In my recent insight, BBC iPlayer Shows Limited Appetite for Mobile TV, I observed seasonality with mobile usage generally increasing during summer. The BBC has noted that overall usage is increased during sporting events, which tend to occur during the summer months, but the BBC iStats do not discuss whether or not that pattern is true of mobile usage.

I decided to test some alternate hypotheses, using data from the UK’s Met Office (UK’s national weather service). Below is a chart showing the % of BBC iPlayer usage which is mobile against UK average temperatures.

The results correlate very strongly, with an R² value of 0.65. I ran a simple F-test and there is a 0.000001% probability that the correlation is down to chance. A-ha! Believe me, the sun always shines on mobile TV…

The failure and subsequent sale of News Corps direct-to-consumer (D2C) mobile asset, Fox Mobile Group, (which includes Jamba, Jamster, Mobizzo,  iLove, and Bitbop) to Jesta Group underlines the challenges faced by media companies aiming to build a position in the fragmented and fast moving media landscape. Furthermore, it serves to highlight the need to understand <a href="http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=4732">the dynamics underpinning mobile media content distribution</a>. 

News Corp. acquired a controlling interest in D2C mobile content provider (e.g. ringtones, wallpaper, games, and video) Jamba from Verisign in September 2006 for $188 million. In October 2008 it acquired the remaining 49% for $200 million. The unit was merged with the Fox Mobile Entertainment unit. 

There are obvious pros and cons for media companies to develop their own branded distribution channels. On one hand media companies can take a greater share of consumer spend if they retail the content themselves, rather than through an operator or mobile content store that take a share of revenue for retailing. Owning distribution also allows media companies to control their business model and promote their own content favourably ahead of other content providers. Media companies also have the capacity to make their own content exclusive to their portal, creating consumer demand to visit their sites (assuming they have desirable content). On the other hand owning distribution channels can lead to internal conflict between whether to license content for distribution through alternative channels or not. Most importantly, content distribution requires a different set of skills to media creation e.g. content acquisition, aggregation, and merchandising among others.  So, despite access to strong and desirable content, and the fact that globally <a href="http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=5750">consumer spending on premium mobile content will continue to grow from approximately $35 billion in 2010 to $65 billion by 2015</a> what went wrong?

<strong>1) OEM stores to the fore:</strong> OEM application stores, lead by Apple’s App Store have become a popular method of accessing mobile applications and content. 

a) OEM app stores provide greater diversity in applications and content than the traditional ringtones, wallpaper, games and video content offered by many D2C mobile portals. App stores also offer content from a large number of content providers. 

b) OEM stores are typically well integrated with the handset and provide a better user experience than ordering via mobile internet or using premium SMS.

<strong>2) Sullied brand:</strong> Jamster and Jamba developed a bad reputation for misleading young consumers into signing up to expensive subscription based services. Although it attempted to amend this image the tag remained.

Although Fox Mobile Group no longer exists we do not expect News Corp. to abandon its ambitions in this area. In our opinion emphasis should now be placed on driving branded applications and content distribution through popular OEM app stores, while simultaneously licensing content to publishing brands that have achieved success in content distribution, e.g. <a href="http://blogs.strategyanalytics.com/gwp/?p=171">Hulu or Netflix</a>. 

Nitesh Patel

CES Preview day was all about hardware, but day 1 was all about filling that hardware with new and innovative content.

1. Extending TV content to mobile devices. This is perhaps one of the most compelling trends expected to proliferate in 2011. Verizon and Time Warner shared the stage to discuss the evolution of TV Everywhere. Dish Network will further extend its Sling Media ability by allowing subscribers to access their live and recorded content on Android devices. The extension of pay TV content to the mobile device will surely complicate the mobile media market in the US by offering an already paid for alternative to mobile specific solutions such as Primetime2Go or even iTunes.

2. Mobile Media continues to grow up. First, Hulu Plus announced it would be available on Android devices soon. This brings Android on par with iPhone but the long lag between the Hulu Plus Beta launch in August and the eventual release of Hulu Plus on Android shows that content owners clearly see iPhone as the premier platform for now. Finding a way to fuse digital and physical, Ultraviolet continued to discuss its development in making accessing owned content more convenient through a digital locker and embedding the technology in as many devices as possible. For more information about Ultraviolet read my Fierce Wireless article. The goal of both services is to increase consumption and with ever larger screens on handsets and the tablet incursion of 2011 these services will find a waiting audience.

3. Video is key to 2011 and beyond. As LTE launches, new video services become available, and phones offering more multimedia-centric features 2011 is sure to be the year of mobile video. But video is about more than just professional content. It also encompasses video conferencing. Recognizing this opportunity, Skype acquired Qik, a provider of mobile video software and services that enable individuals to capture, instantly share and preserve great moments on video from anywhere. This will surely help Skype better compete with other video conferencing services.

What is evident from these announcements is that content owners see mobile as the next big opportunity as well as a necessary outlet for ecosystem building. How networks will handle the load associated with all this video remains to be seen as most popular applications today – broadly speaking – are light on network usage compared to video streaming apps. But its clear that 2011 will be the year of mobile video.

CES 2011 is nearly upon us and the conference will unveil to the public innovations that will shape the year. So, as press day hits its stride it's evident that there are a few key themes in mobile media we can expect throughout the conference and 2011. One key phrase to sum up the events thus far; thinner, faster (both device and network), and bigger (Which is not a contradiction with the first adjective). 1. 4G. One of the buzzwords that will be discussed throughout the show and has been said more times today than zealots at a Steve Jobs keynote say ooh and aah. 4G is clearly the future and for a multimedia loving public the ability to stream and download content more quickly will impact their device usage. 2. Thin. Depending on when a handset manufacturer announced their newest flagship handset today they were briefly the "thinnest smartphone on the planet." Peruse a few press releases and this key phrase will unabashedly appear at the top. 3. Fast. The 1.2GHz Qualcomm SnapDragon processor (and its competitors) and dual core variants will begin making their way into handsets this year. For content consumption this will inevitably mean richer applications, more immersive games, and of course HD video consumption/recording/editing. 4. Cross Platform. Whether it be a TV, a tablet, or a car cross platform services are quickly becoming the rage. As OpenFeint discussed at the AT&T developer conference this morning the ability to compete with friends across platform is the future. Also at the AT&T event discussions were had about developing apps for U-Verse that work on various tablets and phones. For users hoping to better immerse themselves in their content, apps, and games this cross platform functionality will change how they view the ecosystem of products they buy and allow for the creation of very compelling apps unlike anything we've seen so far. 5. Bigger. Screen sizes are growing ever larger (Samsung has a 4.5" device coming) and compatibility with third party accessories such as PC docks and HDTVs will turn phones into a hub for media consumption unlike ever before. For users uninterested in consuming content on a 3.5" screen the new options will make media consumption much more compelling and should impact the growth of digital content distribution as well. This is just the beginning of course and if you're interested in hearing more you can follow Strategy Analytics analysts by tracking the hastag #SACES on Twitter or view our intermittent live stream from CES at .

Rumors abound that Qualcomm has cancelled its direct to consumer Flo TV service. Before delving in to the implications of such a decision it is important to note that as of now Qualcomm’s white label service it sells to carrier partners is still intact even if it is next on the chopping block.

Qualcomm’s decision to kill its never commercially viable direct to consumer Flo TV should come as no surprise. Many of the challenges were discussed in a report published in December 2009. The service suffered a number of hurdles to adoption:

1. The cost of FLO TV dedicated hardware
2. The cost of FLO TV service
3. The linear nature of the FLO TV service

The challenge in winning consumers was not unexpected but there are important lessons that carriers can take from Qualcomm’s inability to drive market demand for mobile broadcast TV services if they in fact plan to continue offering mobile broadcast services and most of these challenges are the same as Qualcomm faced in their direct to consumer play.

1. The cost of mobile TV enabled phones. Of the 4 AT&T phones that offer mobile TV service (mostly featurephones with touchscreens) only one is free while the others range in price from $49.99 - $149.99. Compare this to the 20+ free phones available to consumers and the reasons users may opt against mobile TV enabled phones are clear. As smartphones continue to gain momentum in established markets feature phones are attractive to a more communication/cost-centric audience. Therefore an increase in hardware cost to the carrier must translate to an increased cost to the end user. Therefore the increased cost of hardware featuring mobile TV makes the devices less attractive.
2. The cost of the service. Despite carriers testing various models – such as giving away broadcast channels for free or offering free service for a few months – the price of the service remains too high for the value it offers. If in fact the type of user opting for a feature phone is not multimedia inclined even then even a nominal fee – in this case $10 which is more than nominal – could be enough to scare away potential subscribers.
3. The demand for linear TV services. This will always be an issue for Flo services and in the increasingly on-demand world full of alternative video options paid mobile linear services simply don’t make sense for users.

In countries – such as South Korea – where most phones have mobile broadcast chipsets combined with free robust services adoption can even be deemed modest successes and the revenue for content owners in such a scenario remains unclear. But it does so only because it is free. Just because Qualcomm is retreating from the direct to consumer space doesn’t necessarily mean its white label service will also be a failure. One potential albeit unlikely side effect carrier should be wary of is that Qualcomm’s content partners – recognizing the limited opportunity the market offers combined with the limited success of these services could abandon mobile TV limited the amount of content available.

This only underscores the challenges that carriers in developed regions are facing. In an era where the carrier is becoming increasingly marginalized for phone services they must decide where to invest and right now that investment in both development, marketing should be behind their own branded app stores.

Qualcomm on the other hand should decide what other services the FLO spectrum can be used for. One opportunity regularly touted was aftermarket accessories for smartphones that could receive Flo broadcasts – but that too would have inevitably failed so now Qualcomm must go back to the drawing board. After spending a reported billion dollars on FLO technology and spectrum it may be worth Qualcomm considering licensing the spectrum for some other use..

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 industry has long talked about operators evolving into smart pipes by exposing a variety of network based assets for developers to use in their services and applications. The pressure on carriers to do so is certainly mounting. Smartphone sales are blazing and the market for mobile phone applications and browsing is going gangbusters, yet other than revenue from selling data operators are not seeing a lot of the action, particularly as app sale growth is happening through OEM stores rather than carrier portals. Take Telecom Italia just as one example:

• For the first three months of 2009 it reported a 27% drop in content revenue over the same period the previous year from €343m to €250m. This compares to 13% growth in browsing revenue from €469m to €530m.

Therefore increasingly, operators are considering how they can enter the value-chain of applications and services delivered over the top of their networks by exposing network capabilities such as their charging platforms, user location, presence, and user profile information to developers via APIs. There certainly seems to be demand for it if the Mobile Entertainment Forum’s Smart Enablers web seminars have been anything to go by. During these presentations the BBC and Yellow Pages, among other content providers, clearly stated that they hope in future to be able to access carrier information such as network latency for video streaming and user location data.

The stumbling block remains how operators commercialize these assets in a way to make it worth their while, while not employing a model that discourages the developer community. Alcatel-Lucent (ALU), a company that usually sells equipment, has come up with what it believes is a solution. Its Open API service, which will be discussed in more detail in an up coming Insight titled, Commercial Model A Stumbling Block To Alcatel-Lucent's Open API Service, proposes a revenue share model to compensate operators for sharing network based data with developers.

ALU proposes developers take between 60%-75% of application revenue, operators between 7%-10%, 3% to ALU to cover costs and the remainder to any third-party API providers such as advertising networks.

ALU claims to have already signed up some operators to Open API, but my initial thought is that at 7%-10% carrier revenue share represents a significant discount on the 30-70% operators currently receive from billing. Although I believe this type of revenue sharing agreement and API aggregation model is the way forward, the big questions are whether operators see it that way, and importantly, whether or not they are prepared to lower their lucrative 30-70% revenue share?

Nitesh Patel