Smartphones are pushing adult mobile traffic to record levels, but revenues are threatened by free content, according to the latest research.
Revenues from mobile adult content and services are expected to reach $2.8 billion by 2015, driven primarily through the uptake of video chat and subscription-based services.
According to a new report published today by Juniper Research, the increase, from $1.7 billion in 2009, comes despite the proliferation of free content available via tube and thumbnail gallery post (TGP) sites, which has depressed revenues in Western Europe.
Video chat service providers have reported a combination of high retention rates and, with services often billed at several dollars per minutes, of very high ARPU. Thus, even with a comparatively low user base, service providers can generate extremely strong revenues.
Meanwhile, the industry is experiencing a transition from pay per download to subscription models as direct to consumer adult sites gain traction and traffic by offering a wide range of specialised niche content.
However, the mobile adult strategies report found that while the rise in consumer smartphone adoption had led to a dramatic upsurge in mobile traffic to leading adult websites, sites are only now beginning to monetise this traffic by offering mobile-optimised content and billing mechanisms.
Furthermore, the transition from walled garden to open internet has seriously impacted on-portal adult revenues in more mature markets.
Stated report author, Dr Windsor Holden: “In Western Europe, adult areas on operator portals were relatively successful, as were off-portal services billed via PRSMS. As people have increasingly surfed the internet via the mobile, they’re discovering a wealth of free content, much of it not optimised for the mobile experience, but still more than sufficient for casual users.”