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Killing the Golden Goose

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There are certain things successful mall operators do well, and there are things they don’t. Generally, competing against your own tenants is a no-no.

[Photo of Keypad]
For example, there’s this small mall operator who would turn green with envy whenever a tenant did brisk business. When a small pizza stall was doing well, they put up their own, then jacked up the rental renewal rates of the original pizza stall. Net result, the mall owner didn’t do as well as the original pizza stall tenant, and the mall’s pizza place (much fancier, though priced competitively) folded up. Because of this and similar policies, the entire mini-mall went from bad to worse. Today, you could describe the place as derelict if not only fit to be torn down.

The point is focus is important. If you’re a developer running a mall, make it the best place you can for your customer traffic and your tenants. Dabbling in retail sales is akin to trying to grab too many cookies out of the jar.

The problem is the evil temptation to do too much outside your core competencies is often disguised as diversification or an alternate profit stream. Sad to say, many middle managers try to foist these ideas on their companies in order to justify their positions—and maybe get a promotion.

Why the Poor Service

In my last column, I raised a skeptical eyebrow at telco companies acting like they were appliance stores. Why should they be doing this when they can’t even provide consistent service? The situation gets worse when telcos try to monopolize content. A carrier or utility is supposed to provide a basic service (e.g., telecommunications) well. Everything else, including what goes over the wires or airwaves, is secondary; icing on the cake, gravy for the roast.

Take the case of mobile content. Ever since SMS text messaging proved to be such a huge (and initially unexpected) revenue generator, telcos have been in a dizzy race to find the next big thing. Mobile applications and content promise to be it; the golden goose that may even supercede SMS text as a moneymaker. Mobile apps and content are often developed and deployed by third-party providers, and there is some form of revenue sharing between content provider and carrier (telco).

In countries like Japan and Korea, where there is a flourishing mobile content industry, the telco makes as little as 10% off fees charged for apps and content. The bulk of the income rightly goes to content providers and provides an incentive for innovation and development, while the carrier makes money off its carrier fees anyway.

In the Philippines, the situation is strangely reversed with the telcos grabbing the greater revenue share. This lopsided sharing is a disincentive that discourages independent content providers.

Drowned in Gravy

Not satisfied with their standard carrier fees, the carriers themselves are into content development. The telcos are competing against their “tenants”—a no-no for mall owners!

The net result is a stagnant mobile applications scene that still depends on old SMS for its revenues. In nearly a decade, the sought-after golden goose isn’t there; or rather, it has been drowned in too much gravy! By trying to do it all, the overall job (particularly basic services and customer support) gets done pretty poorly.

Now, telcos and some broadcasters want to broadly interpret the constitutional restrictions on foreign ownership of utilities and mass media to restrict incoming investment and technology-transfer. With the resulting dearth of independent creativity and imagination, we can expect even more lackadaisical service in the future.

I’m still hoping that local carriers will give up the failed fantasy. Perhaps, after over eight years of trying and failing, they can cut out some of the self-serving fat, thereby re-engineering for leaner times. If not, there’s always the possibility of a new player with the guts and gumption to encourage independent third parties instead of killing them in the nest.

Print ed: 03/09

 

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