Content Drives Wireless Carriers’ Revenue

(c) MediaCaster Magazine, 3/30/2007

Faced with a falling Average Revenue Per User (ARPU) for their voice services, mobile communications providers are offering premium multimedia content in order to compensate for their reduced voice revenue per subscriber, according to the market-research firm iSuppli Corp.

Voice ARPU in 2006 fell by an average of 5 percent for the 13 key global wireless carriers profiled by iSuppli’s Mobile Multimedia service. These carriers collectively represent more than 1 billion subscribers worldwide.

Further voice ARPU declines will occur in 2007 and beyond, iSuppli predicts. Because of this, these carriers are turning to music, video, gaming and other data services to offset their losses.

“As more wireless communications providers embrace the premium mobile-content opportunity, they are being transformed from pure communications providers to become something more: content distributors,” said Mark Kirstein, vice president of multimedia content and services at iSuppli.

Researchers and analysts added that, while information was collected from Canadian operators such as from Rogers, it wasn't included in the detailed published results. Overall, among the US-based operators, the trends (declining voice ARPU, rising data) held true for every operator, Kirstein explained. The trends were generally true for all regions as well, with only two mobile operators of the 13 showing different trends. "I'm confident the results are reflective of the Canadian market as well," he added.

The wireless operators’ transformation is boosting the mobile premium multimedia content market, which consists of audio, video and games delivered via the carriers’ wireless networks to paying subscribers. Global premium mobile content market revenue rose to $16.4 billion in 2006, up 22 percent from $13.4 billion in 2005, according to iSuppli.

Within the mobile premium-content market, music was the dominant category in 2006, while mobile video achieved rapid growth, although from a small base. The mobile games market grew quickly in North America, but lagged in Europe and Asia.

Turn up the volume

Music—including ringtones, ringtunes, full-track downloads, streaming and ringback tones—continues to be the largest premium content category for mobile phones. Both mobile operators and content providers are cashing in on this phenomenon as revenue associated with mobile music nearly doubled on an annual basis in 2006. Music recording labels are benefiting from this boom as well, as the major firms in this market generated nearly $1 billion in revenue in 2006, with Universal Music Group capturing the largest share.

By 2011, global mobile music revenue will reach $17.6 billion, maintaining a Compound Annual Growth Rate (CAGR) of 19.8 percent from $7.1 billion in 2006, according to iSuppli. Of this, full-track downloads delivered both wirelessly and via broadband, but billed through mobile operators, will grow to the largest segment of the mobile-music market at $5.7 billion in 2011.

No plug needed

While mobile music is growing at a staggering pace, mobile video is emerging worldwide as a robust, opportunity-laden market, even though it remains in its early stages of development.

Global mobile TV subscribers are set to reach 130 million by 2011, rising by more than a factor of 40 from 3.2 million in 2006, iSuppli predicts.

Total mobile video revenue will expand to $17.6 billion by 2011, maintaining a CAGR of 76.7 percent from just $1 billion in 2006. This growth will make the mobile-video market as large as the mobile-music area for the first time in 2011. The mobile video segment includes streaming and download revenue, as well as mobile television.

Technorati tags: mobile TV