Mobile operators are in a good position to boost their revenues by offering users compelling mobile phone content, according to a new report by consulting company Ovum.
The efforts of operators worldwide to create attractive content services for consumers will pay off, says Ovum. If they keep momentum mobile companies should prove more successful at generating content revenues than independent WAP and service providers.
By the end of 2005, operators will make more money from content than all other players put together: their global share of revenues will climb to 61%, amounting to $22.3 billion against $15.5 billion earned for non-operators, according to Ovum’s forecasts.
This gap has widened since 2002, when the revenue split between operators and third parties was $6.1 billion to $4.0 billion respectively.
“Operators have, until very recently, approached premium content with a mixture of caution, confusion and complacency,” says Eden Zoller, research director with Ovum. “This meant they missed the boat with the first wave of premium content, notably ring-tones and adult entertainment.”
“They cannot make the same mistake going forward and are making serious efforts to drive premium content. If they keep up the momentum and continue to create user-friendly services, they will remain the dominant player.”
Ovum forecasts that revenues generated by information and entertainment services globally will grow four-fold in the next five years from $16.7 billion in 2003 to $77.8 billion in 2007. This includes both traffic and content revenues.
Currently most information service revenue comes from low-cost, simple text message type data. In 2003 this kind of traffic generates $5.8 billion, whilst richer premium content creates just $2.2 billion.
However, by 2007, premium content revenues will reach $15.8 billion, with simple ‘traffic’ revenue only slightly ahead at $20.0 billion. This is because richer delivery forms such as pictures and video will become more common. Rather than text-based football scores, for example, users will receive colour video clips with commentary.
Unlike information, most of the revenues generated by entertainment services come from premium value. In 2003, traffic is worth $3.8 billion compared to the premium value of $4.8 billion. By 2007 the premium value has increased to $25.6 billion, compared to $16.3 billion for traffic.
