Mobile TV: where's the money?

Ovum releases latest analysis into new media

For immediate release, 17 October 2006. Ovum, the analyst and consulting company, today releases its latest research round-up on mobile TV. Key issues under the spotlight are the role of advertising in mobile TV and the cost implications of deploying a DVB-H mobile broadcast network.

Mobile TV is seen as having good potential because it is a service that should have mass appeal across the whole customer base, unlike many other content services such as games, which only appeal to around 20% of users. There are some promising if not spectacular results from commercial mobile TV services: Orange France has reported 335,000 subscribers and Vodafone UK 200,000.

Although consumers say in trials that they are willing to pay for services, this should be treated with caution. For Ovum, it should be seen more as an expression that they see value in mobile TV, rather than hard proof that they will pay up in a commercial setting. "How much users are willing to pay is a make or break question," says Eden Zoller, Principal Analyst with Ovum's Consumer Practice. "If the answer is not much or nothing, then service providers will need to consider advertising-supported models."

Operators in the US have adopted this approach, but their European counterparts are far more cautious. From an advertiser's perspective, mobile TV is appealing but unproven. "Mobile TV is an attractive medium in terms of the targeting opportunities and reaching audiences that have fallen away from traditional TV," observed Zoller. "The flip side is that audiences - and precious impressions - are still small and impossible to guarantee."

Mobile TV also presents some significant technical challenges: cellular networks are not designed to deliver the same content simultaneously to a large number of mobile users. In contrast, a broadcast solution is one to many (i.e. multicast), which is a more efficient mechanism for the delivery of mass-market popular content, especially live content. This translates into a better utilisation of network resources and lower cost of delivery per user.

"Operators that are pushing mass-market, rich entertainment services will eventually need to consider a mobile broadcast solution, but the business case for a dedicated broadcast network for mobile TV is hard to stack up," says Vincent Poulbere, Senior Analyst in Ovum's Consumer Practice.

In a business case analysis for the deployment of a DVB-H mobile broadcast network in the preferred UHF spectrum, Ovum estimates that the cost of deployment in the UK would be €140 million. This is taking into account core service requirements which include, among other things, good indoor and wide-area coverage, and 25 channels including some audio.

To achieve a return on investment in around three years, a mobile broadcast service provider in the UK would need to ramp up a customer base of 1.7 million subscribers, each generating revenues of €10 per month. "This will be very hard to realise if several mobile broadcast networks are competing in the market and considering that user willingness to pay is still uncertain," observes Poulbere. "This once again underscores the importance of revenues beyond premium content, namely from advertising and value-added services such as interactive applications," concludes Zoller.

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For further information

EMEA

Claire Booty
Tel: +44 (0) 20 7551 9081
Email: claire.booty@ovum.com

Asia-Pacific

Tanisha Kuckreja
Tel: +61 3 9601 6723
Email: tanisha.kuckreja@ovum.com

North America

Sara Kaufman
Tel: +1 617-722-4602
Email: sara.kaufman@ovum.com