Mobile entertainment's rocky road

CTIA serves as a microcosm for the wireless industry, and while it may have been a bit more micro this year, it was clear that application stores are exploding, mobile marketing is ready to bubble over and mobile entertainment is in danger of fizzling out.

Like Mobile World Congress, a flurry of app store announcements punctuated CTIA. Research In Motion debuted its long-awaited BlackBerry App World, while Microsoft and Nokia both outlined more details on their launches. Even the carriers got on the action, if not just to tout revamped versions of their WAP sites. Granted, many of the apps making their way to the various storefronts are entertainment-driven, but the market for mobile entertainment just isn't receiving the same enthusiasm, according to analyst firm Juniper Research.

Growth in user spending on mobile entertainment will slow dramatically over the next two years unless key markets emerge from the recession, Juniper said in a recent report. Even if they do recover, however, revenues will be lower than previously forecasted — potentially even $13 billion lower. Juniper found that the worst-case scenario of a prolonged global recession would yield mobile entertainment revenues of nearly $13 billion over the next five years — still significant, but also significantly less compared to pre-downturn forecasts of more than $26 billion.

The recession is having an adverse effect on both subscription services and one-off downloads of games and music, as consumers are either reducing their adoption of these services or churning away from them. Of the entertainment services, Juniper forecasts that mobile TV — never particularly strong — is likely to fare the worst, followed by music and user-generated content.

One space the downturn might actually be helping is mobile advertising. Even CTIA's pre-conference, Mobile Entertainment Live, focused more heavily on mobile marketing and advertising than actual entertainment. Executives from across the wireless industry stressed the importance of being a first mover in mobile advertising to capitalize on consumers' most personal and targeted platform. It's going to take awhile to tackle this uncharted territory, but as Dan Smith, CEO of go2, said, though advertisers may be slashing budgets now, when they reallocate them mobile should be a top priority.

When the economy began its downward spiral, industry observers maintained that the cell phone wasn't going anywhere. That may be true, but the same doesn't hold for discretionary items such as mobile entertainment. Juniper said that ease of access and data costs also are holding this industry back. The recession will play out as it will, but mobile entertainment services can learn from the app stores' simple, widget-driven user interfaces and benefit from mobile advertising subsidies. Working together might just be the best bet for all of them.