Revenue from mobile video services is expected to top $2 billion worldwide in 2013, according to the latest data from ABI Research.
Video services included in this forecast are video telephony like the iPhone 4's FaceTime, video messaging, video sharing, video-on-demand, VoD downloads, and "other" video services.
"Video services revenue will only amount to about $121 million this year," says senior analyst Mark Beccue.
"But the growth curve is very steep indeed, and will only continue to accelerate through the end of our forecast period in 2015."
Video sharing will be a small portion of this revenue while video telephony, video messaging and video-on-demand will account for the lion's share.
Consumers' appetite for mobile infotainment, sparked by the availability of 3G networks, is one of the main drivers for this market.
This will only increase as mobile network operators (MNOs) move to 4G. At the same time, the proliferation of connected mobile devices means more screens in the hands of subscribers.
Web 2.0 services, with their emphasis on real-time collaboration, communication and networking add fuel to the fire.
A few factors, however, do have the potential to limit this growth. The lingering global recession may affect consumption patterns, especially in industrialized nations.
The popularity and adoption of OTT services provide intense competition for MNO-branded mobile video services. There is still an insufficient range and variety of video-capable mobile devices.
And because this industry is still in its infancy, the business models are still immature and imperfectly matched to consumers' preferences.
"MNOs mustn't settle for the role of undifferentiated mobile ISPs that manage 'dumb pipes'," Beccue advises.
"They should provide a variety of mobile video services and leverage strategic ecosystems until they upgrade their networks to provide quality video services. Partnering with device OEMs and software solution providers will help to optimize mobile devices.
"This will contribute to an already significant investment, but the rewards will be great."
