Mobile TV Providers Could Have To Consider Ad Supported Models
Mobile TV is seen as having good potential for growth as it is a service which should have mass appeal across the whole customer base, unlike many other content services such as games, according to new research from Ovum.
Ovum does sound a note of caution however, with regards to consumers saying that they are willing to pay for mobile TV services. The analyst and consulting company says that this should be seen more as an expression of consumers seeing value in mobile TV rather than hard proof that they will pay in a commercial setting.
Eden Zoller, principal analyst with Ovum’s Consumer Practice, said: “How much users are willing to pay is a make or break question.
“If the answer is not much or nothing, then service providers will need to consider advertising-supported models.”
Although operators in the US have adopted this approach, European service providers have been more cautious when it comes to advertising-supported offerings.
Zoller added: “Mobile TV is an attractive medium in terms of the targeting opportunities and reaching audiences that have fallen away from traditional TV.
“The flip side is that audiences, and precious impressions, are still small and impossible to guarantee.”
In addition, Ovum points out that mobile TV presents some technical challenges, with cellular networks not designed to deliver the same content simultaneously to a large number of mobile users.
However, a broadcast solution is one to many (ie multicast), which is a more efficient mechanism for the delivery of mass-market popular content, especially live content.
This translates into a better utilisation of network resources and lower cost of delivery per user.
Vincent Poulbere, senior analyst in Ovum’s Consumer Practice, said: “Operators that are pushing mass-market, rich entertainment services will eventually need to consider a mobile broadcast solution, but the business case for a dedicated broadcast network for mobile TV is hard to stack up.”
Ovum estimates that the cost of deployment of a DVB-H mobile broadcast network in the preferred UHF spectrum in the UK would be £140 million. This is taking into account core service requirements which include, among other things, good indoor and wide-area coverage, and 25 channels including some audio.
Ovum adds that to achieve a return on investment in around three years, a mobile broadcast service provider in the UK would need to ramp up a customer base of 1.7 million subscribers, each generating revenues of £10 per month.
“This will be very hard to realise if several mobile broadcast networks are competing in the market and considering that user willingness to pay is still uncertain,” said Poulbere. “This once again underscores the importance of revenues beyond premium content, namely from advertising and value-added services such as interactive applications,” concluded Zoller.
A recent report from Analysys said that non-voice services will account, on average, for 13.3% of total service revenues for US mobile operators in 2006 and this is set to grow to 24.5% by 2011 (see Entertainment To Drive US Mobile Data Revenues).
Staying with the US,research from Telephia revealed that primetime viewing for mobile video in the US is in the afternoon and early evening (see US Mobile Video Viewed Most In Daytime).