Mobile operators set to win the battle for content revenues worldwide

But only if they keep up their pace of innovation, says Ovum

For immediate release, 15 August 2003. The innovative efforts of mobile operators worldwide to create compelling content services for consumers will pay off, says Ovum, the analyst and consulting company. But only if they keep up the momentum.

Ovum’s latest forecasts for revenues generated by content on mobile phones show that operators are in a very good position to win the battle against other players such as 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 percent, amounting to $22.3 billion against $15.5 earned for non-operators.

This gap was not so obvious in 2002 with the revenue split between operators and third parties at $6.1 billion and $4 billion respectively.

Mobile operators have woken up to the fact their dominance of the wireless content market is not guaranteed and realise how crucial innovation is. Through initiatives such as Vodafone Live! O2 Active and T-Zones, they are starting to provide consumers with premium content that is fun and easy to use.

“Operators have, until very recently, approached premium content with a mixture of caution, confusion and complacency,” says Eden Zoller, research director with Ovum and a wireless expert. “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.”

For Zoller, measures introduced to improve the user experience are the right kind of initiatives. This is the case for example of the icon-based user interfaces and new range of exciting devices underpinning consumer services such as Vodafone Live!.

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.

Information services are mostly driven by traffic value, because their price is relatively close to a simple text message or the cost of a pure data connection. In 2003, this is very pronounced: traffic is worth $5.8 billion and the premium value only $2.2 billion.

But by 2007 the premium value will jump to $15.8 billion (traffic $20 billion), thanks to the added value provided by richer delivery forms such as pictures and video. Instead of text-based football score, colour video clips with commentary will be common.

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.

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About the Research

Making Money from Wireless Content, authored by Eden Zoller and Dario Betti, is available now from WirelessMultimedia@Ovum. For sales information, please contact Ovum at www.ovum.com, or call +44 (0) 20 7551 9021.

About Ovum

Ovum, the analyst and consulting company, is the largest European headquartered advisor on telecoms, software and IT services.

Resolutely independent, Ovum advises large corporates, IT and software vendors, IT service providers, telecoms operators, regulators, service providers and equipment suppliers. It analyses the commercial impact of technology and market changes and has a real strength in advising on the developments where telecoms, software and IT services interact.

Ovum takes a global perspective on leading-edge developments from our offices in Europe, North America and Asia Pacific. Its experts spot the short-term issues that will have an immediate impact on markets and organisations and advise on the longer-term 'visionary' aspects which form the basis of strategic planning.

More information on Ovum, its customers and its independence is available at www.ovum.com

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