Where Is Mobile Entertainment Heading in 2007?
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1 Where Is Mobile Entertainment Heading in 2007? Panelists Linda Barrabee Program Manager, Consumer Research, Mobile Entertainment Mike Goodman Program Manager, Consumer Research, Digital Entertainment Joshua Martin Analyst, Consumer Research, Media and Entertainment Copyright Yankee Group Research, Inc. All rights reserved.
2 Where Is Mobile Entertainment Heading in 2007? Mobile Music Mobile Gaming Mobile TV/Video Mobile Advertising Conclusions and Recommendations Page 2
3 Select Questions We Will Explore During Today s Discussion What impact will the iphone have on the marketplace? What s happened to mobile gaming? Is it tapped out? Will consumers tune in to mobile broadcast TV services launching later this year? Are the carriers ready to embrace advertising? Page 3
4 Where Is Mobile Entertainment Heading in 2007? Mobile Music Mobile Gaming Mobile TV/Video Mobile Advertising Conclusions and Recommendations Page 4
5 Multifunctional Handsets Will Struggle to Replace Digital Audio Players US Digital Music Market $ Digital Music Revenue (in Billions) $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $ Addressable Market of Portable Music Players (in Millions) $ Online Music Revenue Digital Audio Player Installed Base Music-Capable Phone Active Users Mobile Music Revenue Music-Capable Phone Installed Base Source: Yankee Group, 2007 Page 5
6 The PC Is Key to the Acquisition, Storage and Management of Digital Music Where do you usually get the music you listen to? (select all that apply) Which way do you use MOST OFTEN to get the music you listen to? (select one) Percent that Listen to Music on a PC Buy CDs Download Music to PC Borrow CDs From Friends Trade CDs with Friends Download Music to Phone 8% 16% 2% 4% 1% 47% 28% 33% 78% 58% Sources For New Music One Main Source For New Music On average, DAP owners store just less than two-thirds of their music files on their player DAP owners have, on average, 1,334 music tracks stored on their PCs but only 841 tracks stored on their digital audio player Young adults (18- to 24-years old) are nearly twice as likely (46%) to downloaded music to their PC Fifty-seven percent of respondents who downloaded music to their PC do so from licensed music services Source: Yankee Group 2006 US Portable/Mobile Entertainment Survey Page 6
7 Where Is Mobile Entertainment Heading in 2007? Mobile Music Mobile Gaming Mobile TV/Video Mobile Advertising Conclusions and Recommendations Page 7
8 Carriers Are Not Monetizing a Large Segment of the Market Mobile Users (in Millions) 97 Just less than 9% of mobile gamers are being monetized 9 Mobile Users Games Available on Phone Play Games on Phone Pay for Downloads Source: Yankee Group, 2007 Page 8
9 The Video Game Market Comprises Multiple Segments Mainstream/Hardcore Gamers Young adult male Self-identify as gamers PC, console, handheld, web, mobile Casual Gamers Older, female Do not self-identify as gamers Web, mobile Page 9
10 Advertising Is Required to Monetize Casual Gamers Web Games Mobile Games Advertising $380 million Paid Subscription/ Downloads $360 million Paid Subscription/ Downloads $294 million Source: Yankee Group, 2007 Page 10
11 Where Is Mobile Entertainment Heading in 2007? Mobile Music Mobile Gaming Mobile TV/Video Mobile Advertising Conclusions and Recommendations Page 11
12 US Consumer Interest in Mobile Video/TV: Not a Top Priority If you had additional money to spend each month on services for your mobile phone, what would be the top five things that you would spend it on? Information/Directions Ring tone downloads Text Messaging Picture/photo and/or video messaging Receive alerts Mobile Internet access/browsing Walkie-talkie voice calling/p2t Video calls Watching TV/Video Ring back tones Game downloads Music or Radio Mobile Instant Messaging Graphics, logos, screensaver downloads Gambling Adult entertainment Base: Willing to spend additional money (2,809 or 53% of total base of 5,300 adults) Source: Yankee Group 2006 US Portable/Mobile Entertainment Survey 0% 10% 20% 30% 40% 50% Percent of Respondents Listing Among Top Five Page 12
13 Mobile TV: More Active than Passive Page 13
14 Mobile TV: Unicast to Broadcast Page 14
15 Where Is Mobile Entertainment Heading in 2007? Mobile Music Mobile Gaming Mobile TV/Video Mobile Advertising Conclusions and Recommendations Page 15
16 Mobile Advertising Is Emerging $ :19 $70.00 $60.00 $ :42 3:50 3:21 Advertising Revenue (in Billions) $50.00 $40.00 $30.00 $47.40 $ :39 1:30 2:52 2:24 1:55 1:26 Average Time Spent per Day by Media (in Hours) $20.00 $10.00 $0.00 0:42 $ :30 $0.07 $0.04 0:48 0:57 0:28 0:00 TV Newspaper Radio Internet Games Mobile Advertising Revenue Average Time Spent per Day by Media Note: Average time spent on mobile includes voice and data services. Source: Television Bureau of Advertising, Cabletelevision Advertising Bureau, Radio Advertising Bureau, National Newspaper Association, Internet Advertising Bureau, Electronic Software Association and Yankee Group, 2007 Page 16
17 Gap Between What Adults Say They Will Pay for Multimedia Services and What It Currently Costs Percent of Respondents Interested in Service/Feature 25% 20% 15% 10% 5% 0% Adult Gambling Graphics IM Music/radio Base: Percent of total respondents listing among top five. Source: Yankee Group 2006 US Mobile User Survey Adult Interest Levels in Services/Features and What They Are Willing to Pay for Them Games Ringback tones TV/video Video calls Push-to-talk Web browsing Alerts Picture/video messaging Text messaging Ringtones Information/directions Page 17 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 Amount Willing to Spend per Month Percent of Respondents Interested in Service/ Feature Amount Willing to Spend per Month
18 Advertising- vs. Subscription-Based Business Models Would you be willing to access mobile data services at a reduced price if they contained advertising?* Would you rather pay subscriptions for sports scores, news, weather and other content you browse on the mobile internet, or see a banner advertisement and receive the content for free?** 100% % % % 60% % % Female 30% Male 20% 10% Total 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Total Male Female No Don't Know/Had Not Considered Yes Pay subscriptions View advertising Don't know/had not considered *Base: Willing to spend additional money (2,809 or 53% of total base of 5,300 adults) Source Yankee Group 2006 US Mobile User Survey **Base: All respondents (5,300 adults) Page 18
19 Where Is Mobile Entertainment Heading in 2007? Mobile Music Mobile Gaming Mobile TV/Video Mobile Advertising Conclusions and Recommendations Page 19
20 Top Things that Will Impact Market Successes or Failures Mobile Music Wi-Fi DRM iphone Wireless carriers Mobile Gaming Advertising Wireless carriers Mobile TV/Video Advertising The experience (content, device/ui, network) Mobile Advertising Wireless carriers Ecosystem maturity Measurement Page 20
21 Recent and Upcoming Research Yankee Group Notes Will Apple s iphone Redefine the Anywhere Consumer?, February 2007 In a Merger Made in Heaven (Literally), XM and Sirius Finally Merge, February 2007 Off-Portal Channels: Taking Mobile Content to New Heights, December 2006 Digital Music Revenue Will Reach $6.2 Billion by 2011, December Portable/Mobile Entertainment Survey, November 2006 Can Zune Oust ipod?, November 2006 Will Mobile Advertising Maximize the Potential of the Mobile Content Market, August 2006 Yankee Group Reports Portable Gaming: Who s Paying and Who s Playing?, January 2007 Mobile Video/Broadcast TV Market Assessment: Will Operators Get the Picture?, November 2006 Mobile Advertising in 2006: A Test Year for New Carrier Business Models, May 2006 Yankee Group Surveys 2006 US Mobile User Survey 2006 US Mobile User Teen Survey 2006 US Portable/Mobile Entertainment Survey 2007 US Consumer Survey Suite Page 21
22 Thank You Linda Barrabee Program Manager, Mobile Entertainment Consumer Research Mike Goodman Program Manager, Digital Entertainment Consumer Research Joshua Martin Analyst, Media & Entertainment Consumer Research Come and visit us at one of our upcoming Live! events or tune in to one of our free webinars. For schedules, please visit our web site: Page 22
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