South Korea’s mobile television providers have 22 million mobile television viewers — about 45 percent of the country’s population, according to The Korea Times. However, the providers have been struggling to develop a profitable business model.
The country’s three cellular operators — SK Telecom, KT and LG Telecom — have sold about 20 million phones that use the free, advertiser-supported terrestrial DMB mobile TV technology, the article says. TU Media, a division of SK Telecom, sells a satellite-based DMB (S-DMB) mobile TV service with a customer base of about two million, compared to 1.3 million during the same period last year.
S-DMB costs less than $4 a month for mobile TV and radio channels. TU Media introduced a “Slim Package” price plan that enables subscribers to view some DMB channels for free, The Korea Times reports. TU Media believes a total of 2.3 million subscribers could be signed by the end of the year, and 2.5 million are needed for the service to be profitable.
Problems with profitability
Although mobile TV is very popular among South Koreans, it’s not sufficiently popular to generated sufficient revenues. The article says TU Media’s total loss is more than 310 billion won ($240 million), and its less expensive “Slim Package is further decreasing the average revenues per subscriber.
“Things aren't much better for terrestrial DMB operators, who rely on an advertisement-supported model. The country's six terrestrial DMB broadcasters, including the country's three major television networks KBS, MBC and SBS and DMB-specific operators such as U1 Media, Korea DMB and YTN DMB, combined for only 8.9 billion won [$6.9 million] in advertisement revenue last year,” The Korea Times says.
The article notes that advertisers have difficulties determining the effectiveness of their DMB commercials. For example, a 15–second commercial on DMB that’s broadcast during the prime morning and evening commutes and lunch time, costs 500,000 won ($390) to 600,000 won ($468). However, a 15–second prime time commercial on traditional nationwide TV costs a minimum of 10 million won ($7,815), the article says.
Advertiser-supported model?
Many analysts might wonder if South Korea, which has one of the most popular — if not the most popular — mobile TV businesses in the world can’t generate sufficient profits, how will mobile TV businesses thrive in other countries?
Of course, different cultures often have different business dynamics. What is popular and profitable (or not) in one country isn’t always appropriate in another country.
One of the most interesting mobile TV efforts in the United States will focus on advertiser-supported programs by broadcaster members of the Open Mobile Video Coalition, of which I’ve written many times previously. The first broadcasts for beta testers will begin this summer, using the ATSC’s Mobile DTV protocol. It employs the existing spectrum authorized for broadcasters.
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