The OMVC released its sponsored white paper, "Assessing the Mobile DTV Opportunity and its Role in the United States Communications Ecosystem," written by Danielle Levitas, an employee of the IDC research firm last week. The white paper makes a supportive case for the launch of OTA mobile broadcasting. The white paper may be a useful resource as broadcasters begin implementing mobile transmission.
In order to help broadcasters better understand the issues, we’ve reprinted portions of the above white paper. This summary covers some of the key sections of the document. The entire report is not included here because of space limitations. However, readers are encouraged to download PDFs of the entire white paper and a separate executive summary . You can also visit the OMVC Web site and the IDC Web site. The views represented below are those of OMVC and IDC.
IDC opinion
IDC believes that ad-supported free over-the-air (OTA) Mobile DTV will be a popular business model and deliver a level of access to video services that will play an important role in educating the market and evangelizing Mobile DTV services. From this starting point, premium services will be added (via broadcasters' spectrum, and potentially Mobile DTV can be coupled with other subscription services) to drive further monetization. Examples of broadcaster' options to monetize mobile video include subscription services to premium channels, subscription or a la carte access to other media, information services, or catch-up TV services, localized and targeted advertising, and even more possibilities when a Mobile DTV device is paired with a two-way communications technology that provides a return channel, such as on demand services and commerce.
Mobile DTV is a complement to other communications technologies. For consumers, it complements both time-shifted content and their home TV sets. We see inclusion of Mobile DTV receivers in devices ranging from netbooks and portable DVD players to in-car entertainment and navigation devices before broad inclusion in mobile phones. It's a technology that allows OEMs to add value to existing and new device categories. It allows carriers and service providers to offer popular, live, and/or local programming without burdening their networks and complements their network-delivered services and capabilities.
Methodology
IDC integrated research from across the consumer research team (including surveys, forecasts, other related insights), interviews done specifically for this white paper, and secondary sources, including information in the public domain and a separate but related study the Open Mobile Video Coalition (OMVC) conducted with Frank N. Magid Associates Inc. Much of the primary research cited in this study comes from several IDC online consumer surveys conducted over the past 24 months for IDC's syndicated services (more detailed methodologies are available upon request) …
Additionally, IDC also conducted a number of interviews with key stakeholders across the ecosystem, including silicon makers and other intellectual property owners, original equipment manufacturers (OEMs of PCs, CEs, mobile phones), broadcasters, broadcasting equipment companies, carriers, and other related service providers, specifically for this research …
Situation overview
Mobile DTV has the potential to extend viewers of broadcast TV by tens of millions of Americans with the advent of mobile ATSC transmission. Consumers that do not currently receive broadcast TV would have a new reason to tune into broadcast TV on their mobile device(s). Mobile consumer electronics are a diverse group of products — portable computers, in-car infotainment/entertainment systems, media players, navigation devices, mobile phones — and most of these devices can deliver additional value to customers by integrating Mobile DTV. Shipments for all of these products reached 156 million units in 2009 and are forecast to grow to 230 million units in 2013 — and this doesn't include new device categories that have yet to ship, like Internet tablet–type devices …
Mobile video today
When looking across the mobile video/TV market, we see that consumers have shown a strong appetite for portable video ...
The one area where the use of commercial video services has been more modest is via the mobile phone, where mobile operator on-deck services typically cost $10–14 per month. Mobile phones represent an enormous market, with 180 million sold each year in the United States and more than 1 billion sold globally. These devices are increasingly capable and have larger and larger screens. This isn't to say that consumers do not want video on mobile devices such as phone, but the content selection, price points, availability, and awareness levels of these services have yet to be delivered. Additionally, the cost of providing video broadcasts over the cell networks — even 3G and 4G networks — is prohibitive because the unicast nature of these networks was not designed to serve broadcast-sized audiences simultaneously …
IDC's past two annual mobile entertainment surveys found that 2.5–5% of mobile phone owners view TV/video on their phone regularly or viewed TV/video at least once in the three prior months. And in IDC's most recent ConsumerScape 360° survey, fielded in November and December 2009, only 2% of 7,002 U.S. respondents reported watching premium content/TV on their phones within the prior month. Even if we assume the data to be underreported, it clearly is in its early stages …
In IDC's surveys on mobile video/TV use, the split between gender is relatively close, but there is a clear correlation between age and mobile video/TV usage. In our surveys, we consistently see the under 45 segment using these features by a factor of 2:1 compared with the next oldest group, and the older group's usage appears to fall by 50% with each older age group. In looking at our various surveys, we found that content viewed on mobile phones is relatively consistent, with TV shows, sports, and news being the most popular.
Consumer behavior, interest
IDC has been conducting surveys for a number of years, querying consumers about their use of video across various devices. In our 2009 U.S. Video Survey, 90% of Internet users reported using Web-based video services within the prior three-month period and one 1 out of 2 respondents reported that they have watched TV content online, with a nearly identical percentage stating they have watched news online. It's also important to note that 1 out of 5 people have watched sports programming and educational videos online. These types of content are more often than not delivered via broadcast networks.
In late 2009, Frank N. Magid Associates conducted an online survey of mobile device owners on behalf of the OMVC. One of the key findings in the study is that nearly half of the respondents reported strong or moderate interest in viewing live programming on their portable electronics device.
Interest among men and women is about the same, which is not unexpected. The differences across the age groups do stand out, however. Given the fact that younger consumers tend to watch more time-shifted content — especially Internet video via the PC (IDC data supports this as well) — one may assume that younger audiences are watching less live programming than older audiences. However, younger consumers are more likely to use multiple devices and are more likely to watch to consumer media and specifically video of various formats on smaller screens …
Benefits of over-the-air broadcasts
The U.S. broadcasting industry efficiently provides essential emergency warnings to nearly 100% of the public, through direct news and weather broadcasts and through the Emergency Alert System (EAS). The EAS is a simple cascade system that allows for nearly immediate relays of emergency messages across the country. As participants in EAS, broadcast stations monitor emergency message signals from Primary Entry Point (PEP) broadcast stations and then automatically generate the EAS messages for broadcast. The broadcast industry is now prepared to enhance this role and increase the effectiveness of its emergency messaging capabilities by delivering these messages in its Mobile DTV broadcasts. This is a unique role and capability, given that emergencies can drive an overload on other network types, and one that is greatly enhanced by its integration into Mobile DTV broadcasts …
The top six types of content that people have reported the highest interest in viewing live via their mobile device are those that are typically delivered via local broadcasters and broadcast networks… Furthermore, the level of interest was very high for each of those six content types, as 54–76% of respondents reported wanting to view those program types live on their mobile device …
(Editor’s note: See PDF for graphs.)
The role of OMBC and mobile DTV rollouts
… The cost of adding the transmission technology (Mobile DTV exciter and signal encoding) to existing infrastructure and towers that are already broadcasting at full power is approximately $100,000 per station today. As of March 9, 2010, IDC estimates that 35 stations are already up and running with Mobile DTV broadcasts, and many more rollouts are scheduled throughout 2010 and beyond. We estimate that upwards of 150 stations will be on air by the end of this year.
Testing done by some broadcasters that are already on the air has proven that the signal is robust, in terms of both coverage and reception for the given broadcaster’s coverage area. This includes the ability to receive the signal in vehicles that are moving throughout cities (an example being WRAL's integration of Mobile DTV into Raleigh’s buses) and in vehicles moving at fast highways speeds (the technology was designed to support vehicles moving well over 100 mph).
Outside of the OMVC, discussions are under way for the formation of at least two broadcaster groups that are working to determine how best to develop Mobile DTV and bring multiple broadcasters or networks together to engage more effectively and efficiently with partners, like cable networks, carriers, advertisers, and pay TV providers. Such initiatives would help facilitate development of the market and mitigate the challenges associated with the fact that there are nearly 1,800 broadcasters.
Future outlook
In discussions with U.S. TV broadcasters, IDC has found that they believe that the additional viewing opportunities on more devices to reach more people and to reach many of the same people more frequently more than offsets the $100,000 investment to broadcast Mobile DTV. Broadcasters acknowledge that consumer awareness and acceptance of Mobile DTV will depend, in part, on the wide availability of Mobile DTV broadcasts and receiving devices. Mobile DTV receivers are being built into various CE devices (LG being a strong proponent) as well as PC dongles and transceivers like Valups WiFi Mobile DTV Receiver product that can be used with many devices such as notebooks, netbooks, and smartphones that have WiFi …
… While there is a lot of buzz around 4G technologies like WiMAX and LTE, 3G is still being built out and will be the dominant mobile broadband technology for years to come. And while there are key programming types that consumers want to see live, on-demand services will develop nicely as next-generation mobile broadband is rolled out over the next decade. For popular broadcast programming such as the top shows on network TV, major live news events, live sporting events, etc., mobile broadcasts are more efficient in delivering that content live and to hundreds of thousands or millions at a time.
Furthermore, the current options for consumers that are interested in viewing mobile TV programming on various portable electronics are to stream what is available via IP on a device like a PC or subscribe to a mobile video service like V CAST or FLO TV, which require monthly subscription fees. Neither of these distribution channels generally transmits live programming or live local events due to a combination of network capacity challenges for carrier networks and distribution rights to programming via services like FLO TV…
The mobile DTV ecosystem
For the nation's television broadcasters, mobile DTV is a way to extend their reach and relevance to additional screens by delivering value to more people and places across their community and to drive incremental revenue to station owners and/or stockholders.
IDC believes free OTA broadcasts will be popular in the initial launch years. Meanwhile, Mobile DTV broadcasts, when coupled with broad adoption of Mobile DTV receiver devices, mean expanded audiences (which mean more eyeballs) and more time with a broadcaster's core audience, both of which translate to stronger ad revenue. Mobile DTV represents broadcasters' opportunity to participate in the development of multiple screen experiences and opens the door to more people and screens having access to highly popular content.
IDC expects the majority of Mobile DTV rollouts to be mobile simulcasts of the programming being broadcast via ATSC to TVs, especially within the next few years ...
Advertisers
For advertisers, mobile DTV means more viewers of their ads and the ability to layer in localization, which should translate into greater relevance for the advertisers and improved CPMs (cost per thousand impressions) for broadcasters. It is important for advertisers to note that in the OMVC/Magid study from late 2009, 18- to 29-year-olds were the most interested in Mobile DTV, with 65% saying that it's very or somewhat appealing, followed by 50% of 30- to 39-year-olds ...
Service providers and cable networks
The technology becomes the most useful and compelling when coupled with a persistent two-way connection or, at a minimum, a return channel to transmit data about viewership, location, programming preferences, ad impressions, etc.
While the rollout of 4G technologies has begun, starting with WiMAX from CLEAR and then LTE from Verizon in 2010, these technologies will take years to cover the country …
… It needs to be noted that Sprint is participating in the Washington, D.C., showcase by offering the Samsung Moment phone. And we portend that if the carrier sees strong use of Mobile DTV on the Samsung Moment, increased customer satisfaction, and/or reduced churn, it will continue to support Mobile DTV products and even become a proponent of the technology.
IDC believes that in the long term, it is in the operators' self-interest to use this technology to complement their current and core business model — fee-based subscription services. We do not expect large carriers to support Mobile DTV in the short term due to the additional cost of integrating a Mobile DTV receiver, which the carrier typically subsidizes a large portion of; analysis that needs to be done to determine how Mobile DTV complements or challenges other on-deck revenue generating TV/video services; and because, depending on how Mobile DTV is integrated into a carrier offering, mobile operators may need to set up deals with many broadcasters/broadcasting companies. But given the fact that network capacity is precious and arguably better suited to more unicast, on-demand, and data/Internet services, we foresee some carriers will come to see Mobile DTV as doing something complementary for their business …
Challenges/opportunities
In the research IDC has done, including the many interviews with stakeholders throughout the ecosystem, we believe there are a few key challenges to Mobile DTV's rollout and long-term success.
First, the greatest challenge for Mobile DTV is for broadcasters to roll out Mobile DTV broadcasts in a reasonable time frame to attract broad participation from OEMs and retailers. This is important for their own (business) interests, and it is also critical to driving a broad array of OEMs to bring Mobile DTV products to market …
The second critical element that needs to be effectively executed on is audience measurement. It needs to be noted that the Mobile DTV standard and broadcast equipment are designed to capture viewership and ad impressions. The data captured on the device can be relayed intermittently (i.e., via a WiFi connection or through another Internet-connected device like the PC) or in real time (when designed into a device with a two-way/3G radio) …
The third challenge is the role of carriers (or other service providers) and the fact that mobile phones are the single largest number of portable CE shipments each year and represent an enormous market with healthy annual device replacement rates. As noted in this paper, device costs will decline steadily over the next few years, and companies like Samsung and LG that make chips and phones can help mitigate these costs …
The fourth challenge is unique in that it is not about the ecosystem players; rather, it is about those they serve — consumers. Consumer behavior and media consumption continue to evolve and slowly shift away from live TV – on the TV. While the majority of TV we watch as a nation is live and on the primary screen, we are increasingly time-shifting our viewing either via DVRs, VOD, or online streaming or purchases. That said, the increasing importance of mobile video across the many portable CE devices we own opens the door to Mobile DTV as a feature that complements streamed or on-demand services for some program types, at certain times of the day, and/or based on location and network access availability. We estimate that the additional bill of materials for including these receivers will initially add between $8 and $15, with costs falling quickly as integration allows for a single semiconductor chip solution and as volumes rise.
The last key challenge we call out is consumer education. Clearly, there is an enormous need for consistent messaging and promotion. Consumers will need to know the state of available broadcasts in their local market (or other markets they regularly travel to), the device types they can use to view Mobile DTV, and if there are fees for various types of Mobile DTV services.
Conclusion
The era of mobile video services is arriving, and live mobile TV is a core component of a compelling video service offering for consumers. Mobile DTV broadcasts have begun for an estimated 35 stations today, and approximately 150 stations are expected to be on air by the end of 2010. Within three years, it is feasible that several hundred stations will broadcast Mobile DTV, reaching upwards of 100 markets …
It should not be a question of broadcast or broadband. Both are critical communications technologies that serve a distinct purpose and work better when they are coupled together. Mobile DTV is truly a complementary service to streamed and on-demand services because it can efficiently deliver services and live content that are hugely popular and/or highly localized to consumers, while two-way networks can be integrated onto the same device to offer more personalized experiences and content. Broadcast TV has been a critical source of continuous news and information not just as emergencies happen, but through their duration.
Broadcast TV started with news and sports, and since that time, programmers and creators learned how to leverage the medium and its evolving technology. Now, 70 years later, much of the same content will drive Mobile DTV and encourage the development of new formats and services while leveraging broadcast for the value and public benefit it has historically been great at — delivering live local and popular media.
Here's a complete PDF of this white paper, which includes multiple graphics.
Copyright IDC, 2010.
