Accessibility Key to Portal Survival

Portal sites looking to survive on the Internet have to harness increasing consumer expectations, growing Internet usage and mobile penetration, according to research by Ovum. The end result will be the transformation of surviving portals into multi-access portals, which Ovum defines as portals that can be accessed via two or more delivery networks or devices such as a PC, a mobile phone, PDA, TV or voice. Whatever the medium, the same brand and “look and feel” should be accessible.

By 2006, Ovum predicts global revenues from multi-access consumer portals will be nearly $70 billion. However, if portal operators want to cash in, they must adapt their business strategies now or suffer the fate of well-known online names such as Excite, which filed for bankruptcy with $1 billion in debt; or AltaVista, which continues to de-emphasize its consumer-facing content, forcing it to plummet down the rankings of the most popular sites.

“The landscape has changed dramatically. A year ago, when the economy was still booming, stories of young Internet entrepreneurs and their billion-dollar dot-coms were the norm. But times have changed,” said Annelise Berendt, senior analyst at Ovum. “The consumer now demands more, and portals must adapt accordingly. Following the dot-com crash and the consequent lack of financing from the venture capital community, portal operators must scrutinize their business models with a focus on long-term sustainability and profitability based on multiple revenue streams.”

According to Ovum, it’s likely the current shakeout in the fixed Internet portal sector will leave only a handful of global players that will dominate the market and provide services for the masses. Smaller, niche players built around particular communities of interest will exist; but, any player considering entry into this market must have a strong consumer brand. Moreover, Ovum says partnerships will be the crucial element for multi-access success. In order to deliver attractive content and services to the end-user, differing types of partnerships will be made, ranging from short-term project partnerships to vital long-term alliances and even acquisitions.

Exploring new revenue streams, which has been a focus of portal sites attempting to become less reliant on banner advertising, will be of paramount importance to stay afloat. Creating economic value remains the key to success and depending on advertising as the prime source of revenue has hit even the leading market players hard.

“Advertising formed over 90 percent of revenues in this market in the early days. This will dwindle significantly to a mere 36 percent by 2006,” Berendt said. “Having a portfolio of revenue-generation sources has never been so important. It is the only way forward and business-to-consumer (B2C) portal operators must open their minds to new models, as well as enhance existing ones. Having a multi-access strategy will help this, offering consumer portals five main revenue streams: e-commerce, subscription fees, advertising, placement and premium content.”

Ovum also expects the globalization of the Internet audience to be reflected in the portal market. By 2006, North America will loosen its control of the multi-access consumer portal market, dropping its share of global portal revenues from the current 58 percent to 35 percent. Western Europe and Asia-Pacific will then own 24 percent and 21 percent, respectively.

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