Mobile TV - Tuning in or Switching off?

Tuesday, March 17th, 2009

Arthur D. Little projects worldwide mobile TV subscribers to increase from 40 to 140 million by 2011

  • Broadcast mobile TV has disappointed so far: while 40 million users worldwide watch mobile TV, this is only about 1% of mobile phone users. Additionally, many services are offered free of charge or as part of a high value service package so that direct revenues generated by broadcast mobile TV are low
  • But broadcast mobile TV can help mobile operators to offset the commoditization of voice and data access services. The industry is continuing to improve broadcast mobile TV business models and work on launching next generation satellite/terrestrial mobile TV networks
  • Arthur D. Little therefore expects subscriber figures to increase to about 140 million by 2011.

VIENNA, Austria — Approximately 40 million users watch mobile TV based on broadcast networks, in addition to those watching mobile TV streams via 3G networks – but this is well below initial projections and only about 1% of all mobile phone users. Even the business models in markets with sizeable numbers of broadcast mobile TV subscribers – such as Japan with 18 million, South Korea with 17 million or Italy with well over 1 million – have not yet become viable commercial success stories. However, mobile operators remain interested in promoting the service as it can support customer acquisition and retention, and can be used to promote high value “flat-rate packages”.

Arthur D. Little’s new report, “Mobile TV – Tuning in or switching off?” investigates the status of broadcast mobile TV uptake worldwide and identifies actions that key players need to take to improve the prospects of broadcast mobile TV businesses.

How to improve the broadcast mobile TV business?

Arthur D. Little proposes four ways to improve mobile TV business models:

  • Regulators need to support the set-up and potential success of emerging mobile TV businesses

    Benchmarks show that national telecommunication and media authorities play a fundamental role in supporting or hindering the success of broadcast mobile TV. They need to be aware that their tender processes significantly affect the way that players co-operate along the broadcast mobile TV value chain. In addition, they should adopt a moderator role to facilitate negotiations between the mobile operators, terrestrial network operators and content providers which otherwise compete in the respective country market.

  • All key players need to work on lowering the costs of delivering broadcast mobile TV services

    The profit potential from broadcast mobile TV services for mobile operators is low. In an exemplary country market, mobile operators can only generate 1 Euro profit per mobile TV subscriber – under the condition that a critical mass of 10% of all mobile phone users in the market subscribe to broadcast mobile TV services at a monthly fee of 6 Euro. Therefore, any plans for new broadcast mobile TV businesses must ask the question: “How to bring down the three key cost drivers: network roll-out outs, incremental handset subsidies and content costs?” The report suggests combining existing mobile networks with broadcast mobile TV networks and financing the content costs partially with advertising.

  • The industry needs to improve the service and price attractiveness of broadcast mobile TV to end-users

    The price, usability and attractiveness of broadcast mobile TV services need to be continuously improved, for example, by providing improved outdoor and indoor network coverage and improving the TV channel bouquet.

    “Mobile users can already choose from various mobile TV offers – they can selectively snack on mobile TV via 3G streaming, download TV clips from Youtube, or, in some markets, watch free to air mobile TV via DVB-T. As such, broadcast mobile TV services need to offer a more superior user experience in order to motivate users to pay monthly subscription fees for the right to watch 10-15 TV channels, many of which they receive anyways at home,” Karim Taga co-author of the report and Director at Arthur D. Little’s Telecoms Information Media & Electronics (TIME) Practice.

  • Mobile operators need to factor in indirect benefits from offering broadcast mobile TV

    Mobile operators can use broadcast mobile TV services to differentiate their services, increase customer loyalty or offload traffic from 3G streaming TV services.

    “Mobile TV is here to stay as an important contributor to offset the commoditization of mobile voice services and accelerate the convergence of the media and telecommunication industries,” says Karim Taga co-author of the report and Director at Arthur D. Little’s Telecoms Information Media & Electronics (TIME) Practice.

What’s the future of broadcast mobile TV?

Broadcast mobile TV will experience continuous, but slower than previously expected subscriber uptake. However, the prospect of establishing profitable, new broadcast mobile TV business models remains and indirect benefits further motivate the industry to push the service. And, in spite of the current recession, consortia such as China Satellite Broadcasting Corporation or Satellite2mobile, based in Dubai, have advanced plans to launch next generation hybrid satellite/terrestrial mobile TV networks. Once these are launched and reach critical subscriber mass, they will lead to a step-change in the nascent broadcast mobile TV business.

The development in China indicates that Asia may remain the key world region for mobile TV. The national broadcast mobile TV service already has 1.2 million subscribers. The planned launch of the satellite platform and the fact that over 200 types of CMMB-enabled mobile devices are available could lead to rapid mass adoption of mobile TV.

Arthur D. Little expects the number of broadcast mobile TV subscribers to increase from 40 to 140 million users by 2011 – and recommends that executives stay tuned rather than switch off on the topic.

More: The Report