Transcript IBC 2005 - Irish Software Association

MDTV: Business, Economics and Regulation
MMF in association with AVF and SPI
IBEC, Dublin, Ireland
09 February 2006
Dermot Nolan
TBS
Available now…
(C)TBS 2006
The 30 second TV spot’s future
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The 30 second TV spot’s future

‘ We are facing a cliff edge moment within five to ten
years’

‘ We will have to deal with the mobile phone as one
of the devices to communicate with customers and it
will probably be the largest biggest medium in the
world’
Maurice Levy, Publicis, November 2005
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Ireland: Outlook for MDTV services

Many commercial, political and regulatory delays to launch consumer DTT/DAB

No clear timescale, apart from DVB-T field trials (system which already works!!!)

Irish DTT service may be marginalised by UK Freesat service

However, second mover advantages BECAUSE:

Spectrum IS available for DTT, MDTV and DAB as services NOT allocated (cf UK)

Follow path set by France, Finland and Spain : allocate UHF MDTV spectrum?

Requires radical rethink vs current assumptions re services, regulation and viability
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Ireland: Outlook for MDTV services

ComReg consultation interesting BUT: scale economies, market size, technology
divertissements and licence terms are ALL problematic

Who pays for the new MDTV networks: broadcasters, mobile operators or a consortium?

External factors complicate the rollout: UK overspill of xG services and DTT/future MDTV
services, Freesat makes Irish DTT look very shaky, market preemption etc…

Reappraise current priorities for wireless systems to support broadcasting, mobile and
MDTV services

A new business model, Government policy and regulatory framework is needed.
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Agenda

Technology transition tippingpoints

Introduction

Mobile vs Broadcast industries: current situation

A very clear MDTV proposition

Economic issues

In-band / hybrid MDTV systems

Platform wars

The Trials Game
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UK national network indicative costs

Business models
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More Agenda
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Distinctive content proposition

Service pricing

Rightsholders relish rollout

Ownership structures

Regulatory risk reduction

Spectrum and environmental issues

TV Viewing implications

TV advertising implications

Ireland: outlook for MDTV services

MDTV Takeup predictions

Outlook
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Technology transition tippingpoints
PVR
Revolutionary, but not mass-market yet
HDTV
Niche high ARPU pay TV
IPTV
Dream solution, serious funding issues
MDTV
2.5/3G MDTV now, hybrid MDTV later
Podcasting 3 M TV downloads in first 45 days
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Introduction

Satellite MDTV in South Korea May 2005(c 350k subs)

xG based MDTV many countries (US, EU, Asia)

Global technical trials of hybrid MDTV services

Standards wars inevitable (EU & US)

Multiple business, consumer and regulatory issues

Emerging revenue models: subscription / advertising
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Mobile vs broadcast industries: current situation
Comparison
Mobile
Broadcast
Scale
Global
National
Subscriber Churn
25%
10%
Device base
2.0 billion
1.0 billion
Hardware replacement
lifecycle
6 months
5 years
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A very clear MDTV proposition

‘Its live TV on your phone, stupid!’

Simple selling proposition, BUT…...

Problems: logistic, execution, regulation

Numerous regional variations likely

End-to-end value chain scrutiny (who gets what?)
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Economic issues

Substantial infrastructure investment costs

Onerous coverage requirements

Handset pricing & subsidy strategies
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Content acquisition & rights costs
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Service pricing & business models

Regulatory costs
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In-band vs hybrid MDTV systems

In-band MDTV broadcast via xG (=2.5G or 3G) networks

Hybrid MDTV = xOFDM / xG networks integrated in handset

xOFDM transmission = DVB-H, ISDB-T, T-DMB, MediaFLO

Distinct regulatory environments

Separate deployment timescales
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In-band MDTV systems

NOW (MobiTV, Orange TV, SkyMobileTV, etc)

Vertically integrated with cellular operator

Test bed: consumer behaviour, demand, pricing

-’s: Picture quality, mass-market scalability, usage caps

Dominant for next three years…..
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Hybrid MDTV systems

US / APAC (2006), Europe (2006/7)

Separate mobile TV / cellular networks
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+’s: Picture quality, mass-market scalability, services

-’s: Ownership, regulation, spectrum, access

Competing standards create consumer confusion
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Platform wars

Korea & Japan:
self-contained standards/markets

Europe:
DVB-H vs T-DMB

US:
DVB -H vs MediaFLO

Asia:
DVB-H vs T-DMB
Cellular carriers & vendors will pick winners!!!
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PAY-TV past lessons in Platform wars
Year
Platform war
1989
2002
SES Astra vs BSB
SkyDigital vs
ITVDigital
DVB-H vs T-DMB
200?
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Service Ratio
Advantage
3.2
6.5
Winner
10.0
?
SES Astra
SkyDigital
Numerous MDTV field trials

Worldwide trials by cellular carriers / broadcasters
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‘Showcase’ technical trials

Economic conclusions: focus group / tame triallists

All trials of hybrid MDTV systems

AND parallel xG TV rollouts by carriers….

To hone the MDTV service proposition…
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Latest trial results: O2/Arqiva, January 2006
(Oxford, UK, DVB-H trial)

375 O2 triallists of DVB-H, 18-44, mixed demographics

16 channel MDTV service (terrestrials, basic tier pay services)

83% satisfaction levels, 76% would subscribe

Usage profile:36% (home), 23%(work), 21% (bus)

Channel choice drives usage

Key to secure major broadcasting brands

Results all in public domain
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UK National Network indicative costs
UK national network indicative costs (£M)
6000
5000
5000
DVB-T
4000
DVB-H Low UHF
3000
DVB-H L band
Orange PCN network
2000
1000
1200
200
500
0
1
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1000
Typical 3G network
Business models

Free-to-air / advertising:

Subscription / advertising: S-DMB, SkyMobileTV

Mixed FTA / subscription: regulatory requirement?

Wholesale to carriers : BT, CrownCastle, Qualcomm
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Korean T-DMB
Distinctive content proposition

Location, personal, time, screen specific

Mass-market channels & live premium sports

Viable genres: news, business, comedy, childrens
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MDTV exclusive, ’Mobisodes’, localised services

Adult services key drivers (via xG TV services)

Graphics, display, picture quality CRITICAL
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Service pricing

Mixed advertising / subscription models

Hybrid trials / in-band MDTV services: Flat rate fee

Price elasticity not quantified: take-up key

Churn mismatch between two segments:

– cellular
25%
– pay-TV
10%
Hybrid MDTV break-even: pricing, takeup, network cost
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Rightsholders relish rollout

New distribution platform for rightsholders...

Potential global reach

High growth pay-TV platform? - fixed platforms peaking

Rights clearance: complex & problematic (see UK…)

Non-exclusive short-term licensing

Conditional Access for high value rightsholders

Content owners positioned to leverage value
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Ownership structures

Large upfront investment costs

Various equity ownership structures

Advantages / disadvantages

Competition policy issues: SMP in Europe

Environment considerations impact industry
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Regulatory risk reduction

Licence(s)

Coverage, service, technologies

Spectrum availability, authorisation, access

Licence allocation mechanism

Licence term

Competition policy requirements
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Spectrum and environmental issues

Hybrid MDTV requires spectrum allocation

Potential bands: VHF vs UHF vs L band

Issues: antenna size, interference, radios, costs to deploy

Critically dependent on national DTV transition strategies

Low UHF (E21- E49) is preferable, but..

HDTV vs MDTV, auctions etc post-analogue

Higher frequencies = greater environmental impact
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TV viewing implications

Location independence mirrors cell phone success

Fundamentally alters peak-time viewing definitions (O2
confirmed this shift)

‘Bite-sized’ viewing patterns favoured

Short attention span formats flourish

Superior audience research / interactive possibilities
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TV advertising implications

Potentially GLOBAL mass market medium

From THIRTY second to FIVE second spot!!!

Highly targetted advertising NOW possible

Simulcast existing terrestrial channels ( Italy etc )

Dream demographics: 16-35 year olds
(C)TBS 2006
Ireland: Outlook for MDTV services

Many commercial, political and regulatory delays to launch consumer DTT/DAB

No clear timescale, apart from DVB-T field trials (system which already works!!!)

Irish DTT service may be marginalised by UK Freesat service

However, second mover advantages BECAUSE:

Spectrum IS available for DTT, MDTV and DAB as services NOT allocated (cf UK)

Follow path set by France, Finland and Spain : allocate UHF MDTV spectrum?

Requires radical rethink vs current assumptions re services, regulation and viability
(C)TBS 2006
Ireland: Outlook for MDTV services

ComReg consultation interesting BUT: scale economies, market size, technology
divertissements and licence terms are ALL problematic

Who pays for the new MDTV networks: broadcasters, mobile operators or a consortium?

External factors complicate the rollout: UK overspill of xG services and DTT/future MDTV
services, Freesat makes Irish DTT look very shaky, market preemption etc…

Reappraise current priorities for wireless systems to support broadcasting, mobile and
MDTV services

A new business model, Government policy and regulatory framework is needed.
(C)TBS 2006
Forecast MDTV handset shipments 2012(m)
Source: Screen Digest September 2005
MDTV The Coming Handheld Revolution
CUMULATIVE MDTV HANDSETS SHIPPED BY 2012(m)
82.8
109.8
USA
Europe
Asia
63.2
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Outlook

xG MDTV reigns supreme for next three years

Fragmented growth prospects for Hybrid MDTV

Regulatory / ownership hurdles

Very profitable franchises?

Simple business models highly effective?

(MD)TV advertising has to be completely reinvented

MDTV everywhere within a decade ?
(C)TBS 2006
Contact us

MDTV: The coming handheld
revolution, Screen Digest

Ordering Details:
www.screendigest.com

Contacting TBS: +44 (0)20 7286 5570 , skype:
dmenolan, email: [email protected]
(C)TBS 2006