Global advertising, commerce and subscription revenue from mobile phones will reach $7.5 billion by 2003, with North America accounting for just $0.7 billion, or less than 10 percent of the total, according to Jupiter Media Metrix. Asia will lead with approximately 66 percent of the total, or $5 billion, while Western Europe will represent $1.7 billion.
Nearly all mobile content providers in the United States will experience a negative return on investment (ROI) in the near-term, Jupiter Media Metrix found, because they do not have a direct revenue source such as subscriptions or per-minute revenue sharing in these two markets.
“Despite a growing wireless audience, the U.S. is a revenue wasteland for mobile phone content providers. Although carriers garner revenue for incremental usage of the wireless Internet, they have thus far failed to support a viable revenue model for content providers,” said Dylan Brooks, Jupiter analyst. “Mobile content providers must think in terms of long-term investment rather than short-term return on investment, as mobile revenue will remain extremely limited for the foreseeable future.”
According to Jupiter’s Global Wireless Model, Asia’s 136 million mobile surfers will generate $5 billion in revenue by 2003, an average of $37 per active user. And consumers in Asia will have a longer average tenure on the mobile Web than North Americans or Europeans, which encourages greater usage time, more mobile transactions and familiarity with a wider range of services.
Jupiter analysts predict that U.S. mobile content providers who do not license or syndicate to carriers will incur tens of millions more in expense than in revenue over the next two years. Many would-be wireless content providers should save their money and develop only a moderate mobile presence through 2003.
Although Europe is more advanced than the U.S. in terms of wireless penetration and usage of text messaging, Europeans have generally rejected the first versions of WAP or wireless access protocol, which makes it possible to read email, trade stocks or buy movie tickets via a mobile phone. Jupiter analysts expect greater adoption of future WAP versions and upcoming I-Mode services, with advertising, commerce, and subscription revenues growing from just over 100 million dollars this year to nearly $8 billion in 2005.
“Asia’s dominant share will be driven by Japan’s early lead in wireless technology and payment systems,” said Nina Young, Jupiter analyst. “DoCoMo’s combination of carrier-based billing and a packet-based network in its I-Mode service have created a seamless and cost-effective user experience, spurring usage activity and revenue streams for the carrier and its content partners.”
Wireless carriers continue to miss the boat in the United States. According to a report by Cahners In-Stat Group, wireless providers are making a mistake by casting wide nets for their data and Internet services. The report, “Show Me the Customers: The Growing U.S. Consumer Market For Wireless Data Services,” suggests that carriers should target-market user niches with tailored applications and marketing.
“Business users have been first to adopt wireless data and Internet services, just as they were the first to adopt cellular voice services in the 1980s,” said Becky Diercks, director of In-Stat’s Wireless Service. “With a population of more than 250 million in the United States today, however, the consumer market has barely been penetrated.”
In-Stat estimates there are more than 109 million wireless phone service subscribers and more than 60 million households with Internet access in the United States.
“These numbers indicate demand for wireless Internet should be significant, however, there are only slightly more than 600,000 consumer wireless data users in the United States today, representing just one-half of 1 percent of all U.S. wireless subscribers,” Diercks said.
To boost that percentage, providers must promote simple-to-use applications that users find valuable in addition to offering flat-rate pricing.
In-Stat’s study also found:
- Initially instant messaging, location-based services, news and alerts, banking and financial applications will be the primary draws for consumers. Successful marketing of these services will not come from service providers alone, but also through service provider/content provider partnerships.
- Provided all of the necessary ingredients are in place, consumer wireless data subscribers as a percent of total U.S. wireless data subscribers will increase from 14 percent in 2000 to 37 percent by 2005.
- Carriers must focus on four key areas: customer equipment, applications, services,= and market integrity. If they are able to do this, In-Stat expects the market to grow to more than 36 million residential subscribers by year-end 2005.