Tuesday, May 02, 2006
As the mobile television industry emerges, there are several big questions that will make or break startups trying to catch a piece of the next big trend.
Will users pay to watch television on mobile devices? On one hand, research indicates that there will be 125 million mobile TV subscribers by 2010. But on the other hand, catchy mobile technologies have been attracting attention for years without gaining traction with the customers.
Furthermore, given a customer base, how will mobile television be commercialized, in terms of business model, content and technology?
Lastly, can a standardized business model be reached and who will carve up the proceeds? Since broadcasters own the content and mobile operators own the devices and usually the customer relation, is it possible to wrestle a significant revenue share away from these powerful entities, and still enable everyone to work together?
If the first question is favorable for the industry, MobiTV has a great first mover advantage on the second question. Yet, in order to win in this networking era, MobiTV must continue to position itself with the best partnerships, and must make sure that when the industry emerges, MobiTV is the delivery standard of choice. Otherwise, there will be no leveraging point with which to battle the operators and opposing technologies or business models will wipe the company out. Already, competitive technologies, splintering operators, and powerful broadcasters all threaten to squash the startup before it reaches the big time. However, as the only company with a significant mobile television customer base, MobiTV is currently in a favorable position.
MobiTV is the only company that provides mobile television and radio service worldwide over cellular, WiFi, and broadband. Founded in 1999 and launched in 2003, they recently reached over 1 million paying subscribers, a number which has doubled in the last six months. Furthermore, they are the only mobile television service in the
While I do not believe MobiTV has reached profitability yet (they are private so financial information is hard to come by), their revenues are growing quickly. 2005 reached $20M in revenue, which is twice that of 2004. With an estimated average of about 300,000 subscribers throughout 2005, and a $10/month subscription fee, I am assuming that MobiTV relies almost exclusively on subscription fee for revenue and not on any advertising revenue.
In the words of CEO Dr. Phillip Alvelda: “our vision is to deliver the best possible live television experience to consumers, across a range of devices and networks." Thus, MobiTV’s service is basically the market leader as a content aggregator. They offer many premium channels (ESPN, NBC, ABC, Fox News, etc.) over a wide range of devices. The service is not proprietary to any device or mobile operator, however, only certain service providers offer MobiTV. For instance, Sprint customers and Cingular customers in the
The content MobiTV provides is a range of live television including sports, weather, and news, in addition to static content such as cartoon episodes, movie trailers, and music videos. The company also offers a radio service.
As it stands now, advanced mobile technologies are failing to offer mobile operators significant incomes. With 2 billion paying mobile phone customers, finding the killer application is a huge question. Television could be the answer (for
Yet to achieve this idealistic picture, the industry needs to actually grow up. Currently there are competing standards and a range of business models, any of which could win and significantly change the entire industry. Thus, there is no “industry shift” to be aware of, but rather an unknown tidal wave, that could go any which direction should the mobile television industry become established.
Here’s how the process works:
- Digital video signals are compressed and formatted to fit the small screens by MobiTV
- The user requests and accesses the MobiTV servers over the public Internet (through a mobile phone application or desktop application) to obtain access to the mobile TV content
- The compressed video is sent in IP packets over the public Internet directly to the user’s handset, using the mobile's carrier network for the "last leg" (or AT&T WiFi access points)
- The mobile user communicates directly with the MobiTV servers, no additional hardware or software is required on the networks of the mobile carriers to offer the service
- The mobile TV access and delivery processes are essentially the same as the video streaming technology that has been in use for many years over wireline Internet connections. Essentially, the role of the mobile carrier’s network in delivering mobile TV services is similar to the role played by an Internet Service Provider (ISP) network in a typical Internet application such as video streaming.
Thus, the first major influence on the winner is the chosen technology standard to deliver content.
Current Delivery System Technologies for Broadcasting:
1) DMB has been adopted in
2) Digital Video Broadcast (DVB) favored in
3) MediaFlo from Qualcom is being rolled out in the
MobiTV has opted to act agnostic in this arena, and therefore can operate on any broadcasting technology. Since the company only obtains, packages, and then distributes the content, the actually delivery is done by the operator on whatever technology is available. This is a favorable position for MobiTV to be in, not having to bet on a single technology to emerge as the worldwide standard or risk a disruptive technology to ruin the process. On the other hand, it likely introduces complexities in maintaining compatibility across the different delivery systems. However, I am guessing that the complexity may be completely absorbed by the data networks of carriers, since they are responsible for ultimately sending the TV programming.
However, where MobiTV has already picked a side is on the desktop arena. By partnering with Microsoft this month, MobiTV has committed to the Microsoft digital rights management package. This move allows MobiTV to offer its mobile television content to all Windows XP computers, as well as Windows Mobile devices.
"By combining MobiTV's premium content lineup with the Windows Mobile and Windows Media platforms, consumers will be able to easily access rich television-viewing experiences on their Windows XP-based PCs or Windows Mobile-powered devices."
While mobile device users with Palm OS or Windows Mobile can both use MobiTV, only Microsoft XP users have access in the laptop industry. This alignment and support for the Windows digital rights management package could be caused by Apple’s iTunes and video iPod being viewed as a major threat. More on this in the partnership section.
Within the industry, competing business and delivery models highlight a power struggle and lack of clarity as to which way the industry should go. According to experts there are three main ways to delivery TV to mobile users:
1) "Push & Store" with local playback
· As with music on iPods, the idea behind Push & Store technology is that users can download their own content from the Internet over home broadband connections for free, or for a small fee, and then load this, via USB links, onto mobile video devices.
· Apple is working with broadcasters to increase the range of shows available
· One major advantage is that shows stored on an iPod can be watched on an underground train or in regions with patchy network coverage
· In addition, TiVo is working on enabling download from your TV to a portable device
· Typically commercialized by selling the content per piece ($2 per episode) and giving most revenue to the content provider
· Another revenue model based on providing the content for free and instead charging for traditional advertising, or skip-resistant advertising.
2) Streaming over 3G mobile data networks
· Mobile TV services delivered via 3G streaming are similar to media-file download services (like ring tones) offered by all operators today, apart from the fact that the TV feed is in real time
· At the moment, mobile TV is mostly streamed over 3G networks. But sending an individual data stream to each viewer is inefficient and will be unsustainable in the long run if mobile TV takes off.
· Mobile operators could form a consortium and build a shared network to provide mobile television using advanced mobile technologies
· In addition, existing television broadcasters could build such networks and cut out mobile operators
· Typically commercialized via the traditional advertising technique with spots inside the streaming content, and most of the revenues split between the content provider and the mobile operator. In addition, subscribers pay a $10/month fee to use the service that would otherwise be part of their cable television package.
· MobiTV also provides additional revenue potential with commercial only channels that allow interaction and are linked to other channels
3) Dedicated mobile broadcast networks.
· In addition, there is also serious interest in dedicated, terrestrial mobile TV broadcast networks, with several operators around the world now involved in small-scale trials.
· This could also be offered through satellite, much like satellite radio
· Some mobile operators are already buying broadcasters to trial this offering
· Commercialization technique still emerging
Interestingly enough, a study of the current television industry (earlier in the blog) indicated a trend toward anytime television as opposed to appointment television, which would favor the “push & store” method. However, the streaming over 3G is the mobile method of choice at the moment. A quick analysis shows that the streaming content is the only way for live or appointment television to be shown. Thus, it should not be surprising that MobiTV’s premium channels specialize in this live content with minimal sitcom type providers of content. On the other hand, Apple recently partnered with ABC/Disney to provide popular shows not restricted by appointments that suit with their strong push & store capabilities.
MobiTV can compete in either arena, steaming or push & store, but obviously their strong suit is streaming because such functionality is not available to iPods (yet). The last alternative, dedicated mobile broadcast networks, would very much work against MobiTV in that broadcasters would no longer require MobiTV to package and deliver their content. In this scenario, mobile television would very much look like the days of pre-cable TV when anyone can tune into any of the major networks. It is possible MobiTV could still win in this world by positioning itself as the aggregator of all other content, meaning content not popular enough to warrant its own broadcast or financial backed to enable broadcasting. Thus, MobiTV could become the “cable provider” for mobile television era. More on this in the partnerships section.
According to CMO of MobiTV: There will be room for some time for both unicast mobile TV, which is what MobiTV provides, as well as broadcast TV to mobile phones. Eventually, he says, there will be a synergy between the two so that carrier networks could handoff unicast shows to a broadcast network if there were capacity issues. MobiTV's technology could use either a cellular network or a digital video broadcast-handheld (DVB-H) network.
Obviously a big threat despite using a different methodology for the moment. It is possible that iTunes could capture the market for non-streaming video, leaving only live and interactive TV for players like MobiTV. Furthermore, Apple could become an MVNO and enter the streaming market as well, and enter it with force wielding a large library of content and brand name.
Re-broadcast recorded DVR/Tivo/PC content to your mobile device:
As a rising star, Sling Media has popularized re-broadcasting your DVR content to your computer or any other internet location. But now, the startup is introducing a mobile application that allows your DVR content to be transferred to mobile phones and PDAs. This is just another push & store alternative, but having already paid for the content with a cable television subscription, it makes financial sense for the user, as opposed to paying for a cable subscription for home and a mobile subscription as well.
Re-broadcast any PC stored content (pictures, videos, etc) to your phone. Mobile television enabled with a media center such that your television programs are stored to your PC. (FREE)
Alternatives to MobiTV’s content
Sprint TV, Verizon VCast, and Cingular + REAL Networks are the mobile operators trying to own this space and cut out content aggregators like MobiTV (however Sprint offers MobiTV as well). If mobile operators can obtain and repackage the content, then there is no space for MobiTV to play in. Each offering is different, but primarily the mobile operator either includes the TV service with enhanced data plans, or charges a subscription fee like MobiTV and then adds on extra fees for premium content like HBO.
Other startups such as GoTV, PacketVideo and SmartVideo are bringing limited video content to phones.
San Diego-based Qualcomm, which makes chips for phones, and Houston-based Crown Castle International, which has 12,000 broadcast towers, are testing systems to send TV signals from towers right to cell phones.
MobiTV enjoys a first mover advantage over the competition, but could be a victim of committing too early to technology. Newer technologies such as those offered by Sprint TV enable quicker transfers, less congestion for the mobile operators, less data loss for the customers. I am guessing that is part of the reason why Sprint was able to offer Sprint TV having already introduced MobiTV to Sprint users.
Partnerships – To Keep a Piece of the Pie
The threats to MobiTV are very real and substantial. It is possible that users will be slow to adopt, or might not ever significantly adopt television on limiting mobile devices. If they are open to the idea, are they willing to pay enough for it that there is still a piece of the pie after mobile operators and broadcasters take their share?
MobiTV currently holds the only significant mobile television consumer base, and if they can maintain that advantage then they can leverage it for more power when negotiating with the operators and the broadcasters. However, the key is maintaining customers and I see that through 1 of 3 options. Either they are the ultimate source for premium content, the only source for long tale content, or they are the best provider of anytime-anywhere.
If MobiTV can be the best content aggregator, then customers will be drawn to them when looking to fulfill mobile television needs. However, to get to this spot MobiTV needs to work closely with the broadcasters which means they begin to lose some of the power they are trying to build. Instead, MobiTV could take the approach that satellite radio stations have done and skip the broadcasters (or the stations) and go straight to the content providers. For streaming television the premium content is then NFL, MLB, FIFA, Connie Cheung, Regis and Kathy, etc. Partnering as the exclusive provider of full major league baseball coverage could be a huge leverage point for MobiTV. But it goes back to the question would users actually watch an entire baseball game on a mobile device, or would they rather an ESPN broadcast. This suggests the ESPN partnership is more valuable, and I agree, but it doesn’t help the power struggle when ESPN decides to take the majority share of the revenue. Or even worse, if broadcasters are the reason why MobiTV has a user base in the first place, then when they all decide to move to broadcasting straight to mobile devices and bypass the middleman, MobiTV fails.
The second option is to become the long tale provider of content, in that MobiTV aggregates so much content that users are attracted because they have it all. This would give them power over the broadcasters and the mobile operators because then MobiTV has users and content that are otherwise unavailable. To get to this position, MobiTV might look to partner with Google, the internet masters of this space. Already Google Video is aggregating a large library, and they have the resources to continue. If MobiTV can arrange a partnership and thus multiple its library content immensely, that could be very valuable. Yet this library of content is push & store content not the streaming content that makes MobiTV standout. So the partnership and strategy is not ideal, and furthermore MobiTV needs to evaluate exactly what it is providing to Google to see how important the relationship with MobiTV is to Google. As a company that can repackage, and has relationships with many mobile operators for delivery, MobiTV provides some valuable service. Thus, this is one possibility.
However, my advice is to look towards the third strategy, being the best at anytime-anywhere. MobiTV is already the only company offering television on cellular, WiFi, and broadband. Users pay for easy access, and if MobiTV can establish itself as the best provider of television no matter where you are, then users will sign-up for the reduced hassle of having to worry about a player for the laptop, a player for phone, a player when your in the bar/stadium/airport or a different one for at home. Ideally, MobiTV would also be your traditional television subscription, such that you only sign-up for one. Thus, a partnership with Comcast or TimeWarner is my strongest recommendation. Users would be much more likely to pay an extra $5-$10 on top of their current cable subscription to take a subset of their channels with them on the move, then having to deal with yet another television provider. In addition, if MobiTV can get dual-branded service then they will be building an even better customer base that can be leveraged when negotiating the business model with mobile operators and broadcasters. And if MobiTV is in your house, then that will be a huge claim when the industry starts to shake out and choose which delivery model and technology is the winner. A similar partnership could be done with DIRECTV, yet they are probably looking to the satellite broadcasting to mobile delivery methodology, and may not want to lock in a partnership that skips broadcasting.
Partnerships – To
Streaming content to mobile devices offers interactive options that are not available with the push & store methodology. It is these options that really hold the future for mobile television. Quiz shows, upload-able content, voting, viewed influenced content or results, all are possibilities with live streaming content that don’t have the same impact with static downloaded content. Positioning MobiTV to be a leader within this space is the challenge. Two of my thoughts are gaming companies and reality content producers. I believe Mark Brunett is considered the master of the reality TV content space. Perhaps MobiTV teaming up with him could help produce an innovative show tailored to the strengths of unicast streaming to user’s mobile devices. Another alternative is a partnership with EA. Electronic Arts is a master of interactive sports gaming and has rights to sports characters. Combining interactive sports with actual sports casts on a mobile device could produce content attractive of both the television fan base and the gaming community.
Increasing the popularity of live and interactive television shows is the best competitive strategy against push & store threats. Alternatively, MobiTV could accept the delivery mechanism even more, and partner with Apple competition. They have already started doing this with the Microsoft partnership, accepting the Microsoft digital rights management as opposed to iTunes. They could go even further and partner with TiVo, becoming the repacking agent and distribution arm for TiVo to push user content to mobile devices. Apple requires users to identify, purchase, and then download content. A TiVo + MobiTV solution would utilizes the user’s existing cable service for the content, TiVo’s “season pass” service which automatically records and downloads your content, and MobiTV to get it to your mobile device. This partnership could be a direct move against Apple’s methodology.
In all, MobiTV has some serious hurdles to overcome and is playing in space with very powerful entities. Any mistakes or slowdowns will likely mean the industry, the technology, and the user base will all pass the company. However, if they can continue a market leadership position with the biggest customer base, then they are positioned for great success.
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