Summary
This analysis discusses an impact that global recession has on mobile entertainment business and highlights modalities that could help mobile entertainment services cope better with current economic downturn.
Analysis
Many of the applications making their way to the various storefronts are entertainment-driven, but the market for mobile entertainment just isn’t receiving the same enthusiasm. We expect that growth in user spending on mobile entertainment will slow dramatically over the next two years unless key markets emerge from the recession. Even if they do recover, however, revenues might be lower than previously forecasted — potentially even $13 billion lower. The worst-case scenario of a prolonged global recession would yield mobile entertainment revenues of nearly $13 billion over the next five years — still significant, but also significantly less compared to pre-downturn forecasts of more than $26 billion.
The recession is having an adverse effect on both subscription services and one-off downloads of games and music, as consumers are either reducing their adoption of these services or churning away from them. Of the entertainment services, mobile TV — never particularly strong — is likely to fare the worst, followed by music and user-generated content.
One space the downturn might actually be helping is mobile advertising. It might be more appropriate to focuse more heavily on mobile marketing and advertising than actual entertainment. It is important to be a first mover in mobile advertising to capitalize on consumers’ most personal and targeted platform. It’s going to take awhile to tackle this uncharted territory, but though advertisers may be slashing budgets now when they reallocate them, mobile should be a top priority. Ease of access and data costs also are holding this industry back.
The recession will play out as it will, but mobile entertainment services can learn from the app stores’ simple, widget-driven user interfaces and benefit from mobile advertising subsidies.
