Virtual Goods Emerging as New Mobile Revenue Stream

Mobile networks are stand to profit from a new trend: consumers using mobile phones to pay for virtual goods sold by third parties, like MMOs and social networking sites. Significantly, Andrew Bud, executive chairman of mobile billing aggregator mBlox and global chairman of industry association the Mobile Entertainment Forum, observed that sales of PC-based services and virtual goods through mobile SMS are overtaking sales of mobile content for use on the phones themselves.

Sales of ringtones and mobile wallpapers have long since taken off as a microtransaction business, a sign that cell phones had become as much status symbol as gadget. Bud refers to such mobile-only content as "handset jewelry," and sees it as a market that's on the decline. Instead, users are increasingly using mobile phones, often pre-paid, to purchase virtual goods for use in general Web-based settings like social networks and virtual worlds. 

Is "handset jewelry" really a dying market, or are consumers of mobile content simply hungry for something new? Companies like Viximo are still making waves by exploring the iPhone as a platform for a new breed of handset jewelry. While the pricey iPhone is stronger among adults than teens and kids, its large screen, marketplace, and Web connectivity offer new ways to bridge the gap between the two markets.

"[Mobile] is still the most convenient payment method for young people who, with or without credit cards, enjoy the flexibility of being able to top up their mobile at cash points and shops to pay for services and goods, and upgrade features," said Martin Montague, CEO of cross-platform billing provider 3Bill.

So while teens are using their mobile phones to level up in an MMO or buy a new piece of content for their social network avatar, adult iPhone owners will soon be jeweling up their handsets new types of platform-specific virtual goods.