Cross-over points coming this year in media numbers

We look at all types of digital and interactive media here at Communities Dominate, but as my particular experience is the business and numbers of the newest of the seven mass media (ie mobile), I occasionally discuss those numbers, as they can be quite startling to many of our readers.


UDATE Dec 10 - I've just published my annual statistical review about the overall size of the mobile industry for end-of-year 2008. All new numbers so if you are interested in the "big picture", you may want to read this blog entitled Trillion with a T: Newest Giant Industry is Mobile


This year once again we will be seeing several significant cross-over points as mobile overtakes other major technologies and mass media channels.

And for those not very familiar with mobile as the 7th mass media channel - how is it even possible to reach the numbers I'll talk about, note that the world has passed 3.6 billion mobile phone subscribers as of the first half of 2008 (we'll be just about 4 billion at the end of this year). So what we're looking at is a monster-sized industry and even a billion users out of all mobile subscribers is only less than one in three.. So lets dig in..

We reported earlier that Informa has come out with 2008 numbers for the industry total revenues. They reported that mobile data services, excluding SMS text messages, will be worth 70 Billion dollars this year. For some media context, thats slightly larger than the global book publishing industry, or roughly as much as Hollywood box office revenues, global music industry revenues, and videogaming software sales, put together. Just ten years ago this industry (mobile data, excluding SMS text messages) had zero dollars in revenues.

This year we'll see sales of 300 million multimedia phones, says Rider Research. A multimedia phone has a camera, a colour screen, and a media player ie music and/or video player. That is a big number, yes. Bear in mind since 2001 when the iPod was introduced, Apple has sold about 200 million total iPods (media players, mostly music players obviously but also video players). And this year the phone industry sells 300 million phones that are multimedia capable. What a business, eh? Or to put it in another way, this year more multimedia phones are sold than TV sets; or more multimedia phones than laptop PCs.. Yes, its a big industry indeed.

Talking about TV. There are about 1.4 billion TV sets in the world. But this should get the TV advertising people to pay attention. This year there will be 1.5 billion people who will receive advertising on their phones according Juniper Research. And against the total mobile subscriber base, that is obviously only a little more than 4 in 10 phone owners who will receive ads. More than half of the population in countries as diverse as Japan and Spain already do so. Yes, 2008 is definitely the year to boost interest in mobile advertising.

Picture messaging, often known by its techno-babble cryptic name of MMS (Multimedia Messaging System) ie the ability to send your picture from your cameraphone to any other modern phone (ha-ha, well, except for some bizarre reason the iPhone, the only smartphone that is not compatible with the global picture messaging standard) is nearing a major milestone. This number is hard to find, but my company TomiAhonen Consulting tracks moble industry numbers and we're very fast approaching a major milestone, which I'm sure will then be reported by the major analysts. We have passed a billion active users of picture messaging, but the point is, we'll pass 1.2 billion users of MMS picture messaging. Why is 1.2 billion a relevant number? Because that is the level of usage of the second most popular data application on the planet (email; SMS text messaging is obviously the most popular by a massive margin, with over 2.5 B users). Yes, probably near the end of this year, or else early next year, there will be more users of mobile phones sending picture messages, than there are active email users..

Then we have those mystic 3G phones and subscribers. 3G was once accused by many so-called telecoms experts (who mostly came from the fixed landline side of telecoms, or else from backward countries like the USA) who argued that the 100 billion dollars that was spent on 3G licences in 2000-2001 would never be paid back, and would bankrupt the industry. They hadn't done their math. As I argued back then - and in my book M-Profits, the industry was set to earn those license fees back well before this decade was done. Well, this year there are 362 million customers with 3G phones and 3G services on 3G networks. They will generate over 250 billion dollars of service revenues just this year alone. As the industry sustains over 35% profit margins (EBITDA profit margins for the accountants out there) - assuming even only modest growth for the future, the 100 billion can be paid off in the next 12 months, out of the profits earned by the industry.. This is a big big industry with big big numbers. We don't talk millions in mobile, we talk billions.

And of those billions, the total value of the PC based internet, including all service revenues, all advertising revenues, and all monthly subscription fees including broadband and dial-up, globally, was 177 billion dollars in 2007 according to PriceWaterhouseCoopers. I don't have their number for 2008, but it will be very close to 200 billion, in round terms. Guess what. Mobile data revenues (not counting the costs of mobile subscription fees, just the data revenues) are worth 200 billion dollars this year according to Informa. So we are now reaching the point, where the little brother, mobile as the 7th mass media channel, is going to pass in size the sixth mass media channel, the internet, in total revenues. A major milestone indeed. The biggest engine of that income in mobile is SMS text messaging, which will deliver over 130 billion dollars to the industry this year. Yes, you read that right. SMS alone is larger than global newspaper advertising revenues of $120 B, for example, and almost as large as the global soft drinks industry of $145 B. Think about that when you reach for your next Pepsi..

We are past 3.6 billion mobile phone subscriptions in the world. Even the poorest continent, Africa stands at 34% mobile phone penetration per-capita. Every economically viable person on the planet has a phone, and can be reached with SMS text messaging. And the industry keeps selling a massive number of new phones. This year we'll sell over 1.2 billion new phones and over 190 million of those will be smartphones says Gartner. Will those be those Apple iPhones? Actually Gartner's latest quarterly data has five brands of smartphones outselling Apple, with RIM's Blackberries outselling iPhones 5 to 1, and Nokia smartphones of course being the giant of the handset business, outselling iPhones 15 to 1..

Finally we are approaching the tipping point for the mobile internet. Here there are vast differences in definitions and what is counted and what is reported. Briefly, it is possible to measure access of the "real internet" ie the 6th Mass Medium by using a mobile phone or for example a 3G data card or 3.5G USB dongle and a laptop. By this use there are only some hundreds of millions of internet users accessing from mobile, and a small fraction of all internet users (of over 1.3 billion).

But then there is what is called a "mobile internet" which could be said to be synonymous with WAP and other such mobile browser environments like iMode etc. By this count there are nearly a billion mobile internet users. Then there is a definition of internet content, being accessed by mobile. So downloading a mobile game, over the air, would count as this, or downloading a song to a musicphone. If counting mobile data downloading and browsing, we are well past a billion users, probably near the 1.3 billion internet user number in 2008.

Which brings me to those internet user numbers. Note that out of 1.3 billion internet users, there are only 950 million personal computers (desktop and laptops combined) in use. So we already have a discrepancy of 350 million who access the internet without a PC. Most of those will be accessing via mobile. Mobile access to the internet is the majority in many countries around the world including Japan, South Korea, Taiwan, India and South Africa; with many European countries nearing the half-way point this year.

My point is, that we are at a cross-roads also for internet access, and internet service access by mobile or PC. There are many services which report more access from mobile devices than PCs, and the internet weather service websites were among the first to report this two years ago.

Also - please do note, that most users will have access to both (say you have a Blackberry but also access your email on a laptop at work; or you have both a Mac and an iPhone, etc). Most users in the develped world who can afford the mobile internet (and a suitable phone) will have both means to access the web, and use both. But in the developing world there is a far greater need for just one device. The smartphone, while expensive, is a far easier option for budget-constrained youth at university or in a first time job, than buying a laptop. When forced to have only one, it will increasingly be a mobile internet enabled phone. But worldwide, this year, we'll probably be at a one third/one third/one third split. One third who access exclusively by PC; one third who access exclusively by phone; and the last third, who access by both PC and phone.

So keep your eyes on these numbers and really, if you don't have a mobile strategy and have a professional interest to read our blog, why not? Can you remain viable for long without a mobile strategy anymore?

For those who would like to understand the industry more, remember I have my free Thought Piece on Mobile Industry Size 2008, which I am happy to email to you. Send me a request to  tomi (at) tomiahonen (dot) com. In return I will include as a bonus, the 30 page excerpt from my brand new book, Mobile as 7th of the Mass Media, which will appear on Amazon shortly (the publisher is already taking orders at their website)

UDATE Dec 10 - I've just published my annual statistical review about the overall size of the mobile industry for end-of-year 2008. All new numbers so if you are interested in the "big picture", you may want to read this blog entitled Trillion with a T: Newest Giant Industry is Mobile

Comments

[Alan Moore]

Tomi I was asked at Mobile Monday, which country leads the world in Mobile advertising.

Sadly I could not answer - is it Japan, Korea or elsewhere...?

Perhaps you could advise and also give a perspective perhaps in a separate post how and when this is going to go mainstream or perhaps a better way to explain it part of the media ecology as an everyday event.

Interesting, I also think that until we have metrics and an understanding about what is exactly mobile advertising - media, publishers and advertisers are going to struggle.

My analogy that previous ad formats (display) are the furniture of advertising is an apt one, and inappropriate to mobile or indeed the fixed internet.

Who wants old furniture in your house when yu can get something that perfoms much better unless you are into nostalgia?

Alan

[Tomi T Ahonen]

Hi Alan

Great question, and yeah, Japan and South Korea are up there. I would put Japan the most advanced mobile advertising market, and the one which is most mature, ie the advertising industry knows mobile best.

South Korea is very advanced too. Surprisingly strong is India (where they invented the mobile advergame). Spain is Europe's most advanced mobile advertising market. But UK is also one of the European leaders.

I'll do a blog about shifts to mainstream, obviously we're seeing those but its slow going, as the internet eco-system desperately needs advertising to survive, and the "draw" in young creative advertising talent is more to the internet side. In the mobile services industry, essentially all mobile service categories (far larger than those on the internet) are all fully self-funded by customers paying content revenues, so the innovation is more on advanced services, than specific ad innovations. Thus we still see the "furniture" borrowed from the internet, banner ads, spam SMS text messages etc - in mobile, rather than a lot of innovation. Total mobile advertising was only 2.2 billion dollars worth last year (one half of one percent of all advertising dollars spent globally). Internet advertising is far larger.

This will change, as advertisers learn more about mobile and its particular strengths.

Tomi :-)

[Dean Bubley]

Hi Tomi

Som fascinating stats - I didn't realise the MMS user figure was that high. Any idea of regularity of use? (How many people are regular users, eg 5+ per month?)

Although I'd pick you up on this one though:
"out of 1.3 billion internet users, there are only 950 million personal computers (desktop and laptops combined) in use. So we already have a discrepancy of 350 million who access the internet without a PC. Most of those will be accessing via mobile"

...actually, most of that discrepancy will be using a shared PC, at home / school / Internet cafe.

In China, for example, according to CNNIC, the average home PC connected to the Internet has 2.7 users. And the number of individual Chinese Internet users is now growing faster than mobile users when you correct for multiple SIM ownership.

For this reason I'd also disagree with the notion that emerging-market users will choose smartphones as a "sole device". More probable is that family members will get cheap low-cost handsets, plus a cheap shared family PC. Buying 4 * $150 smartphones for a family - with 2 year lifespans at best - is much more costly than 4 x $30 ULC phones and a single $300 PC with a 4-5 year life.

Cheers

Dean

[Tomi T Ahonen]

Hi Dean

I figured that posting might get you to visit us again and post your thoughts, ha-ha.. Not surprised..

MMS - yeah, the numbers are staggering, about 48% of Asians are already active users. But - all recent numbers I've seen, suggest MMS is only about 1% of total mobile messaging trafic - so the volumes used are nowhere near those of SMS. The average mobile phone subscriber sends 2.8 SMS per day. The average subscribers sends perhaps 1 MMS per MONTH..

To find even that reasonable, but quite modest usage level you suggest - 5 MMS per month - I'm sure that user base is somewhere near 100 million people or so. The usual criterion for MMS "active user" is one MMS sent per month..

But three important things. MMS requires a compatible handset and compatible network connection; ie MMS cameraphone and at least GPRS (ie 2.5G) network or faster. That was zero in 2001. Even as MMS usage level is very modest compared to SMS, the growth in MMS users has been astronomical this decade.

Secondly, if SMS total traffic in 2007 was 1.9 Trillion messages, and MMS is 1% of SMS, then the global total of MMS picture messages sent last year was 19 billion. That is no small number. Even across the global mobile phone subscriber base, it is 6.3 MMS per subscriber per year, or half an MMS per person per month. Or per active user, it is 1.58 MMS sent per active user per month.

Thirdly, we are now seeing the emergence of MMS as a viable advertising and marketing platform, which will very likely dramatically increase MMS usage. Similar to how American Idol/Pop Idol and other reality TV shows have expanded the SMS text messaging use, teaching non-users to vote with SMS, I do think that new mobile advertising built on MMS will help teach many non-users to use the MMS ability of their phones. I've reported here at our blog for example of Blyk using MMS messaging to do engagement marketing, as well as for example just now the BMW campaign for winter tyres. Little bits and small target niche segments, but this adds to total MMS traffic, and also helps teach users to get onboard..

Oh, the PC user numbers. Yes, we do have multiple users especially in the Developing World, per PC. Note the opposite is also true, professional people like you and me, often have several PCs, so a single white collar worker could have one at work, and a private PC at home, two PCs to one user. It somewhat balances out still today, where the total PC population in the developing world is so small in numbers compared to the developed world.

And running in parallel, more and more countries now report that domestically they have more internet access from mobile than PC users, which was first reported in Japan in 2005. Last year we had South Korea and India join the numbers (and briefly China, but then Chinese broadband user numbers passed mobile numbers). Now we have for example South Africa and Taiwan joining the group of these countries. And I'd guess very much of Africa and developing countries in Asia, mirror the India and South Africa pattern. Meanwhile in Southern Europe, we are at the level of 40% of all internet users accessing via mobile in many countries like Italy, Portugal, Greece etc. So am expecting the first European country to announce this cross-over point near the end of this year or soon next year.

Thanks for writing Dean.

Tomi :-)