Mobile entertainment’s potential sharply debated.

Forecasts for mobile entertainment diverged sharply as 2006 wound down, with the difference being measured in the tens of billions.

In November 2006, Juniper Research forecast that total revenues for wireless providers from mobile entertainment in the mobile music, video, TV, gambling, gaming and adult categories would exceed $77 billion by 2011.

One month later, Informa Telecoms & Media followed with a mobile entertainment forecast that stated the total market in 2011 would be $38.1 billion.

As they say at the Pentagon, “After a billion here and billion there, you’re about to get into real money.” A near $40 billion gap between market forecasts indicates that either something is way out of whack or researchers have not agreed on what to count when they consider the potential for mobile entertainment.

For its part, Juniper did not break down publicly the elements that comprised its aggressive mobile entertainment forecast. Informa’s projections assumed a sharp uptake of mobile video and mobile television services as the engine driving its forecast. By 2011, the firm estimates that around $8 billion will be generated by mobile video and television services.

It is simplistic to chalk up the divergence as typical of researchers spending too much time with Microsoft Excel and not enough time outside in the real world. The closer truth is that there are some wild cards over the next five years that may mean that any projection made now turns out to be an exuberant fantasy or a conservative understatement.

On the technical side, the integration of mobile into other broadband platforms such as 802.11 (Wi-Fi) is already underway. In the US, T-Mobile has launched a hybrid wireless broadband service called “HotSpot@Home” that allows T-Mobile subscribers to route their mobile calls — and presumably their mobile data traffic later — over their home broadband connections instead of through the cellular network. Sprint Nextel plans a similar model, perhaps based on WiMAX in order to take advantage of a unique spectrum advantage it enjoys in the US market. This comes on top of mobile TV initiatives such as Modeo and MediaFlo.

In Europe, continued deployment of the DVB-H standard is proceeding apace with leading telecom equipment manufacturers such as Ericsson teaming up with operators to trial personalized mobile TV advertising.

Confusing? Sure. More important, however, is that mobile operators in the world’s largest media markets are squaring off to attack the fundamental economics of wireless broadband, something that can only help further the cause for filling those new or expanded pipes with entertainment.

Even bigger wild cards lie outside the US, especially in the wireless juggernauts that are China and India. Leaving the eye-popping subscriber numbers to the side for a moment, China has publicly committed itself to having a nationwide mobile TV network well established before the start of the 2008 Beijing Olympics. In late 2006, the two top wireless operators (China Mobile and China Unicom) signed deals with the national broadcaster to start carrying video to cellular phones to move this process along. Analysys International estimates there will be over seven million mobile TV subscribers in China alone by 2011.

In the meantime, India is adding subscribers at a rate of several million per month, many of whom are eager to import Bollywood content into their handsets. There, the prevailing opinion is that over 400 million people will be mobile phone users by 2011, with the vast majority of these being new additions, who by definition are more amenable to try new activities with mobile handsets.

If we combine the mobile entertainment infrastructure being built in today’s largest media market with what is happening in tomorrow’s top media markets, the absolute scale of the previous mobile entertainment forecasts do not look all that loopy. The gap, then, is a measure of basic uncertainty of whether the technical side of the expansion (eg, increased technical activity that brings down the cost of wireless bandwidth) or the market side (eg, China and India providing the scale to push that cost even lower) will dominate the direction of mobile entertainment.

Where does this leave advertising and marketing activities? Sitting pretty, if some fundamental wrinkles can be ironed out. All that mobile entertainment not only needs to go somewhere, it needs to be paid for.

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