Convergence Drives Entertainment Opportunities on Cell Phones: Growing Usage of Multimedia Continues to Trail Voice.

PORT WASHINGTON, N.Y. -- One year after number portability became the hottest trend, multimedia opportunities and flexible pricing plans now tempt consumers to switch devices, according to The NPD Group's recent report, Marketing Beyond Minutes: Tracking Cell Phone Photos, Games and Ringtones.

The report, the first in a series of annual studies to measure ownership and attitudes underlying the growth of the mobile phone market, is intended to aid manufacturers, marketers and sellers of cellular phones in their planning and marketing to meet the needs of consumers.

According to the report, music, games, photos, e-mail and Internet have all found their way onto cell phones, and as more consumers look for ways to integrate multimedia technology into their everyday lives, it is no surprise that nearly 74 percent of Americans now use a cell phone on a daily basis. However, lest manufacturers think handset usage is ubiquitous, 26 percent of Americans still do not use a handset today, indicating there is still a significant market for first-time buyers.

"The incredible distribution power of carriers is putting phones that can handle ringtones, photos, and games in more consumers' hands," said Ross Rubin, director of industry analysis for The NPD Group. "However, digital camera and MP3 manufacturers have little to fear for now as user interface complexity and conflicting development priorities stand in the way of the cell phone becoming more than a jack-of-all-trades,"

Ringtones are by far the most popular entertainment feature for consumers, with 14 percent downloading them to their phone. Sending pictures follows, with 5 percent of consumers using that service and another 4 percent stating they also receive pictures. Other popular content to download is pictures or screens 4 percent and games 5 percent.

According to the study, while only nine percent of handsets have an integrated still or video camera, nearly 55 percent of consumers with the capability pay to send pictures from their cell phones. Nearly a third of camera phone users take pictures at least once per week with over three percent using it every day.

As for gaming, over 95 percent of consumers with game-equipped cell phones use them to play games although over 70 percent say they must pay for downloading games to their game-capable handsets. Over 30 percent claim that they play games on their cell phone at least once per week although nearly 14 percent claim they are at least somewhat dissatisfied with cell phone games.

"As Internet content drove a wave of PC adoption, consumers are opting for handsets that can support the new media types offered by faster cellular networks," said Rubin. "Many early adopters have been willing to pay the tolls to access these extra features, but carriers may be sacrificing long-term adoption for short-term revenue."

Cell phones are rapidly becoming capable data communications devices but feature poor connectivity. The NPD Group found that more than a quarter of consumers' cell phones are capable of some form of Internet access and e-mail, and that more than 15 percent have instant messaging capabilities.

When asked what features consumers would like in their ideal and affordable handset, the top of the wish list is longer battery life, caller ID and a changeable phone ring. In addition, over 40 percent said they'd like a color screen and voice-activated dialing. Over a third want a built-in still camera, Internet access and Web browsing, short text messaging and a bigger screen.

For consumers considering on buying a handset in the next 12 months, the most important features they will be looking for are a built-in still camera, short text messaging and email. Nearly 28 percent will look for Internet access or web browsing capabilities, and 18 percent want a built-in PDA organizer. As both consumers and technology grow more sophisticated, there is increasing demand for greater capabilities and features.

Methodology

Marketing Beyond Minutes: Tracking Cell Phone Photos, Games and Ringtones was an online survey conducted among members of NPD's online consumer panel. A national sample of 4,703 adults completed the survey in September 2004. The survey is intended to provide detailed ownership and usage information about cell phones.

About The NPD Group, Inc.

Since 1967 The NPD Group has provided reliable and comprehensive sales and marketing information for a wide range of industries such as apparel, appliances, automotive, beauty, consumer electronics, food and beverage, foodservice, footwear, home improvement, housewares, information technology, music, toys and video games. NPD provides critical knowledge on what is selling, where, to whom and why to help clients make more successful, fact-based business decisions. For more information visit www.npd.com.