Mobile TV has big mkt potential

By Kim So-young

SEOUL - Global mobile phone operators hope mobile TV will be the next big money spinner, but if South Korea is anything to go by, their optimism may be misplaced.

As mobile call rates sag in established markets, operators in Asia, Europe and the United States are gearing up for mobile TV broadcasting, a market that could be worth $8.4 billion by 2010, according to London-based Informa Telecoms & Media.

Despite industry excitement, analysts say carriers may end up with only a fraction of this potentially huge pie, while content providers grab the lion's share.

"I think content providers and broadcasters may be the two parties that will benefit from mobile broadcasting," said Eleana Liew, Gartner's telecoms analyst in Singapore.

"You don't need mobile operators' networks to broadcast. The value that operators give to customers is very low."

Unlike existing TV services for mobile phones or video downloads provided over fast 3G networks, live mobile TV technologies like Korea's DMB, Europe's DVB-H and Qualcomm Inc.'s MediaFlo all bypass mobile networks.

The new system allows an unlimited number of users to watch TV at the same time, which is much cheaper than on-demand video.

How the returns are split may be key to whether this will become a new revenue stream for operators or yet another service that largely benefits third parties.

Ringtones -- music or sounds used on incoming calls -- generated $5 billion in 2005 worldwide, according to Informa Telecoms & Media, but the music industry took the lion's share.

PROFITS OR PUBLIC SERVICE?

Ten months after flat-rate satellite digital media broadcasting (DMB) for mobile phones started in South Korea, it accounts for less than 0.2 percent of total revenue at the country's top mobile operator SK Telecom Co.

Content providers and a TV network vendor scoop up 75 percent of SK's revenue generated from its DMB service.

Mobile operators say they had no choice but to agree to the split because they need subscribers in a near-saturated market.

"For telecoms operators, mobile TV is a public service rather than an income generator," said Stan Jung, an analyst at Woori Investment & Securities.

So far this has not discouraged other countries from starting the service. Japan started real-time broadcasting for cellphones on April 1, while Italy and the United States are expected to follow suit later this year.

"We really hope content makers would be modest with their pricing as mobile TV represents a growth opportunity also for their industry," said Juha Ronakainen, director at Nokia's multimedia unit.

MIXED FORTUNES

While operators search for business models that work in their favour, handset makers are upbeat because subscribers will need new phones to watch TV.

The phones used for the new services, which typically cost $500 to $700, are expected to expand the $115 billion global handset industry's revenue by $5 billion to $7 billion annually, Prudential Financial estimates.

Some content providers also stand to make easy money just by repackaging existing content for mobile media.

"In many cases, we're talking about taking a television show and telescoping it into what's called a mobisode ... The cost of doing that is very marginal and the revenue is almost all incremental," Tom Freston, CEO of Viacom Inc. said at last month's Reuters Global Technology, Media and Telecoms Summit in New York. Viacom runs TV networks including MTV.

Though the service has been slow to catch on, expectations for the next few years are huge. One out of every 100 people now watches mobile TV in Korea, but the government predicts one-third of its 48 million population will sign up by 2010.

Gartner forecasts at least 10 percent of global mobile phone users will subscribe to TV service by 2009, though it will depend on pricing and regulations in various countries.

Mobile phone TV also faces competition from Apple Computer Inc.'s video iPod and Japanese game maker Nintendo Co. Ltd., which is to begin showing TV programmes over its popular DS portable game console this year.

The services may be adopted more slowly in the United States because most Americans drive and have less downtime outside of their homes than those in countries more reliant on mass transit.

"Japan and Korea have already shown people will buy profitable TV services. I just don't know that a similar dynamic will take place in the rest of the world," said Michael King, a U.S. analyst for Gartner.

Despite headaches over revenue splits for mobile firms, some South Korean customers are happy with the service.

Lee Tae-suk bought a $700 phone with a TV receiver to watch Manchester United midfielder Park Ji-sung, the first Korean soccer player to appear in the English Premier League.

"I didn't want to distract my children from studying by watching a soccer game at night," said Lee, a construction firm manager in Seoul. "Now I can watch his games without concerns."