IDC Thailand: Thai Mobile Content and Application Market is Still Small, but Growing Fast

Wednesday 03 June 2015 13:09
The mobile content and applications market in Thailand continues to grow, but customer usage outside of social networking and entertainment shows weak adoption of mobile applications. These findings are part of IDC Thailand's newly launched Thailand Mobile Content Market Study 2015, the research firm's study on mobile content and applications usage in the Thai market.

As the second largest smartphone market in ASEAN region, Thailand’s mobile content market is potentially lucrative. There are 87.5 million mobile subscribers on 3G and LTE network, making the mobile application market attractive to both local and international content developers to reap benefits from this market. IDC's research study is the first such exercise done in Thailand to comprehensively assess the current and potential addressable market. The research also focuses on the number, activity rates, and preferences of Thailand's mobile application users.

Michael Araneta, country manager for IDC Thailand states, "Less than half of Thai population has access to mobile applications on a daily basis. Additionally, outside of key applications, only 15% of total active users access to other types of mobile applications. The Thai market is still at the initial stage, but is predicted to have fast growth."

Key findings of the report are as follows:

High number of active users in social networking and entertainment, but not in other areas. From IDC Thailand's Mobile Content Market Study 2015 (MCMS2015), there are 24 million active users, or a 37% of total Thai population accessing to mobile applications every day. Mobile applications that are widely used include Facebook, LINE, WhatsApp, Google Maps, TripAdvisor, Agoda, YouTube, mobile games, and mobile music.

Among total active users, there are around 22 million users accessing social networking sites on a daily basis, the highest active users among all mobile applications used. However, entertainment mobile applications including mobile games, music, and video also have high daily access, with an average of 14 million active users.

Other categories of applications showing high activity rates include mobile shopping (25% of total active users). Mobile applications that relate to lifestyle that have seen slow take-up for now include mobile banking, accommodation and travel booking via mobile platforms, mobile commerce, travel, food review, health and living.

However, revenue-generation is impressive. Revenue-generation through mobile content and applications is relatively new. However, revenues generated in the past twelve months have been significant, already reaching US$600 million in 2014. Ad-based mobile revenues gained the highest share, approximating 42% of total market value.

International content providers are winning. While it is expected that most mobile applications downloaded are originating from international content providers, the gap between mobile active users on international mobile applications versus those on local mobile applications is wide: at a ratio of about 9-to-1 as of April 2015. However, local mobile applications are noted for gaining strength: Ensogo and Wongnai.

One-way communication is fast losing its appeal. Most applications launched by many companies have so far failed to generate interest of their intended market. They have in general not matched people's interest on lifestyle, leisure, and entertainment. They have also fallen short in meeting expectations of ease of use and convenience. Araneta continues, "We do not criticize the mobile applications that have been launched with the key purpose of being information channels for customers. However, they have to quickly evolve with the times, especially because the concept of great customer communication has now shifted to being two-way, not just one-way. Providers of content can also incorporate social and gamification elements to increase adoption and stickiness with target users."

There are many ways to generate revenues, but only one is succeeding. Companies launching mobile applications are scrambling to generate more revenues from mobile platforms in Thailand. According to IDC Thailand, there are different alternative business models for generating revenues: ad-based revenue, revenue-sharing, freemium, official accounts, and subscription. Neeranuch Kanokvilairat, senior market analyst for telecommunications research of IDC Thailand and lead analyst for the study states, "The key business model in Thailand that generates the largest revenues is still the ad-based one. However, companies are exploring the other four options." Key content developers deploying ad-based business model include Facebook, Google, and LINE.

Only a few industries are succeeding. The IDC study covers mobile application strategies of 13 vertical industries, all of which have reference mobile applications that can already be downloaded for free by mobile users in Thailand. However, not every industry is getting high numbers of active users for their applications on mobile platforms. Utility, healthcare, insurance, energy, and construction industries have some of the lowest rates of activity, mainly due to low awareness of users of the availability of mobile applications. Neeranuch however notes, "Industries that have the largest potential to successfully generate high revenues from mobile platforms over the next 12 to 24 months include finance & banking, retail, broadcast, and telcos. The base of active users in these sectors is expected to grow 11-15% in the short-term."

Local developers need to scale up. Thai mobile content and application developers continue to play a crucial role in making Thailand a vibrant market for mobile content. They need to shift their mindset of perceived low ROIs from creating local mobile applications. They also need to consider an ecosystem of partners in Thailand to access more funding, and to create more powerful and more world-class mobile content to compete against international content developers. For now, the suppliers of mobile content are not meeting their potential though they have released many local language applications. Jarit Sidhu, senior market analyst for client devices research at IDC Thailand comments, "The problem is not the lack of talent, but rather the lack of creativity. Local developers inarguably have better understanding of what Thais prefer so the key is to creatively translate such knowledge into localized applications that yield not only usability but also great user experience."

Usage expected to grow further. IDC predicts that the future of mobile content market will be boosted by higher penetration of smart phones, higher usage of mobile broadband, improvement and expansion of 3G and LTE networks, and a society that is moving towards the 'Everything-Mobile' lifestyle. Jarit comments, "We expect the sales of smartphones to grow by 29% to reach 20 million units by the end of 2015. This will boost the number of smartphone users up to 36 million. This rapid adoption rate of smartphones will definitely stimulate much higher usage of mobile content and applications.”

For more information about IDC Thailand's Mobile Content Market Study, please contact Phawadee Pongsupan at +662 645 2370 or [email protected]. To set up an interview with the lead analysts, please contact Sasithorn Sae-iao at +662 645 2370 or [email protected].