Anyone familiar with hip hop outfit Public Enemy would associate the band with politically charged lyrics, disparagement of the media and concerns of the African American community. Perhaps what the New York-based group were less famed for, was their insight into the mobile entertainment market. Back in 1988, the group released one of their most anthemic tracks, Don’t Believe The Hype, which not only provided commentary on what the band believed to be cultural misinformation at the time, but unbeknownst to them, almost 20 years on would hit an appropriate note for the shennanigans of the mobile entertainment market.

The UK market is seen as the vanguard of the European mobile entertainment market and has long believed the hype that it will evolve as part of a thriving industry worth billions of dollars. In 2005 the mobile entertainment market was worth £600 million, which is an impressive sum for a market still in its infancy. Upon such buoyant figures companies alter their strategy and start-ups emerge in their droves, each looking to execute the successful business model. And why not? The problems arose when these carefully drawn-out business models failed to entertain the notion that the mobile entertainment market in the UK would be worth £600 million in 2006. It was. Worse is to come: This figure is most likely to decline in 2007, and at best remain stable (I’m working on the forecasts now).

But as the two worlds of entertainment and mobile converged, the glitz and glamour of Hollywood replaced the grey suits of the wireless world, sky-rocketing the hype associated with mobile entertainment into the stratosphere. And there it has remained. The burning question now is for how long?

The issue it seems is that the foundation upon which the mobile entertainment market has been created, ringtone revenues, are now in decline. However, the fact that that mobile entertainment revenues are yet to have waned, indicates that money is being diverted from ringtones to other areas of mobile entertainment  video and full-track downloads are two of the fastest growing services – in relation to the size of the mobile entertainment market.

Assuming the average piece of mobile content in the UK costs £3, approximately 200 million transactions occurred in 2006 (and 2005 for that matter). And based on a UK mobile subscriber base of 45.3 million, the mobile entertainment ARPU equates to £13.2 (4.4 transactions) per annum. But this does not account for the fact that approximately only 20% of the UK’s mobile users purchase content. Therefore, the MEARPMEU (mobile entertainment average revenue per mobile entertainment user) in 2006 was £22.1 per annum based on an average of 7.4 transactions by 9.06 million users.

The number of mobile entertainment transactions in the UK still represents less than one per month. And for this reason, the mobile operators have sought to introduce flat-rate data bundles (FRDB) as a direct means of increasing data APRU in the face of a stagnant mobile entertainment market.. But whether FRDBs will consequently drive mobile entertainment revenues remains to be seen. 3 UK have not seen an uplift in content sales since launching X-Series.

This converged wireless and entertainment industry has ultimately created a mobile content proposition that is compelling. It is compelling for the 20% of mobile users that part with £600 million per year, but not sufficient an incentive to encourage market growth.

Operator portals are primarily the first port of call for consumers either seeking infotainment or considering making a content purchase. Concentrating on Vodafone live!, the majority of its users are happy to click 30-40 times to access Google. (Actually it is something nearer 10; it is comparable to saying that I moved my mouse a total of 27 inches across the mouse matt and clicked 10 times to get to the content I was after. In my book, a “flick” of a navigational stick does not constitute a click). Consequently, Vodafone now has the Google search box on the live! homepage.

Vodafone has struck major content deals with the likes of Sony and Sky, which now begs the question why given the eagerness at which consumers seek to escape the confines of the operator portal – supposed walled garden or not – and access the infotainment experience provided by the mobile Internet.

Operator content revenues reflect this trend. Of the £600 million mobile entertainment revenues, some 70-75% is generated off-portal, equating to £180 million for the UK operators. In effect, operators are now competing against the consumer’s desire to browse the mobile Internet beyond the confines of their portals. The good news is that operators are looking to evolve their content and services offering inline with consumer requirements.

What is perhaps most staggering of all, is that the UK mobile entertainment market is generating £600 million, and the jigsaw is still missing a number of vital pieces. Until mobile broadband speeds approach anything near the fixed-line experience, consumers will not consider the mobile as a viable content delivery apparatus. What’s more, those 20% of mobile consumers that are willing to gamble on the delivery time of mobile content have already overcome one of the last remaining hurdles to mobile content: the user interface. In 2008, the time will be right for the rest of the market to follow suit. So Don’t Believe the Hype, at least not yet – 2008 will see the resurrection of the mobile entertainment market in the UK… and beyond.

 'Don't Believe the Hype...' will feature in September's issue of Mobile Entertainment magazine www.mobile-ent.biz.