By Jo Twist
BBC News science and technology reporter
Mobiles are becoming "media channels" as music, games, gambling and adult content clamour to make the industry worth $42.8bn (£24.6bn) by 2010.
Mobiles that can hold 50 to 60 tracks will become the norm
Analysts at Informa Telecoms predict the way people pay for content will change as content providers target people directly, outside operators.
Audio will be big business too, worth $11bn (£6.3bn) by 2010, with downloaded music likely to double as ringtones.
This is partly down to prices people are used to paying for music online.
On average, ringtones currently cost more than the average full-track music downloads onto a computer or digital music player.
People will shy away from having to pay for a music download online, then paying for the same track to use as a ringtone, at three times the price.
"What you will see is more use of buying a download that you can use as a ringtone, or video streaming with it rather than just the ringtone," Simon Dyson, senior analyst at Informa told the BBC News website.
With increasing connectedness on mobiles - the ability to get straight onto the net - big media companies, such as Disney, will be able to offer content directly to people too.
"The mobile industry seems to think that people will always pay for mobility," added Jessica Sandin, principle analyst at Informa.
"I think we will see more bundled services, as lower rates and so on. It is about user experience at the end of the day."
No iPod killer
Mobiles will support MP3 audio formats as standard, just as cameras are standard on mobiles now, and models that have enough memory to hold 50 to 60 full tracks will be common place, said Mr Dyson.
This will make the mobile the most popular mass market digital music device within the next five years, but by virtue of the mobile being so popular in the first instance.
The mobile will not be the "iPod killer" that many have suggested.
Instead, said Mr Dyson, the mobile will start to challenge smaller flash-based digital music players that can hold 256MB or 512MB of data.
The Informa report into the mobile industry shows how the mobile - the device of choice in the majority of people's pockets - is a key way of tasting, or sampling, digital entertainment while on the move.
Content on phones will be increasingly linked in with the wider digital entertainment sphere.
Mobile TV, however, is still an uncertain area for many within the mobile industry.
Although there are trials going on to broadcast TV directly to mobiles, there are rights issues that need to be sorted through. Most operators were looking at mobile TV via their 3G (third generation) video networks for now.
Until the industry found out what people actually wanted to watch on their mobiles though, the "jury was out" when it came to mobile TV as a big businesses, said Informa.
"Mobisodes", mini episodes of 24 which Fox trialled, proved a success, said the analysts, because it was obviously linked to a show they liked watching on TV.
One thumb bandits
Gaming remains a "healthy" area of mobile entertainment, but it is still a niche arena. It is worth $2.6bn (£1.5bn) in 2005, but will climb to $11.2bn by 2010, the report suggests.
So far, said Stuart Dredge from Informa, retro games such as Pac Man and Tetris had done well, but the industry was worried that only 5% of mobile owners actually paid for and downloaded games regularly.
Games on net portals, such as Yahoo, were also making the move to mobiles, and would do well.
Operators have to make sure they know what people want
He said that the industry was finding that people like turn-based games, such as poker, where they are connected to other players with whom they can share highest scores.
There had also been lots of games released for the mobile that were linked to films, or to existing console games, but these had been of "varying quality" so far, said Mr Dredge.
But big gaming giants, such as Electronic Arts, were looking seriously at the mobile arena and were set to release about 12 games.
He said that mobile games could start to act as tasters, or as mini games, that help gamers accomplish something larger, or solve some puzzle, in the console game.
The games companies are also looking at different ways to play games on the mobile, such as titles which only require single thumb control.
Mobile and casual games have proven to be bigger pulls for women and older people than console games.
But console games makers and the mobile industry are both keen to appeal to much wider audiences than they currently do.
The games for mobiles, said Mr Dredge, could also start to be more about selling other content, such as ringtones, rather than the game itself. He added that there was still room for prices to drop somewhat.
Other forms of entertainment on the mobile, such as gambling and adult content will continue to do good business, the Informa report suggests, but their growth would be dependent on regulation issues in different regions.