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The market for mobile services such as messaging and games will reach $126 billion by 2008, according to a new report.

The study, Mobile Content and Applications 2003, by London-based consultancy ARC Group, predicts that mobile services will account for 20 per cent of total mobile operator revenues by 2008. According to ARC, this represents a solid growth trend for the mobile services market over the next five years, with revenues more than doubling from their 2003 level.

The study found that while voice revenues are forecast to grow at a slower pace, the total mobile market will continue to expand, as usage of services such as messaging, games and music start to penetrate the mass market.

"We see the mobile services market developing from the early adopters and the youth sector to include the wider consumer mass market, as well as business users," said Richard Jesty, senior consultant at ARC and lead author of the report. "This will mean an increase in total revenues for operators, as these new mobile services will offset the likely shift from voice calls to messaging."

Spurred on by the popularity of ringtone and image downloads, entertainment will be the second largest revenue generator, accounting for just over a fifth of total revenues in 2008, as mobile video applications and mobile games start to reach mass-market penetration, according to ARC.

Although consumer services are leading the way, the study also forecasts strong growth for the business sector of the mobile services market, predicting high usage levels and a growing awareness of the value of adding mobility to front office applications. These factors will help to put office applications aimed at the mobile business user in third place after messaging and entertainment by 2008, ARC says.

Operators will need to create new channels to market, by partnering with systems integrators and consultants in the business sector for example, or developing new self-service retail formats such as multimedia kiosks to reach the mass market consumer, according to ARC. This trend towards a greater reliance on partnering will also mean that new business and revenue models will need to evolve in response to the requirement of a more complex market place.

Mobile revenue models are still at an early stage of development, and a number of alternative models are competing for acceptance. Currently, the most favoured models are either purely per event-based or are combinations of subscription charge and event-based charging structures, ARC found.

As the market develops, there will be more opportunities to offer value-based charging and this in turn will call for more sophisticated billing systems which can offer active rating facilities, and share revenues with third parties, it concludes.

© ENN

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