Mobile media revival expected in 2010

The US mobile entertainment industry is poised to make a comeback, with 58% of companies in the value chain expecting revenue to increase by 20% or more in 2010, according to the Mobile Entertainment Forum (MEF) Americas’ survey of 80 of its member companies. The industry is counting on the proliferation of mobile handsets coupled with plans for business-model experimentation to overcome a year marked by shrinking revenues and economic uncertainty.

According to MEF Americas Chairman Jim Beddows, the global trade organization undertook the survey at the request of its more than 120 member companies. Following last year’s spring CTIA that saw lackluster support for mobile entertainment, the MEF’s membership grew increasingly dissatisfied with inaccurate projections for the industry. Beddows said that companies would build business plans based on these projections of expected ARPU levels, but they continuously fell short. MEF’s goal was to accurately capture the pulse of the industry and how it’s evolving to let its members know what to expect. In light of managing expectations, however, the consensus was hope for a better year than 2009.

The optimism stems largely from the penetration that mobile phones, especially smartphones, have achieved in the past year, as well as the proliferation of apps and app stores. Of those surveyed, 71% are involved in app development compared to seven other mobile media categories identified. But these respondents were actually amongst the least optimistic when it came to revenue generation. Beddows said that off-deck aggregation companies had the highest hopes with 59% expecting 20% revenue growth, while only 39% and 48% of content owners and app developers, respectively, anticipate comparable growth.

Content owners continue to have angst about how they monetize their content and what business model will be most effective, Beddows said. App developers have the same worries, compounded with the issue of increasing discoverability of their apps versus the other 200,000 out there.

"I can only surmise that one of the issues that the study captures is that there was a lot of anticipation and expectation around mobile advertising," Beddows said. "Those projections didn’t pan out as optimistically as everyone had projected, which caused content owners to be less optimistic as opposed to off-deck guys. The off-deck guys were more optimistic because of the explosion of off-deck driven by the iPhone and mobile Internet."

Mobile ads will be an important part of monetizing media content, but maybe not in the way they’ve historically been imagined, Beddows added. Citing both WAP sites and mobile ads as examples, he said that the mobile industry tends to hype expectations for a new service and, when those expectations are not met, sees the service go away for a year or two before emerging in a new and improved form.

"Mobile ads are not going away, but need to be rethought to really capture the opportunity," Beddows said. "There will be a lot of experimentation. Companies in the mobile space need to continue to drive revenue. If one business model isn’t working, they need to continue to look for other ways. That will be one driver for that continued experimentation."

The MEF was formed 10 years ago to foster relationships between Hollywood and entertainment companies and the mobile industry, and its primary goal in today’s mobile environment is to drive revenue generation for all its member companies, including Samsung, Motorola, Playphone, Fox Mobile Distribution and mBlox. To do so, MEF Americas also recently launched an initiative around mCommerce to explore alternative ways to monetize apps, including mobile couponing, vouchers and micro-payments. It still has kinks to work out, but according to Beddows, the mobile entertainment industry has a lot of potential left in it.

"At the end of the day, the underlying point is that mobile devices are the most emotional, personal consumer device we own," Beddows said. "That penetration can be used to explode [mobile entertainment]. The challenge is how do you monetize it and capture that."