Mobile content expected to show strong growth in SA

By Astrid Hamilton

Findings from BMI-T’s Mobile Media report reveal that mobile content is expected to show strong growth over the next five years. The segment recorded a compound annual growth rate of 33% for the combined revenue from mobile music, mobile games and mobile TV, which is expected to reach R558 million by 2013. This figure is calculated specifically for revenue from paying users, and does not include illegal downloads or mobile advertising revenues.

In SA, mobile music will in all likelihood remain the biggest contributor to mobile content revenue, followed by mobile games and then mobile TV. Major factors leading to the growth of mobile content and services include: innovative service provider offerings, high cell phone penetration rates in SA, rapidly increasing media capability or functionality of available handsets, the launch of application stores offering a wide range of mobile content, growth of mobile Internet usage and the social networking phenomenon. Added to this is the fact that - for a lot of South Africans - their handset is their only opportunity to access digital media.

Figure 1 below depicts the expected revenue growth trend over the next five years.

Mobile music will remain the forerunner of mobile content revenue even though music sales in general are not showing good growth due to piracy. Mobile music is expected to show a CAGR of 35% over the next five years. This trend will be driven by a wider variety of improved mobile music offerings, supported by the 'music culture' of South Africans, in which music is very popular and important to the individual.

Mobile games will increase in popularity as more mobile application stores are launched and more games are developed. BMI-T expects a CAGR of 27% over the next five years. Spurring on revenues is the increase in Smartphone penetration, the low cost of games and an improved game experience, such as motion gaming.

Mobile games are expected to show strong growth in users, but a good proportion of mobile games will be advertising-supported, thus reducing the revenue growth rate when compared with mobile music. Mobile TV still has some challenges to overcome, such as regulatory and licensing issues as well as expensive and limited handset availability for broadcast mobile TV. The right revenue models need to be chosen for impressive growth to occur for paid-for mobile TV.

BMI-T expects a revenue CAGR of 41% over the next five years as mobile TV is coming off a much smaller base than mobile music and mobile games. However, BMI-T only expects a 19% CAGR for the number of paying users over the next five years. Usage of free video streaming (YouTube, etc) however, will grow much more dramatically than this.

The growth of mobile Internet usage and the accompanying increase in mobi-sites, the continuing popularity of social networks, the changes in marketing and advertising methods for mobile devices, and the increase in cloud computing are all spurring the growth of mobile content.

On the negative side there is still the issue of piracy and the cost of content, which in certain instances is almost as high as the cost of the physical goods for a digital product. Content and quality of content is still vital and will increase in significance, as will consumer influence on the market and its offerings.