Qualcomm’s Flo TV didn’t live up to expectations, but U.S. broadcasters still believe mobile television has a chance.
Mobile television has not exactly taken off in the United States. Qualcomm gave the pink slip to its Flo TV mobile television subsidiary in October after the service failed to gain traction with consumers, and transmissions using the U.S. ATSC mobile broadcast television standard are limited, as are the number of devices that come with the necessary hardware to view it.
All this has some analysts questioning whether the technology will ever get off the ground, and even optimistic types admit it could take years for mobile broadcast television to become mainstream.
ALL SYSTEMS GO
The mobile broadcast community, however, is undeterred. MobiTV, which runs on cellular networks and doesn’t require phones to have extra hardware, says demand continues to ramp for its white label mobile television service, and the Open Mobile Video Coalition (OMVC) says the U.S. broadcast television community is raring to go with the ATSC standard.
From their perspective, the failure of Flo TV is just a blip on the radar screen.
“I don’t think you can equate the Flo TV circumstances to the health of the category,” says Ray DeRenzo, chief marketing officer of MobiTV. “All the things we’re seeing at MobiTV in terms of subscriber growth, engagement and the launch of new branded television services are all positive indicators.”
MobiTV powers mobile video offerings with AT&T, Sprint, T-Mobile USA and Verizon Wireless, and expects carriers to expand their mobile television initiatives early next year, DeRenzo says.
The OMVC is similarly optimistic and reports that the number of broadcast stations outfitted with ATSC equipment has doubled to more than 70 over the past year. Though that number is just a fraction of the 1,600 broadcast stations in the United States, the coalition is upbeat about the technology’s traction in the marketplace.
“Here’s why I think it’s going to be successful in the U.S.: Consumers want TV,” says OMVC Executive Director Anne Schelle, citing similar successes with mobile television in China, Brazil, Japan and South Korea.
Schelle points to recent consumer trials of ATSC-based mobile broadcast television conducted in Washington, D.C., during which more than 350 consumers were given ATSC-enabled cell phones, netbooks and DVD players. Nine local broadcasters offered consumers 23 channels of local and national news and entertainment programming during the trial, which ran from May to Nov.1.
The OMVC reports that the demo showed healthy demand for local broadcast content. Users tuned in to mobile television at home when the family television was occupied with different programming, while commuting on public transportation and during lunch breaks and long waits, such as at the doctor’s office or the supermarket.
“Consumers really do want local television on the go,” Schelle says. “Nobody can offer that outside the home except for broadcasters.”
BROADCASTERS SEEK TO REGAIN RELEVANCE
The OMVC’s confidence in mobile broadcast television’s potential is founded in more than just the results from the Washington, D.C., trials. For broadcasters, mobile television is a way for them to regain relevance as consumers are increasingly distracted from local television content by competing media from cable television, the Internet and services like Netflix. Breaking into the mobile television market will help broadcasters regain mindshare and the advertising dollars that go with it.
Fortunately for broadcasters, getting the mobile broadcast signal onto the airwaves requires a relatively minimal investment. They don’t have to buy additional bandwidth since mobile television signals can be transmitted on their existing DTV spectrum, and the additional transmission equipment is relatively inexpensive compared to other infrastructure investments.
Media General, which owns 18 network-affiliated television stations and an assortment of other media properties, estimates it costs stations between $150,000 and $250,000 to install the necessary equipment to send out mobile broadcast signals. Media General has launched ATSC-based mobile television services at its stations in Columbus, Ohio, and Tampa, Fla.
Jim Conschafter, a Media General executive who has been closely involved with its mobile television initiatives, says it’s up to the broadcast industry to get mobile television off the ground. “Whenever you start a new industry, there’s a little bit of chicken and egg going on to see who makes the first commitment, and broadcasters are making that commitment,” he says. “We have the spectrum, we have the programming, we have the relationships.”
Conschafter says Media General is “pretty confident” that mobile television will be a solid business for the company in the future, and expects to see more ATSC devices hitting the market after the second half of next year.
“In these days, we have to be pretty convinced those investment dollars are going to take off for us,” he says. “We wouldn’t be doing this if we didn’t think there was a good business there.”
The broadcast community has banded together to get mobile television to market with the formation of a joint venture, Pearl Mobile DTV, and an advocacy group, The Mobile500 Alliance. Pearl Mobile DTV is comprised of nine broadcast companies that are working with Fox, NBC and ION Television to speed the technology’s time to market. The Mobile500 Alliance shares Pearl’s strategic objectives and is composed of more than two dozen individual broadcast companies that own and operate about 346 commercial television stations in the U.S. market.
DIFFERENT BUSINESS MODELS
The OMVC and its members are confident they will succeed where Flo TV failed because their business models are very different despite similarities in their offerings.
Qualcomm’s MediaFlo began as a greenfield operator: It had to buy its own spectrum, build its own network, invest money in programming and do its own marketing outside of its relationships with carriers.
Uptake of Flo’s service was slow because of the cost of its narrow programming selection, which lacked important local content, as well as the service’s limited regional availability and the small number of handsets and devices which supported the technology. Flo was largely dependent on its carrier partners to market the service to their subscribers, and it’s unclear how successful its standalone personal television and in-car entertainment systems were.
In the end, Qualcomm decided its investment in Flo was better spent elsewhere, and decided to shut down the direct-to-consumer portion of the business. The company is currently debating a number of options for Flo, including selling its valuable spectrum holdings or operating it as a wholesale service.
In contrast, deploying ATSC-based mobile television is a relatively inexpensive endeavor for broadcasters. They already own the necessary spectrum resources and programming, the equipment is relatively cheap and they have the power to market mobile television with the same enthusiasm they put behind advertising the switch from analog to digital television. “All the pieces are coming together,” Conschafter says.
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Mobile TV: A Long Time in the Making
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For all the enthusiasm broadcasters have for mobile television, it will be years before the technology becomes commonplace. Media General executive Jim Conschafter admits “it’s going to take some time” for mobile television to go mainstream, and it may be 2012 before momentum really begins to pick up. The distant horizon for success has spurred doubt in the analyst community. ABI Research analyst Aapo Markkanen has doubts about consumer demand for mobile television on cell phones, though he concedes that the service may be more popular on tablets and laptops. “It’s very complicated to build a feasible business case around the concept of this technology. I’m quite skeptical that it’s going to take off soon,” Markkanen says. “If you look at 2013, 2014, there might be a more developed business model.”
Carriers could be enticed by the possibility of using ATSC-based mobile television services to shift mobile video consumption from congested 3G networks to broadcast networks, but that will take years to accomplish because of the immature state of the device ecosystem and the limited availability of service. The device ecosystem could be a sticking point for broadcasters, which will have to convince manufacturers to put ATSC chips into their devices. This is a difficult proposition in the near term, since the modules will raise the price of devices at a time when mobile television broadcasts remain limited. Embedding ATSC chips into consumer electronics will become more attractive as the broadcasts continue to come online, but backof-the-envelope calculations show that just 10 percent of the country’s stations will offer the service even if the number of stations transmitting ATSC signals doubles over the next year. Since U.S. mobile broadcast television services won’t reach significant scale for some time, it’s hard to make predictions about what the end-user experience will be like, but MobiTV expects applications to combine broadcast mobile television with on-demand content in a single, interactive user interface. Such an application would allow users to interact with content and advertisements and switch between ATSC-based, free-to-air local television and cellular-based, premium content without having to move between apps. Broadcasters also have to figure out viable ways to monetize the service. Josh Martin, an analyst with Strategy Analytics, has doubts about the potential success of subscriptionbased mobile broadcast television like Flo TV, preferring ad-supported models, but thinks the technology could have promise if combined with on-demand services. “I think the subscriptionbased model of getting linear content on a mobile device will continue to be challenged. Until you find an on-demand solution, you’ll have problems getting subscribers,” Martin says, citing services like iTunes and Hulu. Martin doesn’t think the uncertainties in the U.S. market will deter broadcasters from pushing forward with the ATSC effort. When asked if mobile television was dead, Martin replies: “I don’t think anything is dead as long as people are going to try to make money off of it.” Flo TV, in its present incarnation, will not end until next spring when Qualcomm takes the service off the air. MobiTV is reporting steady growth despite the increased congestion on operator’s 3G networks and broadcasters are forging ahead with ATSC. Despite the hits the U.S. mobile television has taken over the years, it’s far from ready to give up the fight. |
Markkanen describes the small display on cell phones as a “last resort screen” and says ATSC-embedded tablets and laptops could make mobile television more attractive but cautions that there is still a considerable amount of ironing out that needs to be done around business models, device ecosystem and distribution. “It’s a work in progress, but it’s progressing very slowly,” Markkanen says. Carriers, which hold key distribution relationships with subscribers, have been largely absent from current ATSC efforts in the United States, with the exception of Sprint, which provided 200 Android-based Samsung Moment phones retrofitted with ATSC chips for a Washington, D.C., trial with the Open Mobile Video Coalition (OMVC).
