Monetizing Mobile Content

http://www.emarketer.com/Article.aspx?R=1007369

NOVEMBER 10, 2009

The emergence of hybrid models

The long debate over how to monetize digital content has gained new life in the economic downturn due to the slumping ad market. The question of paid models versus ad support is particularly urgent in the fast-emerging mobile space.
eMarketer predicts that by 2013, nearly 50% of mobile phone users will access the mobile Internet at least monthly. Along with rising smartphone shipments and increases in spending on mobile data plans, this will create a growing mobile content market.

“The expected increases in mobile Internet users, mobile data revenues and smartphone sales will produce an environment in which users will be hungry for content,” said Paul Verna, eMarketer senior analyst and author of the new report, “Mobile Content: Paid Models Take Shape.” “It is likely that mobile content will follow a trajectory similar to Web content, with paid models dominating in the early, infrastructure-building years before giving way to ad-based models and hybrids of ad-based and paid models.”
Mobile Internet users, used to a largely ad-supported Web, will expect free content on their phones as well. But content owners, after years of experience with monetization, will have a direct-revenue mindset.
“Premium content will be monetized through subscriptions, download fees and other direct transactions with consumers, while more commoditized media will likely exist in ad-supported settings,” said Mr. Verna.
Mobile applications are a major channel for content delivery to mobile devices. In September 2009, the Yankee Group estimated that US paid smartphone application revenues would reach $4.2 billion in 2013—an order of magnitude above the 2009 estimate of $343 million.

“The recent success of smartphones from multiple manufacturers is driving demand for mobile content, and consumers have shown a willingness to pay for at least some of that content—as well as the applications that deliver it,” said Mr. Verna. “The barriers between the online world and the mobile world are breaking down, and people expect to be able to access their content on whatever platform suits them. In this climate, media companies with premium content are in an advantageous position to launch paid models.”

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The full report, “Mobile Content: Paid Models Take Shape” is available only to Total Access subscribers, and also answers these key questions:

• What factors will fuel demand for mobile content in the US?
• How will news content be monetized on mobile devices?
• What is the revenue outlook for mobile video and mobile music?
• Do paid mobile applications represent an opportunity for content owners?