Mobile Video On Steep Growth Curve

Revenue from video telephony, video messaging, and similar services is projected to grow from $121 million in 2010 to $2 billion in 2013, says ABI Research.
Mobile video services revenue from video telephony, video messaging, video sharing, video on demand, VoD downloads, and other video services is expected to exceed $2 billion in 2013, according to the ABI Research Mobile Video Services annual global study.

By contrast, video services revenue will only be about $121 million in 2010, according to Mark Beccue, senior analyst. But the growth curve is "very steep indeed," he said, and will continue to accelerate through the end of 2015, which is the end of ABI Research's forecast period.

ABI Research predicts video telephony, video messaging, and VoD will make up the majority of this revenue, while video sharing will comprise a small percentage. Video telephony -- similar to voice telephone -- is real-time video streaming between two 3G or 4G network connected devices, said Beccue. The study found both video telephony and video messaging have the most subscribers in Western Europe, followed by Asia Pacific, and then the United States.

One of the prime factors driving the market is the availability of 3G networks, increasing consumers' demand for mobile infotainment, ABI Research said. As more mobile network operators (MNOs) segue to 4G, growth will continue, coupled with the continuing development of connected mobile devices, the firm said. Further propelling demand is the availability of real-time collaboration, communication, and networking from Web 2.0 services, ABI Research said.

But this growth could be limited by certain factors, including the continuing poor economic climate, which could affect usage, notably in industrialized nations, the study found. Mobile video services provided by MNOs also face stiff competition from so-called over-the-top (OTT) video services, which have strong popularity and adoption rates, the firm said. There also aren't many video-capable mobile devices on the market and the ones that are remain "immature and imperfectly matched to consumers' preference," given that the industry is in the early stages, according to the firm.

"MNOs mustn't settle for the role of undifferentiated mobile ISPs that manage 'dumb pipes'," Beccue said. "They should provide a variety of mobile video services and leverage strategic ecosystems until they upgrade their networks to provide quality video services." He suggested that to optimize mobile devices, the MNOs should consider partnering with device makers and software solution providers. "This will contribute to an already significant investment, but the rewards will be great."

If the carriers aren't aggressive about bundling premium services and incorporating the charges into their existing mobile bill, someone else will, Beccue warned. He said he believes that when it comes to mobile devices, not many people will watch long videos since the form factor is bad, so streaming video and VoD will be more of the "snack" types of video. "So offering it as a one-time or subscription service on a mobile bill is a convenience consumers will prefer," since they are already approved and don't need to enter additional information. "Those APIs are very valuable,'' he said.

The Mobile Video Services study focused on branded or co-branded regional MNO video services including video telephony and video messaging, peer-to-peer, and Web 2.0 video sharing and mobile video entertainment provided to mobile consumers for either a subscription-based or per-unit transaction fee. Video voice mail, chatting, ringtones, and dating are other mobile video services ABI Research expects to see emerge in the next few years or are available now on a limited basis.