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Monday, May 15, 2006

Mobile TV... I'm in two minds

Quite a lot of the discussion at last week's World Handset Forum was around Mobile TV... DVB-H, DAB/DMB, Mediaflo and all the rest. I also dropped in on the UMTS-TDD Alliance meeting which was occurring (by coincidence) across the other side of Prague, where they were discussing their TDtv technology.

I still like the underlying proposition - "It's TV, on your mobile" . Nice, easy to communicate to customers, and apparently with good results in customer acceptance during trials.

But there are a few issues.

I don't have time to write about all the issues about spectrum here, but clearly that's a big problem.

Similarly, it looks like getting good indoor coverage may also be an issue - at low frequencies (sub 1GHz), it may be do-able with a 50% premium in infrastructure spend vs. "outdoor + best-efforts indoor" coverage. But at higher frequencies like 3G-band 2.1GHz, this is likely to be much worse.

There also hasn't been much discussion about the handsets. Looking at some early devices, it seems that typically they have to have 30-70% larger batteries than ordinary 3G phones (which lets face it aren't the most power-efficient in the first place). Various commentators have said that they can get 2-4 hours viewing time, although this presumably excludes people using the devices for other 3G stuff like music downloads or serious gaming as well.

There's also the old favourite problem of user interface design, and integration with all the other bits of software on the phone. Unless we have a "velcro-type" (trademark acknowledged...) solution, it seems likely that we'll have to have a huge amount of integration work knitting in the various bits & pieces. Want interactive viewer-response? OK, customise the SMS client to behave in the right way. Want to have a Tivo-like experience? Get some more software (& memory). Want the TV to pause when you get a call coming in? Or maybe picture-in-picture when you get an MMS? Get writing some custom code....

Bottom line is that I reckon a handset may cost a lot more than just the additional hardware bits & pieces. Obviously it will depend on volumes, but I reckon that by the time you've done additional software work, added in a TV chipset / antenna / better screen / more memory / clever hinge etc, done some "useability" consulting and so on, it may add $50-120 to the price of a handset.

Now, supposedly people are prepared to pay a monthly fee of $10 / €10 for mobile TV. Some trials bear this out, although a speaker from Finland (ie pretty affluent mobile-centric country) thought €5-8 was more likely. I'd be surprised if massmarket punters would be willing to pay much more than €5 (ie roughly what they pay now for SMS per month). €60-100 per year, maybe. And unless you can persuade them to pay more for a device (€50 was mentioned as being acceptable), operators will need to subsidise it - so probably an extra €10-€50 per sub per year, given a 18/24 month upgrade cycle. Then there's the capex/depreciation cost of the network, marketing & sales & support, opex for the backhaul network, revenue-share with content owners or broadcasters etc.

Bottom line: I'm getting sceptical about the business model ever working, even at €10 / $10 per month. Unless there's a hefty wedge coming from advertising - maybe $30-50 per sub per year. (I've got no idea what the comparative figure is for TV advertising although that would need to be multiplied up by average # of viewers per household subscription anyway)

The other possibility is getting additional voice / SMS calls from people talking about TV programmes they're watching, SMS'ing in for interactive votes etc. Which is all very well, but has to be weighed against the risk of people making fewer calls or SMSs or music/game downloads, because they're busy watching TV.


Reuven said...

Excellent analysis, as usual. However, I think there is one key point missing:

What are the likely scenarios in which people would want to watch TV on their mobiles? I think mobile TV makes sense only in very specific location types and usage scenarios (waiting rooms, outdoors, etc.), and for very specific programming (sports, episodes that absolutely can't be missed, etc.). Combine this with the cost / weight / power consumption of the handset and the subscription cost and you get very little motivation to subscribe. Even if it is totally advertisement-driven, I am sure the viewing rates will not be great.

I think that mobile TV is another example of a technologically-driven market where there is a complete interdependent network of hype - operators, investors, manufacturers, content providers all want to show future growth and ROI which is not connected to real user needs and, like other such hypes, will crash once it reaches the end-user.

Digital Evangelist said...


Interesting analysis but have to say that one of the keys is that at present the media companies have very little interest in Mobile.

Have been able to talk with the production company behind Big Brother and they say that they are two years away from doing anything that is mobile specific. The big rocks for them at present are HD and IPTV.

At a recent demo night the Discovry Channel told the crowd that they were using Vodafone to run loops that were adverts of what you get as a full subscriber rather than showing full length shows.

This week's media supplement of the Guardian had a kick at Sky's new test match coverage and how the mobile element on Vodafone's 3G service was not showing any cricket dispite clicking on the link. The report suggested that perhaps the seaside town he was in had achieved 3G saturation.

Have to say that I think that mobile TV will be even more niche than Radio on your phone. It will be used as a look at me service to show just what you can do in terms of mobile data but it will not be something that makes money.

Paul Jardine said...

I think the mobile Tv scenarios will be limited, as reuven says, but I think that news items and 'shorts' produced by the users themselves (e.g. YouTube, MySpace etc) are likely to be the most common. I see the iTunes user generated 'playlist' concept as being a driver to uptake. Advertising can become THE content as opposed to interstitial - remember the Tango adverts from a few years ago?

Kareem said...

And yet another 3G-joke!
Who on earth would want to watch TV on 3" screen?! And when; on the move?! And why; to through away some cash?!
The 3G continues to prove that it is a "technology searching for application". If only operators could accept 3G as a "big pipe" and let people do whatever pleases them!

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