Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
Today, while the U.S. mobile adult content market remains in a very early stage as there is no “pure” mobile adult content available on the carrier’s deck, no “robust” age verification, classification or rating system, the market has not reached a tipping point. That being said, we are likely to see an exponential rise in mobile adult content given the increasing openness in mobile networks, the growing popularity of “sexting” and off-deck content, and the expected rise in all-inclusive data plans offered by the carriers.
1. Adult content still a sensitive topic among the carriers and handset vendor community, but key players are already monetizing adult content directly and indirectly: U.S. carriers and handset vendors like Apple have remained fierce opponents of mobile adult content over the years, shutting down mobile adult applications, as they could harm their image and reputation and increase churn. Ironically, most U.S. operators already offer “soft-type” adult (e.g. swimsuit/bikini wallpapers) content on their deck, and several soft-type adult content apps (e.g. suicide girls) have become best selling apps on mobile app stores like Apple’s. That being said, today the reality is that through the mobile app store carriers like AT&T, when selling data plans, and Apple, which captures 30% of paid apps, are monetizing such content.
2. 2009 is set to become a critical year for adult content in America. Mobile app stores are becoming a driving force. 2009 is set to become the year when mobile adult content starts gaining significant traction off deck. In my opinion, the emergence of small application developers focusing on mobile adult content for mobile app stores should remain a key driver. In the coming years, I believe that the line between on and off deck is likely to become blurry as mobile app stores continue to gain momentum. With the growing popularity of off-deck content, the growing adoption of mobile Web, carriers’ migration toward mobile advertising, and an open-network environment, it will become critical for carriers to offer more robust content filtering tools/parental control tools, and legitimate age verification systems. Sadly, the only true age verification system is done off-deck through credit card payments.
3. Sexting becoming a big phenomenon among American teens. Sexting, often characterized as sending or receiving sexually suggestive, nude or nearly nude photos by e-mail or MMS, and used by 20% of Americans according to the National Campaign to Support Teen and Unplanned Pregnancy, has become a real phenomenon and a big issue in the U.S. among American teenagers.
4. U.S. carriers are lagging behind U.K. carriers when implementing tools to protect under aged users, but U.S. carriers are likely to catch up in the coming years. While U.S. carriers are currently lagging behind U.K. carriers when it comes to implementing robust age verification systems, I expect the U.S. to catch up with its European counterparts in the coming years. A number of factors will keep that number from being as high in the U.S., but a number of factors could result in a similar sales environment in the U.S. in the coming years.
5. U.S. Carriers are not equal when it comes to protecting under aged users against mobile adult content, with Verizon out in front. In my opinion, Verizon Wireless, which ranks first in my leaderboard, has offerings that are very similar to that of AT&T. Like AT&T, Verizon Wireless offers parental controls for wireless, high-speed Internet service, television and landline phone service. What sets Verizon apart is that it can monitor PSMS (short codes) – the special telephone numbers or short numbers used for value-added services, such as TV voting and ringtone purchases — and it also offers turn-by-turn directions on its LBS-based Family Locator application. However, AT&T is not too far behind Verizon Wireless. The carrier is lacking in protection for PSMS (short codes), however, and because of this I ranked them second. Sprint Nextel, which ranks third, appears to be slightly lagging behind AT&T and Verizon today in this area. For instance, the carrier does not monitor music containing explicit lyrics on its music and video service. Like AT&T, Sprint Nextel also does not offer filters for PSMS (short codes). However, Sprint Nextel offers various parental control tools. For instance, like AT&T and Verizon Wireless, Sprint Nextel offers an LBS-based Sprint Family Locator, which enables parents to use a phone or PC to locate a child on a map. T-Mobile comes last on my leaderboard as the depth and variety of tools it offers to help parents control and filter inappropriate content seems to be fairly limited compared to AT&T, Verizon and Sprint Nextel. For instance, T-Mobile is the only U.S. carrier who does not offer for the majority of its handsets a Family Locator, a LBS service, which enables parents to use a phone or PC to locate a child on a map. Of note, the carrier only offers such service on select devices (Android and BlackBerry devices) through the Android store and RIM store.
6. In the coming years mobile adult content is set to be available in a multiplatform environment, with 4G network technologies (LTE and WiMAX) likely to become key drivers. Mobile advertising is also set to drive price erosion. By 2013, I believe that mobile adult content users will be able to enjoy a full mobile Web experience across various platforms (cellphone, PC, laptop, digital camera, set-top box, video consoles, Slingbox, etc), network types (e.g. 3G, LTE, WiMAX, Wi-Fi, etc.), and business models (e.g. subscription-based, ad-based revenue model, a-la-carte), and with the best QoS anytime anywhere. As smartphones become more advanced and affordable with advanced live video streaming capabilities, we expect to see the emergence of new types of mobile adult content services like mobile video chat. WiMAX, Wi-Fi, and LTE are set to become key drivers here. Lastly, as mobile advertising continue sto gain momentum in the U.S., I expect to see the emergence of rich ad-funded or ad-supported mobile adult content services/content. This should help drive the price erosion, and drive the adoption of mobile adult content services.
Bottom line: U.S. carriers need to do a better job protecting under aged users by offering more robust content filtering tools/parental control tools, and true age verification systems. Now is the time for U.S. carriers to step up to the plate. Otherwise, things could quickly become out of control as the adoption of Web-based mobile adult content continues to grow, the mobile Internet continues to open up, and carriers continue to migrate toward an open-network environment, especially if the FCC’s new plan for net neutrality becomes a reality in the coming years. It will then become critical for carriers to continue to work closely with organizations like CTIA and others to move in the right direction.
For more on this topic check out JBB Research’s report “Expect a proliferation of mobile adult content in the United States in the next five years.”
