Direct carrier billing (DCB) is finally coming into its own: PSD2 and GDPR-friendly, it is starting to fit the bill for a growing number of mobile services from gambling and dating to car parking, transport and even education. Paul Skeldon what’s driving its renaissance
The surge in prominence of mobile gaming, a rise in demand for over-the-top (OTT) content and an increase in penetration of smartphones is driving the growth of the global direct carrier billing platform market, with research suggesting it will be worth $172.3 million by 2026.
According to Allied Market Research’s report, “Direct Carrier Billing Platform Market by Content (Application & Game, Video & Audio, and Others) and Operating System (Android, iOS, and Others): Global Opportunity Analysis and Industry Forecast, 2019–2026″, the global direct carrier billing platform industry garnered $55.6 million in 2018, and is estimated to generate $172.3 million by 2026, growing at a CAGR of 14.7% from 2019 to 2026.
While, complications related to direct carrier billing ecosystem hinder the market growth, the surge in usage of subscription based digital content create new opportunities in the market.
DCB certainly has come into its own of late. In the UK, a ban on credit card for online gambling is likely to be a fillip for carrier billing, offering as it does a great alternative, with built-in spending limits (see page 6).
In an increasingly regulated online world, too, DCB has some key advantages. In Europe, where PSD2 and GDPR are now fully in place to regulate payments and use of data, DCB offers a quick and easy to use mobile payment tool that requires the least amount of consumer data to provide a payment at the point of use.
This is a vital facet of DCB and one which is increasingly being seen as an offset to the traditionally poor out-payments seen with this billing type.
THIS ARTICLE FIRST APPEARED IN ISSUE 56 OF TELEMEDIA MAGAZINE
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What is it being used for?
Based on content, the applications and games segment held more than two-thirds of the total market share of the global direct carrier billing platform market in 2018, and is estimated to retain its lead position during the forecast period. This is due to rise in collaborations by platform companies with digital content providers for optimisation of their businesses, increasing in-app payment revenues and creating large market for applications, in-app purchases, and games. The research also analyses the video and audio content segment.
However, the other type of content segment is expected to grow at the fastest CAGR of 37.6% from 2019 to 2026. This is due to rise in purchases of on-demand features, such as gaming applications, podcast, eBooks, health and entertainment applications through app stores.
Based on operating system, the android segment held the highest share in the global direct carrier billing platform market in 2018, contributing to nearly three-fourths of the total share, and is expected to maintain its dominance in terms of revenue throughout the forecast period. This is attributed to higher smartphone penetration and availability of 2.8 million apps for download on the platform. Contrarily, the iOS segment is expected to grow at the highest CAGR of 15.3% from 2019 to 2026, owing to purchases of on-demand features for various applications.
DCB around the world
Based on region, North America held the largest share in 2018, accounting for nearly half of the global direct carrier billing platform market, and will lead during the forecast period.
This is due to rise in demand for trending digital contents, increase in collaborations of platform providers with several content creators, and surge in number of over-the-top (OTT) providers.
Asia-Pacific is estimated to witness the largest growth rate, registering a CAGR of 18.6% from 2019 to 2026. This is attributed to adoption of direct carrier billing platform payment method by mobile network operators and other content creators in the region.
In Europe, the Nordics lead the way. With smartphone penetration approaching 90%, carrier billing in these countries has a 10-21% market share from digital content payments. In Norway, DCB is the second most popular payment method for digital gaming, while in Finland, it has a 16.2% market share in digital gaming transactions, according to SuperData Research. Digital merchants including Facebook, Apple, Google, Netflix, and Riot Games have begun to leverage carrier-based payments in the region.
LatAm and MENA, meanwhile, offer some of the key areas of growth for DCB services.
Fast adoption of smartphones and low access to traditional payment methods such as credit cards has made DCB very popular in LatAm. According to a report by Fortumo, carrier billing is the second most popular payment method for digital gaming transactions in this region.
Like the rest of the world, the rise of subscription services and the need to access mobile services such as music and games is driving the LatAm DCB market. According to a report by GSMA, it is expected that by 2025, 75% of Latin America’s population will subscribe to mobile services, closing the gap with the average for developed markets, which stands at 87%, points out a white paper from DOCOMO.
However, as the Fortumo report shows, LatAm still has some way to go when it comes to the deployment of modern direct carrier billing solutions by telcos, while the complicated taxation system makes doing business in the region challenging.
For this reason, telcos rolled out their own offerings, such as Vivo with its Android app store in Brazil and Claro with its music streaming service across the entire region. Also, a great potential here is represented by gaming and digital content.
Meanwhile, MENA is also on the up when it comes to DCB. The Middle East has witnessed rapid advances in technology in recent times which has led to rapid economic growth, industrial production and the birth of a considerable mobile consumer base. As a result the mobile telecom sector is booming.
So finds the latest report from DOCOMO Digital – Middle East’s digital ecosystem: set for growth – which says that the total number of mobile subscriptions in the Middle East increased by 8 million in 2018 to reach 304.5 million. And in this time, the total number of internet users in the region increased by 18 million to 182 million.
Here, digital content and streaming is largely paid for using DCB with SLA Digital the key player players in the region. In fact, the average revenue per user from DCB in UAE was $6.4 in September 2018, higher than in Switzerland or Netherlands. Of great importance for the evolution of DCB in the region is 5G technology, with its commercial 5G networks, which is expected to drive the usage of DCB.
