• by Mark Walsh  @markfwal, January 9, 2009

The audience for mobile video is growing, but remains limited to only about 5% of all U.S. cell phone subscribers, according to a new report from Nielsen Mobile.

Holding back the spread of mobile video are factors including a lack of consumer awareness, high cost and a dearth of compelling content. So while 109 million subscribers have video-capable devices, only 10.3 million are using them to watch video.

"In the U.S. today, we find ourselves at mobile video's plateau--a point where, all things remaining the same, we could expect the adoption of mobile video to slow considerably," according to the paper titled "Tuned Into the Phone: Mobile Video Use in the U.S. and Abroad."

Despite its moribund outlook, Nielsen suggests there is hope for mobile video in the wider use of the mobile Web, the rollout of mobile digital TV and an improved advertising model around subscription-based streaming video services.

For now, the picture looks especially hazy for mobile video subscriptions, which increased from 6.4% of all subscribers to just 7.3% in the last year. That category includes services such as MobiTV and Qualcomm's MediaFLO technology, which powers mobile video on wireless carriers such as Verizon Wireless.

What's more, only 26% of subscribers who paid for mobile video services during the third quarter of 2008 actually used them at least once a month. Nielsen estimates that Sprint TV, with 1.6 million users, is the most popular subscription service.

The most common way to access mobile video overall today is via the mobile Web (without an extra fee), with 66% of video users tuning in to free sites such as YouTube. That compares to 42% who rely on mobile video subscriptions.

While YouTube commands the biggest mobile video audience, with 3 million viewers, the Nielsen report notes that other sites are also starting to build mobile followings. Among them is Hulu, the video joint venture of NBC Universal and News Corp, which has a monthly audience of 700,000 mobile viewers.

NBC ranks as the most popular video brand, with 4.7 million cell subscribers watching its mobile programming, or nearly half the total mobile video audience. When it comes to types of content, comedy is tops among mobile viewers, with 40% opting for lighthearted fare. The typical viewer overall watches video 3 hours and 37 minutes per month over 17 sessions.

To expand the mobile video audience, Nielsen suggests carriers will have to loosen up the large degree of control they maintain over the market through their on-deck video services. The research firm sees the most opportunity for growth coming from carrier "all-you-can-eat" plans such as Sprint's "Simply Everything" plan that include Web access as part of a bundle of services.

"The draw of YouTube over mobile Web is an indication that a large audience could exist for new mobile video channels when the price is right; namely, 'free,'" according to the report.