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* The Western European mobile content market has been slow to take off, reaching just EUR2.3 billion in 2003, well behind Japan and Korea

* Revenues could reach EUR15.0 billion by 2009 if operators resolve pricing and billing issues

* New services are taking centre stage, such as mobile music, video clips and downloadable information applications

* Java will increasingly displace SMS and WAP as the method of delivery for text-based information

* Report includes forecasts for service adoption, spend, ARPU and revenue in France, Germany, Italy, Spain, Sweden, the UK and Western Europe as a whole

CAMBRIDGE, UK, 17 December 2004 – European mobile operators need to overhaul their pricing strategies to kick-start the lagging mobile content market for third-party services such as ringtones, logos, games, music and videos, according to Making a Success of the Mobile Content Value Chain, a new report from Analysys Research, the global advisers on telecoms, IT and media (

The mobile content market in Western Europe has taken off more slowly than expected, generating revenues of just EUR2.3 billion in 2003. While it currently lags behind markets such as Japan and North Korea, there is plenty of scope for it to catch up, provided that operators and other industry players urgently address the barriers presented by current pricing structures and billing capabilities.

“A key short-term priority is addressing the inadequacy of pricing structures,” insists Alex Zadvorny, report author. “The prevailing approaches to pricing are far too complex and difficult for the customer to understand. In some cases a subscriber incurs three types of charge in order to access one piece of mobile content. Western European operators should either follow the Japanese operators’ approach or strive to develop affordable flat-rate content packages similar to those in the satellite TV industry.”

The choice of pricing philosophy will also depend on the relative strength that an individual operator has in the overall content value chain. As large content owners increasingly realise the potential for distributing content via mobile networks and try to play a greater role in this market, operators will face the choice of either becoming integrated content ‘broadcasters’ or focusing primarily on the provision of network capacity. Moreover, this decision is increasingly interrelated with factors such as pricing, billing and customer segmentation.

New services such as mobile music and video have recently captured the imagination of mobile operators, according to Analysys: “South Korean operators have provided evidence of the growth potential in mobile TV and video – by offering video on demand based on an easy-to-understand flat rate they have managed to achieve nearly three times the 3G penetration of Japanese operators,” says Zadvorny.

“At the same time, the success of fixed-line music download services such as iTunes has prompted mobile operators to launch their own music download offerings. The operators’ approaches have differed – from selling full tracks to providing access to song fragments. However, we expect that such offerings will face a number of challenges and will struggle to reach the mass market, as fixed-line alternatives will continue to dominate,” cautions Zadvorny.

While music and video services clearly have potential, no single service is expected to become a ‘killer application’. According to the detailed revenue forecasts provided as part of the report, a number of different services will contribute to overall market growth in the next five years.

“Despite the recent focus on music and video, text-based information is expected to continue to be an important service category,” says Zadvorny. “What is likely to change is the method of its delivery – in addition to, and increasingly instead of, SMS and WAP we expect Java applications to take centre stage.”

If operators address these issues quickly, Analysys forecasts that Western European mobile content revenues could account for over 10% (EUR15.0 billion) of the total mobile services market by 2009.

Other key growth factors and challenges facing this industry, such as service discovery/ease of use, device features, standardisation, Digital Rights Management (DRM), and mark-up convergence are covered in the report, which also contains detailed forecasts of growth in Western Europe split by key markets (France, Germany, Italy, Spain, Sweden and the UK), including subscribers, service adoption, spend, ARPU and revenue.

The report is available to purchase online at, priced at GBP1700. For more information, telephone Analysys on +44 (0)1223 460600 or email

About Analysys (

Analysys provides strategy and management consultancy, information services and start-up support throughout the telecommunications, IT and media sector. Its grasp of market dynamics, coupled with creativity, rigour and renowned objectivity, enables Analysys to consistently exceed the high levels of quality and innovation that its clients expect. The company has over 130 staff in offices in Cambridge, London, Glasgow, Madrid, Milan, Paris, San Francisco and Washington DC, and works with associates in Auckland, Melbourne and Vancouver.

Recent reports include:

* Retaining Customers and Minimising Churn: strategies for mobile markets (December 2004)
* The Role and Impact of WiMAX and Proprietary BWA (November 2004)
* Viable Business Models Point to Big Opportunities for Public WLAN (November 2004)
* TV and Video Services on a Mobile Phone: the killer application for 3G? (September 2004)
* Delivering high-speed mobile Internet/intranet services: the role for 3G and public WLAN (August 2004)
* The Business Case for Broadband Entertainment (July 2004)
* 3G Launch Strategies: critical decisions on services and technology (June 2004)
* Western European Fixed Telecoms Markets: forecasts 2004–2009 (June 2004)
* Spectrum Trading and Liberalisation: new threats and opportunities for telecoms business models (June 2004)
* The Road to Fixed–Mobile Substitution Starts with 3G (April 2004)
* Western European Mobile Forecasts and Analysis 2004–2009 (March 2004)
* VoIP in the US Market: services, business models and regulation (March 2004)
* Strategic Options for Fixed and Mobile Operators in Central and Eastern Europe: scenarios and forecasts (February 2004)
* Vodafone live! versus i-mode – lessons and prospects for the rise of global wireless services (February 2004)
* Delivering the Broadband Home. New fixed and mobile services and devices: forecasts 2003–2008 (January 2004)
* Scenarios for the Evolution of the Wireless Industry (December 2003)
* The Future of Personal Videotelephony (November 2003)
* Operator Strategies and Key Performance Indicator Benchmarks (December 2003)

Media contact (for author photography, executive summaries and interviews)

Louise Nunn
Analysys Ltd
Tel: +44 (0)1223 460600

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