A look at the mobile entertainment industry

The mobile “entertainment” market has emerged as a result of the rapid growth and technological evolution in the wireless communications industry.

The key attributes of this growth, as borne out by the following statistics and predictions are:

1) Growth in mobile subscriber numbers

2) Deployment of advanced wireless networks

3) Increased availability of affordable mobile phones with multimedia capabilities, and

4) Overall demand for wireless entertainment.

Mobile wireless is the fastest growing and largest new mass medium; there will be 2 billion mobile phone users by mid-2006. (Source: EMC)

Annual sales of mobile phones are expected to grow from 465 million units in 2003 to 689.1 million units in 2008. Manufacturers are increasingly offering mobile phones with multimedia capabilities enabled by technologies such as BREW and Java. Penetration of mobile phones with BREW and Java is expected to grow from approximately 23 per cent of all mobile phones sold in 2003 to approximately 97 per cent of mobile phones sold in 2008, according to ARC Group.

Mobile entertainment services will generate over $27 billion globally by 2008. (Source: ARC Group)

Mobile gaming is not only the fastest growing media segment, it is also about to become the key driver for innovation and expansion in numerous high technology markets, new media and entertainment over the next six years. (Source: Deloitte Research)

While voice traffic is still the primary source of wireless revenue, new applications and content will be the key growth drivers going forward, with mobile entertainment representing the largest single component and driving force for both applications and content.

Additionally, the quality of the mobile entertainment offered by the carrier will be a key element in their drive to increase ARPU and reduce subscriber churn.

With the advent of next-generation networks, predominantly 3G and, in some markets, even 4G, offering greater bandwidth for mobile devices, users will be able to download far more substantial content than what is currently possible.

This coupled with more capable handsets providing greater memory capacity and inherent functionality will support the appeal of applications such as live broadcasting of digital TV; 3D interactive gaming; location-based services and location-based games; and digital quality music and video downloads.

All of these applications are software intensive, which bodes well for wireless software providers. However, this increase in demand also increases the complexity around the management and revenue tracking/allocation requirements on the carriers.

With content, many external parties including content owners, content developers, third-party hosting vendors and content aggregators are involved in the supply chain of delivering content to the end user.

In many cases, the responsibility of compensating all these involved parties falls on the carrier. Adding to the complexity are pricing bundles, discounts and special offers introduced to entice or retain subscribers.

While mobile entertainment’s popularity is only in its infancy, it is rapidly shifting from novelty to mainstream. Consumers are demanding new levels of quality, innovation and entertainment from wireless carriers and content providers.

With industry revenues projected to exceed US$59 billion by 2009, it is gaining the attention of and attracting many new entrants to the space, which in turn will bring investment, innovation and new and exciting content.

Our CTO, Stephen Lawson, says that as the wireless infrastructure reaches 3G level, the rate of new product and service rollouts (from content to delivery), that used to be years will now evolve to being weeks or days to deploy. Once back office billing systems and serve departments are moved to near-real-time integration, some of the new products and services will move from concept to delivery in a matter of hours.

The challenge for the industry: How to deliver real-time linkages to billing systems, service and customer documentation at warp speed as the networks are evolving.

Ian Halliday is executive director of professional services of Fox Group. He can be reached at [email protected]. He is also EVP & COO of SilverBirch Studios Inc. a Toronto developer and publisher of mobile entertainment products.

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Jim Love, Chief Content Officer, IT World Canada

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