By Jack Kent, Principal Analyst, IHS Technology
- IHS forecasts that total revenues from mobile media and advertising will pass $90 billion in 2018 up from $53 billion in 2014.
- Mobile advertising will become the leading mobile business model, overtaking paid content revenues in 2015.
- Amazon has the most highly monetised user-base generating over $350 revenue per year from each of its active customers, but with more than 30 times higher profit per user Apple's profitability dwarfs all others in the mobile industry.
- Japan is the most successful mobile content market with average mobile content revenues of $40 per subscriber in 2013 compared with $21 in South Korea, $15 in the US and $12 in the UK.
- Asia leads for content, commerce, and communications innovation, and the next battleground will be in enabling other forms of mobile commerce in the country
Key Findings from the report:
Mobile advertising will overtake paid content revenues
Mobile advertising will become the leading mobile business model, overtaking paid content revenues in 2015.
In-app purchases will remain the primary revenue stream for app developers as mobile search stays higher than mobile display advertising revenues.
Wearable apps provide new opportunities, but business models must evolve
Wearable devices are a new focus for mobile app developers, with Health & Fitness and notification services attracting most interest so far.
Many of these apps remain too focused on one-off payments and need to a find a way to create sustained revenues from users through subscription and service based models; Health and Fitness apps took only around 1% of top UK app store revenues in Q1 2014, but accounted for 6% of the leading paid downloads.
Wearables will play a key role in mobile advertising; but will be best used to collected data rather than as new screen on which to display adverts.
Mobile users are not created equal; scale does not guarantee monetisation success
IHS has analysed the total mobile content spend of mobile subscribers in a number of major markets – looking at music, video, apps and games – and also compared how leading companies in the mobile ecosystem monetise their users:
Japan is the most successful mobile content market with average mobile content revenues of $40 per subscriber in 2013 compared with $21 in South Korea, $15 in the US and $12 in the UK.
Games is the main differentiator for mobile success. Strong domestic games industries in Japan and South Korea have helped grow content revenues.
Operators, device makers, OS providers, retailers and content companies are all battling for control of the mobile user. Amazon has the most highly monetised user-base generating over $350 revenue per year from each of its active customers, but with more than 30 times higher profit per user Apple's profitability dwarfs all others in the mobile industry.
Asia leads for content, commerce, and communications innovation
Asian messaging apps LINE, WeChat, and KakaoTalk have led the way when it comes to using a communications platform to drive additional revenues through content and services.
The next battleground will be in enabling other forms of mobile commerce. China is a key country; WeChat, owned by leading online services and content company Tencent, is squaring up against soon-to-IPO Alibaba.
There is no one size fits all strategy for mobile monetisation
Games, driven freemium in-app revenues, continues to be the standout category for overall app store revenues.
Virtual currencies are driving games freemium success; accounting for more the 70% of the top US in-app purchases in Q1 2014. But outside games, subscription models are often the best route to monetisation with dating and music apps among the most successful.
