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Progress on Point
Release 15.11 July 2008 Periodic Commentaries on the Policy Debate
A Primer On the US Mobile Television Market
by Joseph S. Kraemer, Ph. D.
I. INTRODUCTION
The title of this paper identifies it as a primer, that is, a document that sets forththe basic state and potential for mobile television as of mid-2008.
The objective is toeducate the reader as to the environment and the opportunity for mobile video. Forthose not familiar with the jargon of mobile television, at the rear this paper contains aglossary of terms and acronyms.Mobile television involves the transmission of video content to, and reception by,mobile/ handheld devices such as TV-capable cellular phones, vehicle-mounted TVsystems, laptop computers, and/or handheld video players. The content may betraditional TV programming, traditional programming re-formatted for small screens,and/or new formats such as user-generated content.
Most importantly, mobile digital television is a logical extension of the digitally-driven development of television from passive entertainment to an interactive, highvalue, versatile medium (see Exhibit 1).
Each stage builds upon the set of earlierstages. “Personal television” adds functionality and value to “web TV” which did thesame to “digital television” which, in turn, did the same to “analog broadcast television.”The development process is additive and cumulative. Although critically important,mobile television is just one aspect of the evolving “personal television” stage.The market for mobile video is forecasted to explode over the next four or fiveyears. The primary factors that are contributing to this are:
*
Joseph S. Kraemer, Ph.D. is an Adjunct Fellow at The Progress & Freedom Foundation and a Directorat Law and Economics Consulting Group. He has worked with, and served as counselor to, seniormanagement at communications, media, and high-tech companies in Asia, Europe, and the Americasand is the author of numerous publications on communications issues. The views expressed in thisreport are his own, and are not necessarily the views of the PFF board, fellows or staff.
1
This paper expands upon certain aspects of another paper: “Study of the Impact of Multiple Systems forMobile/Handheld Digital Television,” that was co-authored with Dr. Richard Ducey and Dr. Mark Fratrik.
2
Mobile television differs from ordinary over-the-air television. The current digital standard for U.S. over-the-air broadcasts was engineered to deliver a digital signal to fixed locations. A proposed mobilestandard will be designed for broadcasters to transmit to mobile devices moving up to vehicular speed.
3
“Television” in this context refers to video carried over all local distribution platforms (e.g., over-the-air,cable, microwave, telco, and satellite).
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Progress on Point 15.11 Page 2
1.
The expanding use of cellular telephones, laptops, and other mobile /handheld platforms as entertainment devices
used to view bothprofessionally created content (e.g., movies, TV programs) and user-generated content (e.g., YouTube). This phenomenon is especiallyprevalent among population segments under 35 years of age, ademographic of special interest to many advertisers.
2.
The increasing availability of spectrum
to be used for mobile video.Examples include: (a) the former television channel 55 being used byQualcomm’s MediaFLO service for mobile television; (b) the potential useby Sprint and Clearwire of spectrum in the 2 GHz range for mobile video;and (c) the expected near-term development of a mobile standard that willfacilitate traditional over-the-air broadcasters targeting mobile receivers fordigital broadcasts as of late 2009.3.
The willingness of mobile device manufacturers to incorporate videoreceive functionality into their equipment
(e.g., laptops, cellularphones). The incentives for manufacturers are: (a) increased prices due toexpanded functionality; and (b) the potential for consumers to pay toupgrade their devices in order to acquire the new functionality.
Exhibit 1:30 Years of Change and Challenge
Analog Broadcast Television
Centralized; passive; limited channels; single location viewing;limitedvariety of content; emergence of subscription channels
Digital Television
Builds on digital architecture; TV set as display device; high resolution;optional multicasting
“Web TV”
Cross referral to web sites with video content; TV set or computer asplayer; interactivity; tailored advertising
Personal Television
Video available on demand with display across multiple devices andlocations (“mobile television”); tailored to the individual; user-generatedcontent; transactions-enabled (“T-Commerce”)
Migration Path1980 -2010
Year2010Year1980
Analog Broadcast Television
Centralized; passive; limited channels; single location viewing;limitedvariety of content; emergence of subscription channels
Digital Television
Builds on digital architecture; TV set as display device; high resolution;optional multicasting
“Web TV”
Cross referral to web sites with video content; TV set or computer asplayer; interactivity; tailored advertising
Personal Television
Video available on demand with display across multiple devices andlocations (“mobile television”); tailored to the individual; user-generatedcontent; transactions-enabled (“T-Commerce”)
Migration Path1980 -2010
Year2010Year1980
4
For a summary of relevant trends, see Deloitte’s “The State of Media Democracy,” based on anOctober 2007 survey.
Page 3 Progress on Point 15.11
With respect to a mobile television business model, two major revenue sourcesare in trial: (1) subscription fee-based service (e.g., Verizon’s V-Cast service); and (2)an advertising-based revenue model in which the video is “free” to the audience butpaid for by advertisers, depending on the size and/or demographics of the audience. Ingeneral, cellular network operators are more comfortable with, and emphasize, thesubscription model. On the other hand, traditional television broadcasters rely on theadvertising model. Note that the models are not mutually exclusive but could becombined as do cable television system operators.Mobile advertising delivers its messages over devices, such as cellular phones.Mobile advertising is projected to grow at the highest growth rate (41%) in the 2006-2010 period of any media category
(although off a small base). Other forecasts for thegrowth of mobile advertising are even more optimistic. IDG has published a forecastassigning an annual compounded growth rate of over 100% through 2012.
Exhibit 2shows projected mobile advertising spend based on eMarketer’s review of trends andthird party forecasts. An analysis of these trends shows: (1) a rapid increase is expectedin mobile ad spend; (2) mobile is a key focus area for advertisers and their agents; and(3) mobile video is a key component in the overall growth of mobile advertising.
Exhibit 2:Mobile Advertising Spending
$Millions
Source: eMarketer
$421$903$1,602$2,395$3,415$4,7582006(a) 2007(a) 2008(e) 2009(e) 2010(e) 2011(e)
$Millions
Source: eMarketer
$421$903$1,602$2,395$3,415$4,7582006(a) 2007(a) 2008(e) 2009(e) 2010(e) 2011(e)
5
IBM Global Business Services, “The End of Advertising As We Know It” (2007), Figure 1, p. 5.
6
“Mobile Advertising Prepares for Take-Off,”
InfoWorld
(September 11, 2007).
7
Traditional television broadcasters have extensive experience selling advertising. Broadcasters couldsell and deliver multi-platform advertising programs (on air, web sites, and mobile) that would enhancethe value broadcasters deliver to advertisers, as well as communicate that broadcast television cancombine elements of both new and old media.
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