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Innovative Entertainment Services
19
Innovative Entertainment Services in the Portuguese Mobile
Communications Sector – the Examples of MobiComp and
YDreams
Nuno Correia1 & Manuel Mira Godinho2
1 Instituto Superior de Tecnologias Avançadas (ISTEC), Av. Engº Arantes e Oliveira, 3
r/c 1900-221 Lisboa, Portugal, correia.nuno@netcabo.pt
2 Instituto Superior de Economia e Gestão (ISEG/UTL), Gab. 615, R. Miguel Lúpi 20,
1249-078 Lisboa, Portugal, mgodinho@iseg.utl.pt
Abstract:
We are presently at a turning point in mobile communications – the third
generation (‘3G’ or UMTS) is imminent. The implications of UMTS for the
Portuguese multimedia entertainment sector could be particularly relevant -
mobile communications in Portugal have a penetration rate above the European
average. Portugal is already a laboratory for testing new products and services
in the mobile entertainment sector, because of this large penetration rate and
because of the small size of the market. Several Portuguese enterprises have
already been successful, locally and internationally, in mobile entertainment
services for the ‘2.5G’ GPRS generation. The paper analyses two case studies,
and their innovative entertainment services and business models. The
theoretical framework for the analysis is economics of innovation in services.
The two enterprises, MobiComp and YDreams, are presented – they were
founded in 2000 and are focused on mobile computing services; they were
already responsible for several international innovations in the field of mobile
entertainment services, which have attracted the attention of main international
players. These innovative services are discussed. The similarities between the
two enterprises are analysed - both have university links, and have similar
dynamics of innovation in several areas. Their distinctions are also studied -
they are from different regions in Portugal and have different business
perspectives and cultures. Finally, a model for the innovation in the mobile
entertainment services sector is presented, based on the two case studies.
Keywords:
Entertainment, Media; Information and Internet Services, Computer Software;
Telecommunications; Technological Change; Innovation and Invention;
Management of Technological Innovation and R&D.
Introduction
The third generation of mobile communications will be commercialized in
Portugal on the 1st of July 2004. Meanwhile, ‘generation 2.5’ or GPRS technology
is being adopted by an increasing number of users. This technology already
allows the implementation of multimedia services, opening a new channel to
interactive entertainment producers. Technology is evolving fast, but, for the
mobile sector as well as for other multimedia platforms, ‘it is the creation of
innovative multimedia services and concepts that is the driving force behind the
multimedia market’. (den Hertog & Schaffers 1996, p. 1). Within these services,
Mobile-Entertainment: User-centred Perspectives
20
content, in particular entertainment content, could be an important factor of
success – ‘interactive content is the element of the multimedia value chain with
greatest value added and is expected to drive multimedia growth’ (Kinder &
Molina 1999, p. 285). The theoretical framework the economics of innovation in
services will, therefore, be useful to analyse innovation in the mobile
entertainment sector.
In order to study innovation in Portuguese entertainment services for mobile
communications, it is necessary to characterize the diffusion of mobile phones in
Portugal and the diffusion of other multimedia entertainment platforms. After that
contextualization, two case studies, MobiComp and YDreams are presented,
based on interviews taken place between May 2003 and January 2004. These two
case studies are then compared and analysed. The paper concludes with a model
that represents innovation in entertainment services within the Portuguese mobile
communications sector.
Multimedia entertainment platforms in Portugal
Internet
The diffusion of the use of Internet depends on a number of factors, such as the
penetration rate of IT equipment; the quality and diffusion of the communications
infrastructure; and the information technology culture. Portugal is situated below
the 15 OECD countries with the highest rates of investment in ICT (Information
and Communication Technologies), as can be observed in Figures 1 and 2.
Although this rate has increased between 1990 and 2001, the comparative
situation of Portugal with the remaining OECD countries has aggravated in this
period. This loss of territory regarding the investment in ICT in Portugal
compared to the main OECD countries helps to understand the comparison figures
in terms of Internet access, currently the main platform of distribution of
multimedia entertainment contents and services.
Innovative Entertainment Services
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Figure 1: Percentage of investment in ITC in total GDP
(1 or latest available year) Source: OECD 2003a, p. 37.
Figure 2: ITC investment in selected OECD countries
(as a percentage of non-residential gross fixed capital formation, total economy) (1 or latest
available year) Source: OECD 2003a, p. 37.
Mobile-Entertainment: User-centred Perspectives
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Portugal is below the OECD average in terms of Internet access in general terms
(Figure 3) and in broadband (Figure 4) – less than 20% of the Portuguese
population had access to the Internet in December 2001, and less than 2% had
access to broadband in June 2002. More recent data, relative to the third quarter of
2003, reveal that 63% of the Portuguese population has access to Internet;
broadband, however, is accessible to only 4% of the population (Anacom 2003).
Figure 3: Internet subscribers per 100 inhabitants, December 2001 - Source: OECD 2003b, p.
121.
Figure 4: Broadband access per 100 inhabitants, June 2002 Source: OECD 2003b, p. 123.
Innovative Entertainment Services
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If in terms of Internet access the Portuguese situation presents some frailties, the
presence of Portuguese contents on the Web tells an even darker story, in
comparative terms. In what concerns the production of content for the Internet,
measured by the number of Web pages for each one thousand inhabitants (Figure
5), Portugal is situated among the five OECD countries with worse results (less
than 5 Web pages for each one thousand inhabitants).
Figure 5: Web sites per 1 000 inhabitants, July 2002 - Source: OECD 2003b, p. 126.
Figure 6: Secure servers per 100 000 inhabitants, July 2002 - Source: OECD 2003b, p. 127.
Mobile-Entertainment: User-centred Perspectives
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The use of electronic commerce is also very scarce in Portugal. The diffusion rate
of electronic commerce in Portugal, measured by the number of secure servers, is
one of the ten lowest in the OECD (Figure 6).
Therefore, there is in Portugal a scenery of low investment in ICT, that limits the
infrastructure and the Internet access, factors that also limit the creation of Web
contents and the creation of business models based on electronic payments by
consumers (using secure servers).
Interactive TV
After a promising start in 2001, with an agreement between Microsoft and
Portuguese cable operator TV Cabo (owned by Portugal Telecom - PT), digital
interactive television suffered two severe setbacks between 2002 and 2003 – the
penetration rate of interactive TV was far behind its objectives and the TDT
(Terrestrial Digital Television) is in a limbo after the cancellation of the licenses
attributed in 2001. These setbacks will have negative consequences in the
entertainment services development sector for interactive TV.
Mobile phones
If in terms of Internet access, Portugal is below the OECD average, in terms of
mobile phone use Portugal is above the OECD average and the UE average
(Figure 7). In 2001, almost 80% of the Portuguese population were mobile phone
users, which put Portugal in the group of 10 OECD countries with the highest
penetration rate of mobile communications. Portugal is equally among the ten
OECD countries with the highest weight of mobile communications revenues in
global communication revenues – more than 45% in 2001. In the third quarter of
2003, Portugal was one of the ten countries above the EU average in terms of
mobile communications penetration – 86% (the European average being 83%)
(Anacom 2003).
Figure 7: Cellular mobile subscribers per 100 inhabitants, 2001 - Source: OECD 2003b, p. 90.
Innovative Entertainment Services
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This framework of a high penetration rate of mobile communications and high
weight of mobile communication revenues in total telecommunications revenues
creates a favourable environment for the diffusion of entertainment contents and
services through mobile phones in Portugal. The first steps were taken in 2002,
with the availability of the first GPRS (‘generation 2.5’) services, based on MMS
(Multimedia Messaging Service). Portugal was the first country in the world to
allow MMS between the networks of the different national operators, in February
2003 (Público – Computadores 2003). Afterwards, several multimedia services
for mobile platforms were launched in Portugal, some developed on purpose for
GPRS, others expanding the functionalities of older services, developed initially
for GSM (‘generation 2’) WAP technology. However, Portugal’s communications
regulator, Anacom, has not yet published data about GPRS data traffic, which
makes it impossible to quantify the volume of services or profits generated. The
commercial launch of UMTS (‘generation 3’) in Portugal on the 1st of July 2004,
can, through the increase in bandwidth, constitute a milestone in the access to
multimedia entertainment by mobile phones.
The case studies: MobiComp and YDreams
MobiComp
MobiComp was created in 2000 in Braga, a city located in the region of Minho in
the north of Portugal, with the purpose of creating solutions for mobile platforms.
The MobiComp project started in the Summer of 1999 and the firm was formally
created in June 2000, some months before executive director Carlos Oliveira
finished his course (in Universidade do Minho, which has a strong tradition in IT).
Two ideas have been present since the origins of MobiComp: to create innovative
solutions and internationalization. On one hand, MobiComp has the aim of
introducing something new in each solution it creates, because it believes it will
become a distinctive factor. On the other hand, it considers that Portugal as a
market is too small for its ambitions, and that the sector where it is rooted allows
for an adaptation of solutions to other markets.
MobiComp started by developing business solutions for PDAs. One of its first
products won a main innovation prize in the Portuguese IT industry (ANETIE) in
its first year – 2000. By the end of 2000, Lusomundo, Portugal’s largest cinema
distributor (and one of its main media groups, later bought by PT) launches its
WAP ticket service, which allows the user not only to buy tickets but also to
choose the seat in movie theatres. This service uses MobiComp’s AMI (Adaptive
Mobile Interface) technology, which allows the adaptation of the format,
presentation and navigation of the contents to any mobile device that is used – the
contents are optimised for the identified device. The inclusion of the seat choosing
functionality was a initiative of MobiComp, and the client was pleasantly
surprised. This was the first Portuguese m-commerce service.
Mobile-Entertainment: User-centred Perspectives
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In 2001, TMN (a subsidiary of PT for mobile communications) launched the
Internet and WAP portal MyTMN, developed by MobiComp. In 2002,
MobiComp develops for TMN MMS-based services, namely a goal information
service related to the World Football Championship. MobiComp was one of the
first companies in the world to conceive a MMS-based service.
In 2003, TMN launched its GPRS portal, called ‘i9’ (read ‘innovate’ in
Portuguese), an evolution of MyTMN. MobiComp again develops several
services included with this portal. For example, all MMS-based content services;
pre-written MMS easy messaging; a service that allows sending a traditional
postcard with an MMS; and all premium contents billing. The Lusomundo mobile
ticket service was integrated by MobiComp in the i9 portal, and now also provides
movie trailers. MobiComp developed content management and billing software
for i9 that allows content providers to create MMS services.
MobiComp is also working with Portugal’s biggest private bank, Millenium BCP,
on its mobile banking solutions. It is also developing services for mobile operators,
namely ‘Mobile Keeper’, which allows the user to store its data in the operator,
avoiding the loss of information. MobiComp is preparing its internationalization,
based on local partnerships. An office in Spain was the first step in this direction.
YDreams
YDreams was created in June 2000. YDreams’ CEO is António Câmara, who had
his PhD from Virginia Tec, USA. After his PhD, he returned to Portugal, to teach
in Lisbon’s Universidade Nova, and worked in several environment and
geographical information systems projects. António Câmara and four other
Universidade Nova researchers wanted to create an IT laboratory similar to the
MIT MediaLab (where some of them had worked), but concluded that this kind of
structure would be difficult to set up in Portugal, due to the lack of
corporate/university ties. YDreams was created in Universidade Nova’s
Technology Park, not as a university laboratory, but as a private firm. The
location allows the creation of synergies between Universidade Nova and
YDreams, in terms of investigation and work force (both University students and
teachers work at YDreams).
YDreams’ mission is to give life to the mobile lifestyle, developing innovative
interactive applications, services and entertainment. In the beginning of its activity,
YDreams was contacted by Portuguese mobile operator Telecel (now Vodafone)
to create a map channel to its Web/WAP/PDA portal. This map channel was a
success, and was given by Motorola its highest rating – Motorola considered it
‘superb’. The company has two main business areas – Mobile Location-Based
Applications and Entertainment/Image Processing. In terms of mobile services,
YDreams has the advantage of employing experts who have studied applications
for wireless communications at least since 1993. Additionally, YDreams has state-
of-the art technology for real time image processing in mobile phones.
Innovative Entertainment Services
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In 2001, YDreams developed a WAP portal for the Seville trade show ‘Feria de
Sevilla’, enabling visitors to find stands and people, which proved to be a success.
Since 2001, YDreams has been working with the Portuguese National Water
Institute to provide a mobile information service about the water quality in
Portuguese beaches, first in GSM WAP and recently in GPRS. Users can also
access the information online or through SMS. Regarding location based services,
YDreams has developed several applications for the Dutch Agricultural Ministry
and Lisbon City Hall.
In 2002, YDreams started commercializing games for mobile phones. The
company has a distribution deal with Vodafone Portugal, which can be extended
to other Vodafone branches; a deal with Portuguese operator Optimus; a
distribution deal with a network that is present in 60 countries; a deal with
Germany’s biggest games portal; and a deal with one of China’s biggest mobile
operators, China Unicom. The business model for mobile phones gaming is based
on a 50/50 split between operator and game producer. YDreams implemented a
new business model, with a innovative billing system based on SMS, issued by
each time the game is played. These SMS are billed to the customer, who is not
aware that SMS are being sent.
In 2003, YDreams created YLabs, in charge of the R&D side of the company, and
of making the connection with Universidade Nova. YLabs projects are funded by
different entities, like the European Union and Portugal’s Agência de Inovação
(Innovation Agency). YLabs created several installations, demos and participated
in a theatre play. YDreams is collaborating with several hardware manufacturers
(Alcatel and Nokia, for instance) to prepare demos and services for UMTS.
YDreams also created Web-based services (for example, the reality show ‘Big
Brother’ Web forum for Portuguese Channel TVI and Endemol) and Interactive
TV services (namely, a game room for TV Cabo Portugal). YDreams also
participates in less traditional projects, like a project for European Space Agency
that involves creating suits for civil protection and firemen with an integrated
communications system.
YDreams is expanding its international network, and plans to create a branch in
the US – because of the connections its management has there, and also because
of the potential of the North American market. Brazil is another strategic market
for YDreams, and a branch is being opened there, with several projects in the
pipeline (for instance, contents for Brazil’s largest mobile operators).
Comparison
Both MobiComp and YDreams were founded in 2000 and both have university
ties; the former to Universidade do Minho and the latter to Universidade Nova.
MobiComp’s university links are weaker and function essentially as a source for
qualified labour. On the other hand, YDreams’ management have teaching
Mobile-Entertainment: User-centred Perspectives
28
positions at University Nova and the company conducts R&D in conjunction with
Universidade Nova – its premises are situated inside the university campus.
Although MobiComp has a mobile focus in its activity, entertainment and media
is only one of its areas; the others involve banks; retail; mobile operators and
professional services (its final clients are in the corporate and consumer sectors).
YDreams’ activity is centred on mobile entertainment services (its final clients are
mostly consumers).
MobiComp is situated in Braga, in the north of Portugal – the quality of living of
Braga and Universidade do Minho had an influence on the localization of the
enterprise, since most of the clients of mobile-based services are located in Lisbon
and Porto, Portugal’s biggest cities. YDreams is located in Almada, to the south of
Lisbon.
MobiComp has 14 employees; YDreams has 32. All of MobiComp’s employees
have a technological background. YDreams employees have a more diversified
background (for example: environment, design, management); 72% have a
technological background. One of MobiComp’s employees has a post-graduate
course. One third of YDreams employees are post-graduates.
Both enterprises grew, in number of employees, sales and profits, during a period
of crises in IT and in the economy as a whole.
Innovative behaviour, innovation sources and innovation obstacles
MobiComp and YDreams consider themselves to be among the most innovative
companies of their sector internationally. The innovations they introduce are
mainly international innovations. The types of innovation introduced by both
enterprises are diversified: new technological options, new concepts of service;
new forms of interacting with costumers; use of new distribution channels; new
business models. Organizational innovation is scarcer, although YDreams
considers that it innovates through the use of a multi-functional custom-built
Intranet.
The most important innovation source for both companies is internal and external
R&D, followed by qualified labour. Contact with technological partners and
information feeds are also important. YDreams puts an emphasis on the
relationship with costumers. Key competences are open-mindness, creativity and
technical know-how.
The main obstacle to innovation, for both companies, is the small size of the
market – even though this small size of the market is also cited as responsible for
Portugal being an excellent test market. YDreams also cites the reduced
dynamism of demand, the inadequate policies for the sector and the peripheric
Portuguese localization as obstacles for innovation.
Innovative Entertainment Services
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Innovation and knowledge management and innovation protection
Innovation and knowledge management, in a formal manner, is rare. Both
companies have R&D departments (YLabs, in the case of YDreams). Due to the
small dimension of the enterprises, knowledge management is informal and often
based on meetings and e-mail. YDreams makes use of its Intranet for innovation
and knowledge management uses.
Neither MobiComp nor YDreams consider the registration of intellectual property
important to protect innovation. The following innovation protection methods are
considered very important: confidentiality; maintaining human resources; being
ahead of competitors; market reputation.
Innovation and competitiveness
Both companies consider innovation to be fundamental for its competitiveness,
and base their mission and strategies on innovative behaviour. Both enterprises
estimate that more than two thirds of their sales result from innovative products
and services.
Model for innovation in entertainment services in the
Portuguese mobile communications sector
Figure 8 shows a model for innovation in mobile-based entertainment services,
based on dimensions of innovation, sources of innovation and innovation
environment (obstacles and incentives). The dimensions of innovation were
adapted from the four dimensions of the den Hertog and Bilderbeek innovation
model (cited in Mamede 2002, p. 18): new concept of service; new interface with
client; new system of service (new business model) and new technological options.
The fact that the companies deal with emerging technology and platforms
determines that they innovate in terms of new technological options. These new
technological options, associated to the creativity of the companies, generate new
business concepts – concepts that, by the interactive nature of the services,
explore new forms of interface with clients. The exploration of new technologies
and new concepts of service, associated to the need of profitability, can generate
new business models (generally, variations of mobile commerce, or m-commerce).
The key competences of both companies (open-mindness, creativity and technical
know-how – University ties having an important role in this regard) help them
through the innovation process.
Mobile-Entertainment: User-centred Perspectives
30
Figure 8: Model for innovation in entertainment services in the Portuguese mobile
communications sector
This innovation process in mobile communications has another important
incentive: the high penetration rate of mobile communications, coupled with the
small size of the market, turn Portugal into a good test market. International
players can establish partnerships with innovative Portuguese companies to test a
service, and then leverage that experience internationally. MobiComp and
YDreams are, apparently, trying to ‘ride the wave’ of internationalization, since
the small size of the Portuguese market is often an obstacle to accomplish a
critical mass of profitability through innovation.
References
Anacom (2003) Serviços de Transmissão de Dados/ Serviço de Acesso à Internet -
3º Trimestre de 2003. http://www.anacom.pt/ (Accessed 23 January 2004).
Innovation sources:
Internal and external R&D
Qualified labour
Contact with partners
Information feeds
C
L
I
E
N
T
New
technologic
al options
New client
interface
New
business
model
New
service
concept
Obstacles / incentives:
Small size of the market
(negative – lack of critical
mass; positive – good test
market) High mobile
communications
Key competences:
Open-mindness
Creativity
Technical know-how
(university links)
Innovative Entertainment Services
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den Hertog, P. e Schaffers, H. (1996) Innovation in Services: The Example of
Multimedia, Institute for Prospective and Technological Studies Report, vol 07.
http://www.jrc.es/home/report/report_main.html (Accessed 23 January 2004).
Kinder, T. e Molina, A. (1999) ‘From Purposiveness to Sustainability in the
Formation of Multimedia Clusters’, in: Braczyck, H., Fuchs, G. e Wolf, H. (eds.)
Multimedia and Regional Economic Restructuring (Routledge Studies in the
Modern World Economy), Londres: Routledge.
Mamede, R. (2002) Dinâmicas Empresariais de Inovação: o Caso da Novabase,
PROINOV – Curso Avançado em Políticas e Gestão da Inovação.
OECD (2003a) ICT and Economic Growth, Paris: OECD.
OECD (2003b) OECD Communications Outlook, Paris: OECD.
Público – Computadores (2003a) Portugal foi dos primeiros a trocar MMS entre
todas as redes, 10/2/2003, p. 7.