5 Reasons FLO TV Failed

Qualcomm (s QCOM) announced Monday it was selling the spectrum it used for its FLO TV mobile video service to AT&T. (s T) The spectrum sale was long-expected, and came after Qualcomm announced it would shut down the FLO TV service next March. Few gave FLO TV much of a chance in establishing a foothold, but here are the top five reasons Qualcomm’s big bet on mobile TV failed to pan out:

Ahead of its time
FLO TV launched at a time when most consumers were still getting used to having the Internet on their mobile handsets, let alone viewing broadcast television. Unfortunately for Qualcomm, this was probably the biggest reason its mobile video aspirations failed. By the time media companies actually started streaming on other devices, FLO TV was an afterthought in consumers’ minds.

People don’t watch live TV on their phones
There are very, very few times when people watch TV on their phones; mobile viewing happens when people are stuck somewhere — like waiting for a plane or on public transportation — or when there’s an important sporting event going on that they can’t see anywhere else. Services like Netflix (s NFLX) and Hulu Plus have made their videos available on smartphones, but even those providers admit that viewing on mobile devices runs a distant third, behind viewing on connected devices like TVs and on PCs.

Users needed a dedicated device
You’d think that Qualcomm might have been able to capitalize on first-mover advantage when media companies began streaming on the iPhone (s AAPL) or Android (s GOOG) phones. But for many years, FLO TV was only available on dedicated devices, before becoming available on select AT&T phones. Even when consumer behavior changed, and mobile streaming became (more) mainstream, consumers realized they didn’t need another device for a single service.

The hardware and service were too expensive
In addition to buying a dedicated device, generally for about $200, FLO TV users were expected to pay $15 a month for use of the service. For many consumers, that was simply too much to ask, especially in a rough economy when they were already seeing their cable bills rise year after year. It seems that $10 a month is the breaking point for supplemental consumer video services. FLO TV eventually lowered its price, but by that point, it was too late.

Qualcomm isn’t a media company
Let’s be honest; Qualcomm’s core competency is in making mobile devices. It believed that it could create consumer demand for more of its mobile gadgets and chipsets by launching a new service that required its hardware. What didn’t register was that it would have to create a service that consumers would want to pay for. Qualcomm might have been better served by selling hardware used by different services as opposed to trying to run its own.

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