US mobile phone customers would rather play music than games on their handhelds, yet gaming-derived revenues will remain higher until an ecosystem for widespread music distribution develops, says In-Stat. Delays could cause carriers to miss a rich revenue opportunity, the research firm says.

According to In-Stat, consumer surveys show phone customers — especially within younger demographics — are willing to spend significantly for music-playing phones. This suggests that if carriers fail to offer music services in a timely fashion, customers will simply buy music-enabled devices such as the Motorola e680i and transfer music files onto the devices themselves.

Both broadcast and downloaded music are more appealing to consumers than games, In-Stat says. Meanwhile, mobile music ecosystem factions continue to haggle over pricing, revenue sharing, and DRM (digital rights management).

In-Stat analyst David Chamberlain said, “The window to catch a group of wireless users we call 'Mobile Music Intenders' — those interested in mobile music services — may be closing soon. They're ready to buy new handsets, and they're willing to pay extra for handsets that play music. Without available music services or handsets, carriers may miss this opportunity to grab what could end up being a very lucrative mobile music market.”

Additional findings from In-Stat's recent wireless subscriber survey include:

• One-fourth of Mobile Music Intenders spent more than $150 for their current handset
• More than two-thirds of Mobile Music Intenders expect to buy new phones before the end of 2005
• Thirty-four percent of all respondents are “somewhat”, “very”, or “extremely” interested in mobile music services
• Survey respondents who could be classified as “MP3 Intenders” are younger, more often male, prefer Sprint PCS and T-Mobile, and spend more on their handsets

Additional details about In-Stat's report, “Mobile Music Intenders: Get 'em While They're Hot,” can be found here.

 
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