Things can only get better - the market potential of mobile TV

Rating: the only way is up?

by Annie Turner

The predicted uptake of mobile TV hasn’t happened. Instead complaints remain about picture quality and sound, screen size and battery life. The jury is still out on how operators will bill for mobile TV services and whether or not customers will be prepared to pay. Uncertainty surrounds what kind of content will work, regulators are already threatening to impose strictures on this embryonic industry and there are potentially four broadcast standards competing against 3G as the means of delivery.

Indeed even the name mobile TV is a misnomer because it suggests transplanting ordinary TV on to your mobile phone whereas, as Paul Goode, vice president, development, with m:metrics which monitors how people use their mobile phones in a number of key markets, explained, “There’s streaming versus broadcast versus broadcast over 3G networks versus downloads – and different operators are going for different models.”

John Orlando, vice president of marketing with NMS Communications, says, “3G networks are designed for peer-to-peer communications, not broadcast. The economics are very tough. Lots of operators are holding off from getting involved or running trials of DVB-H for multimode handsets. 3G and broadcast can complement each other, they don’t necessarily have to compete.”

Whatever technology route they are taking, operators are struggling to establish the business case for mobile TV. Patrick Parodi, chairman of the Mobile Entertainment Forum (MEF) says, “ “Ring tones are 100 times smaller than an MP3 [file], but people pay four times more for them. It’s all tied to personalisation and communication; regulators and others who are looking at the industry haven’t caught that extra value that is generated by mobile.”

Certainly research released in August by Orange underlines his point. It reported that more than two million mobile phone users in the UK aged between 16 and 18 have modified their handset in some way, which equates to around 86.4% of that age group. Pippa Dunn, Orange Director of Brand Marketing comments, “Mobification has established itself in Asia-Pacific over the last two years and we have noticed that is now catching on in the UK as well. We estimate that handsets are now being modded [that is personalised] at a rate of around 1,000 a week.”

Interestingly, according to Mobile TV Broadcast and Multimedia 2nd edition, published in July 2006 by Informa, the regions that embrace personalisation the most correlates to those who will be the biggest mobile TV markets. Asia-Pacific will be the biggest mobile broadcast TV market, with over 30m users by 2009, followed by Europe with around 18m and the US about 8m. Also, while Asia-Pacific remain ahead of Europe, Europe’s growth curve mirrors that of Asia-Pacific while the US growth is slower. Hence by 2011, Asia-Pacific is forecasted to have 96m mobile broadcast TV users, Europe around 70m and North America fewer than 20m.

Paul Goode of m:metrics adds, “Lots of young people are making self-generated content, which is pretty poor quality anyway, taken by the phone itself, so they already associate video on a handset with poor quality and are willing to accept it.”

Bena Roberts, founder and senior analyst with bki:media goes further. She thinks that user-generated content will be the saviour of mobile operators; “Giving consumers the ability to create their own content will mushroom the uptake of mobile content services. It will finally make return on investment possible for operators and media companies.”

She continues, “Providing the right ready-made content has proved harder than expected. Operators have tried mobisodes – clips from series, for instance, Vodafone ran mobisodes from the 24 TV series – but they didn’t attract an audience despite its huge popularity on TV. Vodafone and T-Mobile in Germany gave away mobile TV in Germany for two years hoping to build critical mass. They didn’t. It is more likely that the ‘look-at-me-now’ generation would be more interested in reality shows like Big Brother and the X-Factor. 3 in Italy has found success with its 93 Minuto which shows the week’s best football goals in a 20 minute mobile TV programme and T-Mobile has done something similar in Germany with the Bundesliga and Vodafone too is pursuing this in Germany. It’s about tuning into the culture, but the bottom line is that service if often rotten and at best unpredictable.”

“Operators don’t recognise the need to manage the adoption of services, yet if they are tricky to initiate and use, customers abandon them. Our research found that 44% of UK mobile phone users who used a mobile data service for the first time during the 2006 soccer World Cup won’t use it again,” explains Oren Glanz, CEO and founder of service management company Olista. Users said the service was too expensive, of poor quality and too difficult to use; for instance, “Lots of people wanted to watch the goals from the World Cup on their handset, but they only saw the goals after the game had finished, which undermines the value of mobile TV to a user – they might as well set their DVD recorder.”

As for services being too expensive, Parodi says, “Vodafone has agreed to allow third parties to sell wholesale traffic on their network. It used to be that you didn’t know how much it would cost in terms of the data download for a track, it could be a big amount. Now Vodafone has done a deal with Monstermob, mBlox, Ministry of Sound and others, whereby the song is one transaction for the whole thing and the consumer knows that. It is the kind of pricing model that the MEF endorses because that’s what’s going to help the market grow.”

Mike Short, vice president of research and development, O2 Group, thinks subscriptions are the way to go, because the viewer knows what the bill will be and granular billing is an IT nightmare for operators. He points out that many different models have been tried from per minute , or per episode or episodes bundled together, but so far the vast majority of subscribers haven’t been tempted.

Short adds, “We found that the two groups of people who have expressed most interest are business people on the move and, perhaps surprisingly, people who want to watch it in the home because they can choose what they want when they want and have access to content that is not on TV. We also found that TV was not wanted in isolation, but as part of a mix of services. Clearly getting content right is the key, although we do recognise the need to have easier to use interfaces and menus for all services.”

A spokesperson from Vodafone said that although people tend to ‘snack’ on mobile TV, on average watching a channel for five minutes per session, but they will watch for up to 30 minutes if the content is sufficiently compelling, for example, live sport.

Another life-saver could be advertising. TV advertisers are not reaching 16 to 19 year olds, who potentially could be one of the biggest mobile TV audiences. Short says, “Its role hasn’t been tested yet, but, for example, we could have sponsored channels which would generate a higher response rate with offers, competitions and voting.”

In Europe at least, it looked like regulation could kill off advertising before it had begun. The MEF argues that the proposed changes to the Television Without Frontiers Directive (TWF) could blunt Europe’s competitive edge and stifle innovation because they are designed with ordinary TV in mind, yet would apply to mobile multimedia services including mob TV broadcasts and video-on-demand. The amended TWF Directive is seeking to regulate the length, frequency and appropriateness of advertising, depending on content, target market and timing.

The MEF submitted its argument to the European Commissioner for Information Society and Media, Viviane Reding, in July to explain why the proposed restrictions on advertising for traditional broadcasting should not apply to mobile multimedia. It is hopeful of a positive outcome.

Roaming could present another regulatory hurdle too. The European Commission’s view is that roaming charges are much too high for phone calls and that debate is likely to rumble on concerning other services too which will ultimately have ramifications for mobile TV, but at this stage, a much bigger and more complex issue is about intellectual property rights and which rights were sold to whom for specific types of use in which country.

Goode concludes, “Battery performance should improve greatly in a couple of years once manufacturers start to use polymer LED screens which promise very low battery consumption and very high resolution. In the meantime, TV subscribers are getting closer to 1% of all mobile users, but more interestingly, 10% of 3G users. Operators are finally getting people to use it, but growth is slowing and whether people continue to use it is another matter – the next few months will be very interesting.”

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