European broadcasters discover an enormous appetite for SMS services, enabling users to interact with TV shows -- but who gets the revenue?

August 23, 2002

3 Min Read

AMSTERDAM -- In a development unforeseen by most analysts, European television broadcasters have embraced SMS text messaging as a revenue generating tool enabling users to interact with television broadcasts. Game shows, reality television and channels dedicated to teenagers and young adults are using SMS text messaging to enhance their programmes with interactive features.Broadcasters have found an enormous appetite for these services amongst their users. In Spain, a simple crossword quiz of 30 seconds generated 6,000 SMS answers per day with a peak of 43,000 on a special anniversary edition. CCRTV Interactiva, the interactive division of the Catalan Broadcasting Corporation (CCRTV) that aired the SMS-TV show, was able to cover the entire cost of the production from the SMS revenue generated alone. The German television show, 'Jede Sekunde Zählt' (Every Second Counts) invited users to send SMS messages to influence which contestant would win a competition. This call to action generated 1.2m SMS messages within half an hour.With the SMS-TV sector growing across Europe, and as a result of the complex nature of the SMS-TV value chain, there is a fierce battle for revenues. Throughout Europe various models have developed for dividing the proceeds of premium SMS-TV services between the different parties in the value chain.Nevertheless, the dominant position of the mobile operators is clear across all markets. Usually the mobile operators take up to 50% of the proceeds after taxes. The average revenue split for a Premium Rate SMS Message of €1.00 gives the mobile operator €0.40, the broadcaster / production company €0.25 and the solutions provider €0.15. The remaining €0.20 covers taxes. The mobile operators claim their large slice of the revenues for three reasons:Firstly, they have access to the audience. Without their networks, no messages can be sent or received. This significantly raises their bargaining position.Furthermore, the mobile operators charge for data traffic, as they would normally do. Delivering and transmitting data over networks is never a free ride and there is no exception when it comes to SMS-TV.Thirdly, mobile operators conduct the billing. The beauty of SMS as an interactivity tool for television shows lies in the fact that the mobile operators have an established micro-payment system. Post-paid customers pay for premium SMS services via their normal (or itemised) mobile phone bill. Consequently, the mobile operators claim they have a collection risk and should be rewarded for carrying this burden.As mobile operators are struggling to finance the construction of their UMTS networks and to decrease the considerable debt they have gathered in acquiring UMTS licenses, SMS-TV might prove to be a very welcome income stream.These, and other key findings, are included in the forthcoming report from Van Dusseldorp & Partners which analyses the various business models spawned by the marriage of SMS and TV. "SMS-TV: Interactive TV Reinvented" covers the sustainability and division of the substantial revenues generated, the complex value network and the changing roles therein. The report assesses and analyses the balance of power and the tensions between the SMS application developers and providers, the telecommunication networks, the TV concept developers, production companies, production distribution companies and broadcasters. With over 100 pages of detailed case-studies, and an extensive directory of the major players in the SMS TV sector, this timely report is essential reading for anyone who needs to be up to speed on this burgeoning European industry.Van Dusseldorp & Partners BV

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