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Global revenues from premium mobile content, which includes music, games, graphics, video, and adult content, are expected to more than double in four years, with video expected to be one of the biggest growth drivers, a market research firm said.
Content for mobile devices like cell phones will top $44 billion in 2011, more than double the nearly $20 billion that'll be generated this year, iSuppli predicted. The mobile video market is expected to develop incrementally, but offers the biggest potential upside, growing to more than $6 billion next year from $1 billion this year.
There are a number of problems that hamper growth in mobile video that will have to be resolved in time. For one, the market is highly fragmented with uncertain business models, technology standards, and consumer usage models, iSuppli said. In addition, content rights issues have yet to be resolved, and geographic differences are significant, both in content consumption and government regulations.
Another threat to mobile video, at least from the carriers' perspective, is a practice called "side-loading," where consumers download video from a PC onto a mobile phone. The practice essentially bypasses premium services sold by mobile communication providers.
Wireless carriers are expecting data and content revenues to eventually offset declining voice revenues. The average revenue per user, or ARPU, from voice for the 20 key operators tracked by iSupply fell 6% in the first quarter, compared with the fourth quarter. The ARPU for mobile data, meanwhile, increased by 1% sequentially, and was particularly strong among North American operators, where both messaging revenue and mobile multimedia content are seeing strong growth, iSuppli said in a report released Thursday.
Among the wireless operators tracked by iSuppli, nearly 20% of revenue is associated with data. Three of the operators, SK Telecom, NTT DoCoMo and O2, derive more than 30% of their revenue from data.
Mobile gaming growth, however, is slowing significantly, particularly in Asia, iSuppli said. Game publishers Glu Mobile and Square Enix each gained market share in the first quarter, while Electronic ARTS and THQ each lost about 3% of their shares. Universal Music held the largest share of mobile music content revenue among the major record labels.