O'seas faster on uptake with next- gen devices and networks

Despite the preoccupation with “mobisodes” among some American TV networks right now, only about 1% of the more than 200 million cell-phone users in the United States subscribe to mobile video services. With the most popular services –such as Verizon’s Vcast and MobiTV — charging $10 to $15 a month, that gives the nascent segment annual revenue in the neighborhood of only about $300 million.

But that’s nothing compared with the potential almost everyone sees in the U.S. mobile video market, which is expected to become a billion-dollar — if not multibillion-dollar — business before the decade is over. Exactly how the business will get there and what will motivate people to spend that kind of money makes the specific path the industry will take to the promised land less than clear.

Drew Hull, research director of mobile content for the NPD Group, says the main obstacles to growth are standards, price points and content.

New standards and technologies such as HSDPA, Qualcomm’s MediaFlo and Crown Castle’s Modeo will improve the quality of the mobile video experience, but they also will require carriers to invest time and money in expensive new networks. Meanwhile, consumers will have to buy more advanced phones.

Existing mobile video services also are relatively expensive when compared to other entertainment services, and content providers still have to figure out exactly what kind of programming people want to watch on their phones.

Hull says the market and technology is still very much in the trial phase in the U.S. and in Europe. Asia, meanwhile, has become the largest and most advanced market for mobile video as millions of phone users have a full gamut of streaming and downloadable video content to choose from.

China is thought to have about 400 million mobile phone subscribers, more than twice the number in the U.S.

Japan, South Korea and Indonesia have 171 million subs between them. The Yankee Group estimates mobile video will generate $1.3 billion in the Asia-Pacific region in 2006, growing to more than $3 billion by 2009.

Asians also are using the advanced features on their phones a lot more frequently. In 2005, 42% of Japanese and 27% of Chinese and South Korean phone users downloaded or sent pictures photos or videos. Only 12% did so in the U.S. and 18% in Western Europe.

Hull says part of the reason international markets are developing faster than in the U.S. is that it’s cheaper and easier in most countries to access high-speed networks with phones than it is to buy a computer with broadband Internet access.

When taken as a whole, Europe is right behind Asia in size — with Russia, Germany, Italy, France, Spain and the U.K. totaling about 390 million mobile phone subscribers in 2005.

While Europe has been an innovator in networks and things like text messaging, the mobile video market there remains in roughly the same stage as the U.S., with exponential growth forecast for the next five years, Hull says. The Yankee Group forecasts the Euro market could top the Asian-Pacific mark and close in on the $5 billion mark by 2009.

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