Mobile TV providers strive to stay out of the red
Sep 15, 2009 3:01 PM
Google "mobile TV revenue" and you'll get plenty of results, but most of them will also include the words "projection" or "forecast." That's probably because the revenue coming directly from mobile TV to date hasn't been something to write home about.
Informa Telecoms and Media put 2008 global mobile TV revenues at $1.5 billion. SNL Kagen pegs U.S. mobile TV revenues at $306 million for 2008 and $359 million this year. This isn’t very much when you consider that the Mobile Entertainment Forum reports that mobile entertainment revenues will hit $32 billion this year. Almost all of mobile TV's revenue, worldwide, continues to be from subscriptions and premium content.
The subscription model can be successful with the right content, as the success of MobiTV illustrates. The company offers 60 channels of live and video-on-demand programming as well as special event live programming and vertical services such as Mobi4Biz. Although the privately held company won't share its financials, MobiTV currently has 7 million subscribers across North America and continues to grow at a breakneck pace.
Advertising-funded mobile TV only exists where there's free-to-air mobile TV, and today that means Asia. As recently as last year, mobile TV ad revenues were more than disappointing — Total Telecom reported earlier this month that Korean T-DMB mobile TV broadcasters made about $5 million on advertising in 2008.
But things may be looking up, at least in China. Chinese telecom analyst firm Analysys International reports that mobile TV generated about $118 million in advertising revenue in the first half of 2009, a 56 percent year-over-year increase. Of that total, outdoor ad network company VisionChina grabbed the lion's share — $58.07 million, up 74 percent from the same period last year.
Another point of light is International Data Group's report that African mobile phone carriers MTN and Safaricom are teaming up with Nokia and Digital Mobile TV (DMTV) to provide mobile TV to subscribers at no cost for a year. Why? Because it seems that they'll make money doing it.
They expect the service to deliver significant advertising revenue as well as expand their services portfolio. This reinforces the contention of the OMVC and suppliers of free-to-air TV tuners that mobile TV is that path to more subscribers and higher ARPU. "For mobile operators, they view mobile business as an opportunity to further enhance convergence of data, voice and video as a way of satisfying customer needs and improving ARPU," says Felix Kyengo, DMTV Kenya general manager, in the IDG report.
Another point of validation for advertising-sponsored mobile TV is mobile ad network company AdMob's recent news that it has served more than 100 billion ads to mobile devices — roughly 17 for every man, woman and child on earth. On its Web site, the company also highlights the results that house paint manufacturer Sherwin Williams got from a $15,000 two-day ad buy promoting its iPhone app, boosting the app's rank from 70 to 18 and increasing downloads 300 percent. The bottom line is that mobile advertising is becoming a lot more familiar — for viewers, advertisers and operators.
But none of that says that anyone's making money from mobile advertising. "I've been hearing from analysts that this is the year of mob advertising — for the last five years," says Jeffrey R. Miller, principal at JRMill3r.com and former president of market development at Telescope, a pioneer in interactive TV voting applications. "It's not a hockey stick; it's going to be a consistent growth," Miller says, and he cautions against looking to Asia for guidance. "Asian market translation does not always hold up. There are significant cultural differences," he says.
Miller's forecast is that ad-supported mobile TV is "a couple of years off" for two reasons, the first being depressed economic conditions. "But even if that did not happen, the ad market is becoming so fragmented across linear TV, online, on-demand,” he says. “Mobile TV is at the back end of advertisers’ choices. It's very much competing with other priorities."
So what should operators do while they're waiting? Miller sees a trend toward a hybrid business model, “free-mium.” "What I am seeing online, which operators consider for mobile TV, is giving away some basic TV shows and up-selling," he says. The free-mium business model certainly describes MobiTV's MobiMix, which adds ATSC free-to-air mobile TV to its premium channel lineup.
"If operators aren't doing [free-mium] market trials, they should at least have it in their plans somewhere," Miller says. "The real magic is what you give away and what you put a premium on. You need [to do] good research and validate that with market trials."
The right mix depends "very much" on content category, Miller advises. "The way to get it right is to look across consumer behavior and attitudes."
That's something MobiTV chief marketing officer Ray De Renzo would endorse. "Be bold, make your best content available for mobile distribution, engage with the consumers and make them aware they can watch video content,” he says. “Consumer awareness continues to be a barrier to mobile video adoption; work collectively to bring down that barrier."
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