand. The base network
infrastructure is simply not capable of coping with
current demands. This is likely to be one of the
reasons why separate IPTV set-top boxes have not
been considered by NTBC, as such set-top boxes rely
on a high-bandwidth IP network to stream high
definition quality video to the client terminal(s).
6.3. NTBC IPTV Service for Advertisers
6.3.1. Service concept. For the advertisers, service-
offering follows current web based marketing value
offering to advertisers, that is, provisioning banner
type ads to the consumers while they are watching
the content. Especially developers were impressed by
the fact that the advertising is very measurable in this
way. The interactivity also raised some interest.
Actually, there was a clear consideration to use the
consumer generated meta data for targeting the
advertising more precisely. However, there was no
clear one single value proposition targeted towards
advertisers yet.
6.3.2. Client interface. Client interface issues with
advertisers seemed not to be that evident with the
interviewees. One of the few comments we got from
the interviewees was that “Our customers have
always seem to have been the advertisers, the people
who pay the bills.. We’ve have lots of traditional
relationship management.” From this comment we
can assume that the advertising sales department
handles these interactions within NTBC and the
technology department is currently considered a
service department for service development requests.
6.3.3. Delivery system. The current delivery system
for the IPTV advertising was relying on an Internet
browser and a DoubleClick web marketing system.
The NTBC VoD player is integrated with
DoubleClick’s advertising push service. Push
advertising was an innovation in the IPTV sector for
New Zealand, and the development team had to
stretch some technological boundaries to get the
system working with their player software and
DoubleClick’s system, which lead to further
challenges in advertisement billing. All things were
resolved, however, and when asked, the developers
forecasted a rather interesting avenue for IPTV
advertising, where IPTV streams would be broken-up
into twelve minute chapters, which would in turn
enable advertising to be seamlessly integrated to the
video stream.
6. Discussion and Conclusions
In this paper, we propose a model to study and
better understand the multitude of issues related to
ICT intensive service innovations in many-sided
markets. Our model adds to the theoretical
understanding of ICT intensive service innovations,
particularly in n-sided markets, also contributing to
the literature on mobile services and service
innovations. We present that our IISIn model can be
potentially very useful for evaluating and assessing
the dynamics between consumers and other players in
platform mediated services. We demonstrate this by
using the IISIn model to analyze a pilot in mobile TV
services and more mature IPTV service offering.
For instance, our findings point to some potential
reasons for difficulties of the Mobile TV industry in
Finland. Similarly, we can understand what
challenges IPTV service providers experience,
especially in smaller markets regions exemplified by
our case organization from New Zealand. What we
see as connecting between the two case studies are
challenges faced in reaping the benefits of cross-
network effects from different sides of the markets.
In the Elisa Mobile TV pilot this was more or less
neglected totally and the effort was more a
technology demonstration. The pricing of the service
and the business model in general was not very clear
with exclusion of possibly selling music to mobiles
through the jukebox application.
The second case study had a more solid business
model. The pricing strategy for NTBC’s IPTV
service has been to fully subsidize the consumers (i.e.
the get the service for free, at least for the time
being), while the advertisers pay for the access to the
consumers through their ads. This pricing model is
the same as with the traditional television
broadcasting, and consistent with the idea of strong
cross-side network effects, i.e., the advertisers value
the size of the consumer side user base. However,
also here the cross-side network effects had not been
carefully considered by the NTBC development
team. This is a major limitation in our current work,
which is derived from the reported data set.
In our future research, we will continue refining
our model, but also focus particularly on the pricing
strategies and same and cross-side network effects
between and among market sides. For this purpose,
we propose the following research agenda.
Initially, we see that we should continue with case
study approach to investigate the network effects
between industry players and market sides. Most
likely, this would require a more established field of
study vs. Mobile TV or IPTV in order to fully
appreciate the network effects. For this purpose, we
are currently investigating research possibilities with
more established service innovation platforms that
are also commercially very successful, for example,
Apple’s iPhone Appstore or Nokia’s Ovi-serivce. We
see that at the next step, more in-depth case studies
should be done that would also possibly enable a
longitudinal data collection in order to understand
especially the cross-side network effects.
Furthermore, the in-depth case studies could lead
to possibilities in quantifying the IISIn model, which
we find fascinating. This could, in turn, lead to
economic modeling of the service usage data
enabling us to understand more fundamental
dynamics behind how many-sided markets in ICT
services function when looked at from an
organizational level. This would help researchers to
understand how service systems, or constellations,
function at a micro level. For ICT and service
industries, these findings could possibly lead to better
understanding of how to facilitate emergence of new
service innovation platforms and ICT enabled service
design, and how to build successful business models
and pricing model for them.
Even if our IISIn has already proved to be useful
in understanding different ICT intensive service
innovations (IPTV and mobile TV, so far), we
acknowledge that its further development is essential.
By strengthening its theoretical grounding and the
conceptual foundations, we believe that refined IISIn
can be developed into a valuable tool for researchers
interested in ICT intensive services and service
innovations.
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