Mobile entertainment prepares for growth

According to a new report, Western European consumers will spend €23 billion on non-voice entertainment services through their mobile phones.

The report said that currently, European consumers spend around €2.7 billion on various non-voice content and entertainment services for their mobile phones, a category that includes ringtones, logos, games and SMS based content.

This accounts for nearly 3 percent of the total amount (€97 billion) Europeans spend on mobile services.

But over the next five years, consumer spend on such services will increase both as an absolute figure, and as a percentage of the total spend, to hit €23 billion or 17 percent.

The research company behind the report, UK based Analysys, claims this trend is a sign that "attempts to revive [operator] revenue through non-voice services are starting to pay off."

Katrina Bond, the author of Charging and Revenue Sharing for Mobile Content and Entertainment claims that until now mobile operators have not benefited in full from these services, because in most cases payments are not made through the mobile phone bill or prepaid account.

"Many of the content providers interviewed for the report would prefer to use operators' billing systems because of the convenience to themselves and to customers," said Bond.

"But they are frustrated that operators have been slow to upgrade their billing systems," she said.

Bond claims that with better billing systems in place, operators will get a greater share of the revenue from these services. Furthermore, easier billing will encourage more developers to create new, compelling applications, driving use by consumers.

"It is not just the high share of mobile content revenue demanded by many operators that is slowing market development, but also the closed nature of the revenue-sharing arrangements that they are negotiating," Analysys claimed.

Negotiation takes time and lack of information about existing deals creates uncertainty in the market.

The report said that although operators are starting to promote open revenue-sharing arrangements, the margins of many independent portals, content aggregators and content and games developers will continue to be put under pressure, with consolidation being the inevitable outcome.

"Not only do mobile operators hold a strong position in this market," claimed Bond, "but at the other end of the value chain media companies and major content brands are recognising their ability to generate additional network traffic for operators and are demanding a higher share of mobile content and entertainment revenue." © ENN