Market Trends
Mobile services are a global mass market with over 2 billion potential consumers. With increased mobile phone penetration and improved functionality, the demand for more value-added services will rise. But for more consumers to take the step from traditional voice services to other mobile services, the user benefit must be obvious, while starting to use the services must be easy. To get to this point, buying and usage processes must function smoothly, which raises challenges for payment and delivery systems, and on content quality.
The market for mobile content services is in high growth. Record labels now view mobile distribution as a strategic sales and marketing channel. Major games players like Electronic Arts and Vivendi Universal entered the mobile market fully in 2006. Hollywood has also started to focus sharply on the segment., with one example being Fox Entertainment’s acquisition of 51% of mobile content distributor Jamba to access a mobile distribution channel for its media content.
These examples are unequivocal evidence of the convergence between different media formats, with TVs, computers and mobile phones starting to converge. Consumers want to access the same content from different platforms. TV is migrating into the computer and mobile phone. Users want to log onto their Internet community wherever they happen to be. When buying a track from a mobile phone or computer, users should be able to have it delivered to whichever unit suits them at the time—computer, mobile phone or mobile media player.
This progress, in tandem with growing bandwidth on fixed and mobile networks, suggests that the mobile content services market is heading for continued growth through the coming years. For example, sector commentator Gartner anticipates the consumption of mobile music growing by 400% by 2010. The communities segment is also evolving from primarily being something for young people into a mass market phenomenon for all age groups. As yet, mobile TV is almost only for early adopters, but the forecast potential is enormous.
The Consumption of Mobile Services
Mobile phones are becoming an increasingly important part of many people’s lives. In 2005, 51% of all private individuals in Sweden used mobile content services, a 4% increase year on year, with download services like ringtones, games and background images being the most popular (see diagram on next page).
Research in the US revealed that over 90% of people asked would go back home if they had forgotten their mobile phone, while the corresponding figure for a forgotten wallet was 60%. Mobile phone penetration is increasing across all age groups. In the 5-24 age group, basically 100% will have a mobile phone in 2007 (Mobile Youth 06). Additionally, young people are spending more of their disposable income on mobile phones and mobile services (see diagram on next page).
Research in Norway showed that mobile phones have a high status in the 6-13 age group. 58% of the so called trend-setters stated that mobile phones were one of their five biggest interests. The corresponding figure for the total 6-13 age group was 47% (TNC Gallup, Game & Mobile Report, 26 January 2006).
Consumer behavior has changed in many ways. The demand for mobile services has increased sharply through recent years, but for demand to keep increasing, the quality of services must improve. This applies to the quality of buying and delivery processes, as well as actual product quality.
Satisfied customers become loyal customers, spreading news of their positive experiences to the people around them.
This is a prime factor for older and younger people listening to people around them before taking decisions to buy goods. 92% of young people aged between 5 and 24 said word of mouth was an important factor affecting their buying decisions. 65% of the 5-24 age group said they told other people about what they liked (Mobile Youth 06).
Customer participation in making products is also becoming more important. Personalized visiting card services, where users add their own text or photos as an integrated part of products, is an obvious developmental step. For example, people interested in games or music are communicating with other people with similar interest by offering tips on various services or publishing personalized top tens or game high score lists.
From primarily being a youth phenomenon, there are now clear indications that the usage of mobile phone services is proliferating through age groups (see adjacent diagram). Differing interests and drivers affect consumption in different age groups. Younger teens want to be part of a group and accepted by their surroundings, where for example, the external features of mobile phones such as ringtones or background images are important. In slightly older age groups, the need to differentiate becomes important, and then alternative music becomes more interesting, while acceptance by a smaller group to identify with becomes important. People also become more interested in consumption for their own entertainment, and as a leisure activity, which means the interest in games and music increasing generally. More than half of all games are sold to the over-25s. The communities segment is also starting to become a mass-market phenomenon, with 68% of visitors to MySpace being over 25, and 52% being over 35. 55% of YouTube’s visitors are between 35 and 64, which means that the overall market is growing, and a somewhat older target group is contributing to greater purchasing power.
But looking ahead, the younger target group will continue to lead the way, and be first to use and adopt new mobile services.