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This category covers applications that are primarily designed for leisure and entertainment, such as music and video-movies, horoscopes, jokes, and soap opera updates. Games, sporting events, icons, ring-tones, postcards, and video clips are included in this category. Most of these will be multifunctional, provide information and advertising, and may change according to season or nature of the event.
Entertainment and lifestyle will be a popular category of applications as users look for ways to personalize devices. These applications will offer truly personal services that follow the user throughout the day and offer bursts of entertainment when convenient.
Key drivers for entertainment and lifestyle applications are:
• Cool, current, and compelling data. Entertainment is a very personal and fickle subject because user preferences and content that is “in” changes often.
• Notifications of events with limited timelines. Concerts often sell out within minutes of being announced, leisure events are often subject to last minute promotions, and special offers make timeliness and mobility a benefit.
• Changes and delay. Weather can cancel or delay travel or other personal activities with little notice. Consumers with the right wireless applications can regroup and plan an alternate course of action to better utilize personal time and efforts.
During 1999, over 19 million people worldwide used mobile phones to download or access online games, audio, or video services. Entertainment will be one of the leading forms of content carried over wireless networks. Surveys of industry confidence indicate that entertainment is perceived to be the second most popular mobile application after email and SMS.
In 2000, simple embedded games and ring-tone downloads are popular. As new low-cost broadband wireless services become available, we will see more new applications. These include playing interactive mobile games, listening to music downloads (in MP3 format) via the wireless phone or attached accessory, and watching video clips (e.g., football highlights) on your wireless video-phone.
TRAVEL. In 1999, US consumers booked $6.5 billion of leisure and unmanaged business travel online, almost triple the $2.2 billion booked in 1998, representing 5 percent of total US bookings in 1999. Online bookings are expected to increase significantly to 14 percent of total bookings by 2005 ($28 billion), with key segments including lodging, cruise, tour, and rental car products.†
MUSIC AND MUSIC CONTENT. Music content delivery involves the transporting of music content (usually in digital form) from a manager of the content (a music producer or their agent) to the end customer. In the 1990s, much of the content was sold via the Internet rather than delivered through it due to the limited amount of bandwidth and devices to store and play downloaded music content. Downloading a full-length CD, even in compressed form, is a formidable challenge for the average user with a dial-up modem. The market for digital distribution of music in 2002-2003 is estimated at approximately $150 million. With 3G broadband wireless data, it will be possible to download entire music CDs in less than 2 minutes.
The sale of compact discs (CDs) and tapes via online services is expected to grow to $2.6 billion (14 percent of total U.S. music sales of $18.4 billion by 2003). Online shopping allows customers to easily preview content or details of a product such as tracks on music albums. In 1998, music industry revenue topped $13.5 billion in the United States, with online sales totaling $157 million, up 315 percent from 1997’s figure of $37 million. As 3G wireless networks and other broadband systems are deployed, consumers will shift their acquisition from purchasing CDs or tapes to downloading their favorite music content to their media player.
By 2000, more than half of the users on the Internet had listened to music audio on a personal computer (PC). Of these, 36 percent have downloadable music and 5 percent have transferred unauthorized (pirated) music files to their hard disk drive. As an interim approach to music content delivery on the Internet, companies are offering digitally compressed music in MP3 form. In 2000, MP3.com launched subscription music channels on the Internet. For a monthly fee of less than $10, users have access to thousands of music tracks to listen to.
GAMBLING. Online gambling is the interactive process of allowing customers to wager money or credits in return for games that have standardized odds. Online gambling has the potential to be one of the largest interactive services. In 2000, the global gambling market was valued at over $900 billion. A growing portion of the gambling industry is moving towards online gambling. Customers with a credit card and an Internet connection are able to gamble on casino games, lotteries, and sports books (horse and dog racing, boxing, team sports betting, etc.) almost anywhere in the world.
Although there are some issues about the legality of gambling online, the majority of online gamblers are located in countries with regulations favorable to online gambling companies. Many of these companies operate in places such as the Caribbean, Europe, Australia, and South Africa. It is projected that over $10 billion will be gambled online by 2002 as operators take advantage of the huge audience reach and cost savings of the Internet.
NETWORKED GAMES. Since 1997, networked games have become a big opportunity on the Internet. Networked games allow users to play games against friends who are connected to the Internet. Almost any computer game that can be played by two or more people can be played online. It is estimated that by 2002, 60 percent of children online (over 16 million) will be playing games, and they will spend over $70 per year for game services. Adult will spend $140 per year for an estimated total of $622 million for online game services. Wireless high-bandwidth services allow for substantially improved game services through streaming video and audio, and permit its players to engage in games virtually from anywhere.
And as low-cost home broadband services and equipment become more available, companies will create richer gaming applications. Major game vendors such as Nintendo, Sony, and Sega are entering the broadband market by selling game CDs and allowing potential customers to participate in online games for free. Alternatively, there are some games that can only be played online including Ultima, Starseige, Quake Arena, and Unreal Tournament.
To use online games, customers pay a monthly access fee or pay-per-play. Networked games make it much easier for customers to find new opponents, or to find a partner to play at any time. High-speed data wireless access will provide for much better three-dimensional (3D) graphics viewing.
VIDEO ACCESS AND MOVIE RENTAL. Video content delivery will be one of the leading drivers of the 3G broadband marketplace. Consumers have a voracious appetite for all types of media, particularly video (movie) content. In 1999, over 70 percent of households in the United States rented an average of 1.3 videos per week. The statistics for movie rentals confirm the preference of movie viewers to stay at home to view movie content. Since 1980, when VCRs first emerged as a means of watching full-length motion pictures, the sales of prerecorded rental and sell-through video cassettes has grown by more than 66,000 percent as compared to box office theater growth of 22 percent over the same period. The video rental business is projected to top $7 billion in 2000 and grow to $19 billion by 2004, with video sales reaching $20 billion.‡ Adult entertainment content ordering and delivery has been one of the leading categories of early Internet usage. As such, adult entertainment was an early adopter of user interface augmentation through streaming video, private access to sensitive material, and one-click ordering. In 1998, pay-per-view and subscription adult entertainment accounted for about 40 percent of the U.S. consumer paid online content market.
VIRTUAL RADIO STATIONS. Virtual radio stations are digital audio sources connected to a network (typically the Internet). In 1999, there were over 2,000 radio stations operating on the Internet. Virtual radio stations have a strong competitive advantage compared to standard radio broadcasts. Radio stations Web sites can do more than simply rebroadcast their onair signals. They can provide photos of disc jockeys, contest prizes, and winners, and act as current news centers for entertainment events and weather services.
Broadcast radio stations have been offering content delivery by both radio and Web access in anticipation of a significant shift to Internet (virtual) radio. Internet radio offers the ability to customize (personalize) a broadcast to groups or individual receivers. By 2005, 41 percent of the population will listen to personalized, on-demand audio content at least once a week. Content providers will adopt genre-specific business models.
Radio stations are taking aggressive steps in developing a new breed of Web sites designed to offer fresh content and help the media outlets connect better with their target audience. This includes offering chat rooms, news updates and music reviews, and other social-based services that make their Web sites more appealing. Additionally, virtual radio stations can use their Web sites as research tools to determine listener preferences. The system serves up real-time information, providing details on the music being played. Listeners then are asked to use the Web site to vote on the song being played, thus giving station programmers instant feedback on listener tastes. The radio stations then talk up their Web sites during radio broadcasting, driving more usage to the Internet service. The Internet is having both a positive and negative impact on radio station ratings and revenues.
VIRTUAL TELEVISION STATIONS. Virtual television stations distribute digital video and audio through the Internet to groups of viewers. With broadband digital video access, the Internet will become a new avenue of distribution for broadcasters that hope to target previously unreachable mobile audiences.
Since 1999, there has been growing public interest in interactive TV (iTV). This has been led by satellite and cable systems deploying subscriber equipment and infrastructure capable of delivering a variety of interactive services. Some of these early interactive functions include an electronic program guide (EPG) and parental control through channel-locking features. A type of one-way datacasting on virtual television stations allows viewers to choose from limited, primarily text-based, supplementary content.
Other virtual television features and functions may include game or quiz show audience participation. These features and functions all present new opportunities as well as challenges to programmers, advertisers, and providers of interactive services as they navigate through a maze of complex platform landscapes defined by a complicated mix of networks, set-top boxes, and software. It’s projected that 35 percent of U.S. households (over 25 million homes) will use some form of interactive TV services by the end of 2005.
IMAGE AND VIDEO PRODUCTION. Images and video can be captured in electronic form and transferred to other locations. Because of the large file size of high-resolution images, media transfer has primarily been in the form of high-density disks or video tape.
Although initial production of images or video is in a studio, the production of edited images, video segments, or computer animation may be performed at many different locations. Broadband connections allow for editors and producers to interconnect without the delay of shipping storage media.
INTERACTIVE TOYS. Interactive toys will utilize wireless communication technology to better interact with other toys and to update software programs. Wireless updates will allow toys to keep current with a player’s abilities or interests while increasing the useful life of the device. Interactive toys have motors, sensors, and infrared messaging and speech recognition technologies that respond to communication signals and originate messages. The responses may be in the form of mechanical action or an audio message.
Interactive toys have been available for many years. Some of the first interactive toys responded to signals that were sent via a television channel. These toys responded to colors or patterns within the television signal.
Interactive technologies, specifically the user interface, are constantly improving. With wireless connectivity for example, interactive toys such as virtual pets with artificial lives, will become more “alive” thus offering simultaneous physical, verbal, and PC-like interaction virtually anywhere. | 
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