Sales of music for use on cellphones are expected to nearly double over the next five years, a European cellular content provider said on Wednesday.
From an estimated $7,4-billion this year, sales are expected to reach $13,6-billion in 2011, said Arena Mobile, a Spanish cellphone content supplier.
The bulk of the sales should take place in Asia, with the region likely to account for more than half of global demand for cellphone music services including ringtones, said Josep Anton Aliagas, Arena Mobile’s chief executive.
“It’s a huge industry. We are talking about a very big industry,” he said.
“The industry is going to double in sales because we are introducing new products and new concepts.”
Ringtones remain the clear consumer favourite when it comes to cellphone music offerings from online websites, Aliagas said at a conference during CommunicAsia2006, a major telecommunications trade fair.
Despite the upbeat growth outlook, this particular segment of the cellphone entertainment sector faces challenges which could hinder its long-term prospects, Aliagas said.
The ongoing tussle for a larger slice of revenues by key players including telecom operators, content providers and record companies cannot continue, he said.
“This is where all the game is being played right now. At the end of the day, the consumer is losing,” Aliagas said.
According to him, operators get an average of more than 50% of revenue per customer bill for cellphone music while content providers like Arena receive less than 10%.
“I find it really unfair… we should rethink the value chain,” Aliagas said. “If we create a win-win model for all the parties in this business, the business is going to grow and we are going to develop a huge industry but all the parties have to grow together.”
For the cellphone music sector to continue expanding, the industry must stick to its formula of allowing consumers to easily purchase music of their choice, Aliagas said.
“We see that the consumer is very open to get new services,” he said. “But on the other side, we see that the more difficult the service becomes for the user to download or subscribe, the less success we have in launching the product even if the products are sometimes really, really very good.”
Aliagas did not give specific examples of new products that were spurned by consumers but his comments echoed those of other industry executives at CommunicAsia2006, the largest trade fair of its kind in Asia.
“It’s ultimately about the experience for the consumer. The technology is completely and utterly irrelevant,” said David Butorac, chief operating officer at Astra, a satellite television operator in Malaysia.
Arwin Rasyid, chief executive officer at Indonesia’s state-owned PT Telkom telecommunications firm, also sees it as critical that the industry realise consumers are not necessarily going for the latest technological innovation.
“The key here for any operator especially like myself is really how to satisfy the needs of the consumers,” he said.
“And I think that in this case, content is king and not only that, it’s also affordability …,” he said.
For the telecommunications sector, cellphone entertainment — music, games, gambling and video — is seen as a key income stream as profit margins from voice and messaging services get squeezed from intense competition, industry players say. – AFP