Considering what’s happening in the global economy,
one has to wonder whether the mobile media sector is a good place to be.
It’s a lousy time to be in the auto industry, or investment banking, or the newspaper business. As the global financial crisis seems to loom over, well, everything, it’s worth asking whether the mobile media sector is a good place to be.
Certainly, the wireless industry has had its share of bad news in recent months. Reports of steep drops in demand for chips, layoffs at technology providers, handset manufacturers and mobile operators, and recurring stories about consumers reducing discretionary spending make it clear that the across-the-board growth the mobile industry has become accustomed to is at an end.
While these signs of the downturn are sobering, the encouraging news is that usage of data services and mobile media stands at an all-time high, and several metrics suggest that this corner of the wireless world will continue to grow. Both Verizon Wireless and AT&T reported strong, double digit gains in data ARPU, +27.9 percent and +51.2 percent, respectively. It’s especially notable that gains occurred in a quarter where the economic meltdown came into full public view.
HANDSET REPLACEMENT TRENDS
It could be that economic concerns may yet lead many consumers to trim their mobile spending, and at comScore, we do see some evidence that this has begun to happen. From January 2008 to January 2009, our data shows the handset replacement cycle lengthening by about two weeks, a 12 percent market-wide increase in consumers using a prepaid handset as their primary mobile phone, and a 6 percent reduction in mobile phone owners who receive a full corporate reimbursement for their wireless bill.
But other forces are moving the market forward. While consumers are beginning to replace their handsets at a slower rate, the handsets they are replacing them with are increasingly capable and frequently attached to an unlimited data plan. These factors are spurring Internet access, application purchases and more mobile media consumption than ever before.
Smartphones continue to proliferate; the installed base of these devices in January was 84 percent larger than the previous year. Beyond this top-end category, mid-range devices are growing ever more capable and are also helping to drive mobile media usage. In fact, only half of the top 10 handsets driving media consumption are smartphones, with touch devices such as the LG Dare and the Samsung Instinct making a strong showing alongside iPhones and BlackBerries.
When it comes to monthly consumer spending, we do see signs that some consumers are trimming their budget, but this is offset by the more than 50 million consumers who report spending more than $100 a month on mobile, a group that has grown by 23 percent in the past year, faster than any other. This might seem counter-intuitive in an economy where paring back expenses has become important to so many, but it represents one demonstration of the way that mobile phones – and more specifically mobile media – have become an essential part of many people’s lives.
Operator investments in mobile broadband networks and steady improvements in handset technology put the average consumer experience miles ahead of where it was even 24 months ago. Beyond the improvements to raw technology, though, perhaps the biggest driver of mobile media growth has been the increasing availability and utility of content and applications.
ACCESSING NEWS AND INFO
Probably no single data point captures this better than the fact that the number of people in the United States accessing news and information on a daily basis has more than doubled in the past year. In January, more than 22 million consumers used their phone everyday to access news and information via browsers and applications, a number which excludes those who relied on their data services solely to communicate via e-mail or SMS. Overall, 27 percent of phone owners accessed mobile news and information in January, bringing the total audience size to more than 63 million.
This audience pays for this news and information in a variety of ways, whether it be through data fees and plans, application purchases and service subscriptions. Increasingly, even if the content itself is seemingly free, consumers are engaging in a tried and true value exchange by viewing and acting on advertising. While advertising budgets are falling victim to economic conditions, it looks unlikely that we will see the nascent mobile advertising market do anything but continue to expand in the coming year for at least two reasons. Studies comScore has done for clients indicate that mobile advertising is effective (sometimes more effective than “traditional” online advertising) and it is additive to the audience reach of the Internet.
It’s long been the hope for many in the mobile media space that we would reach a point where mobile media became essential and useful and more than simply a vehicle to fill up those little moments of downtime with “content snacking.” The data suggests this is happening and at a scale that truly establishes mobile as a new medium.
The 100 largest newspapers in the country have a daily circulation of just over 27 million, an audience just 19 percent larger than the 22 million daily users of mobile news and information. While the size of these audiences may be comparable, their trajectories are not. All things considered, it’s hard not to agree that mobile media is a good place to be.