Mobile video usage grows 70%

MOBILE: Consumers increasingly dissatisfied with service, Nielsen says

By Danny King -- Video Business, 9/28/2009

SEPT. 28 | MOBILE: The number of U.S. mobile-video users surged 70% in the past year, but the service isn't sticking with consumers, with dissatisfaction up about 26% from a year earlier, according to Nielsen.

Stemming from products such as the new Apple iPhone and Research in Motion's BlackBerry, about 15 million Americans regularly used mobile video in the second quarter, while the number of Americans accessing the Internet with their mobile devices has jumped 34% in the past year, Nielsen said in two reports this week. About one in 14 U.S. mobile subscribers use mobile video, according to Nielsen.

Quantity, however, doesn't equal quality, or at least consumer satisfaction, according to the Nielsen report. Despite overall improvements in video quality and speed along with lower prices for mobile-video subscription options, about a third of the users were dissatisfied with the experience, according to Nielsen.

"Since its introduction, the adoption rate of mobile video has been governed by a revolving audience of mobile video 'testers,' viewers who try out the medium for under a year and then ditch it," Nielsen said. "Mobile video today still lacks the stickiness it needs for more rapid growth."

Also increasing is adoption of so-called "fourth-screen" products such as media phones, which were first sold in the U.S. last year. Media phones, a step-up from mobile phones that allow better broadband access, are part of a group of fourth-screen devices that also includes digital photo frames.

Fourth-screen devices "in general are competing against more multi-function devices such as smart phones,” ABI Research industry analyst Michael Inouye said in a statement. "But for consumers who want more permanent, dedicated control, they can be a compelling proposition."

About 30 million media phones will be shipped globally in 2014, generating more than $5 billion in sales, ABI Research said in a separate report last week.

Rapid mobile-video adoption also is fueling growth in mobile applications. Although the majority of such features are either free or less than a dollar, American spending on mobile applications will jump more than twelvefold from $343 million this year to $4.2 billion in 2013, Yankee Group said last week. In 2013, about a quarter of mobile applications will be paid, with an average price of $2.37, the report said.

As for the number of people accessing the Web using mobile phones, growth is being spurred largely by women, teens and older people, according to Nielsen. Mobile-Web use among women rose 43% in the past year while mobile-Web use by people 65 and older surged 67%, Nielsen said.