Mobile Video: Slo-Mo(mentum)
There's no question that rollouts of mobile video services can't happen fast enough. Consumers who have grown accustomed to downloading or streaming video to their PCs want to have that experience on their cellphones as well. And with more consumers owning cellphones than PCs, content providers are eager to tap wireless devices as a new distribution channel for their video offerings. Last but not least, mobile operators need to find new revenue streams to offset falling margins in their voice services and see video as a critical booster for ARPU.
So what's holding up the show?
One obvious issue is the data rates available on today's mobile networks – a barrier that's being addressed by emerging technologies such as HSPA, LTE, and WiMax. But speed isn't the only thing standing in the way of a more aggressive mobile video rollout. The mobile industry is also still coming to grips with the question of which video format to use for sending those streaming clips over wireless networks. And while it appears that progress is being made in settling on a single standard, the format issue is still roiling the mobile video market.
The latest report from Unstrung Insider, Mobile Internet Video: Focus on the Format examines the media format skirmish that began in the online video-to-PC market and has now spilled over into the mobile sector. It explores in depth the role of the presumptive front-runner in the mobile video format race – 3GP – and the challenges it faces from other formats and other wireless technologies, including WiMax.
The 3GP mobile video format is designed to decrease the storage and bandwidth requirements of delivering video and other rich media, such as multimedia text messaging, over 3G networks to multimedia-enabled mobile devices. It uses a simplified version of the MPEG-4 video compression standard, tailored to the unique requirements of mobile phones.
The 3GP format was given a huge boost in January when YouTube Inc. , one of the largest providers of video content on the Internet, announced its support of the standard. Four of the other top five online video sites are said to have plans to follow YouTube's lead. And many of the world's largest telecommunications equipment makers – including Alcatel-Lucent (NYSE: ALU), Ericsson AB (Nasdaq: ERIC), Nokia Networks , Motorola Inc. (NYSE: MOT), and Sun Microsystems Inc. – provide 3rd Generation Partnership Project (3GPP) and 3rd Generation Partnership Project 2 (3GPP2) mobile content delivery products and services, which means they are firmly in the 3GP camp. Also, many new mobile phones offer 3GPP and 3GPP2 content capture and playback capabilities. Suppliers of multimedia-enabled phones include Motorola, NEC Electronics Corp. , Nokia Corp. (NYSE: NOK), Panasonic Corp. (NYSE: PC), Sharp Electronics Corp. , Sony Ericsson Mobile Communications , and Toshiba Corp. (Tokyo: 6502).
Despite all this support, 3GP faces some intense competition from rival formats developed by some of the very same companies, including Apple Inc. (Nasdaq: AAPL), Adobe Systems Inc. (Nasdaq: ADBE), Microsoft Corp. (Nasdaq: MSFT), and RealNetworks Inc. (Nasdaq: RNWK). Adobe's Flash Video could play a particularly pivotal role: It's arguably one of the hottest technologies in the Web video delivery market and has been a critical enabler in the explosion of video on the Web. However, Adobe will have to tweak the plumbing of the popular video viewer, especially its use of memory and battery power, to make it work efficiently on mobile phones.
Not only rival formats, but also WiMax, a rival technology to 3G, challenge the future of 3GP. The wireless technology could threaten ubiquitous adoption of the format by breeding a new generation of service providers outside the traditional wireless operator camp that may not share the same goals.
Meanwhile, in the absence of a dominating mobile video format, demand for transcoding services will grow. Mobile video has already created a new class of intermediaries specializing in taking data from one format and transcoding it into another, some providing the service "on the fly."
So stay tuned: The story on mobile video services and infrastructure solutions could prove to have a very long tail.
— John Blau, Research Analyst, Unstrung Insider
The report, Mobile Internet Video: Focus on the Format, is available as part of an annual subscription (12 monthly issues) to Unstrung Insider, priced at $1,595. Individual reports are available for $900. To subscribe, please visit: www.unstrung.com/insider.