1. Mobile media and entertainment in Western Europe: forecasts and analysis 2008–2013 Yanli Suo-Saunders, Matt Hatton, Helen Karapandžić and Alexandra Rehak September 2009 Research forecast report

2. 2 © Analysys Mason Limited 2009 Mobile media and entertainment in Western EuropeContents 5.Document map – Executive summary 6.MME service revenue will grow to EUR6.9 billion in 2013, but will still account for only a small share of mobile revenue 7.Document map – Introduction and scope 8.This report provides MME forecasts for Western Europe 9.The report quantifies nine MME service categories in the context of the broader mobile communications market 10.The nine MME service categories comprise more than 20 different service types 11.The report includes market sizing estimates and forecasts of important KPIs for each MME service category 12.Document map – Market overview 13.MME services accounted for 2.2% of mobile service revenue, and 9.9% of non-voice revenue in 2008 14.The recession will hinder growth in MME service revenue, which will reach EUR6.9 billion in 2013 15.Games will replace personalisation as the MME service category that generates the most revenue by 2013 16.The success of Apple’s App Store demonstrates that demand for mobile content and applications is high 17.The market conditions for MME services are becoming more favourable in Western Europe 18.Mobile operators are shifting towards a ‘service enabler’ approach by offering open platforms to content providers 19.The MME market still faces a number of challenges, the greatest of which is poor user experience 20.Document map – Market forecasts and analysis by service category 21.Market forecasts and analysis by service category: Paid information 22.Service providers are increasing the scope of paid information services 23.Paid information revenue will grow to EUR800 million in 2013, driven by the launch of new service types 24.Market forecasts and analysis by service category: Personalisation 25.Personalisation is the largest MME service category in terms of revenue in Western Europe 26.Personalisation services’ share of overall MME revenue will drop from 43% to 19.1% over the forecast period 27.Market forecasts and analysis by service category: Games 28.Apple’s App Store is likely to have a significant impact on the mobile games market 29.Application stores are redefining the revenue model and opening new distribution channels for game providers Slide no. Contents [1]

3. 3 © Analysys Mason Limited 2009 Contents [2] Mobile media and entertainment in Western EuropeContents 30.Games will become the largest MME service category by 2013, when they will generate EUR1.4 billion in revenue 31.Market forecasts and analysis by service category: TV and VoD 32.Take-up of mobile linear TV and VoD services has so far been low 33.Demand for TV and VoD services is strong, but providers must enhance propositions to compete with traditional media 34.Linear TV service revenue will grow to EUR520 million in 2013, when it will represent 8% of MME revenue 35.VoD services will outperform linear TV services in terms of revenue over the next five years 36.Market forecasts and analysis by service category: Music 37.The perceived value of digital music is declining 38.Music will account for only a small proportion of MME revenue during the forecast period 39.Market forecasts and analysis by service category: Gambling 40.The mobile gambling market is in its infancy in Western Europe, and legislation varies between countries 41.Mobile gambling services will experience rapid growth, with revenue reaching EUR470 million in 2013 42.Market forecasts and analysis by service category: Adult content 43.Adult content is the third­largest service category by revenue, despite operators’ unwillingness to promote it 44.Adult content will continue to represent a significant source of revenue in the MME market 45.Market forecasts and analysis by service category: Social networking 46.Mobile social networking sites are emerging rapidly, but lack a sustainable revenue model 47.The user base for social networking services will grow rapidly, but its impact on revenue will be limited 48.Document map – Recommendations 49.Recommendations [1] 50.Recommendations [2] 51.Document map – Authors, copyright and key to acronyms 52.Authors 53.Acknowledgements 54.Copyright 55.Key to acronyms Slide no.

4. 4 © Analysys Mason Limited 2009 Contents [3] Mobile media and entertainment in Western EuropeContents 56.Document map – List of figures and tables 57.List of figures and tables [1] 58.List of figures and tables [2] 59.Document map – About Analysys Mason 60.About Analysys Mason 61.Research from Analysys Mason 62.Consulting from Analysys Mason Slide no.

5. 5 © Analysys Mason Limited 2009 Document map Executive summary Introduction and scope Market overview Market forecasts and analysis by service category Recommendations Authors, copyright and key to acronyms List of figures and tables About Analysys Mason Mobile media and entertainment in Western EuropeDocument map: Executive summary

6. 6 © Analysys Mason Limited 2009 Analysys Mason forecasts that mobile media and entertainment (MME) service revenue will grow to EUR6.9 billion in 2013, up from EUR3.2 billion in 2008, and will register a CAGR of 16.4% during the forecast period. However, MME services will continue to account for a relatively small proportion of mobile service revenue during the next five years, at 4.1% in 2013, up from from 2.2% in 2008. Embedded, downloadable and online games, as well as entertainment applications from application stores, will account for the largest share of MME revenue in 2013, at 20.1%, when they will generate EUR1.4 billion. Personalisation services’ dramatic loss of revenue share to other services – from 43.3% in 2008 to 19.1% in 2013 – can be attributed to the maturity of the personalisation services market, the declining demand for ringtones and wallpapers, and downward pressure on pricing. Mobile media and entertainment in Western EuropeExecutive summary Figure 1: MME revenue by service category and as a proportion of mobile service revenue in Western Europe, 2008–2013 [Source: Analysys Mason, 2009] MME service revenue will grow to EUR6.9 billion in 2013, but will still account for only a small share of mobile revenue

7. 7 © Analysys Mason Limited 2009 Document map Executive summary Introduction and scope Market overview Market forecasts and analysis by service category Recommendations Authors, copyright and key to acronyms List of figures and tables About Analysys Mason Mobile media and entertainment in Western EuropeDocument map: Introduction and scope

8. 8 © Analysys Mason Limited 2009 This report provides MME forecasts for Western Europe The following markets are modelled individually: w France w Germany w Italy w the Netherlands w Spain w Sweden w the UK. Countries that contribute to the Western European forecasts, but are not modelled individually,are: Austria, Belgium, Cyprus, Denmark, Finland, Greece, Iceland, Ireland, Luxembourg, Malta, Norway, Portugal, Switzerland and Turkey. Mobile media and entertainment in Western EuropeIntroduction and scope Figure 2: Countries included in this report [Source: Analysys Mason, 2009] Modelled individually Modelled as part of the ‘Rest of Western Europe’ category

9. 9 © Analysys Mason Limited 2009 The report quantifies nine MME service categories in the context of the broader mobile communications market Mobile media and entertainment in Western EuropeIntroduction and scope Figure 3: Categorisation of mobile services [Source: Analysys Mason, 2009] MME services Voice P2P messaging Data access via handsets Advertising Paid information Personalisation Games TV VoD Music Gambling Adult content Social networking Mobile broadband Quantified in this report Not quantified in this report Other non­voice services

10. 10 © Analysys Mason Limited 2009 The nine MME service categories comprise more than 20 different service types Mobile media and entertainment in Western EuropeIntroduction and scope Service categoryService types Paid informationNews services, weather information, Yellow Pages, sports content and other information services, including location-based services PersonalisationRingtones, ringback tones, realtones, video ringtones, user-generated ringtones and graphics (including wallpapers, e-cards and screensavers) GamesEmbedded, downloadable and online games, including entertainment applications from application stores TVLinear TV, including broadcast and unicast TV VoDOn-demand video and catch-up TV, including music-related video MusicDownloadable tracks and streamed music (excludes personalisation services and music-related video) GamblingLotteries, betting services and exchanges, and bingo and casino games Adult contentAdult-oriented text, ringtones, graphics, games and video Social networkingSocial networks (Internet/mobile and exclusively mobile), Web logs, forums, mobile dating sites and community-based user-generated content Table 1: Classification of the MME market by category and service type [Source: Analysys Mason, 2009]

11. 11 © Analysys Mason Limited 2009 The report includes market sizing estimates and forecasts of important KPIs for each MME service category Mobile media and entertainment in Western EuropeIntroduction and scope w ARPU – average revenue per user per month, averaged over a given year (forecasts are also provided for operator­ billed ARPU, as opposed to that billed by third parties) w revenue – total revenue generated by a given service category in a given year (forecasts are also provided for operator­ billed revenue – that is, total revenue billed by operators for a given service category in a given year). The revenue forecasts focus on end-user revenue generated directly from MME services, and do not include traffic revenue associated with accessing and browsing the Internet via mobile handsets. This report does not consider mobile advertising revenue because it is business-to-business revenue, and is not generated by end users. For each of the nine MME service categories and the MME market as a whole, the report provides market sizing estimates and forecasts of the following KPIs for each of the seven core countries and Western Europe as a whole: w active service users – the number of subscribers who use a given service category within the given year, estimated as at the end of the given year w service adoption rate – the percentage of total mobile subscribers who use a given mobile service within the given year, estimated as at the end of the given year w average spend per active service user per month, averaged over a given year – for example, for music services, this would equal the average amount spent per month on music streaming or downloads by an active user of music services

12. 12 © Analysys Mason Limited 2009 Document map Executive summary Introduction and scope Market overview Market forecasts and analysis by service category Recommendations Authors, copyright and key to acronyms List of figures and tables About Analysys Mason Mobile media and entertainment in Western EuropeDocument map: Market overview

13. 13 © Analysys Mason Limited 2009 MME services accounted for 2.2% of mobile service revenue, and 9.9% of non-voice revenue in 2008 Mobile media and entertainment in Western EuropeMarket overview Figure 4: Mobile service revenue by service category in Western Europe, 2008 [Source: Analysys Mason, 2009] EUR117.6 billion (78.2%) EUR19.2 billion (12.8%) EUR3.2 billion (2.2%) EUR10.3 billion (6.8%)

14. 14 © Analysys Mason Limited 2009 The recession will hinder growth in MME service revenue, which will reach EUR6.9 billion in 2013 Analysys Mason forecasts that MME service revenue will grow to EUR6.9 billion in 2013, up from EUR3.2 billion in 2008, and will register a CAGR of 16.4% during the forecast period. However, MME services will continue to account for a relatively small proportion of mobile service revenue during the next five years. They will account for 4.1% of total mobile service revenue in 2013, up from 2.2% in 2008. As Internet browsing via mobile handsets becomes more user-friendly and, as a result, more popular, subscribers will increasingly download free content and applications. This trend will restrict the growth of MME revenue to some degree. The economic downturn in Western Europe will limit consumer spending on MME services, which are likely to be viewed as luxuries, rather than necessities. As a result, MME service revenue will not grow as quickly as previously predicted. Mobile media and entertainment in Western EuropeMarket overview Figure 5: MME revenue and as a proportion of mobile service revenue in Western Europe, 2008–2013 [Source: Analysys Mason, 2009]

15. 15 © Analysys Mason Limited 2009 Games will replace personalisation as the MME service category that generates the most revenue by 2013 Mobile game services will account for the largest share of MME revenue in 2013, at 20.1%, when they will generate EUR1.4 billion in revenue. However, this category’s growth rate is slower than those of other services because it was already the second-largest in terms of revenue in 2008, when it generated EUR0.6 billion. Personalisation services’ dramatic loss of revenue share to other services during the forecast period – from 43.3% in 2008 to 19.1% in 2013 – can be attributed to the maturity of the personalisation services market, the declining demand for ringtones and wallpapers, and downward pressure on pricing. Revenue from adult content will grow from EUR451 million in 2008 to more than EUR1.2 billion in 2013. Adult content services will continue to be the third-largest service category in terms of revenue from 2008 to 2013, when it will account for 18% of MME service revenue. Mobile media and entertainment in Western EuropeMarket overview Figures 6a–b: MME revenue by service category in Western Europe, 2008–2013 [Source: Analysys Mason, 2009]

16. 16 © Analysys Mason Limited 2009 The success of Apple’s App Store demonstrates that demand for mobile content and applications is high Users had downloaded 1.5 billion applications from Apple’s App Store by July 2009 – one year after the site was launched. By this time, the store boasted 65 000 applications (up from 500 at launch) and 100 000 developers. In addition, Apple has sold more than 45 million iPhone and iPod touch devices during the past 2 years. Apple’s success has demonstrated that consumer demand for applications is much higher than originally thought, and the store is reinvigorating the mobile content industry, which has suffered from slow growth during the past 3–4 years. Several factors have driven the success of Apple’s App Store, including the iPhone’s effective UI design, wide range of available applications, open platform for developers, and transparent and consistent revenue model. 1 Mobile media and entertainment in Western EuropeMarket overview Figure 7: Number of applications downloaded from Apple’s App Store worldwide, July 2008–July 2009 [Source: Analysys Mason, 2009] 1 For a detailed analysis of application stores, see Suo-Saunders, Y., Mobile application stores: will MNOs succeed?, Analysys Mason (Cambridge, 2009).

17. 17 © Analysys Mason Limited 2009 The market conditions for MME services are becoming more favourable in Western Europe HSPA deployments are progressing rapidly in Western Europe. Most MNOs in Western Europe have launched commercial HSDPA services, and half of the HSPA networks in commercial service worldwide at July 2009 were capable of peak downlink speeds of 7.2Mbit/s or more. 2 Operators are also beginning to deploy HSPA+, which can offer download speeds of up to 28Mbit/s. By the end of July 2009, seven operators in four Western European countries had launched commercial HSPA+ networks. Enhanced connectivity will facilitate the adoption of video-related content, which requires higher bandwidths. The availability of devices with enhanced connectivity, and effective UIs and OSs, is increasing. According to the GSMA, more than 1500 HSPA-enabled devices had been launched commercially by July 2009. 3 Device UI design is also improving – an increasing number of devices feature touchscreens, large high-resolution screens, more-advanced browsers and QWERTY keyboards. In addition, OSs that enable more-sophisticated content and applications to run on device hardware are becoming more common. Flat-rate data plans and sender-pays schemes are reducing the cost of using MME services. Mobile operators are increasingly offering flat-rate data plans to reduce the cost of using MME services. In addition, a sender-pays scheme – which enables third-party content providers to purchase wholesale data traffic from MNOs in order to offer premium content services free of data traffic charges – was introduced in the UK in February 2009. If it becomes popular among operators and content providers, this solution could significantly reduce the traffic charges associated with MME services. Mobile media and entertainment in Western EuropeMarket overview 2 Global mobile Suppliers Association (Sawbridgeworth, UK, 2009), GSA confirms 7.2 Mbps as new baseline for HSPA; Commercial HSPA+ networks in double figures. Available at http://www.gsacom.com/news/gsa_276.php4. 3 GSM Association (London, UK, 2009), Global Broadband Connections to Pass 150 million. Available at http://www.gsmworld.com/newsroom/press- releases/2009/3494.htm.

18. 18 © Analysys Mason Limited 2009 Initially, mobile operators focused on becoming successful content service providers, in an attempt to increase sales of own-branded MME services and a limited amount of third-party content on their portals. However, this ‘content vendor’ approach can be self-defeating because it aims to minimise competition, which could restrict the growth of the MME market as a whole and reduce operators’ data traffic revenue. The success of Apple’s App Store has demonstrated the effectiveness of the ‘service enabler’ approach, in which the portal owner offers an open platform and a sustainable revenue-sharing model to accommodate all application providers. As an increasing number of major vendors open application stores to sell mobile content directly to end users, MNOs are accelerating their own application store initiatives to avoid being disintermediated from the content value chain. Operators’ application store strategies should focus on using their core network assets to offer an attractive enablement platform to developers. Mobile operators are shifting towards a ‘service enabler’ approach by offering open platforms to content providers Mobile media and entertainment in Western EuropeMarket overview AssetDescription Transmission Data pipe: offers bandwidth; in addition, SMS and MMS are viable platforms delivering mobile applications On-phone billing Premium-rate SMS: a billing method prevalent in the mobile content market Mobile Internet billing: enables users to browse mobile content and purchase selected content directly Subscriber insight Continuous presence information: such as user location Demographic and behavioural information: such as age and gender, and WAP or Web access histories Other: such as subscribers’ tariff plans and handset capabilities Table 2: Core network assets that MNOs can apply to the content enabler role [Source: Analysys Mason, 2009]

19. 19 © Analysys Mason Limited 2009 The MME market still faces a number of challenges, the greatest of which is poor user experience Improving the user experience will continue to be one of the greatest challenges for players in the MME market during the forecast period, because consumers are increasingly demanding more­ sophisticated multimedia services w mobile Internet browsing facilities are still under development, as operators and handset providers experiment with different browsers and search engines. The lack of uniformity in mobile Web browsers is particularly inhibiting discovery of off-portal services w device limitations – particularly among low-end and mid-range handsets – continue to undermine the user experience. For example, typing in long Web links on a non-QWERTY keypad is cumbersome, and many handsets’ screens are too small to provide a satisfactory viewing experience. Device fragmentation will continue to inhibit the proliferation and quality of mobile applications. Devices differ in terms of their OS (for example, Android, Linux and Symbian), application platform (for example, BREW, C++ and Java) and capabilities (for example, screen size, memory capacity and battery power). Content and application providers have to develop multiple versions of their products to accommodate this diversification, which results in high development costs and therefore inhibits the proliferation and quality of mobile applications. Some MNOs are attempting to address this issue – for example, China Mobile, SoftBank and Vodafone established the Joint Innovation Lab (JIL) initiative in April 2008, which aims to create a widget platform that developers can use to produce Web-based mobile applications that can run on many types of device. However, the impact of such initiatives on bridging device fragmentation remains to be seen because the JIL has yet to launch its widget platform. Mobile media and entertainment in Western EuropeMarket overview

20. 20 © Analysys Mason Limited 2009 Document map Executive summary Introduction and scope Market overview Market forecasts and analysis by service category Recommendations Authors, copyright and key to acronyms List of figures and tables About Analysys Mason Mobile media and entertainment in Western EuropeDocument map: Market forecasts and analysis by service category

21. 21 © Analysys Mason Limited 2009 Document map Market forecasts and analysis by service category Paid information Personalisation Games TV and VoD Music Gambling Adult content Social networking Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Paid information

22. 22 © Analysys Mason Limited 2009 Service providers are increasing the scope of paid information services Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Paid information Market enablers Information services are easy to deliver and there are few significant technical or device-related issues to overcome. Services that focus on content immediacy (such as live sports scores and traffic reports) will attract spend. Information services that incorporate location-based elements, such as maps and family tracking services, will drive long-term revenue growth. New services, such as e-book services, will appeal to small, but significant, niche markets. Market inhibitors Paid information services face competition from other media channels that tend to offer free information. As Internet browsing on handsets becomes easier, an increasing number of users will visit free mobile websites to obtain the information they need. High pricing is inhibiting take-up of location-based information services. For example, Nokia’s Drive navigation services are priced at EUR1.59 per day. Mobile paid information services tend to focus on news, weather forecasts, celebrity and entertainment information, sports content and location-based information. They tend to be delivered as SMS alerts, or are accessed via a link sent to the subscriber’s phone or via the MNO’s portal. They are available from MNOs and D2C service providers. MNOs tend to focus on offering premium content from established brands. D2C service providers that are not associated with major content brands are unlikely to attract enough subscribers to remain viable business propositions. Service providers are introducing new types of information service, including e-book and location-based services. MNOs can play a key role in offering location-based services because they own network-based user location information. Third-party service providers may be able to bypass MNOs and offer their own location-based services in the long term, if the availability of GPS-enabled handsets continues to increase.

23. 23 © Analysys Mason Limited 2009 Paid information revenue will grow to EUR800 million in 2013, driven by the launch of new service types Paid information service revenue will grow from EUR420 million in 2008 to EUR800 million in 2013, registering a CAGR of 14% over the forecast period. This service category’s share of overall MME revenue will decline slightly, from 13.0% in 2008 to 11.6% in 2013. Many users will migrate from paid information services to free information services available via mobile websites – particularly as mobile Web browsing facilities on handsets become easier to use and more effective. However, Analysys Mason believes that new types of paid information service, such as location-based and e-book services, will compensate for the loss of revenue, and will drive market growth during the forecast period. Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Paid information Figures 8a–d: Service adoption rate, average spend per active service user, ARPU and revenue for paid information services in Western Europe, 2008–2013 [Source: Analysys Mason, 2009]

24. 24 © Analysys Mason Limited 2009 Document map Market forecasts and analysis by service category Paid information Personalisation Games TV and VoD Music Gambling Adult content Social networking Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Personalisation

25. 25 © Analysys Mason Limited 2009 Personalisation is the largest MME service category in terms of revenue in Western Europe Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Personalisation Market enablers Personalisation content is inexpensive and widely available. As well as D2C providers (such as Jamster), MNOs are promoting ringback tones in Western Europe – largely because they are hosted on the network, which enables operators to control revenue and pricing. However, the demand for ringback tones in Western Europe is unlikely to reach the levels witnessed in the Asia–Pacific region. Market inhibitors An increasing number of users are using self-generated or free content sideloaded from PCs (such as music tracks and photos) as ringtones and wallpapers. This will reduce the demand for personalisation services. The pricing of personalisation services is declining. By mid-2009, the average prices for personalisation content were: EUR2–2.5 for ringtones, EUR1–2 for wallpapers, and EUR2 for ringback tones plus EUR1 per month for the ringback tone service. Personalisation services have expanded from simple monophonic ringtones to include polyphonic ringtones, ringback tones, realtones, video tones and user-generated ringtones. Simple graphics products have developed to include static and animated wallpapers and screensavers. MNOs tend to offer a wide range of ringtones and graphics via their portals. They have also maintained a significant role in the off-portal market by offering on-phone billing services, which enable them to retain about 20% of content revenue. Off-portal provision of ringtones and wallpapers is widespread. MME content aggregators such as Jamster offer a wide range of ringtones and images, as do media companies, which aim to promote artists or new releases. Off-portal content tends to be less expensive than on-portal content, and is sometimes free.

26. 26 © Analysys Mason Limited 2009 Personalisation services’ share of overall MME revenue will drop from 43% to 19.1% over the forecast period Personalisation services will lose their position as the largest MME service category in terms of revenue during the forecast period. Revenue from such services will decline from EUR1.4 billion in 2008 to EUR1.3 billion in 2013. The market growth of new tone-based services (such as ringback tones) will be insufficient to compensate for the decline in ringtone and wallpaper services, which are major revenue streams in the personalisation services market at the moment. Both the adoption rate and average spend per service user for personalisation services will decrease during the next five years as a result of declining demand and downward pressure on pricing. Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Personalisation Figures 9a–d: Service adoption rate, average spend per active service user, ARPU and revenue for personalisation services in Western Europe, 2008–2013 [Source: Analysys Mason, 2009]

27. 27 © Analysys Mason Limited 2009 Document map Market forecasts and analysis by service category Paid information Personalisation Games TV and VoD Music Gambling Adult content Social networking Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Games

28. 28 © Analysys Mason Limited 2009 Apple’s App Store is likely to have a significant impact on the mobile games market Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Games Mobile games come in three primary forms: embedded, downloadable and online. Downloads account for the majority of revenue. Online games continue to occupy a niche market, despite their early introduction (The Carphone Warehouse and O2 UK launched such games using the Nokia N-Gage platform in 2003). Most games are delivered via MNOs’ portals, but operators’ ability to retain a high proportion of game service revenue (40–60% in Western Europe) is likely to diminish as Apple’s App Store, which offers a 70% share of revenue to developers, becomes more popular and exerts a greater influence on the market. The off-portal game market is growing as publishers and distributors launch their own portals in an effort to build direct customer ownership. However, data traffic charges continue to inhibit growth in this segment. Industry estimates suggest that a small number of relatively simple games, such as Bejeweled, Pac-Man and Tetris, account for 85–90% of the market in terms of revenue. The popularity of types of game varies by country, although sport-based games are universally popular. Users in Germany favour puzzles, while those in France and Spain focus on games based on cartoons. In the UK, MNOs tend to have the greatest influence on the selection of games that are available, and are reluctant to take risks on unproven or unbranded titles. As a result, established titles such as Pac-Man are popular, alongside games based on well-known TV programmes, such as Who Wants To Be A Millionaire?

29. 29 © Analysys Mason Limited 2009 Application stores are redefining the revenue model and opening new distribution channels for game providers Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Games Market enablers Apple’s App Store, for which games constitute the most popular download category, is redefining the revenue model for the industry, because Apple offers 70% of revenue to developers. Mobile operators are likely to follow Apple’s example in order to remain competitive. This will offer a much-needed financial incentive to the game-development community. Mobile games account for the largest proportion of applications at Apple’s and BlackBerry’s application stores. The increasing popularity of application stores is opening new distribution channels for game-developing businesses of all sizes. This will encourage the growth of the developer community, which will lead to improvements in the quality and quantity of mobile games. Simple games, such as Pac-Man, will continue to appeal to a large audience. Online games are likely to gain importance as network connectivity improves and social networking sites offer more online games in order to gain a new revenue stream. Handset manufacturers are also driving mobile game development. For example, Nokia has been particularly aggressive in developing game platforms (such as N­ Gage). Market inhibitors Device fragmentation and the resulting low ROI for game developers will continue to restrict the development of mobile-specific games – particularly complex games, such as those based on popular titles in the console gaming market. As a result, serious game players are unlikely to be attracted to mobile games. Mobile handsets have yet to match the quality of the gaming experience provided by PCs and consoles because of device limitations (such as processor power, memory capacity, screen size, battery life and keyboard controls). However, much progress has been made, including the use of accelerometers, 3-D graphics chips, TV-out sockets and standalone controller devices. These device limitations are likely to deter serious gamers rather than casual gamers. The price per downloadable game is between EUR2 and EUR5 in Western Europe, which is relatively expensive for many casual game players.

30. 30 © Analysys Mason Limited 2009 Games will become the largest MME service category by 2013, when they will generate EUR1.4 billion in revenue Mobile games will grow to become the largest MME service category in terms of revenue during the forecast period. Revenue from games will increase from EUR0.6 billion in 2008 (or 18.4% of MME revenue) to EUR1.4 billion in 2013 (or 20.1% of MME revenue). Games are the most popular type of download at established application stores, such as Apple and BlackBerry’s stores. Analysys Mason believes that the continued proliferation of such stores will be a significant driver for revenue growth in the mobile games market. Average spend per user is forecast to increase as improvements in device capabilities attract more serious (and high-spending) gamers. Analysys Mason’s forecasts for mobile games include entertainment and leisure applications available from application stores. Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Games Figures 10a–d: Service adoption rate, average spend per active service user, ARPU and revenue for game services in Western Europe, 2008–2013 [Source: Analysys Mason, 2009]

31. 31 © Analysys Mason Limited 2009 Document map Market forecasts and analysis by service category Paid information Personalisation Games TV and VoD Music Gambling Adult content Social networking Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: TV and VoD

32. 32 © Analysys Mason Limited 2009 Take-up of mobile linear TV and VoD services has so far been low Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: TV and VoD Most mobile operators in Western Europe offer linear mobile TV services via their UMTS/HSPA networks, but the viewing experience tends to be poor. Deployment and take-up of broadcast mobile TV services has been hindered in Western Europe by the lack of technology standardisation, spectrum, compatible handsets and consumer willingness to pay w Italy is so far the most-advanced DVB-H market. 3 Italia launched its DVB-H ‘TuaTV’ service in June 2006 and had registered more than 850 000 users by September 2007, making it the leading broadcast mobile TV provider in Europe. Its sports-related TV content is particularly popular w operators in other European countries that are experimenting with broadcast mobile TV have not achieved the same growth in take-up as that recorded in Italy. Virgin Mobile launched a DAB-based broadcast TV service in the UK in 2006, but discontinued it in 2007 because of low take-up. The third­ party DVB-H licensee Mobile 3.0 is facing a similar fate in Germany. German operators were shut out of the DVB-H market when the government awarded the sole network licence to Mobile 3.0, so they refused to distribute DVB-H-enabled handsets, citing commercial concerns over subscribers reducing spend on operator-provided services in order to subscribe to Mobile 3.0’s TV offerings. VoD services, such as those that provide short video clips or enable users to view episodes of TV programmes they may have missed, are available from both mobile operators and D2C service providers. Such services have achieved slightly stronger take-up than linear TV services, largely because they enable users to view content of their choice when needed, rather than employing rigid programming schedules, and the clips tend to be shorter in length, which makes them more suitable for viewing on small screens.

33. 33 © Analysys Mason Limited 2009 Demand for TV and VoD services is strong, but providers must enhance propositions to compete with traditional media Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: TV and VoD Market enablers Service trials and market research have demonstrated that the latent demand for mobile TV and VoD services is strong, largely because of the premium that users place on convenience. Mobile operators continue to extend HSPA coverage, which will reduce the latency issues that have hindered linear TV and VoD offerings. The introduction of LTE from 2010 onwards in Western Europe will enable operators to further improve the quality of these services. Established media companies are recognising the importance of the mobile channel as a means of maximising their returns on TV and video content. These companies’ marketing power will be as significant a factor in driving market growth as the availability of the content. Market inhibitors Mobile TV and VoD content tends to be identical to that available from traditional platforms. Take-up may be restricted until providers can differentiate their offerings and enhance the value of their services to customers. Consumers will be unwilling to pay for mobile services because of the wide availability of free TV channels and video content via Web-based services (such as the BBC’s iPlayer and YouTube). The pricing of mobile VoD services is relatively high. For example, a full-length feature film from a pay-TV VoD service will typically cost EUR4–5, while T-Mobile sells 15- minute video clips for up to GBP1.50 (EUR1.7) in the UK. The deployment and take-up of broadcast TV services continues to be hindered by the lack of available spectrum and compatible handsets, as well as high network deployment costs.

34. 34 © Analysys Mason Limited 2009 Linear TV service revenue will grow to EUR520 million in 2013, when it will represent 8% of MME revenue The market for mobile TV services is still at an early stage of development. Its annual revenue stood at just EUR62 million in 2008, when it accounted for only 1.9% of MME revenue. As mobile operators expand UMTS/HSPA coverage, and more broadcasting networks become available, the user experience of mobile TV services will improve, which will encourage service take-up. Analysys Mason forecasts that the revenue from linear mobile TV services will grow at a CAGR of 53% from 2008 to 2013, to reach EUR520 million at the end of the forecast period. Despite this high growth rate, TV services will continue to account for a relatively small proportion of MME revenue (about 7.5% in 2013) because of the wide availability of free TV channels and the difficulty of convincing consumers to pay. Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: TV and VoD Figures 11a–d: Service adoption rate, average spend per active service user, ARPU and revenue for TV services in Western Europe, 2008–2013 [Source: Analysys Mason, 2009]

35. 35 © Analysys Mason Limited 2009 VoD services will outperform linear TV services in terms of revenue over the next five years The market for mobile VoD services is also at an early stage of development. Its annual revenue stood at EUR117 million in 2008, when it accounted for 3.6% of MME revenue. VoD services tend to be more popular than linear TV services because the video clips tend to be short, and therefore more suitable for viewing on devices with a small screen, which can be uncomfortable to watch for long periods. Mobile TV and VoD services will become more-viable propositions in Western Europe as 3G and 3.5G handsets with larger screens become more affordable and more-widely available. VoD services will outperform linear TV services in terms of revenue during the forecasting period in Western Europe. Revenue from VoD services will grow to EUR690 million in 2013 – almost EUR170 million more than that from linear TV services. Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: TV and VoD Figures 12a–d: Service adoption rate, average spend per active service user, ARPU and revenue for VoD services in Western Europe, 2008–2013 [Source: Analysys Mason, 2009]

36. 36 © Analysys Mason Limited 2009 Document map Market forecasts and analysis by service category Paid information Personalisation Games TV and VoD Music Gambling Adult content Social networking Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Music

37. 37 © Analysys Mason Limited 2009 The perceived value of digital music is declining Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Music Market enablers Demand for music services is strong and universal. Some established market leaders such as Apple will continue to drive growth in the mobile music market. DRM-free music is becoming more prevalent in Western Europe. For example, Orange plans to make its entire Music Store catalogue of 2 million songs DRM-free across its European operations. Some record labels (such as EMI) have adopted a DRM-free approach. This trend will enhance the user experience of music services because DRM-free tracks are easier to transfer between devices. Market inhibitors Consumers will become less willing to pay for standalone music services as the perceived value of digital music declines and advertising-funded music propositions gain momentum. The increasing availability of DRM-free music will encourage file sharing and therefore reduce demand. Sideloading will continue to be a popular method of adding music to handsets because it enables consumers to avoid the cost of over-the-air downloads, including associated data traffic charges. Music accounted for only a small proportion of MME revenue in Western Europe in 2008, at 2.5%. The perceived value of digital music is declining because the cost of music services is often hidden in either service bundles (for example, Vodafone Spain launched a flat-rate data and mobile music tariff in April 2009 priced at EUR12 per month, and had more than 200 000 subscribers after two months) or device bundles (for example, Nokia’s ‘Comes With Music’ service), or funded by advertisers (for example, the Spotify music streaming service). Service providers are introducing new elements – for example, community-based services (which allow users to share playlists or recommendations) and music identification services (such as Shazam’s music recognition service) – to enhance the user experience of music services.

38. 38 © Analysys Mason Limited 2009 Music will account for only a small proportion of MME revenue during the forecast period Revenue from streamed and download mobile music services will grow from EUR80 million in 2008 to more than EUR264 million in 2013. However, it will continue to represent a relatively small proportion of MME revenue – at 3.8% in 2013, up slightly from 2.5% in 2008 – because of the decline in the perceived value of digital music and the difficulty of convincing consumers to pay. Standalone mobile music services will be difficult to sell unless they are partly funded by advertising. Music services will be more-viable propositions if they are sold as part of service or device bundles. Analysys Mason’s forecasts for mobile music services includes only streamed and download services. They do not include ringtones or ringback tones (which are included in the personalisation service category) or video-related services (which are included in VoD service category). Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Music Figures 13a–d: Service adoption rate, average spend per active service user, ARPU and revenue for music services in Western Europe, 2008–2013 [Source: Analysys Mason, 2009]

39. 39 © Analysys Mason Limited 2009 Document map Market forecasts and analysis by service category Paid information Personalisation Games TV and VoD Music Gambling Adult content Social networking Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Gambling

40. 40 © Analysys Mason Limited 2009 The mobile gambling market is in its infancy in Western Europe, and legislation varies between countries Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Gambling Market enablers Consumer demand for mobile gambling services is likely to be strong because simple gambling services – such as scratch cards and national lotteries – are widely popular. Deregulation of online gambling services in some large markets (such as France and Italy) will stimulate growth in the availability of mobile gambling services in Western Europe. Market inhibitors It will take many years to overcome legislative barriers in some markets (for example, Germany). Cultural resistance to gambling services persists because excessive gambling creates social problems (such as addiction and financial difficulties). Mobile operators are reluctant to be associated with gambling because of potential damage to their brands. Consumer awareness is low because advertising of gambling services tends to be restricted or prohibited in order to prevent underage gambling. Mobile gambling is a nascent service in Western Europe, largely because of legislative constraints. Some countries, such as Germany, outlaw online gambling services, including mobile services. Others are planning to lift restrictions – for example, France plans to open up its online gambling market in January 2010. By contrast, the UK permits online gambling and is one of the most­liberalised mobile online gambling markets in Western Europe. The most­common mobile gambling services include lotteries, casino games, bingo and betting services. Following the introduction of 3G and 3.5G technology, gambling services have evolved from simple text­ based lotteries to rich-media downloadable applications such as casino games. Some services also include an online element to enhance interaction among users – for example, Probability added a chat room to its bingo game to provide a more­interactive user experience.

41. 41 © Analysys Mason Limited 2009 Mobile gambling services will experience rapid growth, with revenue reaching EUR470 million in 2013 Analysys Mason expects the revenue from gambling services to grow at a CAGR of 43% during the forecast period, from EUR79 million in 2008 to EUR471 million in 2013, as some of the large markets shift towards a more­liberalised approach to online gambling. Gambling services’ share of overall MME service revenue will also increase, from 2.4% in 2008 to 6.8% in 2013. Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Gambling Figures 14a–d: Service adoption rate, average spend per active service user, ARPU and revenue for gambling services in Western Europe, 2008–2013 [Source: Analysys Mason, 2009]

42. 42 © Analysys Mason Limited 2009 Document map Market forecasts and analysis by service category Paid information Personalisation Games TV and VoD Music Gambling Adult content Social networking Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Adult content

43. 43 © Analysys Mason Limited 2009 Adult content is the third­largest service category by revenue, despite operators’ unwillingness to promote it Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Adult content Market enablers Adult content is of significant interest to many mobile subscribers. Content providers report that the highly personal nature of the mobile device (that is, it is not shared, and the sites that users have visited are not as easy to trace on mobile devices as they are on Internet connections) also drives growth in demand for mobile adult content services. Increasing availability and take-up of 3G technology will drive an increase in the availability and consumption of more-expensive adult content, such as video services. Market inhibitors Social attitudes towards adult content varies significantly, and can be particularly prohibitive in some markets. Operators are unwilling to promote adult content because of concerns about negative brand association. Apple will not allow adult content to appear on its App Store, which further limits the number of distribution channels. Age-verification and content-classification mechanisms will need to be in place to protect underage users, but such measures are lacking or need to be improved in many Western European countries. With the advent of 3G technology, the focus of adult content has shifted from text-based to rich-media services such as video clips and interactive video chat services, which are among the best-selling products. Orange UK reported that adult content accounted for 9% of the videos downloaded in the three months to February 2009 over its network. 4 Mobile operators have to weigh up the potential revenue benefits of offering adult content against the possible brand damage. Many operators, such as O2 UK, T-Mobile Germany, Telefónica Spain, TIM, Virgin Mobile UK and Wind, were quick to offer adult content on their portals, but do little or nothing to promote it. Third-party, off-portal adult service providers (such as Playboy and Private) dominate the value chain because they tend to offer a wider range of content than operators. 4 Orange (UK, 2009), Orange Digital Media Index May 2009. Available at http://newsroom.orange.co.uk/media/uploads/Orange%20report.pdf.

44. 44 © Analysys Mason Limited 2009 Adult content will continue to represent a significant source of revenue in the MME market Revenue from adult content will grow from EUR451 million in 2008 to more than EUR1.2 billion in 2013. It will continue to be the third­largest MME service category in terms of revenue during the next five years, and will contribute 18% of MME service revenue in 2013. Average spend per active service user will increase slightly, from EUR6.2 per month to EUR7.2 per month over the forecast period, as subscribers consume more video-related content, which tends to be more expensive than text-based content. Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Adult content Figures 15a–d: Service adoption rate, average spend per active service user, ARPU and revenue for adult content services in Western Europe, 2008–2013 [Source: Analysys Mason, 2009]

45. 45 © Analysys Mason Limited 2009 Document map Market forecasts and analysis by service category Paid information Personalisation Games TV and VoD Music Gambling Adult content Social networking Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Social networking

46. 46 © Analysys Mason Limited 2009 Mobile social networking sites are emerging rapidly, but lack a sustainable revenue model Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Social networking Market enablers Demand for social networking services is strong. Providers such as Flirtomatic have demonstrated that virtual goods and miniature applications appeal to subscribers and could become a sustainable revenue stream. They have proved to be popular in East Asia. Services that enable users to share user-generated content could prove compelling and attract consumer spend. Market inhibitors Monetisation will continue to be a challenge for many social networking service providers. Privacy and security concerns, such as those surrounding the use of subscriber data for commercial purposes and age verification, continue to inhibit market development. Start-up social networking sites will struggle to attract subscribers if they cannot differentiate themselves from established sites. Several types of player are offering mobile versions of social networking services in Western Europe, including mobile operators, established online brands (such as Facebook) and device vendors (for example, Nokia’s Ovi Share service). Providers have yet to produce a sustainable revenue model for such services, but some dating sites – such as Flirtomatic, which operates in Germany, the UK and the USA – are innovative in their approach and generate revenue from a variety of sources, including advertising, virtual goods and other paid-for services. Operators have tended to adopt a very open approach to offering social networking services, and allow a variety of third-party branded sites to offer services via their portals. Their primary aim is to increase data traffic revenue and offer a competitive range of premium MME content, because social networking service users tend to be heavy data users.

47. 47 © Analysys Mason Limited 2009 The user base for social networking services will grow rapidly, but its impact on revenue will be limited Analysys Mason expects the number of social networking service users to increase by almost 600% in Western Europe during the forecast period, reaching 128 million users in 2013, because of the strong demand for such services. However, social networking services’ contribution to overall MME revenue will continue to be low because providers will find it difficult to monetise this type of service. Analysys Mason estimates that social networking services generated EUR28 million in revenue in Western Europe in 2008, when they accounted for less than 1% of total MME revenue. By 2013, the revenue will increase to EUR207 million, but will only represent 3% of total MME revenue. The indirect revenue from social networking services, such as from data traffic usage and consumption of other MME services, can be significant. Mobile media and entertainment in Western EuropeMarket forecasts and analysis by service category: Social networking Figures 16a–d: Service adoption rate, average spend per active service user, ARPU and revenue for social networking services in Western Europe, 2008–2013 [Source: Analysys Mason, 2009]

48. 48 © Analysys Mason Limited 2009 Document map Executive summary Introduction and scope Market overview Market forecasts and analysis by service category Recommendations Authors, copyright and key to acronyms List of figures and tables About Analysys Mason Mobile media and entertainment in Western EuropeDocument map: Recommendations

49. 49 © Analysys Mason Limited 2009 Recommendations [1] Mobile operators should continue to enhance their ‘service enabler’ role in order to facilitate the growth of the mobile content market. By doing so, mobile operators will be able to retain a position as an essential part of the mobile content value chain as well as generate revenue from their key network assets. Mobile operators need to ensure that flat-rate data packages are promoted heavily, in order to drive growth in revenue from mobile Internet browsing and encourage adoption of MME services among mobile subscribers who may have been deterred by high data traffic charges. Mobile operators, content providers and vendors must seek to improve the end-user experience of MME services, which continues to act as the greatest inhibitor to MME service adoption w mobile operators should continue to improve the UI design of their services – for example, by embedding links to their application stores or popular content on handset home screens to reduce navigation layers, and by categorising content and applications more efficiently to allow users to search for relevant content by a variety of methods w handset vendors should continue to improve the UI design of their devices – for example, by using large, high­resolution touchscreens to enhance navigation and the viewing experience. Apple’s iPhone has set a precedent and demonstrated that consumers are willing to pay a high premium for user-friendly multimedia handsets. Handset vendors will also need to focus on improving memory capacity and battery life to accommodate the growing demand for multimedia mobile services w content providers should develop services and applications that are intuitive and easy to use. Mobile media and entertainment in Western EuropeRecommendations

50. 50 © Analysys Mason Limited 2009 Recommendations [2] Content publishers should continue to explore dual on-portal and off-portal strategies, and use any established non-mobile marketing and distribution channels to promote sales in the mobile market. Primary placement on operators’ portals or application stores is an effective method of accessing customers – particularly while browser and search solutions remain immature. However, content brands need to enhance their off-portal strategies because the off-portal market is significantly larger than the on­ portal market in Western Europe. Handset vendors should continue to enhance their content strategies because it could provide them with a secondary revenue stream and is likely to increase sales of multimedia handsets. The average price and overall sales of mobile handsets continue to decline. Apple’s content strategy has proved successful, and Nokia is investing heavily in its strategy with the aim of becoming a major player in the mobile Internet market. Handset vendors should forge closer relationships with content providers to facilitate a regular exchange of information on forthcoming handset capabilities and prospective content launches, in order to ensure that content is able to fully exploit any additional handset features or that handset features are designed to accommodate specific applications. Regulators should work with operators and content providers to ensure that spectrum is available, and that regulation and an effective legal framework is in place to facilitate the growth of particular MME services. For example, age-verification and content-classification mechanisms are essential to the success of adult content and gambling services. In addition, regulators should release spectrum for mobile TV services at the earliest opportunity – if possible, by accelerating the analogue switch-off process. Mobile media and entertainment in Western EuropeRecommendations

51. 51 © Analysys Mason Limited 2009 Document map Executive summary Introduction and scope Market overview Market forecasts and analysis by service category Recommendations Authors, copyright and key to acronyms List of figures and tables About Analysys Mason Mobile media and entertainment in Western EuropeDocument map: Authors, copyright and key to acronyms

52. 52 © Analysys Mason Limited 2009 Authors Yanli Suo-Saunders (Senior Analyst) specialises in mobile Internet and mobile telecoms services. She has written reports on a wide range of mobile telecoms issues including mobile media and entertainment, mobile handset evolution, mobile market forecasts and fixed–mobile convergence. Before joining Analysys Mason, Yanli worked as a business analyst for Huawei Technologies in its marketing intelligence and strategy department. Yanli has a PhD in strategic management from the University of Southampton. Matt Hatton (Principal Analyst) is the lead analyst for Analysys Mason’s Mobile Broadband research programme, which explores the key issues affecting the evolution of this critical new market. His career in the telecoms industry has included a market intelligence and strategy role with Hutchison 3G UK (3 UK), and five years as a Senior Analyst and Program Manager with Yankee Group. He has an MSc in Telecommunications from University College London. Helen Karapandžić (Analyst) specialises in mobile media and entertainment, mobile payment and mobile broadband. Prior to joining Analysys Mason, Helen was Business Development Manager for an international asset management company. She has also held positions with an independent, Cambridge-based strategy consultancy and eBay AG. Helen has an MA in Modern Languages from the University of Cambridge. Alexandra Rehak (Principal Analyst) focuses on areas that include media and entertainment, mobile telecoms and international carrier strategy. Before joining Analysys Mason, Alexandra was Director of Advisory Services at TeleGeography. She has also held positions at Asia.com, Motorola’s Business Research and Strategy group in Asia, PA Consulting Group and Pyramid Research. Mobile media and entertainment in Western EuropeAuthors, copyright and key to acronyms

53. 53 © Analysys Mason Limited 2009 Acknowledgements The authors would like to thank the many companies and individuals who have contributed to this report by sharing their views and feedback with us, including: Charlotte Blanchard, Director of Products and Services, Hutchison 3G UK; Andrew Bovingdon, VP Product Marketing, Bango.net; Rick Brownlow, Sales and Marketing Director, Mfuse; Andrew Bud, CEO, mBlox; Ernie Cormier, CEO and President, Zeemote; Mark Curtis, CEO, Flirtomatic; Julia Dimambro, Managing Director, Cherry Media; Jaakko Kaidesoja, VP Games, Nokia; Anil Malhotra SVP Alliances and Marketing, Bango.net; Barry O’Neill, President, Namco Bandai Networks Europe; Bango.net; Rimma Perelmuter, Executive Director, Mobile Entertainment Forum; and Tom Rebbeck, Business Analyst for Mobile Data Group, Telefónica Europe. In addition, we would like to acknowledge the invaluable help contributed by our colleagues within Analysys Mason, including Cesar Bachelet, Mike Grant and Jim Morrish, as well as Mark Chambers and Claire Varley for editorial support. Mobile media and entertainment in Western EuropeAuthors, copyright and key to acronyms

54. 54 © Analysys Mason Limited 2009 Copyright Published by Analysys Mason Limited, St Giles Court, 24 Castle Street, Cambridge, CB3 0AJ, UK Tel: +44 (0)1223 460600; Fax: +44 (0)1223 452800; Email: research@analysysmason.com; Web: www.analysysmason.com/research Registered in England No. 5177472 © Analysys Mason Limited 2009 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior written permission of the publisher. ISBN 1 905495 97 8 Disclaimer Analysys Mason Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Mason Limited shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party. Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark. The opinions expressed are those of the stated authors only. Mobile media and entertainment in Western EuropeAuthors, copyright and key to acronyms

55. 55 © Analysys Mason Limited 2009 Key to acronyms 3-DThree dimensional 3GThird generation 3.5GEnhanced third generation ARPUAverage revenue per user BREWBinary Runtime Environment for Wireless CAGRCompound annual growth rate D2CDirect-to-consumer DABDigital Audio Broadcast DRMDigital rights management DVB-HDigital Video Broadcasting – Handheld GPSGlobal positioning system HSDPAHigh-Speed Downlink Packet Access HSPAHigh-Speed Packet Access HSPA+Evolved High-Speed Packet Access KPIKey performance indicator LTELong Term Evolution MMEMobile media and entertainment MMSMultimedia Messaging Service MNOMobile network operator OSOperating system P2PPerson-to-person PCPersonal computer ROIReturn on investment SMSShort Message Service TVTelevision UIUser interface UMTSUniversal Mobile Telecommunications System VoDVideo on demand WAPWireless Application Protocol Mobile media and entertainment in Western EuropeAuthors, copyright and key to acronyms

56. 56 © Analysys Mason Limited 2009 Document map Executive summary Introduction and scope Market overview Market forecasts and analysis by service category Recommendations Authors, copyright and key to acronyms List of figures and tables About Analysys Mason Mobile media and entertainment in Western EuropeDocument map: List of figures and tables

57. 57 © Analysys Mason Limited 2009 List of figures and tables [1] Figure 1:MME revenue by service category and as a proportion of mobile service revenue in Western Europe, 2008–2013 Figure 2:Countries included in this report Figure 3:Categorisation of mobile services Figure 4:Mobile service revenue by service category in Western Europe, 2008 Figure 5:MME revenue and as a proportion of mobile service revenue in Western Europe, 2008–2013 Figures 6a–b:MME revenue by service category in Western Europe, 2008–2013 Figure 7:Number of applications downloaded from Apple’s App Store worldwide, July 2008–July 2009 Figures 8a–d:Service adoption rate, average spend per active service user, ARPU and revenue for paid information services in Western Europe, 2008–2013 Figures 9a–d:Service adoption rate, average spend per active service user, ARPU and revenue for personalisation services in Western Europe, 2008–2013 Figures 10a–d:Service adoption rate, average spend per active service user, ARPU and revenue for game services in Western Europe, 2008–2013 Figures 11a–d:Service adoption rate, average spend per active service user, ARPU and revenue for TV services in Western Europe, 2008–2013 Figures 12a–d:Service adoption rate, average spend per active service user, ARPU and revenue for VoD services in Western Europe, 2008–2013 Mobile media and entertainment in Western EuropeList of figures and tables

58. 58 © Analysys Mason Limited 2009 List of figures and tables [2] Figures 13a–d:Service adoption rate, average spend per active service user, ARPU and revenue for music services in Western Europe, 2008–2013 Figures 14a–d:Service adoption rate, average spend per active service user, ARPU and revenue for gambling services in Western Europe, 2008–2013 Figures 15a–d:Service adoption rate, average spend per active service user, ARPU and revenue for adult content services in Western Europe, 2008–2013 Figures 16a–d:Service adoption rate, average spend per active service user, ARPU and revenue for social networking services in Western Europe, 2008–2013 Table 1:Classification of the MME market by category and service type Table 2:Core network assets that MNOs can apply to the content enabler role Mobile media and entertainment in Western EuropeList of figures and tables

59. 59 © Analysys Mason Limited 2009 Document map Executive summary Introduction and scope Market overview Market forecasts and analysis by service category Recommendations Authors, copyright and key to acronyms List of figures and tables About Analysys Mason Mobile media and entertainment in Western EuropeDocument map: About Analysys Mason

60. 60 © Analysys Mason Limited 2009 About Analysys Mason Analysys Mason is the preferred partner of telecoms, IT and media organisations worldwide. Through our global presence, we deliver strategy advice, operations support and market intelligence to leading commercial and public sector organisations in more than 80 countries. Our clients rely on our consulting and research services to make better business decisions. The intellectual rigour, operational experience and insight of our people have helped our clients to meet some of the toughest challenges they face within the industry. We have consistently delivered significant and sustainable business benefits to our clients during the past 20 years on issues ranging from advising on operator strategy and tactics, development of national sector regulation, through execution of major financial transactions, to the deployment of public and private network infrastructure. We are respected worldwide for the exceptional quality of our work, our independence and the flexibility of our teams in responding to client needs. We are passionate about what we do and are committed to delivering excellence to our clients. Analysys Mason offers two types of service: Consulting: We work with our clients to provide customised advice and support throughout the business cycle, helping major players to set strategy, plan for change and implement that change. We have worked on a wide range of projects that support our partners and help them to increase revenue, reduce costs, plan for the future and minimise risk. Research: We offer research programmes and custom research to help our clients to identify key strategic issues, formulate strategies, identify trends and opportunities, and measure performance. For more information visit our website at www.analysysmason.com. About Analysys MasonMobile media and entertainment in Western Europe

61. 61 © Analysys Mason Limited 2009 Analysys Mason provides a portfolio of research services that help organisations to understand major strategic shifts, as well as country- and region-specific trends, in the global telecoms industry. Through a combination of granular market data and forecasts, and independent qualitative analysis and insight, we enable clients to make informed strategic and tactical decisions, reduce risk and benchmark their business performance. Analysys Mason’s research portfolio Research from Analysys Mason Mobile media and entertainment in Western EuropeAbout Analysys Mason For more information about our research programmes and custom research services, please visit www.analysysmason.com/research. Research programmes Industry Dynamics Telecoms Software Core Data and Forecasts Industry StrategyGlobal Growth Markets Telecoms Markets Fixed BroadbandMobile BroadbandVoice Consumer Content and Applications Service Assurance Technology and Infrastructure Fixed NetworksWireless Networks Service Fulfilment Billing and Customer Care Telecoms Software StrategiesCSP/Operator StrategiesInfrastructure Solutions Service Delivery Platform Strategies Telecoms Software Forecasts Telecoms Software Market Shares Telecoms Market Matrix Core ForecastsCountry Reports Research streams

62. 62 © Analysys Mason Limited 2009 Analysys Mason offers consulting services that span the entire business development cycle from strategy development, through planning and implementation, to review. We help clients in the public and private sectors to make the best possible business decisions on many key issues, including investment, strategy, policy, procurement, network roll-out and market entry. Analysys Mason advises clients in many industry sectors Consulting from Analysys Mason Mobile media and entertainment in Western EuropeAbout Analysys Mason For more information about our consulting services, please visit www.analysysmason.com/consulting. Mobile operators Delivering value through strategy planning and implementation Media companies Helping to maximise revenue in converging markets Public sector organisations Providing ICT and procurement advice for emergency services and public bodies Regulators Establishing and implementing policy frameworks in telecoms and media markets Enterprise users Helping to maximise returns from investment in ICT Financial institutions Supporting vendors, sellers and financiers of industry transactions Fixed operators Defining new strategies, optimising service portfolios and supporting policy development