NRJ Mobile: MVNO business models

Rating: Don’t believe the hype

by Bena Roberts

It’s easy to dismiss NRJ as another failed or failing MVNO. Its ARPU in Q4 2006 was only EUR 8 per month. NRJ has 312,000 subscribers and claims 26% of French MVNO subscribers. The MVNO market is a tough one and these figures for a prepaid-only radio station provider are not that bad. When analysing ARPU, one must take into consideration the general trends and cost of prepaid calling services vs market brand and target market.
In Germany for several years the ARPU for mobile operators such as O2 and E-Plus were as low as EUR8–10 per month. ARPU in general for prepaid companies is low; they aren’t business professionals and specifically the NRJ MVNO user is a young consumer. A music fan under 18.

There are cases in Belgium where Football MVNOs are profitable with as few as 500 subscribers. The focus should shift from MVNOs from how much money they are making compared with traditional network operators – but to what they are or can achieve with in the specific target market.

Mobile is still in its infancy as are MVNOs. The tipping point for MVNO’s such as NRJ will come when they stop competing with network operators and look to new business models. Voice is a killer service, but with the NRJ radio station backbone there is an arsenal of new audio services that can be pushed to mobile to drive new creative and fun revenue streams. One example of this is mobile podcasting.

With the right marketing strategy NRJ could ring in new revenues by using mobile podcasting. Users could sing or record impressions over the phone directly to a premium NRJ line. The recordings could then be packaged as mobile podcasts and available via a funky addition to the web site. Users could then purchase, recreate or personalise the podcasts online and send via voice mail or voice IM to a number of friends or relatives. Indeed, beyond and above this: NRJ could set up a mobile podcast hotline where NRJ users could simply dial in and listen in to what other users are talking or chatting about.

That being said, NRJ does need to tighten its purse strings. It already boasts an army of users in the youth market and its time to exploit that potential. Hefty marketing costs could be cut back by encouraging users to create their own pictures and videos of how they user the NRJ mobile. These could then also be pushed to the media via a competition or promotion.

The Youth market is a trend-setting one, but NRJ has to plant the seed. Once users have understood the concept or the need, uptake will follow, and innovation and more interest will be generated.

EUR 8 per month might not be a lot of money to business professionals, but it is to the youth market. Its essential that NRJ doesn’t forget this.

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