How Mobile TV Could Finally Find an Audience

If you experience déjà vu when reading headlines like “Mobile TV ready for prime time” and “Mobile TV gains steam in the U.S.,” you’ve probably followed the industry for a while. We were up to our ears in claims like these a few years ago, when players rushed to build out nationwide networks dedicated to bringing video to mobile phones. Thanks to a lack of demand, only Qualcomm’s FLO network saw the light of day, and even that service has gone dark. And while analysts generally agree the market will grow in the coming years, eMarketer predicts only 17.6 percent of the U.S. population will be watching mobile video in 2014.

But this week, at the National Association of Broadcasters’ annual trade show in Las Vegas, the Open Mobile Video Coalition (OMVC), a consortium of broadcasters pursuing mobile, announced that 73 stations in 33 markets are now transmitting mobile DTV signals for on-the-go users. The group, which consists of 900 stations from Fox, PBS and other networks, also claims mobile DTV signals will reach a whopping 61 percent of all U.S. viewers within a year. The group is showcasing an external tuner for the iPhone and iPad, and it hopes to entice manufacturers such as Samsung and LG Electronics to produce handsets that can support the technology.

Such an aggressive build out stems in part from mobile video’s low overhead: The technology for it requires only a transmitter affixed to an existing tower, and can be deployed by TV stations for a one-time fee of less than $100,000, or annual payments of roughly $10,000.

Still, there’s precious little evidence users actually want to watch traditional TV broadcasts on their phones, and even less evidence that they’ll pay for it. (OMVC’s website notes a study indicating only 44.4 percent of U.S. mobile users are even interested in mobile television, regardless of cost.)

But while I’m skeptical of the prospects for the OMVC, I think there are a few things that could finally give mobile TV the push it’s needed for years. Instead of simply cramming TV broadcasts into phones, the industry must find ways to address the shortcomings of mobile and customize services that add value to video content. Rather than trying to resurrect the Sony Watchman, those trying to monetize mobile video need to address some key challenges:

1) Mobile-optimized content and services: That doesn’t just mean repurposing video for the smaller screens of mobile phones (although that’s absolutely necessary); it means on-demand functionality in addition to content that is programmed at specific times like traditional TV. MobiTV has gained an impressive following by coupling on-demand content with live TV and optimizing it for mobile use. (It’s worth noting, though, that while MobiTV claims more than 10 million subscribers, the company has yet to discuss its finances and has taken in a staggering $100 million in funding.)

2) Bigger and better devices: Consumers are increasingly interested in larger phones with big, bright screens of four inches or more that deliver a far-superior viewing experience than smaller handsets. And the emerging tablet market is already stoking our appetite for mobile video, according to Cisco, which recently reported global mobile data traffic increased by a factor of 2.6 last year. Video accounted for roughly 50 percent of that data by the end of 2010, Cisco said, and will account for 66.4 percent in 2015.

3) Improved connectivity: Trying to watch video on 3G networks is sometimes as painful as surfing the Web on a dial-up connection, and Wi-Fi is still far from ubiquitous. Mobile DTV solves the connectivity problem by using a chip embedded on the phone to receive the video signal, but manufacturers have been hesitant to invest in those chips until they see some real demand for mobile DTV. Meanwhile, the OMVC has yet to say when supporting phones may come to market, but mobile DTV phones may require carrier subsidies to defray costs, adding yet another speed bump to the picture. The emergence of LTE networks may lay the technological foundation for carrier video services, but that foundation is only now being built.

4) Advertising dollars: Consumers have historically been loath to pay extra for mobile video, so the key in creating viable business models will be in generating advertising revenues. And for those ads to be truly lucrative, they will have to be highly targeted based on location, time and the type of content being viewed, among other factors.

Question of the week

What will it take for mobile video to finally get legs?
Relevant Analyst
Colin Gibbs

Colin Gibbs

Mobile Curator Gigaom Network

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3 Comments Subscribers to comment

  1. Colin,

    The OMVC (with whom I have no relation) is the way that mobile TV will succeed in the USA…if it is to succeed at all.

    I have been negative on mobile TV at every iteration over the past decade, owing largely to my experience working with SK Telecom in Korea in 2001-2003, while they launched mobile TV. The reality has always been:

    - users like mobile TV
    - users prefer PVR-type control over broadcast
    - very few users will pay $5-$15/mo
    - broadcast is cheap to offer, unicast is expensive and congests networks

    SKT offered TV over 3G, and there was enough uptake to be optimistic. People wanted longer form content, and more content. But the few people who subscribed were enough to congest the network, and it wasn’t profitable, even at the high prices the users paid at the time. So SKT launched a satellite and overlay network (TU Media) to broadcast TV to the nation. But the linear broadcast service was nowhere near as popular as the unicast. It was a fail sandwich.

    So, no surprise to me that MediaFLO, and DBH, and MobiTV never became winners. Meanwhile, the Japanese started offering free to air TV broadcasts. Guess which one took off? The majority of Japanese phones now include a TV receiver. ^^^Turns out “free” is the right price for linear TV on the phone. And people don’t have high expectations from the free product, just accepting it as it is – which lowers the cost of supporting the service.^^^

    The Japanese TV broadcasters get paid by selling ads to their free TV service. What a novel idea!

    So why hasn’t this Japanese, free to air, model taken off in the US? One reason: handset subsidy. So long as the carrier is the one actually buying the handsets from Samsung and HTC, there is no way they are buying a handset with an OMVC tuner in it. First, they will try every possible way they can to be the gatekeepers for mobile TV, including partnering with MobiTV, FLO, VCast, charging Google for YouTube traffic…or anything that can give them revenue. Putting a OMVC chip in the phone is relinquishing control to the TV broadcasters, one of the carriers’ arch enemies. It won’t happen unless a groundswell of user demand requires it – and users are currently unaware of the OMVC option.

    I’ll note the irony that, at a time when carriers are overwhelmed by the traffic on their cellular networks, and specifically cite video as the way “bandwidth hogs” are congesting the networks…they are still unwilling to relinquish that traffic to a broadcast OMVC network.

    But these days, there are interesting changes afoot for the OMVC. The shift towards laptops (from desktops), and especially the shift towards tablets offers them a new channel to market. Tablets are often unsubsidized mobile devices that use WiFi. Tablet makers, most using Android, are having a tough time differentiating their products. It would be a good fit for a Tablet maker to throw in an OMVC radio into the device, so users can watch free TV on their tablet.

    If that succeeds, users may want free TV on their laptops, in cars, or in other devices. Once the users are aware that the service is readily available, demand will rise. With consumer awareness, and some demand, there will be a carrier that decides it is too tempting to resist, and they will put the TV receiver in an officially supported phone. I guess Sprint, or some other scrappy upstart. Following this, more models will appear, then they’ll appear on other carriers, too.

    BTW, I don’t promise this will happen, but I do think it’s likely, at say 60% probability. You see, free is just the right price point. All the market lacks for demand is some awareness.

    If you ask me whether people will be watching TV on their phones in 2014, I think it will be much more than the 17.4% predicted by eMarketer. Many will be watching streaming TV from web services on 4G, but many will also watch OMVC TV.

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  2. I agree with Derek that “free” is the right price, and Colin makes some great points about what is needed to make Mobile DTV fly, but I’ll add one more feature that could make it successful. Flash memory is (relatively) cheap, and the Mobile DTV folks should not be emphasizing “live” broadcasts in the traditional linear television model, but rather sell it as a “push” medium of on-demand content.

    Tell your phone/tablet/whatever which “shows” (content) you care about, and it will capture the latest broadcast of that content from the Mobile DTV signal. Whenever you want to watch it — weather, sport scores, traffic, headlines — you’ve got the latest version on your device and you don’t have to remember to tune in on the quarter hour to get the content you want.

    Cheap memory turns your mobile device into a PVR, and makes the content more like on-demand than traditional broadcasts. I think consumers would be much more receptive to this, and it would be a very “sticky” application.

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