The Pearl initiative, which we said in April would be the first nationwide US mobile TV network using the ATSC M/H broadcast protocol, says that it now has firm plans for its market launch during 2011. It will launch under the three letter acronym of MCV, which stands for Mobile Content Venture, and reach 40% of the US population during 2011.
It says that it will offer at least two ad supported channels in what are some of the biggest markets in the US including New York, LA, Chicago, Philadelphia, San Francisco, Dallas, Washinton DC, Atlanta, Houston, Detroit, Tampa, Phoenix, Minneapolis, Orlando, Portland, Cincinnati, Greenville, West Palm Beach, Birmingham and Knoxville. After that it will grow into more territories and offer more channels, it said.
At Faultline we don’t think that it will be the only national network. A comment made back in October by US broadcaster Sinclair Broadcast Group, one of the biggest independent broadcasting groups in the US, and an affiliate of both Fox and ABC, said that by the end of 2011 there will be up to 500 mobile TV stations reaching at least 65% of the US population.
That’s fighting talk from a company not currently a member of MCV and not aware at that point of MCV’s detailed plans. Either Sinclair plans to join this consortium or at least two groupings will jockey for position as the dominant national mobile broadcast network.
In the US there are four broadcast networks which consider themselves national and which attract many affiliates to broadcast the same content outside of the station owned territories and these are NBC, CBS, ABC and Fox.
MCV already embraces two of these in Fox and NBC and the rest of the group is brought up by Belo, Cox Media, Scripps, Gannett Broadcasting, Hearst TV, ION TV, Media General, Meredith, Post-Newsweek Stations and Raycom Media. It’s a powerful collective. ABC, which is owned by Disney cannot afford to be left out of a mobile TV war in the US, and CEO Robert Igor has already shown that he is behind being engaged in as many ‘online’ initiatives as possible to ensure Disney does not miss the online boat. On the other hand Apple CEO Steve Jobs is the largest individual shareholder At Disney and obviously considers that the best route to market for portable video is through WiFi and 3G in a paid model.
The result is likely to mean that any online initiative that is not owned by Disney is one that it can afford to join last, when the other national broadcasters have shown the way. It was the case at Hulu that Disney’s great weight of content meant it was able to decide late and joint the party as a full member, long after the other founder members had shown the way.
This leaves CBS left in no mans land. It either gets a rival group to coalesce around its own content, offers to partner with ABC and bring it into the game or joins MCV. But like Disney it may decide it has enough to bring to the party to enter late, though we think this is less clear than in Disney’s case.
“Our commitment to launch in 20 markets, including 13 of the top 15 DMAs, is a significant and necessary step in building a viable commercial mobile TV business that delivers a comprehensive product to viewers,” added Erik Moreno, co-General Manager of MCV. “We welcome the opportunity to work with Fox and NBC affiliates, as well as additional broadcasters, in rolling out many more markets.”
The plans for handsets offering an ATSC M/H chip which can tune these services appears to have slid backwards from the first half of 2011, because MCV says it is working with various OEMs and device manufacturers to ensure these devices are available in the second half of 2011.
So far the roadmap which we at Rethink outlined in our Report ‘The Rise of the ATSC M/H machines,’ launched back in January has proved fairly accurate, but is perhaps a quarter or two behind where we thought it would be. A second chip supplier in Siano Mobile Silicon has emerged to work alongside the main technology sponsor of the ATSC M/H standard, Zenith, a US subsidiary of LG Electronics. As it becomes clearer to more and more players that this market is really going to happen, more chip vendors will emerge and handsets, PC dongles and in-cars systems will proliferate.
Many US onlookers have talked for some time about mobile TV already being a failure, always implying that consumers have rejected it. Lessons from around the world, in particular in Japan, where it has been very successful with over 70 million devices in play, show that the devices must be subsidized by cellular operators, and services must be cheap or free. The US has never had these conditions in play, having instead tried MediaFLO, a service from Qualcomm which uses its FLO technology, which is now up for sale. This was resold by both Verizon and AT&T, but had made for mobile versions of TV channels with little or no live sport and no local services. Handsets were subsidized but it was never offered on truly trendy handsets and the service initially cost $15 a month, a price which was falling before the service was canned. MCV says it will offer TV which includes sports and entertainment.
So to say that the US has rejected mobile TV is to miss the point entirely. Cellular networks will not have the capacity to show TV to a large number of people simultaneously using cellular streaming, until second generation LTE, in at least ten years. Sure video can be streamed over cellular, but only to around 8 to 12 users at a time from any given base station radio segment. So mobile TV has a number of years in which to mature and flourish and it needs a linear schedule, which borrows from or entirely copies local TV in order for the public to accept it.
The first devices expected to sell well are handset dongles that will take this kind of TV to tablets and large touch screen smart phones. The likely design approach will be to have a dongle re-broadcast a WiFi signal to handsets like the iPhone and to tablets like the iPad and forthcoming Android Tablets.
In our January report our forecasts were dependent upon key things happening and a similarity emerging in the US to the way in which ISDB-T proliferated in Japan. Given that device availability may be 2 quarters behind our initial expectations, that suggests that as long as MCV sticks to its rollout plan, there could be a rapid ramp up during 2011 to ten million devices or so, and by 2013 ATSC M/H handsets shipped could outstrip iPhones.
Other analysts are more conservative, believing that the existence of WiFi delivered video content to handsets, which is rapidly rising in the US on the back of broadcaster and pay TV iPhone and Android Apps, will slow that whole process down and cite numbers more like 30 million by 2014.
Our view is that this under-estimates the market potential and that WiFi or 3G delivered VoD is not an alternative to linear TV, but leads to different content which will develop in parallel.
Just because you have an iPhone and Apple is telling you to buy TV series for $1 a time, doesn’t mean that you can’t go out, buy an ATSC M/H dongle and stream content to your Apple device over WiFi for free.
What needs to happen next is for a major device, probably a top of the line LG Android smart phone, to be offered with ATSC from a major operator like AT&T. Now that the AT&T and Verizon MediaFLO TV efforts are moribund, there is less reason than even for the major cellcos to hold back, especially if the phones come out at the same price with ATSC M/H as without. This is at least likely in the case of LG devices, at least for a while. The bill of materials to add the mobile variant of ATSC to a phone, is around $10 in high volumes, which potentially LG might choose to swallow because of the prospect of long term technology royalties from this market.
In fact there must be some temptation for AT&T, once it loses its exclusive on the iPhone, to embrace Mobile DTV ahead of the pack of other operators in order to replace its iPhone exclusive appeal. The iPhone has been responsible for almost all AT&T Mobility customer growth during the past two years and it will need multiple initiatives to replace it, once gone.
There remains a lot of work to be done in bringing a successful mobile TV strategy to the US. The system needs to become interactive, and the natural return path for advertising enquiry is the cellular network, and for that this group needs a sign up from at least one major cellular network. One business model that has been suggested to tie in the cellular operators is to offer the same content in parallel in VoD, as a paid catch up service to TV, and that this would drive data revenues too, but has not been pursued so far.
The interim Co-General Managers for MCV will be Erik Moreno from Fox and Salil Dalvi from NBC, with Moreno coming from SVP of Corporate Development for Fox and Dalvi from SVP of Mobile Platform Development at NBC.