2009 Year in Review: Mobile entertainment slides into irrelevance

Forget full-track downloads, ringtones and other traditional mobile content formats--richer, more interactive applications are now capturing the attention of consumers and content providers alike, making the mobile entertainment experience of the recent past seem as quaint and antiquated as 78s or the DuMont Network. Despite the conference's name, October's CTIA Wireless IT & Entertainment 2009 event focused little of its attention on entertainment content, instead installing a renewed emphasis on the enterprise segment--while a Mobile Media & Content-themed educational track addressed subjects including mobile TV and social networking, session titles like "Mobile Music: A Familiar Tune?" and "Mobile Advertising: Failure to Launch?" underlined the grave doubts looming over the segment.

Ringtones, once the driving force behind mobile content consumption, are now passé. This summer, research firm SNL Kagan reported that ringtone sales in the U.S. declined from $714 million in 2007 to $541 million in 2008 [1]--a 24 percent year-over-year drop, and the first-ever annual decline posted for a U.S. mobile content category. In all, ringtones' share of total U.S. mobile music revenues fell from 80 percent in 2005 to 63 percent in 2008, a slump credited to consumers learning to create their own ringtones by sideloading edited MP3 clips to their phones and in turn bypassing operators' direct sales channels. Full-track downloads aren't faring much better: A year after the U.K. debut of Nokia's all-you-can-eat Comes With Music service, digital content research firm Music Ally reported [2] the mobile music effort signed up slightly more than 107,000 users worldwide. A Forrester Research study released in August indicates that just 10 percent of U.S. mobile subscribers use their phones to listen to music at least once a month, and while that's up from 5 percent a year ago, it's still a negligible segment of the overall user base. Forrester adds that 60 percent of U.S. mobile subscribers maintain they have no interest in buying music on their handsets.

"We're in the middle of a generational shift in terms of how consumers purchase content," said Robb McDaniels, CEO of digital media distribution firm INgrooves, during a CTIA Wireless IT 2009 panel session. "It's pretty bad right now." So bad, in fact, that McDaniels cracked the panel, titled "View from the Top," should be retitled "View from the Bottom" to more accurately reflect the current state of the music business. Execs remain high on the possibilities of next-generation mobile applications, however: "Connectivity has never been higher. Fan engagement has never been higher," said TicketMaster VP of marketing and music Adam Flick on the same panel. "Now, how do we capitalize on that?" Applications not only offer a more immersive, multi-faceted consumer experience--they also portend additional revenue opportunities for content providers. During a CTIA Wireless IT & Entertainment 2009 educational session titled "App Trends: App Developer Perspective," moderator Tim Chang, principal with Norwest Venture Partners, cited in-app micro-transactional purchases (like those enabled via Apple's iPhone OS 3.0 [3]) as the subject of growing enthusiasm among the Silicon Valley elite. Sony Pictures Home Entertainment, which outlined its forthcoming mobile game slate at CTIA IT [4], said a refresh of its popular Wheel of Fortune title will herald its first plunge into micro-transactions. "That's very much an opportunity we're excited about," said SPHE vice president of worldwide entertainment Kara Bilkiss in an interview. "We're totally committed to giving mobile consumers access to more content."