Monday June 16, 2008

Will Mobile TV finally give U.S. broadcasters some return on their digital TV investments?

Ten years hence the dawn of digital terrestrial TV and broadcasters still haven’t figured out how to profit from it. Enter mobile TV, and now broadcasters may see a way to capitalize on it, but will they succeed?

A smattering of U.S. mobile TV services has deployed, all of which require subscription fees and none of which are offered by incumbent over-the-air broadcasters. The number of subscribers appears to be modest at this point but it’s much too early in the market to keep strict score.

But DTC believes that terrestrial broadcasters who offer free, ad-supported content to mobile devices are in a position to finally get a return on the millions of dollars they’ve sunk into building the digital TV transmission infrastructure.

At least their brethren in Korea and Japan are finding a healthy viewership for their ad-supported mobile TV broadcasts. In fact, these free services are running rings around subscriber-based broadcast-based mobile TV offerings. Digital Tech Consulting estimates that 85% of worldwide mobile TV users get free, ad-supported signals. Apparently, people are so accustomed to ads being on the television that they don’t mind them appearing on their mobile device as well.

So far U.S. mobile-telephone service providers Verizon and AT&T (both use the MediaFlo platform) have opted to employ the subscription business model for their over-the-air mobile TV channels. DTC estimates that there will be about 20 million subscribers to pay mobile TV services worldwide in 2008, increasing to more than 40 million by 2012. But considering that 20 million subscribers is only 15% of the overall population of mobile TV viewers, U.S. broadcasters may be wise to stick to their tried and true stationary TV business model of selling advertising for new mobile TV services.

Much of the success of mobile TV in other countries hinges on a large number of public-transport commuters. But America’s automobile society doesn’t foster a large public-transport commuter population and that could seriously limit the number of mobile TV users willing to add another subscription fee to their monthly budgets.