In a recent Fierce Wireless Article I asked – Does Netflix on the iPhone matter? The answer was yes. With the launch of Hulu Plus the question must again be posed – does it matter? This time the answer isn’t as simple.

Netflix was important because it offered something for nothing (well, nothing more to be specific). Netflix on the mobile wasn’t likely to be the sole reason a subscriber would opt for Netflix but it could offer additional incentive to new users as well as extra value and stickiness to existing users. Hulu Plus faces a host of different challenges however:

1. It requires a new billing relationship and monthly fee. Unlike Netflix, which already has a billing relationship with its 14M+ customers who simply must download a free app, Hulu is asking users to pay $10 per month to a new provider. This cost may seem trivial but in an era of economic turmoil it is not and consumers will have to take money from somewhere else to pay the monthly fee for a service which isn’t quite going to let them cut the cord.
2. Content, content, content. Hulu’s library is deep but it’s not all encompassing. CBS isn’t on board yet and that’s a major wrinkle for a service that has to pride and position itself on its depth of content. Add to that confusing content availability – a current show’s current season will be available but libraries vary for every other piece of content. The lack of clarity will confuse users.
3. The competitors. Primetime2Go and BitBop have already camped out at the $9.99 price point but neither have the brand recognition of Hulu or as deep a library. They do however allow user to download video for offline viewing. One major caveat is that neither is yet or seemingly going to be available for iOS where Hulu Plus is starting before expanding to other platforms
4. Broadband caps. Hulu Plus will allow users to stream over 3G which will invariably frustrate iPhone users not on unlimited data plans and limit utility by demanding users primarily rely on WiFi to stream content.
5. No Freemium offering. If Hulu allowed users to access some content for free it would be much more compelling but the lack of any free mobile play severely limits the service.

So, the question again becomes – does Hulu Plus matter in mobile? The answer is - not a whole lot more than BitBop or Netflix. Hulu Plus is a further demonstration that content owners are reticent to adhere to ad-supported business models on mobile devices and until they do they’ll be limited to niche audiences. For more information, see Jia Wu’s post Online Premium Video: Hulu v. Netflix.

The great thing about sitting on an industry award judging panel is that now and again entrants provide data points or insights that we as analysts can use as assumptions or estimates. In this instance I was honoured to be sitting on the MEFFY judging panel for Technology Innovation, an award that was presented at the Meffys Gala Awards Ceremony on 21st June 2010. One entrant, a mobile ad company which shall not be named, provided stats about its interactive mobile video adverts, which made for interesting reading. Interactive video delivers the advert in a software player that can be customised and made interactive by the advertiser by adding menu options and links to websites or advertising micro portals. Client: Vehicle manufacturer Cost of campaign: €37,606 Number of impressions: 3,497,920 Click on the video: 55,735 (CTR 1.6%) Number of video advert views: 47,525 (eCPM €791) The first thing to note is that the effective CPM for interactive video, which is over €791 in this case, has some way to fall before we begin to see its widespread use and adoption by media brands. Our average CPM estimate for a mobile video ad (which is generated following discussions with mobile advertising companies) is around $7, significantly below the €791 premium for interactive video adverts. The second interesting point is that 15% of consumers that clicked to play the video advert did not watch it. We can speculate why these might be, (see below) but most of the likely problems could likely be solved if the advertising network worked alongside the operator for better device, network and user targeting: 1) The devices/lack of targeting: i.e. they didn't target the ad at people with video-capable devices, or they didn't create the video in all formats so it wouldn't play on some devices. Can operators can provide more detailed information about target handsets and restrict this failure rate? 2) The network: Failed download due to limited bandwidth or connectivity. Operators should be able to provide information to the service provider to adapt their video rate to the current capability of the network. 3) Users not on data plans: An operator could prevent the user running away screaming by zero-rating. While there is much innovation for advertising outside the carrier ecosystem, in my view operators can indeed play an important role in smoothing over any cracks and help enable a potentially lucrative mobile advertising industry for all parties. Nitesh Patel

The iPhone launched in mid 2007. Apps launched in mid 2008. Hulu is still not on the iPhone – or any other mobile platform for that matter. While some content owners have finally dipped their toes into the proverbial mobile waters - as ABC has done with the iPad - mainstream content owners continue to ponder their next move. Sports however continue to dominate.

I initially analyzed the success of sports in the report, March Gladness. Since publication, the Baseball season has started, Hockey and Basketball have completed playoff runs, the World Cup launched into full swing, and Golf’s Masters and US Open have all made their way to the mobile device.

And sports continue to dominate:

• As of April, ESPN’s Scorecenter application has been downloaded more than 5 million times
• More than 1.2 million people downloaded NBC’s Olympic application in the US
• The FIFA World Cup App game ($2.99) was the #2 app on June 16
• ESPN’s 2010 FIFA World Cup game was the #3 and #10 on June 16 and 9 respectively
• The US Open’s mobile site recorded 1.7M visits during the championship, an increase of 518%
• Allot Communications announced that its data showed a 26% increase in mobile broadband usage during the first 10 days of the World Cup

So, how can other content owners get off the mobile sidelines? By learning the following lessons:

1. Timely content is important. Whether it be a TV show that aired the previous night that a fan wants to catch-up on during a commute or a live press conference content needs to be available when a user wants it,
2. Provide an additive experience to TV. One could argue that video would drive interest in mobile sports but other information such as in depth stats, tracking information, and scores are integral to the experience as well and often times drive snacking behavior. In fact, focusing offering context beyond video will lead to a compelling second screen experience for fans while watching TV.
3. Release in various forms. Apps are a component of the go to market strategy but not the entirety. The mobile web is integral. Supporting all platforms (iOS, Android, BlackBerry, Windows, and Palm) is also imperative. Leveraging excitement into other apps such as games can turn into additional revenue.

Overall, it is imperative that content owners begin to do more than just experiment with distributing content on the mobile device. Sports have trail blazed a path of success that other content owners can follow. But they have to step up to the plate or risk users finding their content from alternative channels.

-Josh Martin

The newly unveiled handheld console, 3DS, has once again demonstrated Nintendo’s innovation in hardware, and it could be showing mobile phone manufacturers the way forwards. Let’s look at Nintendo’s history of innovation in controls:

• The “D-Pad” (first appeared on the NES console, 1983)
• Wireless controllers (NES, 1989)
• Vibration feedback ( N64, 1997)
• Touch control (Nintendo DS, 2002)
• Motion sensor controls (Wii, 2006)

Nintendo did not necessarily invent all of these technologies, but it certainly popularized them, and every single one of these features are now commonplace in both games hardware and mobile phones. Nintendo does not innovate for the sake of innovation – these controls were created with the user experience in mind, and were always released with new titles (“apps” to use the mobile buzzword du jour) which used the feature to add to the experience, such as the Wii controller and the feeling of playing “real” sports. So, what has Nintendo done with its new handheld, the 3DS?

• There’s a 3D screen which does not require glasses
• There are not one but two external cameras. Why? Because with 2 cameras you can shoot 3D video
• There’s automatic data exchange (cloud based computing) and an accelerometer which are new features for Nintendo handhelds but old news for mobile phones, and of course the touch screen of the original Nintendo DS remains

Really it’s the 3D that sets this apart. The 3D screen does not require glasses, although it does require the user to sit at a particular angle to view the 3D effect. On a TV with a roomful of people watching, this is a problem, but for a handheld personal device, this is not an issue. Expect to see this in phones in the next 2-3 years. Shooting 3D video is really something quite remarkable. Due to the size of the device, the cameras are by necessity rather close together, so the 3D effect may not be terribly noticeable. However, the 3DS should retail at sub-$300, and likely will come down to a sub-$200 price point during its lifespan. Price points for current 3D camera setups are not even in the right ballpark for consumer products today, so the 3DS is something of a revolution. Yet again, Nintendo has shown us the way and in the near future we could all be shooting 3D video with our phones. The 3D viewing revolution is coming, and it's being orchestrated by a plumber.

 

 

 

The inevitable movement to tiered pricing which started with Verizon Wireless acknowledging its plans to do so for LTE and has been accelerated with the much anticipated data plan announcement by AT&T this week.  So, what next?

• Will we see significant priced based competition for mobile data among the top US operators?
• Will we see significant movement in share of adds for AT&T as iPhone wannabees are tempted by a plan of only $15?
• What impact will lower data plans for smartphones have on AT&T’s Quick Messaging Devices and Verizon Wireless equivalent?
• How long before we see family data plans and shared usage across multiple devices?

The move by AT&T is a smart play to extend the smartphone momentum as the low hanging fruit of Apple aficionados, multimedia techies and style seekers willing to pay top dollar has been significantly penetrated.

There is no doubt that the iPhone remains the coolest device on the marketplace and the end to end user experience remains easily the best in class. So, reducing the TCO to attract the next 20% of customers to a paid data plans while educating customers about data usage levels and managing the traffic risk is very smart business in my opinion.

The lower price points will help AT&T maintain its current leading share of smartphone users and may be attractive to casual social networkers

• Although the 50 photos allowance is not exactly generous! For casual messenger, and social network status checking and moderate email the new DataPlus plan is quite attractive overall and will likely attract a portion of customers who would otherwise opt for a Quick Messaging Device from AT&T or a competitive offering from Verizon Wireless.

I do expect to see some modest price competition among the big operators

• with T-Mobile most likely to drive prices lower given their need for scale and to protect their predominantly youth centric customer base. but also expect an increasingly strong Verizon Wireless handset line up to compete strongly.

The impact on Quick Messaging Devices is in my opinion likely to be modest

• as a traditional qwerty remains overwhelmingly the input of choice for heavy messengers in the US although there is definitely room for lowering the $10 mandatory data plan on featurephones

Family data plans and data plans which allow access across multiple devices are in the pipeline

• but will probably not make an appearance until 2012+ as part of LTE offerings.

From a device vendor perspective, the move to lower priced iPhone plans is likely to put further pressure on vendors like LG who have yet to make a credible offer in this space as well as RIM who will find more competition in the consumer space.

The lower pricing on data plans will be music to the ears of ambitious new entrants like Huawei, ZTE who plan to bring mass market priced devices to the US & Europe. The lower TCO of smartphones as a result of downward pressure on service prices boost their addressable market.