opinion


Mobile TV’s Holy Grail remains as elusive as ever

With mobile TV services in the flagship market of South Korea floundering and with few signs that operators anywhere else have found a successful formula for launching such services, most operator and vendor delegates at the recent CommunicAsia Summit in Singapore struggled to find enthusiasm for the fledgling industry.

The key question is which business model will work best for commercial mobile TV services, and the industry does not seem anywhere close to coalescing around an agreed model.

Some operators and vendors say that mobile TV should be subscription-based, to offer a reliable revenue stream; others say an ad-supported model is the most viable option; and still others argue that a combined pay/advertising approach is the way forward.

Figures from South Korea seem to suggest that both pay-based and ad-supported models have critical weaknesses, which would also apply in other markets in the region. A lot more experimentation and creativity from operators might be required to find the right model.

Those promoting the idea of a pay-based service say that only by charging for content can a business model work. They say operators must team up with content firms to acquire premium content – most particularly sports – that people will be willing to pay a monthly fee to view or even pay for on a per-view basis.

But this line of thinking seems flawed, given that there is a limited amount of blue-chip content for which people will be prepared to pay, most notably live sports events – such as English Premier League soccer games – or highlights of them.

The problem is, of course, that content-rights holders have become adept at exacting a premium price for key sports rights, meaning that mobile TV operators would have to recoup their heavy capital investment by charging high subscription fees.

This is a problem, since the high churn rate experienced by TU Media in South Korea seems to suggest that mobile TV subscribers are extremely price-sensitive.

TU Media subscribers pay just KRW13,000 ($12.60) a month for the service but have been leaving in droves after their initial one-year contracts finish, forcing the firm to offer significantly reduced subscription rates to keep subscribers from deserting the service.

TU Media’s experience suggests that mobile TV subscribers will be willing to pay only so much for services and that although blue-chip sports content has a crucial role to play, operators must find a way to acquire the content without paying excessive prices.

On the advertising side of the debate, many delegates at CommunicAsia argued that an ad-based strategy would work best for mobile TV platforms but that operators would have to be extremely creative in their approach.

Delegates uniformly agreed that the idea of transporting the traditional TV-advertising model to mobile was deeply flawed and that mobile TV operators would not be able to sell regular 30-second ad spots on mobile TV services, given the different nature of the platform.

One senior mobile operator executive said that he was skeptical of the ad-supported model, because mobile TV users tend to watch only 10-15 minutes at a time and it would be hard for operators to interrupt that short window with advertising without disrupting the user’s experience.

But other delegates, including those from both operators and vendors, were more hopeful that a successful advertising model could be built, though the consensus was that ads would have to be shortened to suit the mobile TV viewing experience and that they would have to be carefully targeted at specific user groups.

These are both valid points, but the elephant in the room is the fact that many mainstream advertisers are skeptical of mobile TV as an advertising model – and some might not be aware of its existence at all – meaning that mobile TV operators will need to work closely with media buyers and ad agencies to craft their message.

This might mean offering heavy price cuts in the short term to persuade advertisers to seize the unique opportunity to reach users that mobile TV advertising offers and then trying to turn these advertisers into long-term customers.

There is no magic bullet that will provide a successful business model, but there seems to be a reasonable possibility that an attractive model can be built if operators can match the largely young and technology-friendly subscribers viewing mobile TV on their handsets with advertisers desperate to reach such a market.

Intriguingly, conference delegates also discussed the possibility that broadcast-type mobile TV services might never fully take off in the region and that Multimedia Broadcast Multicast Service video streaming over high-speed HSPA and future LTE networks would dominate the market.

The debate has strong proponents on both sides. Many vendors back an MBMS approach, saying that experience shows that broadcast-style services are not what users are demanding and that the more-narrowly targeted VOD-style content being offered on HSPA networks is already proving hugely popular.

The pro-MBMS argument also runs that with HSPA/LTE networks already in place and offering voice, data and video services, why go to the expense of deploying a terrestrial or satellite-based mobile TV network, especially with the expense involved in creating high-quality in-building reception?

Although this is a persuasive argument, it has shortfalls, most notably the fact that even LTE networks will still be point-to-point networks and will be unequipped to operate as point-to-multipoint services, which a full broadcast mobile TV service would require.

The broadcast-mobile-TV lobby argues strongly that the core strengths of broadcast-based networks cannot be replicated by even high-speed mobile networks, which would not be able to support the huge demand that’s sure to arise for broadcasts of live sports and important news events.

In reality, the MBMS-vs.-broadcast-mobile-TV debate is spurious, given that both technologies are going to be on the market, and it will be users who determine which is the more successful.

At this early stage, it looks likely that subscribers and operators will use high-speed, quality video streaming for VOD-based “snacking” on content and that full broadcast mobile TV will be used for some live events, for which only a broadcast-style service can supply the quality of service required.


Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Polls

Sorry, there are no polls available at the moment.