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Mobile TV – show me the money!
The market for mobile TV is a subject of intense debate in the UK technology media and telecoms community. We know that it is now possible to offer TV like services via mobile platforms, indeed some services have already been launched, but industry faces great uncertainty– what will consumers be willing to pay for mobile TV services? Will spectrum rights be available? How big is the market?
What is mobile TV?
As ever our conversation began by looking at definitions – what is mobile TV? The term has contradictory connotations, bringing together conceptions of TV linked to family, living room, regularity and scheduled content, with notions of access on the move and on demand. One conversationalist helped bring clarity to this discussion by stating that we should not use the term mobile TV, rather we should focus on the 'fourth screen'. Consumers are already accustomed to three screens – cinema, TV, and PC – we are simply introducing them to a fourth, the mobile screen.
This fourth screen or mobile TV opportunity is all about personalisation. Starting from this point of view rather than focussing on TV services, allows us to get a better idea about the new services which could develop – based on communications like email and messaging, building in tailored audio-visual services too. What is certain is that we are not talking about tuning into your favourite soap at 7.30 every night, simply on a screen a fraction the size of your TV.
Obstacles to rollout of mobile TV services
When you read the press comment on new services like mobile TV, the same old grumbles are raised. The screens are too small, the batteries on devices do not last long enough. Our conversationalists addressed these issues head on. Industry appears to be confident it will resolve device issues like battery power and storage capacity in time, not least because these are critical features in a world of increasing speeds and bandwidth. In terms of the often-cited concerns around the small screen sizes of mobile devices, the solution appears to be demonstrating the technology. Evidence from the mobile TV trials shows that when consumers actually see mobile TV services in action, they are always pleasantly surprised about how easy they are to see and use.
So is the future rosy? Are all the concerns superficial? In a word, no. Whilst the conversationalists were relaxed about some the device based barriers to mobile TV roll out, when we polled their views on the real barriers to rollout, everyone agreed: spectrum and content rights.
Everyone recognises that spectrum is critical, as one conversationalist put it, spectrum is the real estate we build networks and run services on. Without adequate spectrum these new converged propositions remain concepts in the domain of technologists rather than consumer realities. The other major barrier identified in the conversation is content rights. Without the rights to a range of content to deliver over mobile platforms, operators will not be able to create a compelling proposition for consumers. We have recently seen the time taken to negotiate new media rights between PACT and the broadcasters and it remains to be seen whether these will pave the way for mobile TV deals. What is certain however is that the content licensing regime would need to become significantly more nimble for new services to be able to launch and adapt to the fast pace of what consumers, particularly younger consumers, demand. Consumers expectations are growing significantly, it is no longer acceptable to offer four channels to the consumer and expect them to pay for a service. Do consumers want it?
If we build, will they come? The conversation visited the age-old question of whether consumers actually want the never-ending possibilities that emerge with new products and services. It was recognised that consumer adoption of new technologies always takes a while, whether it is the ATM or the mobile phone and that it always takes a while for the consumer to understand the need that the new device is fulfilling. With more complex converged products and services, the sell becomes even harder. This is certainly the case with Personal Video Recorders (PVRs), which have been notoriously difficult to explain to consumers. These products finally took off via consumer recommendation of the Sky Plus box – once you see your friend’s you definitely want one. The conversationalists drew parallels between this technology and mobile TV services. It may not be immediately apparent to the consumer that they want one but viral and word of mouth recommendation will do much to sell the concept.
Similarly, the group discussed whether attitudes to Mobile TV differ across generations and between digital natives and digital immigrants. It was agreed that younger people, the digital natives would take to new technologies like mobile TV instantly – they get it. They already interact with a range of technologies and platforms in their everyday life, choosing them over linear platforms like broadcasting. For this demographic, it is natural to use every communications option open to them to access the content they want, where and when they want. The logic of this argument therefore suggests that those who cannot see the market for mobile TV, are likely to be themselves digital immigrants.
There are concerns in the industry that consumers are nervous when engaging with new services over a mobile platform for fear of running up large bills. This was identified as a major barrier to development, for whilst in the many recent trials consumers appeared to be engaging happily with mobile TV, it was not clear if/how much they would be willing to pay for these services. As one conversationalist put it, consumers will try anything when it’s free, but will they still be enthusiastic when they have to pay?
Forcing industry cooperation
Like many areas where convergence is driving the market, the development of mobile TV services demands high levels of cross-industry cooperation. The operators, coming from a telecoms perspective, know their consumers. They know how to find them, tailor services to them and importantly, bill them. However, they know less about content, which ultimately is what the consumers are really interested in. In turn the content industry’s strength lies in creating and distributing content but they don’t how to deal with the consumer as an individual, or to extract money from consumers directly (rather than via advertising). These two parts of the value chain are having to learn to work together closely to develop and deliver new services but also to avoid duplication. It was recognised that there will not be a business case for each mobile operator to build out their own network to run these new services, therefore implying that even the fiercest competitors will have to work closely together in this regard.
Conclusions
There is a reason to be excited about the possibilities for mobile TV. Indeed over half of the people who took part in the convergence conversation said that they would invest in new services. It was suggested in the conversation that the pessimism around new services such as mobile TV always results from extrapolating the behaviour of today's 28-50 year olds and applying it to the future market. We must not fall into this trap, to really be shown the money in mobile TV, we must look at the digital natives, the teenagers of today.
However, as one conversationalist put it, there is an elephant (or elephants) in the room: until content rights and spectrum rights are resolved, the business case for mobile TV is uncertain.
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