Mobile Entertainment Struggles with Biz Model

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LONDON (Reuters) – For the millions of people who spend hours glued to their computer screens chatting on social networks came the good news this year that they could finally get out more often.

From social networks to games, images and music; online entertainment has increasingly moved to the mobile handset. But fans should beware: Those companies trying to grab your attention are hoping you will bring your wallets with you.

According to the trade association Mobile Entertainment Forum, the global mobile entertainment industry is now worth some $32 billion dollars.

According to a survey released in June by the forum and compiled by KPMG, the industry also remains confident that it can continue to grow strongly despite the current economic challenges, predicting average revenue growth of 28 percent for 2010.

The most popular sources of entertainment are music, social networking, text-base chatting and receiving news alerts.

“This is people chatting to each other — sometimes flirting, sometimes chatting and sometimes flirting with machines pretending to be … women,” said one industry insider.

CCS Insight analyst Paolo Pescatore believes the most popular sites such as Facebook might struggle to charge on mobile as users would still expect the service to be free.

But other services with sought-after exclusive content, or niche sites with premium offerings, or communities such as myGamma and Itsmy could prove more successful extracting payment.

One popular mobile service in Britain comes from the pay-TV group British Sky Broadcasting Group PLC, or BSkyB, which offers Premier League soccer clips showing goals, match highlights, interviews, profiles and punditry for 5 pounds a month via all operators.

Other services that could prove to be successful in terms of drawing users and making money will be those which offer a core aspect for free and then charge a small fee for premium content.

One online and mobile service that has followed this route is Flirtomatic (www.flirtomatic.com), a fun dating social network that allows users to post their profiles and rank each other from “freak” to “off the radar.” Over 1 million profiles have been posted so far.

Those who wish to take the service more seriously can also pay extra in a bid to promote themselves. One can advertise themselves on the site, check who is rating them, and pay to give someone else a better-than-perfect rating of 11.

The service, which is available in Britain, Germany and the United States and plans to spread further, also allows its users to send gifts — both virtual and real.

“We’re not a classic dating site; it’s about entertainment and fun,” Flirtomatic Chief Executive Mark Curtis told Reuters. “So, we allow users to cheat.

“We discovered that people don’t like getting freak ratings, not surprisingly, so we also launched a promotion called ‘delete your freak.'”

Another easy way to find content on mobile phones is via applications, small software programs that offer games, directions and a host of other services for free or a fee.

Getjar is the world’s largest independent app store, with over 450 million mobile application downloads to date in more than 200 countries, and it currently does not charge for content.

But Patrick Mork, the vice president of marketing, told Reuters he could imagine a time when it would. He said games were among the most popular.

“Our philosophy at Getjar has been … to get consumers to really sink their teeth into mobile you needed to provide it free as a risk-free way to try content.

“But we think in the future they can both co-exist.”

However Mork cautioned that the number of users who accessed games through their mobile phones was still relatively small and said this would not change until paying methods and ease of access improved.

“When you’re waiting for the train and just want to dip into some content, unless the price is extremely acceptable it becomes difficult to charge.”