Italos take to tiny TVs

Soccer-mad nation kicks tires on incredible shrinking format

ROME — Cellphone frenzied Italy has emerged as the fastest-growing market for DVB-H, a technology that turns cell phones into mini TV screens that’s set to become the next billion-dollar industry for digital broadcasters.

Beginning later this month, Telecom Italia Mobile will air Serie A professional soccer matches on mobile handsets to lure subscribers; Vodafone Italia is trialing a similar offer to soccer-mad Italians. These two services are so new that they have yet to report subscriber numbers.

Meanwhile 3 Italia , majority owned by Hutchison Whampoa, has a jump on its bigger rivals. It purchased from Rupert Murdoch’s satcaster, Sky Italia, the broadcast rights to every World Cup soccer match earlier this summer, a coup that enabled it to become the first to sign up 111,000 mobile TV subscribers.

By comparison, it took twice as long for that many of South Korea’s famously tech-savvy users to sign up to TU Media’s pioneering mobile TV service.

“Italy is the dominant market for mobile TV broadcast services by quite a wide margin. It’s the only one in Europe where there are commercial services rolled out,” says Adrian Drozd, senior analyst at research firm Datamonitor.

From June 1, 3 Italia offered three channels from pubcaster RAI, a channel with the best of Mediaset, Sky Cinema, Sky Sport, Sky TG 24 and Sky Vivo, plus self-produced channels La3 Live and La3 Sport, teen channel Boing and a music channel. Four pay options are available, from e 3 ($3.85) to $127 for six months.

Watching content on a two-inch screen may not sound like the most appealing viewing experience, but mobile operators and digital broadcasters are enticed by the enormous potential audience.

Others are closely monitoring the Italian market to see whether the tiny screen can pull in big revenues for rights holders.

Datamonitor predicts there will be 69 million subscribers worldwide to mobile TV services by 2009, generating $5.5 billion in subscription revenues.

Drozd believes it is too early to predict the value of the advertising and broadcast rights markets associated with DVB-H.

Short for Digital Video Broadcasting-Handheld, DVB-H is expected to emerge as the dominant technology in Europe and North America (besting Mediaflow, DMB and Japan’s ISDB-T) now that major handset makers such as Nokia are behind it, he says.

Buoyed by the early success, 3 Italia’s CEO Vincenzo Novari believes DVB-H will become a TV viewing force, predicting10 million mobile TV customers in Italy by 2010.

He says mobile TV content will consist of familiar TV programming — sports, music, news and talk shows. However, it will add an interactive component, such as SMS-voting or encouraging users to send in videos, a la YouTube, straight from the handset.

“We will offer customers mobility, Web access and TV in one service,” he adds.

Novari is betting big.

His 3 Italia became Europe’s first mobile operator to own a national digital TV licence after it acquired Canale 7, a mid-sized Italian TV channel, in November for $282.5 million, providing the infrastructure to reach 70% of Italy with a DVB-H signal.

The physical rollout is not the only expense. Company has set aside $64 million to develop programming and buy digital rights to programming from Sky Italia and Silvio Berlusconi’s Mediaset group to rebroadcast in DVB-H.

Telecom Italia Mobile also is buying digital rights from Sky Italia and Mediaset.

“We need popular programming content to compete in this market,” Novari adds.

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