Mobile TV is floundering in one of its bastion (Korea ... other one being Japan). The following is from a report in telecoms.com: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.
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.
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 (MBMS) 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.
Korean Insight has an interesting section on Mobile TV (but no blogs on this topic for some time). A blog on this topic last year says a lot:
As TU Media started operations in mid 2005 it tried to acquire simultaneous re-transmission rights from broadcasters. This means that S-DMB viewers would be able to watch popular dramas and shows simultaneously with fixed TV. These contents are considered the most popular on both fixed and mobile TV. However, previously have broadcasters been reluctant to share these contents because they wanted to use it for their own T-DMB service. This is why S-DMB had to focus on other contents like sports and news. But the lack of “killer” contents from fixed TV hindered S-DMB development (as shown in the graphic above). Until today it had been able to acquire approximately 1.26 million subscribers. But according to TU Media they need approximately 2.5 million subscribers to be profitable.
But also T-DMB is struggling to build a profitable business. Despite more than seven million T-DMB devices in Korea the advertising revenues are marginal. Which partially is the result of very restrictive legislation on advertising but also broadcasters have failed to develop an attractive mobile advertising value proposition to make this channel more attractive for advertisers.
Consumers have embraced this new medium and it is very likely that broadcasters will take mobile TV more serious and endeavor to make mobile TV advertising more attractive for broadcasters. Until 2012 more than 20 million T-DMB devices are expected, so mobile TV has a future in Korea.
