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Mobile Manufacturers & Operators Bullish On Entertainment


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Despite mobile handset sales being down by 12.6% in Q4 2008 as compared to Q4 2007 (Source: IDC 2009), the mobile sector is confident music content sales will continue to grow despite the current global recession. TMV would like to delve deeper and see if there are clear foundations to the sectors positive forecasts over the coming year. We also intend to look into the positives and negatives in terms of mobile music sales.

Globally there are 4 billion mobile connections according to the GSMA (February 2009) and these numbers are forecast to grow by 50% to 6 billion by 2013. However, let’s be very clear here. The vast majority of this growth will be in the emerging markets of Africa, Asia, South America and the Middle East. In effect this means if the music business wants to see revenues increase from mobile music content it will need to take the emerging markets segment more seriously in terms of allowing content to be sold.

Even though take up of Nokia’s “comes with music” proposition in western markets has been sluggish, it is clear that Nokia views the emerging markets as the key growth area in terms of handsets and also possibly its music propositions. Reinforcing this fact is the 5800 handset, Nokia’s entry into the touch-screen market was launched in 7 emerging markets before being available for sale in any traditional western markets.

Globally, despite the overall drop in handset sales, the smart phone segment was up 22.5% year on year. What does this signify in terms of the music business? Well, the majority of these smart phones DO have a music player and the vendor normally has some form of music retail proposition to go with the handset. One only has to look at device manufacturer RIM (Blackberry) and their big play in the music sector to understand that the device manufacturers see a big play in music.

Does this mean more people purchasing music via mobile? Not necessarily, as DRM and restricted operator walled gardens on handsets make transferring music files a notoriously painful experience.

Fixed telephony subscribers are contracting on a global basis and some will point to the increased penetration of mobile broadband. What is key for the industry to realize though, is that the emerging markets do not generally have a viable broadband infrastructure. Subsequently, mobile is where consumers experience the internet. Music content owners need to digest this and adapt their digital content sales strategies to take account of this.

Furthermore, despite general music industry murmur’s downplaying the current state of mobile music a new report from analyst firm Juniper predicts that global mobile music revenues will grow to $14.6 billion US dollars by 2013. You may rightly ask why the difference in prognosis on mobile music? TMVs view is that from a Western music industry perspective ringtone sales are going down whilst FTM downloads, albeit increasing, are not matching the pace of the ringtone market decrease.

On the flip side, handset operators are already set to capitalize on increased demand for devices in emerging markets. In turn this may signify that these same device manufacturers are the ones who are primed to realize increased music content sales from there music propositions albeit of regionalized local music, which the western music industry has not managed to capitalize on.

The fact remains that whilst our western markets enter an unprecedented period of stagnation, the emerging economies in terms of handset sales are primed for a massive increase in mobile subscribers. So, growth will occur in these markets and it is local regionalized music propositions in these markets which are the most likely to drive an overall increase in FTM downloads on a global level. So, whilst, device manufacturers and operators alike are set to see increases in mobile sales, traditional western based music content owners are not.

In terms of the music business value chain, this bullishness will be positive for device manufacturers. Whether that trickle down to content creators and owners is another thing altogether…



  • Wayne Rosso

    Wayne Rosso has worked in music and technology for decades. He has worked with such artists as Aerosmith, Bee Gees, Crosby, Stills & Nash, Public Image LTD., Beach Boys, Phillip Glass, Fleetwood Mac, Rick James, New Kids on the Block, Slash, Evanescence and scores of others.


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