Media companies stand to gain a lot more by partnering with cellular providers than they fear losing, a growing body of research shows.
The business of mobile phone television is poised to grow sharply in the United States in the coming years as consumers get more comfortable with the notion of viewing video on their cellphones, as high-speed wireless networks proliferate and as prices for hand-held devices continue to drop, according to media services company Horizon Media, which recently pulled together several mobile TV studies into a single report.
Mobile TV in the U.S. will become an $800 million business in 2009 from a $16 million business in 2004, Yankee Group estimates.
The rise will likely be caused by the expected balloon in the number of U.S. cellphone customers who watch TV programs on their phones. While 1.2 million customers fit that bill in 2005, 15 million people will watch TV on the phone in 2009, predicts research company eMarketer.com. By 2009, more than 30 million wireless subscribers will be watching commercial TV and video on a handheld device, research firm IDC projects. Another research firm, In-Stat, says that figure will be closer to 20 million customers.
Brad Adgate, senior VP and director of research for Horizon, said he was inspired to put together his report because a number of factors are setting the stage for mobile television to be a popular trend in the United States.
“It just struck me that mobile phones are becoming the Swiss Army Knife for this century, and as we move toward wireless broadband, there are some very interesting opportunities for marketers and advertisers,” he said, adding the U.S. market is particularly ripe given it lags behind countries such as Japan and Korea.
North America’s penetration rate of multimedia-enabled cellphones-48 percent last year-is expected to catch up quickly to markets in Europe and Asia, where mobile television has been flourishing for years.
Japan, for example, has a penetration rate of 83 percent, according to an analysis by A.T. Kearney and England’s University of Cambridge Judge Business School. In Western Europe the penetration is 52 percent, while China and South Korea combined claim a 60 percent penetration rate.
There were 40 million multimedia cellphones in the U.S. in September 2005, up from 20 million in January 2005, according to Horizon’s research. By 2010 more than 25 percent of the 279 million digital TV devices sold that year will be cellphones, another researcher, Strategic Alliances, estimates.
The growth potential of mobile TV comes as the entertainment industry grapples with a flurry of new media deals that are altering how consumers receive entertainment content. Thanks to the expansion of video-on-demand and the proliferation of digital video recorders, viewers have more control than ever over when they watch their favorite TV shows.
For many, the question of how they watch their content inevitably followed.
This fall, that topic took center stage when The Walt Disney Co. struck an alliance with Apple Computer to offer downloadable episodes of popular series from ABC, Disney Channel and ABC Family for playback on Apple’s new video iPod. Shortly thereafter, satellite operator EchoStar Communications introduced the PocketDish, a handheld device that can play music and video files.
Yet despite all of the efforts to get content on VOD platforms and to make it available to portable devices, many television executives acknowledge that a lot of what they are doing involves rolling the dice, as it is unclear what kinds of long-term revenue opportunities exist for these services. Disney had a nice surprise last fall when its content accounted for a sizable chunk of the 1 million video downloads that Apple’s iTunes bagged in its first three weeks of offering video.
Many executives have been uncertain about the revenue prospects for VOD, but the studies consolidated in the Horizon report appear to quell at least some of the money concerns when it comes to providing content for cellphones, though many are still worried about piracy.
The concept of mobile TV is not a new one. For some time, television networks have been dabbling in delivering content to cellphones, with many starting out offering sports scores, brief news reports and ringtones.
In recent months, however, both broadcast and cable networks have been striking partnerships with wireless providers to deliver their content on to multimedia-enabled cellphones. And now, thanks to companies such as MobiTV, many deals being made today include live video feeds from networks such as Fox News Channel and The Weather Channel. ESPN has been particularly aggressive, going so far as offering an ESPN-customized cellphone through Sprint that allows subscribers to get sports, news and interviews using Sprint’s broadband network.
Even cable operators are getting into the act, with Comcast, Time Warner Cable, Cox Communications and Advance/ Newhouse Communications inking a deal with Sprint Nextel in November to develop wireless-based products for those multiple system operators’ cable customers. In the deal, which will take effect later this year, cable customers will be able to program their DVRs using cellphones, and even download recorded content from their DVR for playback on the phones. In exchange, the MSOs have agreed to provide video content to Sprint’s TV service.
TV on the Go
A look at the video packages offered by the top wireless carriers
V Cast (Verizon Wireless)
Description: The service runs on the nation’s first 3G wireless broadband multimedia network and features about 300 channels of packaged video clips that run 30 seconds to five minutes and include sports, weather, news and concert videos.
Live TV content: None now, though plans are under way to introduce live video in 30 cities early this year.
Cost: $15 a month; for an additional $1 to $2, customers can access highlights from NBA and NASCAR events. The service also offers music videos and “mobisodes” (one-minute mobile episodes) for 99 cents.
Sprint TV (Sprint Nextel)
Description: Utilizing Sprint’s evolution data optimized broadband network, the service relies on MobiTV, a company that formats video feeds for cellphone delivery and offers video clip highlights. Plans are under way to make available 600 video clips. The company struck an agreement in November that will allow some cable customers to use their cellphones to view content recorded on their digital video recorder set-top boxes.
Live TV content: Yes
Cost: $10 a month for basic Sprint TV service and an additional $10 for Sprint TV Live. Premium channels run between $4 and $10 a month. Customers who use the video service must buy a data plan, which can cost between $10 a month for a basic plan and $25 a month for a multimedia data package.
Description: Uses MobiTV’s service over its EDGE network, which reports data speeds equivalent to dial-up Internet service. In December the company announced plans to offer a 3G-based solution in 16 markets.
Cost: $10 a month for unlimited access to 25 channels. Customers must sign up for a data package, which costs between $5 and $20 a month.
Does not have a video offering available in the U.S. until 2007.
Source: Horizon Media, the companies