Growth of Mobile Content Services to Increase ARPUs for LatAm Operators

Mobile content services have been catching on fast in Latin America and were responsible for 3.1 percent of the total mobile telephony revenues in 2007. In the same year, the number of mobile content users reached 57.1 million or 31.1 percent of the total number of mobile subscribers. While mobile music continues to be the most in-demand service among end users, games and video will gradually gain in popularity.

New analysis from Frost & Sullivan finds that the market earned revenues of $1.15 billion in 2007 and estimates this to reach $8.93 billion in 2014.

"With mobile voice revenues per user not growing at the impressive rates seen in the last few years, Latin American mobile operators have been investing their efforts in promoting data services," note Frost & Sullivan Research Analysts Justina Trotta and Andrés Sciarrotta. "Although mobile messaging is still the dominant component of the regionÃ's mobile data service market, mobile content services are fast gaining traction."

Quite significantly, the two largest economies of the region, Brazil and Mexico, experienced outstanding growth in 2007, achieving $1.11 billion in revenues. This represents a 48.5 percent growth over 2006.

"In Brazil, about 37.7 percent of the total 122.8 million mobile subscribers used at least one of the mobile content services in 2007," says Trotta. "Mobile music represented 38.1 percent of the Brazilian mobile content services market revenues, generating $250.2 million in 2007."

Notwithstanding these favorable market indications, a significant proportion of mobile subscribers are still unaware of the capabilities of their handsets. Furthermore, many users find it difficult to search for the contents they want, especially on WAP portals.

"The Latin American mobile content market is still limited by the fact that not all the mobile handsets are capable of running all mobile content services, especially games and videos," adds Sciarrotta. "The impact of this restraint is, however, expected to diminish once handsets become more affordable and accessible, enlarging the addressable market size."

Given these challenges, operators should make concerted efforts toward educating end users on the capabilities of their handsets and make their WAP portal friendlier. This way, some non-users may begin using content services, thereby increasing penetration.

Posted to the site on 8th July 2008