Why China’s Mobile Video Market Might Be Poised to Explode

The China Daily recently reported that China Mobile, the world’s largest wireless operator, announced a competition for video submissions for potential inclusion on a new mobile video channel. The carrier, which has more subscribers than the US has residents, will share video ad revenues—which could prove substantial in the near future—with the contest’s winners. In his latest eMarketer report, my colleague Noah Elkin estimates that mobile content revenues will soar in the US, driven partially by ad-supported video and music. Several factors suggest that the mobile content market in China—especially revenues from mobile TV and video—is headed down the same path.

ResearchInChina found that as of December 2009, mobile TV and online video adoption rates were relatively low, at 16.5% of mobile internet users in China. However, the popularity of other forms of online communication and entertainment suggest a highly receptive mobile audience.

eMarketer estimated in February 2010 that China will have over 850 million mobile phone subscribers by the end of 2010, for a penetration rate of 64.3%. We also projected that mobile internet users would increase 62.5% in 2010 to 372.8 million, with prospective growth rates remaining high through 2014.

What do these bits of information add up to? As more users buy smartphones and other entertainment-enabled phones, China Mobile is looking to maneuver itself to tap the potential of mobile video and TV revenues. According to Netsize and Informa Telecoms & Media, mobile video and TV account for only €127.27 million ($176.2 million) and €34.38 million ($47.8 million), respectively—less than 1% of all mobile content revenues in 2010.

China Mobile continues to expand current 3G coverage and is heavily investing in 4G, as InformationWeek reported, partnering with mobile hardware developers Nokia Siemens, Huawei and Samsung, among others, on their new proprietary 4G network standard. They are upgrading their network to broaden revenue generating services beyond messaging, voice and basic mobile internet.

All of this makes China even more attractive for multinational marketers and content providers.

With the clout of the largest wireless carrier in the world behind it, the push for mobile video and TV seems like a sure bet to expand subscriber usage far beyond current levels in China. And as smaller carriers such as China Unicom and China Telecom follow suit, marketers will literally be in position to easily place mobile video content — including ads, apps and entertainment — directly into the hands of the Chinese consumer.