Mobile DTV: A technology in search of a business model

Many questions abound about the viability of a competitive mobile video service.
CBC New Media Group is winding down its mobile DTV test in Raleigh and preparing for a real-world commercial launch, complete with local ads.

As more and more stations begin broadcasting part of their DTV spectrum to mobile devices, and about 70 stations have thus far, the required technology continues to mature and become more efficient. Now comes the hard part: finding a viable business models that will bring a reasonable return on the roughly $130,000 investment broadcasters have to make in order to get their systems up and running.

Looking around the industry, most stations are simulcasting their main DTV channel in an effort to figure out if consumers in their market are interested in a new mobile video service. Some, like WRAL-TV, in Raleigh NC, are getting a bit more creative. The CBS affiliated station there has spent the past year working on a project that integrates its mobile DTV signal with local ad-supported electronic monitors mounted in city buses.

Jimmy Goodmon, vice president of CBC New Media Group, said the partnership between his station WRAL-TV, mobile solutions provider News Over Wireless, equipment vendor Harris Broadcast and the city of Raleigh could be financially beneficial to all involved. The beta phase of the project is now winding down, and Goodmon hopes to have a market-ready system in buses and other places to support a real-world service in early 2011. There's talk of using GPS technology to dynamically change ads as the bus travels through different parts of the city and approaches a sponsor's location. The station's parent company, Capitol Broadcasting Company, is considering other ways to monetize its mobile DTV signal as well.

Others, like WSB-TV, in Atlanta, GA, are using their mobile spectrum for both radio and TV transmissions (on two separate channels).

Since a mobile DTV signal is IP-based (using H.264 encoding), other strategies call for store-and-forward, on-demand viewing whereby a station would send an electronic coupon, full-length movie or other requested content to a consumer’s cell phone or other portable device in the wee hours of the night so it can be viewed the next day. Computer electronic program guides and widgets are also possible to quickly bring users to their requested destination on the Internet as well as for commercial sponsorships.

However, thus far none of these test services have made money, due partly to the fact that there are a limited number of available phones with the required ATSC A/153-compliant receiver chip embedded, and the lack of a reliable back channel that would allow consumers to interact with the service and perhaps order content, which has not yet been clearly established for broadcasters. (Although, SMS messaging is being considered for two-way applications like voting.) The other nascent part is developing a programming lineup beyond what’s on TV that will prompt consumers to buy a new phone (or get a compatible device to add on to existing hardware) and pay a monthly subscription fee.

The latter is being experimented in Washington, D.C., as part of a consumer trial being hosted by the Open Mobile Video Coalition (OMVC), a collection of 32 station groups representing 875 stations. The trial is made up of nine local DTV stations that have pooled their spectrum to offer a total 23 channels between them. This is a model being pursued in other parts of the country for commercial launch in 2011.

After seeding the DC market with hundreds of devices — including Samsung cell phones, Dell netbook computers, LG Electronics portable DVD players and external accessories that accept a mobile DTV signal — the group has released initial results that find consumers are willing to watch local news in “snackable” (two-to-three minute intervals) amounts but also full-length TV episodes.

Anne Schelle, executive director of the OMVC, gave a presentation of the finding during the recent Content & Communications World conference in New York City. She said she expects “many more” stations to be on the air with a mobile DTV signal in 2011. In addition to mobile DTV signal propagation, the Washington, D.C., test (via Rentrak) has also provided some key audience measurement analytics, including GPS capture technology to see where and when participants are using their phones to watch television. The response from participants has been positive, with many saying that they use the service at least once a day, outside their homes. Interestingly, Tuesday was the most popular day in terms of usage minutes, and local news was the most popular content viewed.

“The results that are coming out of the D.C. test are very encouraging in terms of the value that broadcasters bring to this on-the-go service,” Schelle said.

There’s a basic (free) tier of the local stations’ programming and a premium tier for shows from networks like Discovery, MSNBC, Fox News Channel, Comcast Sportsnet, MTV (Viacom) and others. The premium channels can include conditional access technology to protect against piracy.

However, while the trial, which ends at the end of this month, has been somewhat successful in terms of usage, it’s hard to judge objectively since consumers were given devices with the receiver chips installed for free. (Samsung Moment phone owners were asked to bring in their phones so that a free chip could be installed.) Another question is when the OMVC or other mobile DTV coalitions within the industry can negotiate with a national data carrier like AT&T, Sprint or Verizon. Sprint is working with the local stations during the Washington, D.C., tests but has not committed to any type of national service going forward.

Also, perhaps most importantly, would consumers be willing to spend $40 or more per month to access local newscasts and other content wherever they are from broadcasters? Many say yes, but few broadcasters have a clear understanding of what that magic formula is.

“We’re trying to figure out if there’s a business, and we think there is, but it’s complicated,” said Ron Stitt, vice president of digital media and Internet operations for Fox Television Stations. Fox has been involved with the OMVC tests as well as with developing the ATSC A/153 mobile video standard. “It’s not a slam dunk, in terms of revenue generation for mobile TV.”

Stitt said the Washington, D.C., test has shown that consumers are willing to watch more than short clips on their cell phones. “Clearly there’s an audience for long-form programming on mobile devices,” he said. “There is potential for consumer adoption [of mobile DTV], but putting together a business to support that is not easy. There’s a million moving parts that the industry has to grapple with. But consumers appear willing to pay for it, if we identify the right price point.”

Alluding to the recent shutdown of Qualcomm’s national FLO TV service, he added, “It’s also clear that if you don’t have local news as part of your mobile service, you are dead in the water.”

Salil Davi, senior vice president of Mobile Platforms at NBC Universal’s digital distribution division has had a lot of experience with mobile video services during recent Olympics broadcasts as well as other programming, leveraging the AT&T and Verizon platforms. He understands the challenges and feels broadcasters have a real chance for success … once they find a business model that plays to their strengths.

“We’re big believers in the opportunities presented by mobile DTV, but it’s complicated right now, and there are a lot of steps to get from here to there,” Davi said. “As we look at the bigger picture, the world is getting more complicated and there are a lot of ways for media companies like ours to distribute content. Yet, what we believe is unique about mobile DTV is that across this entire landscape, delivering live television is a very difficult technical proposition to execute on. As you scale up, the delivery of mobile TV is very hard to get simultaneous usage on a 3G or 4G network. We think broadcasters have an unparalleled distribution platform for allowing a large of number of people to consumer video content.”

After seeing consumers react positively to the signage displaying local news on a city bus driving in and around Raleigh, Capitol Broadcasting's Goodmon said mobile DTV business models will reveal themselves when broadcasters generate enough consumer demand in their markets to prompt chip makers and wireless carriers to make the chips available in large enough quantities to get local businesses interested in advertising.

“Everyone asks me what we think the business model is for mobile DTV” he said. “There are hundreds of millions of computers, cell phones and other portable devices that right now cannot receive our signals,” Goodmon said. All of these devices, whether they hang on your wall or not, are TVs. “Mobile DTV gives us the ability to significantly increase the number of people who watch our programs and therefore increase the value of our advertising. It's like doubling or tripling the TV households in America. That is a business model. And it's only the beginning.”