In the UK On Demand Group has cut a deal with Disney to bring streaming top TV shows to the audience of 3 UK. It is the UK cellular operator’s first ever mobile TV subscription service. Disney will offer hundreds of episodes to subscribers on the 3 network in the UK, including ‘Lost’, ‘Desperate Housewives’ and ‘Grey’s Anatomy’.
We always wonder about the economics and expectation of such deals. This means that existing 3 phones, using some kind of downloaded client, will be able to view streams which are still short on quality, and where any given base station radio can supply maybe 6 to 8 individuals streams at any point in time. After that they are usually told the service is not currently available.
This is an announcement which could have been made at any stage during the past 5 years, and quite simply the same obstacle comes up time and time again, suggesting that 3GPP streaming is not the answer for VOD or any other kind of video on the handset.
As companies like 3 go up through the gears in HSDPA versions, they are limited to maybe 8, then perhaps 12 and finally 20 to 25 concurrent TV customers active at any base station, before it begins to take up all the HSDPA bandwidth, render web usage slow and cumbersome and begin to interfere with the voice capability, which after all remains the core revenue and ARPU driver of cellular operators.
This isn’t likely to change until LTE is installed broadly across large areas of the country and even then, data usage is growing so fast, with App Stores, SMS and general internet use, charging perhaps a handful of dollars a month for video, will always seem a flagrant use of spectrum resources. Video services like this one also need significant bandwidth in backhaul to deliver the service to each base station, or they need appliance based distributed storage, or both.
The Disney angle is hardly a surprise from On Demand Group since it came into existence through partnering with an original service from Disney and Sony in movies. This then delivered its first services to Virgin Media and then the whole shebang was acquired by the server partner Seachange, which owns it today. So Disney was never going to have much of a problem allowing its content to go to any On Demand Group customers such as 3.
The big players in streaming TV in the UK are Vodafone and Orange, which both have lots and lots of channels, but after five years or so neither of them have significant video revenues and cannot scale the service to millions, but instead stay at the tens of thousands of subscriber levels. This is because the only way to justify that use of spectrum is to charge quite a lot for it, and in order to do that, the best content is needed. Hence the call to Disney for household favorites.
No-one wants to use a specialist broadcast service such as DVB-H not only because of the up front costs of building a national network, likely to be $200 million, but also because of the cost of supplying DVB-H enabled devices, which are currently very expensive. The same applies to multicast handsets, which might work with systems such as MBMS, the 3GPP cellular multicast standard. Everyone moans ‘Who is going to pay for the handset,’ and in streaming the moan is ‘Who is going to pay for the spectrum,’ which is why the UK is so retrograde with mobile video right now. We predict this retro service will acquire only a handful of 3 customers.
Existing On Demand Group customers include Virgin Media, OTE in Greece and TTNET in Turkey and its German subsidiary works with Telekom Austria, Unity Media and Kabel Deutschland on cable based VoD.