Videonet - news, blogs and analysis for the pay-tv industry

• 11-Feb-2010 by John Moulding
• Swapping catch-up TV for apps
• Convergence TV

The evidence now points towards mobile video becoming a viable revenue stream for mobile operators, with on-demand video increasingly important for services when some form of payment – whether bundled subscriptions or pay per view – is taken. Mobile VOD and especially television on-demand are likely to be important themes at Mobile World Congress next week.

Pyramid Research predicted last year that the global number of users paying for mobile video services direct to their handset would grow five-fold between 2008 and 2014, surpassing 534 million and equating to 8.5% of all mobile subscriptions. The main revenue opportunities are paid video clips, music videos, TV episodes, TV programming and movies.  

According to Dan Locke, Senior Analyst at Pyramid Research, the Apple iPhone will continue to be a major driver for mobile video consumption in 2010, together with the growth of 3G services. And he also believes that phones with video projectors will also help by allowing consumers to display mobile video on larger screens. This ‘pico projector’ technology was on display again at CES last month.

“On demand will drive consumption,” predicts Locke. “Consumers increasingly want to access content anywhere, anytime and on any device so the more that mobile mimics what people use on traditional pay and free TV the more it will improve.”

In November, 3UK launched what is thought to be the first ever mobile TV subscription VOD offering, giving subscribers access to entire episodes of hit TV shows in a demonstration of what Locke means. This SVOD service is called ‘TV onDemand’ (and is managed and powered by Mobix Interactive, now part of On Demand Group). 3UK says it wants to bring one of the most popular types of Internet service to its mobile customers.

Mobix Interactive views the introduction of subscription on-demand as a new era in the growth of mobile video, pointing to improved penetration and viewing rates using this model. This is exactly the pattern that has been seen in the static television market. This trend will only be accelerated by the development of ‘TV Everywhere’ type multi-platform services by Pay TV operators, most of whom now recognise mobile as another opportunity to extend their reach in addition to the PC.

Brightcove, which helps a long list of major content owners publish video online, has just announced its TV Everywhere Solution Pack to support authenticated TV Everywhere compatible catch-up TV services and this is designed to enable a full three-screen strategy including mobile.

Three-screens

New entrants to the Pay TV market view mobile and web as part of a unified television package from day one. Richard Griffiths, Director of TV & Entertainment at Irish telecom operator Ericom, which plans to roll out IPTV, says three-screens is very much part of launching a new entertainment service today.

“I think anyone in the industry accepts the right thing to do is to put in place a three-screen strategy, which could mean any number of screens,” he notes. “For me that means we empower our customers to watch whatever they want on the device they want and, of course, that means whenever they want to watch it. They should not be hamstrung by platforms or technology considerations. As a service provider we have to sort all that out for them.”

Streaming and linear broadcast events are an important part of the mobile video mix, but 3G networks, with a wide choice of video handsets, can offer on-demand as a service differentiator. Network speeds will be an increasingly influential factor in what is possible in the mobile video market and the GSMA announced this week that mobile broadband is set to account for 52 per cent of all operator investment in mobile infrastructure globally. Multimedia is the carrot that everyone is chasing.

“The forecasted investment in mobile broadband technologies reflects the importance the mobile industry places on enabling consumers to access any type of content on the move – whatever they want, whenever they want, wherever they want,” declares Michael O’Hara, Chief Marketing Officer at the GSMA. “HSPA and HSPA+ have become the dominant global Mobile Broadband technologies and are set to benefit from a significant proportion of this CAPEX investment, resulting in faster and more reliable mobile broadband services being available to more subscribers around the world by the end of this year.”

mobilkom Austria, part of the Telekom Austria Group, was the first European mobile operator to deploy HSPA+ technology and is offering peak download speeds up to 21Mbps. These speeds have also been proved over 12 months of commercial operation by Australian operator Telstra on its HSPA+ network. This kind of bandwidth is clearly enough to cope with consumer demands for HD quality on mobile devices.

Given the increasing convergence of television, broadband and mobile experiences, and the way that applications and services traditionally associated with one industry are penetrating all screens, Mobile World Congress 2010 will also provide an insight into what may be coming next to the television. Given that broadcasters and TV service providers need to remain relevant to an increasingly demanding youth demographic, it is worth nothing that, according to the digital marketing intelligence firm comScore, the average mobile media user is 33 years old and the average age of an unlimited data plan subscriber is 35. What happens in mobile matters beyond video.

Apps lessons

Right now one of the hottest topics is applications. Applications have immediate relevance for TV; they are clearly part of the Connected TV business model. Research group Futuresource Consulting said in January that it “Expects applications to become a key feature of Connected TVs and Blu-ray players, primarily centred upon familiar applications (sport results or weather) and brands that require very little stretching to accommodate the positional shift, like YouTube.

As with most TV business models, applications will probably be a mixture of free and paid-for opportunities. In the mobile market, more than 85% of app store downloads are currently free to users, according to Futuresource, and the company expects that figure to remain stable during the next few years. Patrik Pfandler, Senior Market Analyst at the company adds, “Despite this glut of free content, the market will still experience vigorous consumer spending, and the paid-for market has already developed beyond the established gaming segment.”

In fact, Futuresource predicts global revenues of $4.6 billion for mobile applications this year, rising to nearly $15 billion in 2013, including payments for direct pay-per-download and indirect value-add services like in-app payments and subscriptions. These figures are directly attributable to app stores and do not include the established Java mobile gaming market (worth $4 billion last year). A Futuresource report, ‘Mobile Applications Market Report’, predicts that 6.6 billion apps will be downloaded from app stores this year, growing to over 16 billion in 2013.

The UK’s most popular application for iPhones (according to comScore) is the Carling beer glass (you can pour yourself a beer) and that could be hard to replicate on a widescreen TV, although perhaps the beer barrel is coming to our living rooms soon. The potential for marketers to exploit the television environment for marketing is clear. But other important lessons can be drawn from the mobile apps experience, including the importance of search and discovery.

“This will be critical to the success or failure of any app, particularly as application numbers increase exponentially and developers look to gain competitive exposure,” says Pfandler. Talking about the mobile environment, he says word-of-mouth and viral campaigns are the key methods of directing users towards particular apps and app stores, though smartphone users are also browsing apps charts, responding to mobile ads and ads embedded within their existing apps.

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