Mobile DTV Poised For Its U.S. Premiere

At first, 2009 was to be the big year for mobile DTV. Then 2010 came and went. Now, if you believe the buzz at this year’s NAB Show, 2011 is the year when at least some consumers will finally get their hands on the broadcast-driven mobile service.

There’s only one catch. The mobile DTV rollout will go low and slow — on a schedule that allows plenty of room to fine-tune the business and marketing plans.

“If you’re too early or too, late you goof up,” says Fisher Communications CEO Colleen Fisher. “Just like cable and cellular service, new industries need time to organize and form.”

Brown also serves as president of the Mobile500 Alliance, one of two groups broadcasters formed to license content and craft and launch a coherent service and business plan. In addition to Fisher, it comprises Tribune, Sinclair, LIN Media, Gray and more than three dozen other small-market station groups. Together, they reach 92% of U.S. TV homes.

The other group is the Mobile Content Alliance, whose members include NBCUniversal, Fox, Ion Media Networks as well as nine powerhouse station groups including Belo, Cox, Gannett, Hearst and Scripps. Combined, they reached about 87% of TV homes. [Editor’s note: In the original posting, the story incorrectly reported that MCV’s footprint was 40%.]

The two coalitions are often portrayed as rivals. Not so, says Erik Moreno, co-chairman of the MCV and SVP, corporate development of the Fox Networks. “Our goals are exactly the same,” he says, pointing out that many Fox and NBC affiliates are Mobile500 members. “We both use the same standards. We both want to deliver the content people want in the way they want to receive it, whether that’s live, side-loaded overnight or integrated with on-demand.”

Fisher’s Brown goes even further, characterizing the two groups as “complementary, not competitive. I expect us to find ways to collaborate.”

Neither group was prepared this week to disclose the exact nature of that content, as each is deep in licensing negotiations with syndicators, studios and networks. But both groups reported considerable progress, enough to confirm their preliminary rollout plans for 2011.

By the end of this year, the MCV says it will offer service in 20 markets covering 40% of TV homes. The Mobile500 will announce its rollout plans “soon,” according to Executive Director John Lawson, “but our members’ first priority was establishing a business plan designed to appeal both to consumers and investors.”

To ensure success, Mobile500 members this week reaffirmed their commitment to funding the venture, and authorized the hiring of three prominent consultants to guide their strategy: Venture capitalist Bob Geiman, founder of Roundbox; startup specialist Perry LaForge of the CDMA Development Group; and business strategist Eric McCabe of Ideas and Plans, who will focus on the wireless side of the business plan.

Already, one common marketing scheme is emerging from both Mobile500 and the MCV: a free basic channel comprising copyright-cleared parts of their members’ conventional broadcast channels along with premium channels and VOD.

There’s a good reason that this combination of free-plus-premium — nicknamed “freemium” — content has emerged as a likely business model for mobile DTV. Focus groups during last summer’s mobile trials in Washington suggested that free access to live, local TV news was one of the top three program categories. (The other two: sports and children’s fare.) There’s also historic precedent. In Korea and Japan, where linear mobile TV is well-established, live local news remains one of the top drivers of customer adoption and retention.

Traditional programmers are already eager to support and exploit Mobile DTV.

Speaking at the NAB panel “Mobile Monday: Creating Entertainment Content for Consumers,” Warner Brothers Head of Mobile Natalie Farsi said “Just as we target specific movie fans with a Facebook page, we have lots of data about fans of Ellen or TMZ. The mobile advertising possibilities are endless.” But Farsi emphasized that the industry must move quickly to discover best practices for mobile DTV, even as new mobile video apps and platforms continue to spring up. “Right now there¹s a battle going on for the desktop of your mobile device.”

Another revelation of the Washington trials was not so much what mobile viewers chose to watch as when. Primetime for mobile isn’t after dinner, it’s from 9 a.m. to 5 p.m., says Fisher’s Brown, “especially that ‘sneak viewing’ that occurs in the workplace. It’s a very compelling new daypart.”

The financial upside of mobile DTV is huge. According to a 2008 forecast from the Open Mobile Video Coalition, a broadcasting-led group formed to develop standards and promote mobile DTV, the service could generate $10 billion per year from advertising and fees. Unfortunately, that figure was based on reaching tens of millions of viewers on their mobile phones. To do that, mobile DTV needs access to the smartphones. But to date, not a single U.S. carrier has agreed to permit phones with a mobile DTV receiver chip.

“The carriers have the same questions that a national retailer would have,” says John Godfrey, VP of government and public affairs for Samsung Electronics. “They want to know how much content, how much coverage and what’s the business model?” 

Samsung, which furnished the devices used in the Washington trial, stands ready to mass produce and deliver DTV-ready handsets by the end of the year, if a carrier places an order. So does rival LG Electronics, which showcased its mobile TV couponing and Twitter applications on prototype handsets at the NAB Show.

None of the mobile DTV proponents seemed especially worried about this missing piece of the marketplace puzzle — even though Nielsen projects that by 2012, half of all Americans will own a smartphone. One reason is that experience overseas indicates that non-cellular mobile TV devices like tablets and portable DVD players often precede handsets to the marketplace, and tablets and DVD players offer such advantages as a larger screen and unobtrusive internal antennas. Most of all, the two mobile content coalitions believe that when consumers see local news on non-cellular devices, they’ll demand it on their smartphones as well.

To ensure that mobile DTV attracts participation from all sectors of the technology and creative communities, the Open Mobile Video Coalition announced at NAB the first meeting of its new OMVC Forum — which broadens the tent to include manufacturers, carriers, producers and application designers to collaborate alongside their core broadcaster constituency.

As a result, one financial analyst at the NAB Show was especially confident that U.S. cellular carriers will become mobile DTV supporters. During a heavily-attended session, SNL Kagan’s John Fletcher predicted that at least one carrier would offer a DTV-ready phone. “And if it doesn’t happen, I’ll buy everybody in this room a drink.”