Revenues from mobile 'adult services' are set to approach $3.5bn by 2010, according to a new report.

Juniper Research said that growth will be fuelled by increasing adoption of streamed video and video chat, and a sharp rise in the adoption of 3G services.

A significant proportion of new revenues are expected to come from the relatively underdeveloped North American markets, despite restrictions on on-portal content.

"While operators in the US and Canada are still very reluctant to introduce age-verification systems and offer adult content, it is a completely different story off-portal," said report author Dr Windsor Holden.

"A number of service providers are now offering direct-to-consumer content and services aimed at those markets. As mobile subscribers become more comfortable and familiar with the off-portal environment, traffic to these sites will mushroom."

The report also found that, while new legislation in markets such as China and South Korea will depress growth in Asia, adoption in eastern Europe is rising at a higher rate than previously anticipated.

This is in part down to the greater willingness of operators in the region to offer a wide variety of explicit, white-label on-portal content.

"In most forms of mobile entertainment, the brand is king. But this does not apply in mobile adult content," explained Dr Holden.

"The most popular genre with consumers is graphic amateur content. If operators wish to maximise revenues from adult content, they should provide a mix of genres in which white-label content is given equal prominence to that of major brands."

Juniper predicts that western Europe will remain the largest regional market for mobile adult services throughout the period covered by the report, with revenues rising from $775m in 2007 to $1.5bn by 2012.

The report warned that, while users of adult services are far less price sensitive than consumers of other mobile entertainment services, service providers should be careful not to overprice content.