A recent report by Juniper research has revealed that by 2017, annual revenues from mobile entertainment services will reach almost $75 billion. This substantial growth, from an estimated $39 billion in 2013, is primarily driven by the emergence of more sophisticated monetisation strategies, allied to a nascent ecosystem of app-centric mobile devices, such as smart watches.
The report found that games will continue to generate the largest share of revenue throughout the forecast period. Revenues here – and in most other content categories – are now primarily derived through a freemium model, where mobile content is upsold after an app’s download, via the in-app purchase mechanism, thus enabling the creation of an ongoing revenue stream.
Meanwhile, the report also found that Leisure & eReader apps, a segment which covers a multitude of app categories such as News, Navigation and Shopping, are also expected to exhibit strong growth over the forecast period. It also argued that there were significant longer term revenue opportunities in this sector from apps which connect to wearable devices, such as a navigation app showing directions on a smart watch, as wearable technology assumes a more integral role in the mobile ecosystem.
Juniper Research expects to see a clear ‘spike’ in mobile entertainment revenues during the Christmas 2013 period. Report author Sian Rowlands pointed out ‘Christmas provides the biggest opportunity for mobile entertainment providers in terms of exposure. Storefronts and D2C entertainment brands see a surge in activity on and immediately after Christmas Day as consumers browse and download apps for their new devices, and the recent launch of the iPad Air will undoubtedly exacerbate this’.
According to the report, the Far East & China will account for the largest share of mobile entertainment revenues throughout the forecast period. While relatively low growth is anticipated in the adult sector, where revenues continue to be diluted by free and pirated content, App discovery remains a key challenge for all those in the mobile entertainment ecosystem to overcome.