The Latin American mobile content market is expected to grow at an annual compound growth rate of 28%, from $594 million in 2005 to $2.617 billion in 2011, according to analysts from Frost & Sullivan in a conference call (more research here). Mobile content is a mass market, and revenues already far outstrip those from paid broadband content, which is considered a niche market in Latin America.
The biggest categories of mobile content in Latin America are music (43%), information services (31%), graphics (14%), games (9%) and video (4%). Mobile games and video are expected to be the fastest growing services in the region as people upgrade their handsets, but music — mostly ringtones — and information services will continue to be the main source of revenues. Most mobile content in Latin America is sold via WAP, with SMS a fair way behind.

The biggest impact will come from a change in customer perceptions. “Mobile content is being seen as an infotainment tool rather than a personalization tool,” said Alex Zago, program leader with Frost & Sullivan Latin American ICT Practice. “As this changes from personalization to entertainment we believe it’s going to have a serious impact on the ARPU of mobile content.”
Although deployment of faster networks will increase content sales the regional market is being impeded by a high penetration of low-end handsets, something the carriers will have to combat. The operators also need to do far more in educating their users as to the content available.
In general, the most important content in Latin America is local content. “At this moment what we see in the market right now is that local content has a stronger demand than foreign content. If you see WAP and you see ringtones, most of the ringtones are of local music that is popular at the moment, and that belongs to a specific country,” said the analyst. “Users usually subscribe to the SMS service or the WAP looking for local content.” With the trend towards entertainment foreign content companies such as Disney will do better, but local content will still be more important in the long term. The graph below shows how much more attractive mobile content is than online content in the Latin American digital content market.

That being said, most of the companies providing content in Latin America are “pan-continental” and operate in all the markets…local companies don’t have the infrastructure or reach to compete effectively. Still, unlike the mobile operator market where a couple of companies dominate most of the region, “we see a large number of content providers participating in this market, some of them national, some of them international. But we don’t see any market dominated by a single content provider,” said Zago.
One big issue is 3G, which is beginning to appear throughout the region, although there are still some issues with frequencies and many companies are looking at trialing WiMax rather than 3G. Surprisingly, it’s not seen as that big a problem. “I don’t see 3G becoming popular in Latin America even in the long term, and I don’t see this being a restraint in Latin America in terms of the mobile content.”
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