Wireless Content Revenues

US : Today, wireless (cellular) data revenues are dominated by personal messaging using SMS. But the market for wireless content is growing rapidly. It will contribute an increasing proportion to total wireless revenues (see chart).

The early market for content was dominated by a big success and a big failure. In Japan, i-mode demonstrated that it was possible to make money from content. Meanwhile, in Europe, WAP was killed by the poor user experience.

So far, wireless content has been dominated by handset personalisation – ring tones, logos and so on. But current activity is much broader. Java games are gaining in popularity. Adult content, fun/comedy, TV-interactions, video clips, music, and sports all have potential. Lots of interesting trials are in progress. Marketing will also play a major role, not as pure advertising, but, for example, with promotions linked to other content.

Take TV-interactions, for example. Many of us are familiar (sadly!) with the ‘Big Brother’ reality TV format. The third series in the UK generated 5 million WAP minutes, 10 million WAP page impressions, and 13 million SMS messages.

Outside of Japan and Korea, the content market has so far been dominated by SMS and premium SMS. But the technology is starting to provide a much better platform for wireless content. GPRS and other 2.5G services are now rolled out in developed markets.

A population of new handsets is building up, with larger colour screens, MMS and Java capability. 3G rollouts will provide further facilities, notably video. Having said this, incompatibility is still a big problem in many areas.

A wide range of content providers are jostling for position. The initial players were largely the operators’ own portals. They have been joined by the large Internet portals, such as AOL and MSN, and news providers including CNN and Reuters.

Today, broadcasters and other big brands are also starting to get serious about wireless content. At the same time, there are a huge range of boutique players, such as Codetoys and Digital Bridges in the gaming sector. Sitting in between content owners and operators are intermediaries such as Cybird and iTouch, who aggregate content.

Revenues come from two sources: the traffic generated by content, and charges for content itself. Obviously the operators collect the traffic revenues. Unlike the fixed telecoms market, mobile operators will retain a strong grip over the content value chain.

So content charges are often shared between the content providers and the operators. i-mode is famous for giving content providers 91% of subscription fees – although the fee structures now look low and inflexible. In Europe, on average, content providers take about 50-60% of total revenues, perhaps more for big brands such as Disney.

No-one yet knows if any particular types of wireless content will be wildly successful, in the way SMS has been. The ‘safe’ assumption is that a whole range of offerings will develop, each one contributing a little to overall market growth.

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Today, wireless (cellular) data revenues are dominated by personal messaging using SMS. But the market for wireless content is growing rapidly. It will contribute an increasing proportion to total wireless revenues

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