Social networking over mobile phones has seen increasing adoption in the US and western countries where it has reached up to 20-25% for certain age segments.
The growth has not been so high in APAC till now but will see a steady increase in 2010 when all the players – operator, OTT players, device manufacturers – expect to identify business models to monetize social networking over mobile phones. The size of the market is significant wherein an operator in a country like Singapore can expect to reach 4-5 million USD in revenues in next 3-4 years with a penetration of ~30-40% of the potential market and with a nominal subscription fee of ~2-3 USD.

Most of the smartphones to be launched in 2010 come equipped with features like social networking address book synchronization, clients, and message and media file update for the most popular social networking sites. OTT players, however, will still find it difficult to reach the critical mass due to low mobile internet penetration and still relatively lower smartphone penetration in a few countries. In countries like Singapore where mobile internet penetration is above 10% and smartphone penetration is high, reach due to mobile internet penetration is still small ( less than 400K subscribers overall). OTT players will find it difficult to monetize their reach purely on advertising and will have to depend on the operator.

Operators, on the other hand, don’t have a clear strategy to target this market. Some have made the mistake of attempting to create their own social network and others wish to pioneer strategies in partnership with VOIP telephony players like Skype and fring.

Co-opetition is perhaps the best way forward wherein an operator partners with social networking sites and is their aggregator. Interactions are facilitated by SMS/MMS. Being an aggregator provides the operator with the opportunity to safe keep subscriber address book and media as a trusted service provider and it helps social networking sites increase their reach and explore business models to monetize.

However, even if operator launches plans that make access to social networking sites over the mobile phone through their aggregator site as free with certain free SMS/MMS, the biggest challenge is the price of the plan. The plans should be affordable to the most active age segment of 18-24 years old which is dependant on their parents for a monthly allowance. Operator strategy will be to optimize reach and profitability for the target segment of 15 to 40 years old.

Advertising based models are yet to prove their mettle even in the internet social networking and with current advertising rates, it is hard to expect significant revenues either to the operator or to the OTT players in the next few years.

2010 will see operators launch their own bundled or standalone social networking services in partnership with social networking sites, that will drive increased adoption of social networking over mobile phones. With the expected size of the market, perhaps fb2mobile and XL funbook have little at stake.