Mobile Media Gaining But Old Challenges Still in Place

Written by Aditya Kishore

Friday, March 20. 2009 at 12:05 PM EDT Post a comment

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Despite recent research showing massive adoption of mobile Internet services, there are still several challenges ahead before mobile media goes mainstream.

Researchers have shown several positive trends in the mobile sector recently. For instance, Nielsen Mobile found that unique mobile Internet users grew 30 percent over 2008, from 37 million in January to 48.2 million in December.

According to Nielsen, there were 145 million mobile media consumers, with 127 million using SMS, 70 million downloading mobile content, 48 million using the mobile Internet, and 12 million using mobile video in the U.S.

Mobile vendor QuickPlay also recently released findings from its 2009 independent Market Tools study. It found that awareness of mobile media is growing, with 46 percent of respondents aware that their carrier offers a mobile TV and/or video service, up from 35 percent seen in the 2008 survey.

Smartphones are important drivers, with 41 percent of respondents in the QuickPlay study recognizing that they would be more likely to watch mobile video if they owned a multimedia-enabled PDA or smart phone.

Nielsen Mobile also found that 55 percent of those acquiring new phones in the past six months bought a smartphone. The iPhone alone makes up 10 percent of mobile Internet users, and nearly twice that percentage of all mobile music users.

Despite this, handsets and their associated costs remain a hurdle to mobile media adoption. Steve Ballmer, speaking at the recent McGraw-Hill Media Summit, pointed out that the most popular phones in China and India cost $25 to build, compared with an iPhone that costs more than $500 to make.

"No one's going to pay $500 more for a logo," Ballmer said, referring to Microsoft competitor Apple. However, Apple sold 13.7 million units of the iPhone in 2008, including 4.4 million in the fourth quarter alone.

Given the current economic scenario, and taking a global, rather than just a U.S.-centric view, handset costs are certainly a constraint. In developing countries, the wide base of deployed handsets have very basic capabilities.

Service costs are also an issue. In QuickPlay's study, 58 percent indicated that cost is the No. 1 reason they have not viewed TV and video on their mobile phone. Flat-rate pricing is helping drive mobile data usage, but clearly costs remain a challenge.

Advertising is still emerging as a revenue driver, but it seems to be making progress. Seventy-four percent of QuickPlay's respondents claimed zero mobile ad exposure, down from 83 percent in 2008. QuickPlay admits this could suggest mobile ad penetration is on the rise, as much as it suggests consumers' mobile ad recall is growing.

However, teens aged 13-17 account for 21 percent of mobile video users, which is an important statistic. First, it demonstrates that an emerging generation is more likely to adopt this medium, which is always positive. Second, advertisers are keen to reach this demographic making mobile an important channel for them and potentially lucrative one for mobile media owners and carriers.

In all, the data is encouraging, but highlights that not much has changed in terms of the challenges multimedia adoption faces in the mobile world. There continues to be a high cost of advanced multimedia handsets, service costs for mobile media, and challenges in finding the right advertising models and facilitating ad-sponsored content, and in driving awareness and the quality of experience for mobile media.