FLO TV purveyor QUALCOMM will offer 20 channels of TV for $15 a month — about half of the $25 to $30 that FLO TV’s current carriers charge for the service. FLO TV's Bill Stone judged that at roughly half the price of a typical home cable TV bill, the service was too expensive. “My view is that is shooting over the heads of the market,” he said in a June 24, 2009, interview with Moconews.
Common wisdom is that this will stimulate demand. But the contrarian in me isn't convinced. Will people be any more willing to pay for something they don't know that they even want? And when more and more video content is available free on-demand to any smartphone with streaming video capacity? In this economy? Even as broadcasters are launching their own mobile DTV initiatives?
I'm not the only one viewing this move skeptically. "QUALCOMM is fighting an uphill battle in the U.S., with people used to watching TV on larger sets and doing so in an on-demand fashion," says Jeff Heynen, Infonetics Research directing analyst for broadband and video. "Combine that with the clear trend of subscribers trying to cut back on their bills as much as possible and it's going to be extremely challenging to get any penetration whatsoever."
That's not to say there isn't a market opportunity for FLO TV, Heynen says; however, the operator needs to look beyond the mobile phone.
"I think the key to success is getting receivers integrated into the iPhone, Palm Pre, laptops, netbooks, PCs and PMPs, and offering access to the service for free for a few months," says Heynen, "and [after that], charging no more than $5 per month per device for unlimited access — which needs to include some type of premium broadcast channels and on-demand clips."
On-demand sports programming offers another opportunity for FLO TV, according to Heynen. Certainly, FLO TV has established a leading position in the "need to watch live" category with its mobile TV broadcasts of NBC Sports' coverage of such NBC Championship Season fixtures as the Kentucky Derby, Preakness, the French Open, the Stanley Cup Playoffs, the U.S. Open and Wimbledon on NBC2GO.
But regardless of the strategy FLO TV chooses, "I think the price point has to be really low," says Heynen, "especially if I can access an increasing amount of content for free online.