Reiter's Mobile TV Report

BBC News' glum article about mobile TV offers encouragement at conclusion

BBC News writes glumly about the Telegent Systems/In-Stat analog mobile television report, which I discussed a few days ago, but quotes an analyst who has some encouraging words at the end of the article about free mobile TV.

The article’s headline is “Mobile TV ‘very slow’ to take off,” referring to the relatively lackluster growth of the business — at least compared to rosier predictions of several years ago.  However, Frank Dickson, vice president of the mobile Internet group at In-Stat, says free mobile TV is the key to success.

“When we can get TV on our handset which is funded by advertising instead of subscriptions, we see a strong uptake.  At the end of the day, nothing is more compelling than free,” Dickson says.

Good news for Mobile DTV?

The Telegent/In-Stat report promotes the use and growth of free analog mobile TV because (or when) it offers the same programs as traditional broadcast TV.  If “free” is a crucial component of success, perhaps the efforts of the Open Mobile Video Coalition will pay off.

As I’ve written before, the Coalition’s broadcast TV members are testing Mobile DTV, which uses the members existing TV spectrum for transmitting programs to mobile devices.  The assumption is the programs would be free through advertisements, and available on portable devices, especially cellular phones, that would include the appropriate receivers and software.

Free mobile TV is very popular in a few countries in Asia/Pacific, specifically Japan and South Korea.  However, despite the large number of viewers, these advertiser-supported offerings have problems generating sufficient revenues.

Factoid: Sky TV New Zealand loses mobile TV subscribers from 2008 to 2009

The Sky Mobile TV service on Vodafone’s 3G network in New Zealand (see above) has lost subscribers this year, from 8,427 on June 30, 2008 to 7,800 on June 30, 2009, according to Rapid TV News.

In-Stat forecasts 54 million analog mobile TV users in 2009, 300 million in 2013

Telegent Systems and In-Stat forecast some 54 million analog mobile television-enabled cellular phones this year and 300 million analog mobile TV users in 2013 (see below), according the press release and free downloadable white paper.

The white paper, “Analog Mobile TV: The World’s Most Widely Available Option for Mobile TV,” bases much of its findings on research conducted in the first quarter of 2009 via online surveys filled out by consumers in Brazil, Colombia, Indonesia and Turkey.

The white paper says there are more than 100 mobile TV operators worldwide, with most services being offered via subscriptions ranging from $3 to $20 per month.

Telegent, which manufactures chipsets for analog mobile TV, says it has shipped more than 40 million chips since the middle of 2007.  The cost to add analog mobile TV to a device is typically less than $10, Telegent says.

Value of analog versus digital mobile TV

The white paper notes that although digital TV offers many advantages, analog mobile TV has advantages of lower costs and greater availability (see below).

“Simply put, there are geographies around the world where consumers do not have the money to generate ARPU for pay TV services similar to MobiTV or MediaFLO in the US,” the white paper says.  The report says “the vast majority of the world’s subscribers live in regions with lower GDP and thus do not generate the ARPU of more mature economies” (see below).

The report says analog mobile TV will do well in regions without plans for offering over-the-air digital TV, such as Asia, Eastern Europe, Middle East, Africa and Latin America, or where analog TV will continue to remain for at least five years.

Many program types watched often

Based on the surveys, mobile TV viewers watch a wide variety of programs, including movies, especially news, sports and movies (see below).  That’s certainly no surprise, as news and sports consistently rank among the most popular mobile TV categories.

In addition, the respondents watch mobile TV relatively often, typically at least once a week, although in certain areas a sizeable percentage watch it every day (see below). 

Also, some two thirds of the respondents said that on the days they watched mobile TV, it was for at least 30 minutes.  “Once again the stereotype of small snack consumption of content seems to be inconsistent with survey respondents,” the white paper says.

I’ve always believed that mobile TV watchers want a mix of different types and formats, both shorter videos and longer, full length TV programs.  We’ve also seen in some surveys that people are watching mobile TV for longer periods than many analysts expected, including even at home.

Better performance correlates with more watching…usually

It’s also no surprise that picture quality/performance and device ease-of-use correlates with the number of people watching.  However, that correlation is at odds with viewing in Indonesia, where “satisfactory” — rather than “good” or “excellent” — still results in a significant number of viewers (see below).

The white paper suggests that viewers are willing to “compromise” on their experience in order to view mobile TV.  The paper doesn’t note, however, why Indonesians seem more willing to compromise.

As is common with mobile TV viewing around the world, the greatest amount of mobile TV viewing is during commuting (see below).  Indeed, many analysts point to long commuting times on public transportation in Japan and South Korea as reasons for the large number of mobile TV viewers in those countries.

Promoting analog mobile TV

Telegent is, obviously, trying to promote the value of analog mobile TV.  There are some valid arguments.

However, there are so many variables required for the success of mobile TV that no one survey comes close to addressing them all.  The cost and ergonomics of handsets, the variety of programs and the pricing for the service (e.g., paid subscriptions, free through advertisements) are among the important components in creating a viable business.

Infonetics Research forecasts 397 million cellular video phones in 2013

Infonetics Research forecasts that 397 million cellular video phones, creating a market worth tens of billions of dollars, will be sold in 2013 (see below).  At the end of 2008 there were 41 million video phone subscribers, and that number will increase almost ten times by 2013, the company says.

Based on its research report, “Mobile Video Equipment, Phones, Services and Subscribers,” China’s CMMB (Chinese Multimedia Broadcast) will become the dominant mobile television technology “in the long run.”  Currently, one million subscribers in China already utilize CMMB, the report says.

The Asia/Pacific region has the greatest volume of mobile video sales, Infonetics says.  That’s certainly no surprise.

Also, sports, such as soccer, cricket and automobile racing, is a primary driver of mobile video use.  That also isn’t a surprise.

Disappointing number of paid subscribers

Despite increases in the number of video-enabled phones, the number of subscribers to paid mobile TV/video services is disappointing, says Jeff Heynen, directing analyst for broadband and video, at Infonetics Research. 

“A combination of poor macroeconomic conditions, subpar 3G network coverage for streamed video services and pricing that puts mobile video services out of reach for many consumers is contributing to the lackluster growth of mobile video services around the world,” he says in the press release.

“While mobile video services are expected to eventually grow significantly, until operators can combine broadcast, on-demand and sideloading, revenue will remain a drop in the bucket of overall mobile service revenue, Heynen says.

The press release did not discuss revenues generated for advertiser-supported mobile TV services.

TeleAnalytics predicts 80.8 million - 81.9 million mobile TV users by year-end 2009

TeleAnalytics’ Mobile TV Tracking Service’s forecasts (pdf file) 80.8 million – 81.9 million mobile television users by the end of 2009.

The research firm says, “Despite the financial crisis, mobile TV device sales will at worst remain flat, but an increase of up to two percent may be witnessed with respect to the 2008 sales total.”

The firm’s “Second Anniversary Issue” for mobile TV (see left) provides detailed statistics about usage around the world.  These include:

“Korea: In Q1-09, Korean Mobile TV (both DMBs) device volumes rebounded and were 3% higher than the volumes witnessed in the same quarter one year earlier.  SKT celebrated its 2 millionth S-DMB subscriber in mid-May.

“The Korean automotive MoTV market segment is the first MoTV market segment anywhere in the world to show serious signs of significant saturation.  At the end of Q1-09, the Korean automotive MoTV penetration exceeded 46% of the total addressable (covered) number of Korean passenger car registrations.

“Japan:  Japanese Mobile TV handset volumes have been significantly affected by the financial crisis and are likely to remain around the 6.2 million per quarter mark for the balance of the year. 

“In Q1-09, One-Seg penetration among the total number of Japanese handsets sold climbed to 81% from 61% one year earlier.  End Q1-09 Mobile TV (One-Seg) penetration in the 12+ market segment stood at 39.4%.

“China:  H1-09 CMMB device sales disappointed the CMMB vendors and SARFT's commercialization drive has up to now proven to be badly conceived and executed.  Things are likely to improve in H2-09, but SARFT is quite unlikely to reach its 2009 target (10 million).

“EU:  European MoTV is basically stagnant and as many as half a million DVB-H handsets may be sold this year, due mainly to the normal device replacement process rather than due to new DVB-H adds.

“Brazil:  One-Seg device pricing started falling.  Brazilian ISDB-T USBs cost $225 in Spring 2008, now they cost just over $50.  Additionally, handsets just over the $400 mark were recently introduced (the LG Scarlet).

“The average quarterly 2009 device volume is likely to be more than 28% higher than the volume witnessed in Q4-08 and the Brazilian Mobile TV market has started to get flooded by automotive ISDB-T STBs, which have questionable prospects for more than one reason.

“US:  FLO started expanding shortly after the US ASO.  ATSC-M/H is getting started in late summer.  For both networks, 2010 will be the pivotal year.”

“Air Interfaces:  This year, Mobile TV device sales in Japan and Brazil (ISDB-T) will exceed 27 million units. T-DMB will close the year with more than 16 million users, all of which originated from a single country (Korea).”

South Korea carriers report 22 million mobile TV viewers, but revenues a problem

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.

YouTube says video uploads increase 400 percent since iPhone 3GS released

YouTube says in its blog that since the Apple iPhone 3GS (see above) was launched last Friday, video uploads to its site have increased 400 percent.  Also, during the past six months, uploads from cellular phones to YouTube have increased 1,700 percent.

Why?  YouTube says, “This growth represents three things coming together:  New video-enabled phones on the market, improvements to the upload flow when you post a video to YouTube from your phone, and a new feature on YouTube that allows your videos to be quickly and effortlessly shared through your social networks.

“It takes just a minute to connect your YouTube account to your Facebook, Twitter and Google Reader accounts.  Complete a simple, one-time connection on our upload page to allow all your friends and followers to get a real-time stream of your uploads to YouTube, which can be essential in this age of citizen reporting and ubiquitous sharing.”

iPhone’s influence

YouTube doesn’t say the 400 percent increase was specifically because of the iPhone 3GS, but the implication seems clear that it was.  This is the first iPhone with video recording capability, and the reviews have generally praised the recording quality (given that it’s from a phone).

We don’t know whether this significant spurt in video uploads will be just a brief phenomenon that won’t continue or whether it will increase.  Apple said on June 22 that one million 3GS handsets had been sold in three days — June 19 – June 21 — since the launch.

However, people who purchase iPhones are typically very data-centric, and it’s easy to record video with the handset.  As a result, I wouldn’t be surprised if the proportion of users who shoot and upload videos on their iPhone would be larger than most, if not all, other handsets.

Lack of video recording marketing

I’m not impressed — to say the least — with the way U.S. cellular operators have encouraged the use of phones for recording videos.  Indeed, I’ve written numerous times that the cellular operators’ after-sales customer education typically is terrible.

But if iPhone users continue to record videos in large numbers, I wouldn’t be surprised if some of the operators decide that maybe there’s something to this newfangled camera phone video recording, and perhaps spent a little more time marketing that feature.

Factoid: PricewaterhouseCoopers predicts $630 million for mobile video in 2012

PricewaterhouseCoopers forecasts in its “Global Entertainment and Media Outlook” that consumers will spend $630 million for mobile video in 2012, a dramatic decrease from its previous forecast, according the USA Today.

Last year the firm predicted $2.1 billion for mobile video in 2012.  Stefanie Kane, a partner at PricewaterhouseCoopers, says, “The business model is still evolving.”

However, revenues for other television services will significantly increase.  In 2013, consumers will spend $68.3 billion for basic TV, an increase of 32.9 percent from 2008, USA Today reports.

In 2013, 114.1 million homes (representing 95.5 percent) will receive pay TV services (cable or satellite) compared to 98.4 million in 2008.  Video on demand will generate revenues of $4.5 billion in 2013, compared to $2.7 billion in 2008, PricewaterhouseCoopers predicts.

SNL Kagan's top mobile TV firms: ESPN, MobiTV, MTV, CNN, Comedy Central

The research firm SNL Kagan says the five top mobile television firms, based on revenues in 2008, are:  ESPN, $38.4 million; MobiTV, $23.8 million; MTV Mobile, $22.4 million; CNN, $22 million and Comedy Central, $20 million, according to mocoNews.net.

SNL Kagan estimates the top 18 video providers and aggregators generated revenues in 2008 of $306 million, which will grow 17 percent to $359 million in 2009, including subscriptions, one-time fees and advertising within videos.  MocoNews.net says — realistically — “The figures have a sobering affect on other estimates that put revenues — albeit internationally — easily into the billions.”

Based on the SNL Kagan figures, ESPN, MobiTV and MTV were the fastest growing mobile TV ventures in 2008, although other firms will grow faster this year.  GoTV’s revenues will increase 56 percent, and Viva Vision and Cartoon Network will each increase 30 percent, mocoNews.net writes.

Top mobile TV aggregators

The top aggregator in 2008 was MobiTV with 4.4 million subscribers.  (A few days ago MobiTV said it had more than 7 million subscribers.)  There seems to be a bit of a mistake — mocoNews.net says that in the fourth quarter of 2008, SNL estimates “Qualcomm’s MediaFLO had 239,000 subscribers, up from 40 million in the same period a year earlier.”

I assume the 239,000–subscriber number is correct, but there must be a mistake/typo with the 40 million number!  Could it be, instead, “up from 40,000”?  I’ll send an e-mail to the writer for clarification.

Interestingly, the majority of mobile TV subscribers don’t have smartphones.  In 2008, 20 percent of subscribers had smartphones, which will increase to 43 percent by the end of 2010.  By the end of 2011, SNL Kagan forecasts the majority of mobile TV subscribers will be on smartphones, mocoNews.net says.

Of course, the overwhelming majority of cellular users around the world don’t have smartphones, although that number is growing significantly.

Better browsers

Approximately 70 percent of mobile TV revenues result from content producers’ deals with cellular operators.  “However, video will increasingly be watched over a browser as carrier networks continue to open up,” mocoNews.net writes about the SNL Kagan report.

It seems inevitable to me that cellular subscribers will increasingly view mobile TV programs, clips and even movies via browsers as the software improves.  For example, Skyfire’s proxy-based browser can play Hulu in Windows Mobile and Symbian phones, and is testing the browser for BlackBerry phones.

Also, Adobe has been saying from months that it’s working on a full featured version of Flash (not just Flash Lite) for cellular phones.

MobiTV surpasses 7 million subscribers

MobiTV (see left) has more than 7 million subscribers to its mobile television service, the company says.

MobiTV has both live streaming and video-on-demand programs.  I’ve watched both in the United States over 3G channels on Sprint and AT&T Mobility.

Sometimes the performance is poor, with pixelation and buffering, but MobiTV offers a wide selection of programs.  The quality over 3G isn’t as good as, on average, Qualcomm’s FLO.TV, but overall I like MobiTV because of the selection and the quality is often good enough.

The company says its service is available on 20 cellular operators around the world and more than 350 handsets.