Broadcast Mobile TV - Is Profitability Possible?
IDATE, October 2008, Pages: 80
Overview
This study sets out the main mobile TV services, how they work, their strengths, their shortfalls and their potential for development, together with an analysis of the key factors for broadcast mobile TV' s success.
It provides modelling for the operating accounts of players in broadcast mobile TV, shedding light on the variables that influence their profitability.
Key questions
- What lessons can be learnt from initial feedback on the services already launched?
- What uncertainties still surround the broadcast mobile TV business model?
- What reasons explain the poor success of early fee-based mobile TV solutions?
- Are free services the only guarantee for audience success, as in South Korea and Japan?
- Are commercially-oriented capable of stimulating cooperation between the different players?
- What is the ideal ecosystem for ensuring mobile TV' s development?
Methodology
An operational model
The model developed by IDATE' s experts aims to analyse the costs, revenues and operating results of operators setting up a broadcast mobile TV service.
Modelling for operating accounts by type of player Five types of stakeholder-players in a broadcast mobile TV service:
- A terrestrial generalist channel simulcast on mobile, with a wide audience.
- A new "made for mobile" channel broadcast exclusively on the mobile broadcast network.
- A thematic cable or satellite channel simulcast on mobile.
- A premium channel simulcast on mobile.
- Four telecom operators who sell the service and share the national mobile telephony market (with respective market shares of 40%, 30%, 20% and 10%).
The study provides figure-based forecasts for each of these players, over a period of five years starting from the date of service launch.
Two main business models have been defined:
- In the first model, the service is entirely free for end users.
- In the second model, users must sign up for a monthly 5 EUR subscription.
Within these two models, several key assumptions are then exposed to a number of variations in order to study their impact on the operating accounts of the players studied.
Model' s assumptions
- The solution is commercialised in a country with approximately 63 million inhabitants at the date of service launch.
- Network coverage is progressive.
- Broadcasting costs are calculated for outdoor and basic indoor coverage only (no extensive coverage indoors or underground (metro, etc.). They are naturally commensurate with the level of national coverage.
- Revenue is calculated based on the service' s theoretical audience, i.e. where all equipped users (for the free model)/subscribers (for the fee-based model) actually consume the service.
- Any revenue from interactive advertising is not considered.
1. Introduction
1.1. World perspective of broadcast mobile TV services
1.2. Broadcast mobile distribution technologies
Terrestrial mobile broadcast solutions
Hybrid satellite/terrestrial mobile technologies
2. Value chain models
2.1. Fee-based model structured around mobile operators: Germany, Italy, Netherlands, Switzerland and United States
Framework and characteristics of model
Model' s strengths and weaknesses
Anticipated changes and consequences
Model' s impact on the value chain
2.2. Free-to-air model organised around broadcasters: South Korea, Japan
Framework and characteristics of model
Model' s strengths and weaknesses
Anticipated changes and consequences
Model' s impact on the value chain
2.3. Cooperative model: Austria
Framework and characteristics of model
Model' s strengths and weaknesses
Anticipated changes and consequences
Model' s impact on the value chain
3. Eight key points on broadcast mobile TV
3.1. Free solutions and advertising
A very favourable model for developing usage......
3.2. Profitability
......but one which does not guarantee service profitability in the short term
3.3. Basic package
Commercialisation based on a low-cost model
3.4. Regulatory environment
A favourable regulatory environment for market development
3.5. Agreements between mobile operators and broadcasters
3.6. Fixed network and mobile TV
The interest of mobile TV essentially resides in the take-up of fixed network programmes
3.7. Mobile TV and 3G
Broadcast mobile TV needs 3G
Not insignificant role of completing coverage
A return link for interactive services
3.8. Other terrestrial mobile broadcast solutions
Suitable alternatives to DVB-H?
DVB-T
DVB-SH
4. Operation and profitability
4.1. Assumptions
4.2. Operating account of a simulcast generalist channel
With the free model
With the fee-based model
4.3. Operating account of a new mobile channel
With the free model
With the fee-based model
4.4. Operating account of a simulcast thematic channel
4.5. Operating account of a premium channel
4.6. Operating account of mobile operators
With the free model
With the fee-based model
4.7. Conclusion
List of Tables
Table 1 Terrestrial mobile broadcast solutions
Table 2 Hybrid satellite/terrestrial mobile broadcast solutions
Table 3 Comparison of fee-based mobile TV solutions
Table 4 Examples of mobile DVB-H handsets subsidised by 3 Italia
Table 5 Examples of interactive services
Table 6 Providers of Italian mobile operators’ DVB-H solutions
Table 7 Model’s impact on players in the sector
Table 8 Operators of mobile TV solutions
Table 9 Comparison of mobile TV solutions in Japan and South Korea
Table 10 Editors’ investments and advertising receipts from T-DMB in South Korea
Table 11 Model’s impact on players in the sector
Table 12 Schedule for deploying Austria’s DVB-H Mobile TV service
Table 13 Price of the Nokia N77 DVB-H handset in Austria
Table 14 DVB-H mobile TV solutions in Austria
Table 15 Model’s impact on players in the sector
Table 16 Revenue assumptions for a simulcast generalist channel with the free model
Table 17 Cost assumptions for a simulcast generalist channel with the free model
Table 18 Operating account of a simulcast generalist channel with the free model
Table 19 Revenue assumptions for a simulcast generalist channel with the free model without handset subsidies
Table 20 Operating account of a simulcast generalist channel with the free model without handset subsidies
Table 21 Revenue assumptions for a simulcast generalist channel with the free model with slower extension of coverage
Table 22 Cost assumptions for a simulcast generalist channel with the free model with slower extension of coverage
Table 23 Operating account of a simulcast generalist channel with the free model with slower extension of coverage
Table 24 Revenue assumptions for a simulcast generalist channel with the fee-based model
Table 25 Operating account of a simulcast generalist channel with the fee-based model
Table 26 Revenue assumptions for a simulcast generalist channel with the fee-based model without Operator 2
Table 27 Operating account of a simulcast generalist channel with the fee-based model without Operator 2
Table 28 Revenue assumptions for a simulcast generalist channel with the fee-based model with a higher subscription rate
Table 29 Operating account of a simulcast generalist channel with the fee-based model with a higher subscription rate
Table 30 Revenue assumptions for a new mobile channel with the free model
Table 31 Cost assumptions for a new mobile channel with the free model
Table 32 Operating account of a new mobile channel with the free model
Table 33 Operating account of a new mobile channel with the free model without handset subsidies
Table 34 Operating account of a new mobile channel with the free model with slower extension of coverage
Table 35 Revenue assumptions for a new mobile channel with the fee-based model
Table 36 Operating account of a new mobile channel with the fee-based model
Table 37 Operating account of a new mobile channel with the fee-based model without Operator 2
Table 38 Operating account of a new mobile channel with the fee-based model with a higher subscription rate
Table 39 Revenue assumptions for a thematic channel with the fee-based model
Table 40 Cost assumptions for a thematic channel with the fee-based model
Table 41 Operating account of a thematic channel with the fee-based model
Table 42 Revenue assumptions for a thematic channel with the fee-based model commercialised by two operators
Table 43 Operating account of a thematic channel commercialised by two operators with the fee-based model
Table 44 Operating account of a simulcast thematic channel with the fee-based model with a higher subscription rate
Table 45 Revenue assumptions for a premium channel with the fee-based model
Table 46 Cost assumptions for a premium channel with the fee-based model
Table 47 Depreciation of a premium channel’s investment in dedicated devices
Table 48 Operating account of a premium channel with the fee-based model
Table 49 Depreciation of a premium channel’s investment in dedicated terminals in the case where 50% of subscribers are equipped
Table 50 Operating account of a premium channel with the fee-based model with an equal share of users equipped with broadcast cell phones and dedicated devices
Table 51 Service penetration assumptions with the free model
Table 52 Cost assumptions for mobile operators with the free model
Table 53 Operating account of Mobile Operator 1 with the free model
Table 54 Operating account of Mobile Operator 2 with the free model
Table 55 Operating account of Mobile Operator 3 with the free model
Table 56 Operating account of Mobile Operator 4 with the free model
Table 57 Revenue assumptions for mobile operators with the fee-based model
Table 58 Cost assumptions for mobile operators with the fee-based model
Table 59 Operating account of Mobile Operator 1 with the fee-based model
Table 60 Operating account of Mobile Operator 2 with the fee-based model
Table 61 Operating account of Mobile Operator 3 with the fee-based model
Table 62 Operating account of Mobile Operator 4 with the fee-based model
Table 63 Revenue assumptions for mobile operators with the fee-based model with a premium channel
Table 64 Operating account of Mobile Operator 1 with the fee-based model with a premium channel
Table 65 Operating account of Mobile Operator 2 with the fee-based model with a premium channel
Table 66 Operating account of Mobile Operator 3 with the fee-based model with a premium channel
Table 67 Operating account of Mobile Operator 4 with the fee-based model with a premium channel
Table 68 Overview of modelling exercises
List of Figures
Figure 1 World perspective of broadcast mobile TV services, with close-ups on Europe, South Korea & Japan
Figure 2 Comparison between the ARPU of an average customer and a DVB-H customer
Figure 3 Content providers for broadcast mobile TV in Italy
Figure 4 TV audience market shares in Italy in 2007
Figure 5 Broadcast mobile TV value chain in Italy
Figure 6 Changes in 3 Italia’s DVB-H mobile TV solution
Figure 7 Changes in the number of subscribers to the S-DMB and T-DMB mobile TV services in South Korea
Figure 8 Share of cumulative sales for T-DMB receivers in South Korea, by equipment type
Figure 9 Sponsored links on Japan’s terrestrial mobile TV
Figure 10 Business model of the T-DMB service in South Korea
Figure 11 Broadcast mobile TV value chain in Austria
Figure 12 The four applicant projects for the DVB-H licence in Austria
Figure 13 Market shares of Austrian mobile operators in the second half of 2008
Figure 14 Market shares of TV audiences in Austria in 2007
Figure 15 Acceptable rate for an all-inclusive mobile TV service
Broadcast mobile TV
The success of personal mobile television relies on a feebased service that links broadcasters with telecom operators
While the number of effective launches and announced broadcast mobile TV solutions is multiplying, great uncertainty still surrounds the business model and expectations for profitability from this type of service. Partisans of both free and fee-based solutions are putting up their arguments, while each player’s role in the value chain (whether a TV channel or mobile operator, etc.) has yet to be defined.
"With this new report", states Sophie Girieud, its Project Leader, "we are looking to provide all stakeholder-players in the development of broadcast mobile television with a solid base of analysis that uses detailed modelling for the operating accounts of operators choosing to launch such a service.
Our findings lead us to the conclusion that while a basic package costing more than an average 5-6 EUR per month has little chance of attracting enough subscribers to generate revenues that outweigh the operating costs, a free service aimed at drawing a wide audience to fund itself with advertising, will also be unable, in the medium term, to make sufficient profit to ensure service durability”.
- Great uncertainty still surrounds the broadcast mobile TV business model and feedback from services already launched has yet to dispel such uncertainty.
- The fee-based mobile TV solutions launched by mobile operators have, however, failed to achieve the desired success. Their disappointing results can be explained particularly by overly high rates.
- While free terrestrial mobile TV solutions in South Korea and Japan have guaranteed the success of these services; they have still been unable to ensure profitability. Advertising, the sole source of revenue for such services is, for the time being, largely insufficient.
- The mobile TV service model adopted by Austria seems to be inspired by the best of those approaches already implemented to develop a commercially-oriented regulatory framework for stimulating cooperation between the different players (content providers, network operators and content aggregators/service distributors).
- The presence of TV channel editors and mobile operators is essential in establishing a balanced and viable value chain for broadcast mobile TV. Channel editors supply the content and cover the broadcasting costs, while mobile operators distribute the service to end customers and subsidise compatible handsets.
Our new report studies the main models for mobile TV services, how they work, their strengths, their shortfalls and their potential for development. It then sets out the main lessons learnt from these models concerning the key factors for broadcast mobile TV’s success. And lastly, the report provides modelling for the operating accounts of major players in broadcast mobile TV, shedding light on the key variables that influence their profitability.
- 3 Austria
- 3 Italia
- MobaHo!
- Media Broadcast
- Mobilkom Austria
- ORS
- One
- One-Seg
- Swisscom
- TIM
- T-DMB Special Committee
- TU Media
- Vodafone Live Italia
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