Subscriptions for mobile TV services (data or content plans including video/TV services) are on the rise with 3G services delivering most of the subscribers. DTC estimates that mobile TV subscriptions grew 37% in 2008, reaching just shy of 100 million worldwide.
Source: DTC
The majority of these subscribers, more than 95 million, were 3G unicast subscribers, compared with just 3.5 million subscribing to broadcast (as opposed to unicast) mobile TV services. Broadcast services, however, are reaching many more than the 3 million subscribers as most mobile broadcast TV services don’t require a subscription. 3G mobile TV pay services are outselling pay mobile broadcast TV services for a couple of reasons: One is just simple math – there are far more 3G services that offer video than there are mobile broadcast pay TV services. Also, consumers have warmed up to the unicast packages because they are perceived to have more value by providing both on-demand content, as well as cheaper pricing plans and more varied content.
Mobile broadcast subscriptions, conversely, have typically carried high price tags for fairly limited packages of rebroadcast TV channels. Consequently, there has been little traction with new fee-based broadcast services. In the U.S. for instance, there had been high hopes for MediaFlo services launched by both AT&T and Verizon during 2007/2008. High prices, and the lack of a clear value proposition for consumers, however, have left results far shy of expectations, with 2008 subscribers barely reaching 100,000. Pay DVB-H services in Europe haven’t fared a lot better. Only South Korea’s S-DMB service has met with any measurable success with about 1 million subscribers.
While broadcast mobile TV services have floundered as premium subscriptions, they have fared far better under the free, ad-supported model. Indeed, while premium broadcast subscriptions showed little growth in 2008, handsets that include mobile TV tuners that receive free channels grew 46% during the period, rising from 38 million in 2007 to more than 55 million. Japan and South Korea, two of the first regions to offer free mobile TV broadcast services in 2006, made up the vast majority of installed handsets, comprising more than 50 million combined.
The challenge for either model will be achieving profitability. Though 3G TV is racking up subscribers, it is far more expensive and network intensive to offer unicast TV services compared to broadcast, leaving its profitability in doubt. A likely future scenario for this emerging pipeline (already being experimented with some, such as Telecom Italia) will be hybrid models that combine both the network efficiencies of using broadcast for popular high-traffic content, with the on-demand specificity and niche capabilities of unicast services.
