I would like to say that a huge mobile move forward with mobile ticketing was birthed right here in Toronto.
But in fact we see better technology coming out of Pittsburg (ShowClix) and Helsinki?
Not sure why the land that boasted Blackberry leading the mobile frontier has sat on the backbench while other cities have forged ahead with mobile transit payments, parking meters and the like; but thus is the current state of the union.
Having watched Canadian start-up BuzzTix grow to over 50,000 tickets in just a couple of years; it shows mobile ticketing is here to stay. But where did it come from? How did Passbook and LiveNation become some of our favourite apps? Will hard tickets disappear? Will we even need people any more?
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This paper aims to trace some of the economic consequences that have arisen as a result of the increasing adoption of the new media technology, mobile ticketing. According to Mallat, Rossi, Tuunainen, and Oorni (2009) mobile ticketing took longer than anticipated to be adopted by the masses due to transaction complexity, mobile wireless speeds and lack of development. However mobile ticketing has successfully emerged as a complete business strategy, to the point where companies who issue tickets that do not have a mobile ticketing application will cease to be competitive. Brenner (2013) states that through increased mobile network security, increased speed of mobile networks, have increased personal immersion of mobile devices. Combined with increased user interface design, mobile ticketing transactions have transformed from simple short message service (SMS) based low value purchases into a multi billion dollar industry.
Beginning with a brief history discussing the introduction of mobile ticketing, this paper will discuss the primary business models of mobile ticketing primarily focusing on transportation. Economic consequences will be traced from the perspective of the mobile device user, mobile provider, company issuing tickets, and subsidiary businesses such as electronic intermediaries.
Adoption of Mobile Devices.
It is hard to not notice the integration of mobile devices in every day life. Whether it is while waiting in line at a busy coffee shop or even walking down the hall, it would appear that the majority of persons have trouble looking up from their mobile device. Brenner (2013) surveyed that mobile phone saturation has reached a rate of 91% in American adults with 65% of those users carrying a smartphone. That total equates to almost 176 million users, in America adopting a mobile telephone plan that carries voice, SMS, and data capabilities. With this size of quasi-captive audience it was only a matter of time before the ecommerce medium of online ticketing found its way to the mobile platform.
Mobile Ticketing Case Study – Helsinki Transportation
Industry Adoption. Mobile ticketing, as most mobile commerce, followed much the same historical roll out as mobile devices did. SMS ticketing was introduced first, followed with time and development by complex mobile applications based on streaming data networks. One of the earliest adopters as reported by Mallat, Rossi, Tuunainen and Oorni (2009) was the city of Helsinki with their SMS based public transportation ticket in 2001. Mallat, Rossi, Tuunainen and Oorni (2009) explain that this early form of mobile ticket issued by Helsinki Public Transportation involved the user sending a four-character text message and in return receive a one hour travel text ticket valid on “trams, subway, local trains, and some ferries and buses” (191).
Consumer Adoption. According to Puddle (J. Puddle, personal communication, November 18, 2013) who lived in Helsinki at the time of the introduction of mobile public transit ticketing, this technological advancement was a welcomed addition to the average commuter. As the majority of adults had mobile phones, the ability to “fire off an SMS while en route to the platform saved copious amounts of time and saved 20 cents” (Puddle, 2013). From a broad perspective, Mallat, Rossi, Tuunainen and Oornie (2009) report that commuters who used mobile ticketing saved two million Euros over the course of eight years as ten million mobile tickets were sold equating to 20% of all ticket sales.
At the time of Mallat, Rossi, Tuunainen and Oornie’s (2009) research, the five largest telecom companies in Finland had partnered with the city of Helsinki and were collecting the public transportation dues for them. This example showcases economic consequences at each level (a) the consumer who is able to receive a savings in time and money by using the mobile ticketing system; (b) the telecom providers who are an electronic intermediary (Turban et al. 2000); (c) Helsinki Public Transportation the ticket issuer saves on resources producing, distributing and selling tickets; (d) the local vendor who would have sold the transit ticket who has now been cut out of the transaction.
Breaking Down Mobile Ticketing
The Consumer. If mobile ticketing does not provide a sense of advantage for the consumer, Mallat, Rossi, Tuunainen and Oorni (2009) speculate that adoption of the mobile commerce application will be slow. As the example with Helsinki Transportation depicts, a financial and time saving were positive incentives for users to engage mobile ticketing. Another factor to consider is that according to Professor McEwen in a lecture to a CCIT 109 class on November 7, 2013, many telecom providers in Europe at the time included unlimited SMS as part of a mobile patrons monthly mobile package. It could be argued that part of the rapid adoption rate of mobile users was that they were able to extend the use of a service users had already paid to have unlimited access to. This could also be considered an additional positive financial consequence for mobile ticketing, as it did not cost the consumer anything additional to access. With the ability to create such a positive experience for the consumer, companies who wish to be competitive in the mobile ticketing market place must take cues from Mallat, Rossi, Tuunainen and Oorni, (2009) and host the most efficient user design interface and build a strong sense of “perceived usefulness” (190) in their mobile ticketing application.
Electronic Intermediaries. The expense and resources required to build an infrastructure for mobile ticketing can be too financially burdensome for many companies to undertake. As Turban et al (2000) explain traditional distribution involving a manufacturer, wholesaler, distributor and retailer is an expensive business model that has been largely usurped by e-commerce and electronic intermediaries acting as online marketplaces. Finnish telecom providers were an electronic intermediary acting as a wholesaler, distributor and retailer of Helsinki Transportation’s mobile tickets. An electronic intermediary, like the Finnish Telecom systems, as depicted by Turban et al (2000) is a company that acts as a sales force for a manufacturer’s digital product, taking a commission for services rendered. With the Finnish telecom providers being able to offer their customers a new service as well as generate a new revenue stream, the financial consequence of mobile ticketing would be positive for them as well.
Manufacturers. The new technology of mobile ticketing appears to be an almost obvious win for manufacturers as this eliminates several steps in their traditional distribution supply chain. Practical examples Turban et al (2000) savings for mobile ticketing companies are the elimination of ticket stock, tokens or wrist bands, the shipping and distribution of those items, revenue only paid to the electronic intermediary, and they have the expensive option of creating their own mobile ticketing platform giving them the ability to participate in digital direct sales referred to by Turban et al (2000) as disintermediation.
The others. While mobile ticketing appears to have positive financial consequences for consumers, electronic intermediaries and manufacturers, all of those that have been eliminated in the traditional distribution chain are at a loss. If the example of the Helsinki Transportation system were in the Greater Toronto Area, mobile transit ticketing would mean a loss of thousands of customers monthly for convenience stores like 7-11. As the local retailer loses customers, their distribution chain loses business. A consumer needing transit tokens could lead to a purchase of consumables for their trip or a morning cup of coffee; but without the need to purchase tickets, there is no need to visit the store.
Bly (2009) reports that brick and mortar travel agencies, as well as online travel retailers have had to cut their fees and profit margins compete with airlines practicing disintermediation (Turban et al., 2000,).
It has been famously stated by former Intel chair Andy Groves that companies that do not become Internet companies would cease to be companies (The Economist, 1999). According to Hovan cakova (2011), “it is estimated that in 2013 more users will connect to the Internet via mobiles than via classic PCs” (224). I would challenge that Groves’ statement (The Economist, 1999) would need to be updated to suggest that companies that want to be highly competitive companies in 2015 will need to be mobile companies. Lee & Benbasat (2003) suggest that mobile commerce has the adaptability to grow at a more rapid rate than e-commerce did, while noting that a fluid user interface design was essential to maximize the “user’s limited attention span and the device constraints” (52).
Gross Growth: Murphy (2010) states that mobile ticketing revenues are projected to double in a two-year period, making it a $100bn gross industry globally including travel, sports and entertainment industries. According to Hounslou (2013) Canada’s friendliest airline, WestJet, took a beating on social networking for not having a mobile app. Hounslou (2013) shared some fan frustration on November 26, 2013 when WestJet finally released their first app, which still does not have a mobile ticketing function. This shows the pressure placed on corporations by consumers who are eager to use their mobile devices to carry out a greater array of tasks like mobile ticketing.
With the positive experience and economic consequences for mobile users and mobile ticketing companies, this new media technology has changed the way patrons receive their tickets. As users continue to adopt their mobile devices (Brenner, 2013) to carry out increasingly complicated tasks and transactions in their daily lives, companies who issue tickets, who wish to remain competitive, will require a mobile ticketing option. Electronic intermediaries, be they telecom corporations or e-commerce ticketing agents, will need to invest heavily in the user interface design of their mobile ticketing applications to grow their market share.
Bly, L. (2009). (2009, June 3). Online travel agencies drop ticket booking fees. USA Today. Retrieved from http://www.usatoday.com
Brenner, J. (2013). Pew internet mobile. Pew Internet & American Life Project. Retrieved from http://pewinternet.org/Commentary/2012/February/Pew-Internet-Mobile.aspx
Hounslow, G. (2013, November 26) Introducing the WestJet app for Andriod [Web log post]. Retrieved from http://blog.westjet.com/introducing-westjet-app-android/
Hovan cáková, D. (2011). Mobile marketing. Studia Commercialia Bratislavensia, 4(14), 211. doi:http://dx.doi.org/10.2478/v10151-011-0007-y
Lee, Y.E, Benbasat, I. (2003, December) Mobile commerce opportunities and challenges: Interface design for mobile commerce. Communications of the ACM, 46(12). Retrieved from http:// http://cacm.acm.org
Mallat, N., Rossi, M., Tuunainen, V.P, Oorni, A (2009, April). The impact of use context on mobile services acceptance: The case of mobile ticketing. Information & Management (April 2009), 46 (3). 190-195. Retrieved from http://www.elsevier.com/locate/im
Murphy, D. (2010, July 19) Mobile ticketing revenues to double by 2012, says Junper [Web log post]. Retrieved from http://mobilemarketingmagazine.com/mobile-ticketing-revenues-double-2012-says-juniper/
Turban, E., Lee, J., King, D., Chung, M. (2000) Electronic commerce: A managerial perspective. New Jersey: Prentice Hall International, Inc.