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November 13, 2006

The One To Watch: Mobile TV

By TMCnet Special Guest
David King, CTO LogicaCMG Telecoms

As uptake of 3G increases and more video-enabled devices are sold, widespread adoption of Mobile TV edges closer. Initial indicators are good, with telecommunications researcher Telephia indicating a 45 percent quarter-on-quarter growth in mobile TV viewers to 3.7 million subscribers in the second quarter of 2006. In the longer term, analyst house Gartner (News - Alert) is forecasting that by 2009 one in ten mobile subscribers will be using mobile TV.

However, despite this market expectation, there is still a great deal of uncertainty over how best to implement mobile TV. The economic viability of a multi-standard model is questionable, yet operators continue to experiment with a number of different technologies. This means that they are investing in different, and perhaps incompatible, standards. From a consumer perspective, this is good. From an operator perspective, someone is bound to lose out.
Currently, DVB-H is the most widely used standard undergoing trials in Europe, whilst DMB has been implemented and proving to be popular in Korea. In June of this year, mobile operator 3 Italia was the first to launch a DVB-H commercial service in Europe and attracted more than 100,000 subscribers in the first month. However, this success can at least in part be attributed to the timing — the World Cup 2006 provided the ideal opportunity to roll out mobile TV in the Italian market. Italians are renowned for their love of football; add to this the fact that that their team made it to the final and ultimately became the World Cup champions and you were almost guaranteed a captive audience!
With other European operators tipped to roll out a similar service in the coming months, there is an obvious question mark over whether they will share the same success as 3 Italia without an event of the World Cup’s magnitude to entice audiences and generate the same demand.
In the U.S., Sprint (News - Alert) recently announced it will use Qualcomm’s MediaFLO to power its new VUE mobile TV service. MobiTV, meanwhile — which saw early adoption by Sprint, Cingular and Verizon (News - Alert) — is adopting both DMB and DVB-H. In a Telephia report early this year, Sprint reported two percent penetration of its MobiTV offering in the last quarter of 2006 — TV is still low on the priority list for U.S. consumers, but that is likely to change.
Operators need a crystal clear understanding of what consumers want and expect from mobile TV, and it is widely accepted that its success depends on three things; the content itself, its suitability for the small screen and perhaps most crucially, cost. As mobile TV becomes a reality and gathers momentum, operators must ensure that they are delivering what users really want, when they want it, if they are to achieve the significant and sustainable new sources of revenue that are being predicted by the marketplace.
But what do they want? Evidence suggests that audiences will consume media very differently when on the move, but there is still a great deal of uncertainty as to what this consumption will look like. We have known for over 30 years — since the Walkman — that people will pay for music on the move, but mobile TV is breaking new consumer ground.
Live TV broadcasting will clearly be an important part of the service offering, but other forms of TV content consumption will be equally important. For instance, viewers are likely to use their mobile phones to catch up on a missed episode of a soap opera or watch a particular program recommended by a friend for example — effectively employing streaming and video on demand to create a pocket TiVo. A range of different technologies are required to deliver this wider experience — but these complexities need to be hidden from the consumer so that they can easily and quickly access the programs they want to view.
Furthermore, we need only look at the hype that has been created by Web sites such as YouTube and SelfcastTV to see that there is a real appetite for user generated content, and mobile TV provides the perfect outlet for these short film clips. It has the capability to shake up media hierarchies as we know them, and opens the question — who is the more valuable partner; Comcast or YouTube? Bearing in mind Google’s (News - Alert) acquisition of YouTube, and the touted revenue share possibilities for consumers who upload popular videos, operators need to make sure they are ready to deal with, and take advantage of, these new revenue relationships.
One thing that is generally agreed upon is the need for interactivity in TV across the board, to engage the audience and generate further revenue. In the past few years, we’ve seen an increasing number of reality TV shows such as Big Brother and American Idol, which rely on the public vote. A mobile phone is the perfect medium for this type of content because it enables instant gratification — having watched the program/video clip, the user can vote or pay for a service by simply pressing a few buttons on their handset.
As far as pricing for mobile TV goes, there are various models to be considered from pay-per-view to unlimited usage, but operators must be prepared to be flexible to suit the consumer’s pocket and the perceived value they place on the service. Research suggests that consumers would be willing to pay in the region of US $10 to US $15 per month but the jury is still out.
The industry is also gambling that consumers will warm up to certain potential forms of mobile advertising. Ads were top of mind at this fall’s CTIA show, and mobile TV offers the first potentially viable incentive to viewing multimedia ads on your mobile phone.
Indeed, new forms of advertising and sharper cross-promotion strategies through mobile TV may also need to be employed to make the business case viable. Basic advertising alone does not take full advantage of this new market, especially for quadruple-play providers. In the future a viewer will see an advertisement for last season’s DVD during their TV viewing, immediately go online to make the purchase or order via mobile, and at the same time request previews of the new series to be sent to their PC with an option to buy a digital download. It is these sorts of cross-media promotions that will generate the full potential of revenue from all channels.
If operators are to retain any control over and access to mobile advertising revenue as it takes off, they will have to serve as enablers. To do this, they need to add value beyond what is currently available to the content provider. This will require a significant shift on the part of the operators—a shift from treating customers as subscribers to treating them as users. The difference may seem semantic, but it is a critical one. It involves adopting an advertising model much more similar to that of the Internet than that of television.
Despite skepticism about when mobile TV will achieve any kind of mass market and indeed, what the size of the potential audience really is, mobile TV is very much on the move. However, one thing is clear: content will be the driver for the adoption of mobile TV and operators must therefore ensure that is usable, compelling, appropriate and affordable.
David King is CTO of LogicaCMG Telecoms. The company helps the world’s top network operators, service providers and content aggregators to increase revenues, enhance customer loyalty and capitalize on opportunities offered by convergence. LogicaCMG’s (News - Alert) clients serve over one billion customers in 135 countries across six continents.

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