Seeing Is Believing

Interest in mobile TV has exploded in 2005, with streaming services over 3G blazing a trail for the introduction of dedicated mobile broadcast networks in the future, finds a new research report from Unstrung Insider, Mobile TV: Switching on the Revenue Stream.

The CEOs of global mobile operators are pumping it in their investor presentations, broadcasters are signing up to the vision, and vendors are falling over themselves in anticipation. Fritz Joussen, CEO of Vodafone Germany, for example, recently described mobile TV as a "killer app" for mobile data. [Ed. note: Gee, where have we heard that before?]

Sanjiv Ahuja, CEO of Orange SA (London/Paris: OGE) is equally enthusiastic. "Live TV is really capturing the customer's imagination," he said earlier this year. "Fifty nine percent of our mobile broadband customers [in France] are now regular video and live TV users."

To the skeptics, this just business as usual for the mobile marketing machine, and there's more than a hint of suspicion that this is yet another industry-led attempt to browbeat users into spending money on something they don't really want. Looking at the results from the multitude of market surveys commissioned to assess end-user demand for mobile TV services, it would be easy to conclude that this is yet another case in which the industry is getting ahead of itself and not adequately thinking through the user case.

This time, however, the boosters may be right – the industry could have a blockbuster on its hands. The case for mobile TV delivered by unicast (and potentially multicast) streaming mechanisms over 3G networks is twofold:

  • It works as a lure to tempt users to higher-value 3G subscriptions – so even if they don't end up actually watching that much TV, it could still be judged a success.
  • It could also be a useful driver of mobile data ARPU (average revenue per user) in its own right, and help transition technology-indifferent users to regular consumers of non-voice services.

Both points are important, because in a world in which operator revenues are showing only modest growth, just a few extra dollars of data revenue per month (multiplied a few million times, naturally) would have a big impact on an operator's financial performance.

Unicast streaming over 3G is also vital to assess user demand and preferences ahead of the deployment of dedicated mobile broadcast networks based on DVB-H (Digital Video Broadcast – Handheld), DMB (Digita Multimedia Broadcast) and MediaFLO technologies.

And regardless of the underlying technology, what makes mobile TV so compelling is that it is a known quantity to even the most technology-averse mobile phone users – those who wouldn't ever consider using, say, a "streaming media application." Steven Day, corporate affairs director at Virgin Mobile in the U.K., which is currently conducting a 1,000-user mobile TV broadcast trial in London, puts it simply: "It's dead easy. Everyone knows what it is, and what it does."

But despite this simplicity and familiarity, mobile TV will need a sophisticated sales approach on the part of operators. Usage today appears to be driven by very low-cost or "free" services, with little chance that this will change in the near term. The mass market will only likely pay up to $10 a month for mobile TV, according to our findings.

— Gabriel Brown, Chief Analyst, Unstrung Insider

The report, Mobile TV: Switching on the Revenue Stream, is available as part of an annual subscription (12 monthly issues) to Unstrung Insider, priced at $1,350. Individual reports are available for $900. To subscribe, please visit: www.unstrung.com/insider.

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