Digital Youth - Who are They and What do they Want from Telcos?

Da Youngbouls ar babtastic for de Celly companies. We av always bin chillin and cyber has let us drown in a frown and swim in a smile. We is it and der is no way we is gonna pay chips to the cellies 'cos, rememba, CREAM (Cash Rules Everything Around Me). But, hey, der is moola out der for der cellies and cyber companies as long as day give me a stupid loada fings like WoW (War of Worldcraft) for nish.

Rough Translation:

The (15-25 year-old) Youth market has recently entered Telco consciousness as a customer segment worthy of greater attention. Youth has always been 'different' in their attitudes and behaviour but the internet and the mobile phone have enabled them to socialise and express themselves in new ways. Many of these behaviours have represented a threat to traditional business models (no surprise there - it was the young who used to pirate music by recording on blank tapes many years ago...) but others, such as social networking, have resulted in new models developing.

In this post we explore some of the issues we will be debating in the Digital Youth stream at the Telco 2.0 Brainstorm on 27-29 March. We're looking to:

  • Clarify the needs and usage trends of the Youth segment (how they socialise and communicate, how they use technology);
  • Articulate the key challenges in responding to this (threats to traditional business models, emerging business models, key factors for success);
  • Learn from case studies (what can we learn from Web 2.0 success, the importance of building a community, how to make money?);
  • Refine the strategic options that Operators have in addressing this segment.
    As with all the workstreams at the event, we have a number of terrific stimulus presentations lined up to help us (1) Clarify our hypotheses, (2) Debate the issues and (3) Develop company-specific and, where appropriate, industry-wide solutions and action plans. More on some on some of the presenters below.

DIGITAL YOUTH STREAM HYPOTHESES

Express yourself...Express yourself...Come on and do it... (NWA: Express Yourself)

  • Younger people have been weaned on digital technology and use it differently to their older counterparts. For example, they are more comfortable with multi-tasking (e.g.carrying out an IM chat while listening to music and playing a MMORG (Massive Multi-player On-line Role-playing Game) than the older generations.
  • They want to express their views and feelings actively and contribute to discussions and content creation - Youtube, MySpace
  • The digital world gives younger people the opportunity to meet and express themselves away from prying parents - in Habbo Hotel, Second Life etc.
  • They tend to find ways of avoiding traditional toll charges - e.g. for games, music, videos

We have three very experienced speakers who will explore what the younger generations are thinking, feeling and, most importantly, doing and the implications for the Telco community:

Following his stunning presentation on the younger generation at the Telco 2.0 event in October, Norman Lewis, Director of Technology Research at Orange, will explore in detail what 'Digital Kids' are up to and what being on-line and having a mobile phone in their hands means to them.

Peter Miles, CEO of SubTV, will talk about the understanding SubTV has developed about the student market where it provides ad-funded television and mobile services to 90% of the universities across the UK.

Finally, Nick Bassett, Market Research Manager at Vodafone UK, will share some of the research his team has undertaken on the behaviour of the younger segment within the Vodafone UK customer base.

Enemies of the music business...Black sheep on the cusp...Enemies of the music business (Napalm Death: Can't Pay,Won't Pay)

  • Younger people have always sought ways to affirm their sense of belonging to their 'tribe' by sharing clothes, music etc.
  • Since Napster's early peer-to-peer service, the digital channel has been the preferred way of sharing music and videos without having to pay the record companies and several social networking sites have sprung up enabling this - Youtube, Bittorrent, etc.
  • Similarly, younger people have embraced free internet-based communications services such as IM and VoIP offered by MSN, Google, Yahoo! and Skype
  • These (illegal) distribution methods and 'free' communications services threaten the business models of Telecoms and Media companies

Ian Henderson, formerly of Orange, now Senior Director at SonyBMG will talk about how the company is using an ad-funded portal, MusicBox, to distribute music videos and develop artist-centric communities.

Chris Lennartz, Director of Marketing and Business Development at LogicaCMG, will consider the next-generation messaging solutions required to meet the needs of a youth segment demanding greater interactivity, richness, personalisation, convergence, ubiquity, flexibility and simplicity from their communications.

Moblog UK's founder, Alfie Dennen, will explain how his company has successfully developed a community of young mobile bloggers willing to pay a monthly subscription for the service.

I get good advice from the advertising world...Treat me nice says the party girl (The Clash, Koka Kola)

  • Several new business models have evolved on the web, most of which use advertising to reduce or eliminate user costs
  • There are however concerns as to whether advertising alone can generate sufficient revenue for operators to cover their network costs (which are substantially higher than internet-based businesses)
  • If advertising alone is insufficient going forward, operators are left to consider how subscription and advertising business models should co-exist and what implications these differing business models have for their proposition portfolio and customer segmentation model
  • Operators are now trialling several Web 2.0-like propositions and seeking to develop answers to these questions

We will explore some of these trials and early services at the event:

Martin Duval, Director Business Development & Partnerships with Start-Ups & Venture Capital funds at France Telecom will present Pikeo, the new service which combines the photo-sharing capability of Flickr with the location-mapping functionality of Google maps.
David Springall, Yospace's CTO, will explain how his company developed the business model and technology behind 3's SeeMeTV and O2's LookAtMe.
Phil Guest, MD of Habbo UK, will explain how Sulake has developed such a strong following among the young for Habbo Hotel

Money, get back...I'm all right Jack keep your hands off my stack (Pink Floyd, Money)

To make money in this market it seems there are a number of things that the Telco community needs to do:

  • Understand the needs of customers MUCH better - so it can develop micro-segments and community groups within a diverse customer base
  • Understand the economics of different business models better and the interaction between them (e.g. pay-for vs advertising and the cannibalisation risks inherent in introducing the latter) - see our report Telcos' Role in the Advertising Value Chain for more details on this.
  • Develop propositions which support communities and engender a strong sense of belonging
  • Get the (complex) pricing model right!
  • Partner effectively to extend the value you can offer customers - enable them to express themselves through communications + games/video/music/UGC/etc.

Javier Ferreira, Vice President Sales & Marketing Europe at EA Mobile will explain how the Games and Telecoms industries and can work together more effectively to generate greater value from the game-playing youth segment.

The well-known author and 3G guru, Tomi Ahonen, will outline his 'answer' for operators in this area.

Following brief presentations from Javier and Tomi, the audience will be invited to participate in a debate on the best sources of value for operators in this market.

As with all Telco 2.0 events, the Digital Youth day will be highly interactive with lots of opportunities to debate and discuss issues with the speakers.

I look forward to seeing you there.