Mobile television is all over the place, yet going nowhere fast all at the same time. Consumer choice for TV and video on their cellphones is pretty robust, but that’s only if they know it even exists.
Sure, mobile TV and video usage is growing month over month, but none of the executives at the top service providers would say mobile TV has truly hit its stride. The numbers just aren’t there yet, but momentum is in their corner, they say, and the foundation for new revenue streams is on the horizon.
The fact is most players in the space are experimenting — hoping to pique consumers’ interest in moving images on relatively small screens. The challenge is not for the weak of heart.
“Over the past year for us I would say it’s been moderate momentum,” GoTV Networks Inc. CEO Tom Ellsworth said. “It’s a year of preparation as we look for a year of momentum in the market.” True momentum for GoTV comes when all carriers are on board and at least half of all handsets in use are 3G-equipped, he said.
“As an industry we’ve created a whole lot of buzz over a year, but all of the consumers aren’t equipped. And that’s the way it goes,” Ellsworth said.
“This is like the Olympics,” he said. “I kind of think of us three years ago as a 16-year-old athlete with a vision and a passion, but it’s going to take four years to get to the next Olympics.”
Cutthroat competition hasn’t reared its head. Instead, mobile TV and video players are focused on building consumer awareness and appetite for the services.
Ellsworth insists that his partnerships will rule the day in this space. Yet there are some clear dichotomies in this nascent market between options for broadcast-based services and cellular-reliant services that play more like an on-demand model.
Broadcast services
Broadcast services — the latest to the scene — are bringing the freshest form of television to mobile devices because they deliver live video feeds from networks built exclusively for delivering content. Qualcomm Inc.’s subsidiary MediaFLO USA Inc. is the only network of this kind currently operating in the United States, and with little more than one year under its belt, the service has grabbed the attention of many onlookers.
MediaFLO first picked up a deal to launch the service with Verizon Wireless in March 2007. The service currently offers eight live, linear TV channels around the clock. However, it’s long been assumed that MediaFLO would work with carriers to help differentiate their offerings and provide opportunities for exclusive content. Indeed, AT&T Mobility, which has pushed back its launch several times, has made plans to launch the service with two exclusive channels.
“If you look at any of the advanced data services that carriers are always leading with … there’s always got to be a hook to standout,” said Eric Puterbaugh, director of client services at Nielsen. “The primary purpose is to get another customer.”
Bill Ho, a senior analyst at Current Analysis, also pointed to exclusive channels as AT&T Mobility’s obvious differentiator. “From what I understand Verizon Wireless will also have its exclusive channels,” he said.
Calling the initial eight channels — CBS Mobile, Comedy Central, ESPN Mobile TV, Fox Mobile, MTV, NBC News 2Go, NBC 2Go and Nickelodeon — the standard, Ho said exclusive channels enables the carriers to mix content that might not necessarily come from one content provider.
“You don’t have to have a dedicated content partner for a channel. You don’t have to commit to a big content provider,” he said.
“Like on-demand, you could also do exclusive viewings of concert event,” Ho said. “It’s ripe for stuff like that, the live events, if you will.”
Additionally, there’s room for carriers to complement their TV channel lineup with exclusive datacasting content, which MediaFLO plans to use to push personalized, real-time data feeds to a device.
“The underlying FLO technology can support up to 20 24/7 linear channels, as well as a variety of other services, such as audio, that enable us to provide consumers with significantly more than 20 channels of multimedia content,” a MediaFLO spokeswoman told RCR Wireless News.
MediaFLO expansion?
Qualcomm Inc. appeared ready to expand MediaFLO’s capabilities through the Federal Communications Commission’s 700 MHz spectrum auction as analysts expected the company had its eyes on the E-Block licenses that were adjacent to Qualcomm’s current spectrum holdings.
“I expect that Qualcomm’s going to pull out all the stops to get channel 56,” Ho said prior to the auction, adding that the block is the only one up for bid that is one-way, which makes it ideal for broadcast service.
While Qualcomm did manage to pick up some of the E-Block licenses covering parts of the West Coast and Northeast, the company was trumped by satellite television provider EchoStar Corp., which spent more than $711 million for 168 of the 176 E-Block licenses up for bid.
Qualcomm did provide some hints of its future plans through filings with the FCC, which required it to name all partners that it planned to talk to throughout the auction process. The document reads like a MediaFLO channel listing with all the usual suspects named under the agreements section along with its two operator partners, Verizon Wireless and AT&T Mobility.
But it also lists a few new names: Casbah Productions L.L.C. and Comstock Inc., which are designated as content agreement holders with MediaFLO, and NASDAQ Stock Market L.L.C., which is listed as having a distributor and separate vendor agreement with the Qualcomm subsidiary.
Casbah Productions is a music distribution company that films concerts and distributes them online. There are a number of Comstock Inc.’s in existence, but unless Qualcomm is planning to get into the home-building business, it’s likely the agreement was made with the photo and image provider, which licenses images for commercial use and advertising. And everyone knows NASDAQ’s game.
Cellular-based services
GoTV Networks and MobiTV Inc. are the two biggest U.S. companies on the cellular side of aisle. Each company offers brand-name content from traditional networks and studios and creates their own content in house. Both distribute content directly through carriers’ 3G networks while broadcast services like MediaFLO offer a standalone network dedicated exclusively to video and other media.
Comparing subscriber numbers is a tricky business for these companies because GoTV builds mobile TV products that require a monthly subscription fee for premium channels while MobiTV manages and equips a branded platform for carriers. GoTV counts less than half a million subscribers and MobiTV surpassed 3 million managed subscribers a few months ago. “People think we’re competitors but we’re really not,” Ellsworth said. “We are very symbiotic.”
Like Ellsworth, MobiTV’s CTO Kay Johansson expects a sizeable shift in mobile TV interest through 2008. “A big part of this is not going to be about the networks, I think it’s going to be about the user experience on the devices,” he said. “As long as it’s an IP network, I don’t think it matters.”
Johansson said MobiTV is still experiencing the highest overall usage in the market and that it continues to add customers at a faster clip than MediaFLO. Some sources say MediaFLO has surpassed 50,000 users, but the company has yet to disclose any subscriber counts or usage statistics related to the 10-month old service.
When it comes to broadcast, Johansson isn’t yet convinced. “If you look at usage patterns it doesn’t make sense to use broadcast,” he said. “We are prepared for, hopefully, that so much usage occurs that broadcast really makes sense.”
Still, GoTV’s Ellsworth is a big fan of MediaFLO. “We think that MediaFLO is a really phenomenal demonstration of what’s possible in wireless,” he said. “We build content an
d we want to partner with people like MediaFLO.”
Regardless of the business model at play, most agree that MediaFLO’s service is remarkable and can only drive further interest in the entire market. “We have to make our content look great for the very first user,” Ellsworth added.
TV Broadcasters
While MediaFLO is the only game in town for broadcast services in the U.S., there are plenty of big names following its tracks (or hoping to leapfrog right over the company). Broadcast TV groups formed the Open Mobile Video Coalition last year to develop a mobile variant for digital broadcast TV and the Advanced Television Systems Committee is continuing to vet proposals for a voluntary standard for digital TV programming to broadcast to mobile devices.
When a standard is adopted (some expect this by early 2009), broadcasters are planning to use their digital broadcast signals to deliver content directly to mobile devices in all of the local markets they serve.
Johansson called ATSC the “true contender” for broadcast mobile TV service. “That’s where we see a really big movement,” he said. “The bandwidth and the capacity of ATSC is so much larger.”
Since the standard will be built on the existing backbone of the TV industry, ratings and everything else the industry relies on would stay in place, making the evolution to mobile that much closer to reality, Johansson said.
“The step isn’t that far away,” he said. “I’d be extremely surprised if it doesn’t turn out in cellphones.”
And of course there is the new question of what EchoStar plans to do with its new bounty of 700 MHz spectrum. In addition to its cache of content it currently has access to through its satellite television service, the company recently acquired Sling Media Inc., which is well known for its SlingBox that allows users to stream their television content to mobile devices. While EchoStar has as of yet not disclosed any plans for a push into the mobile TV space, the company has the pieces in places for a major play.
