Mobile TV/Video: Are You Watching?
Dave Willis is not a media revolutionary. The thirty-four year old financial analyst and father of two does not own a Blackberry, thinks YouTube is “junior varsity” and professes to read the newspaper every morning. He does, however, spend $15 each month for the Verizon Wireless V-Cast video service on his cell phone. Mr. Willis notes, “It’s worth it. I can watch Sports Center on a Monday morning without some guy in IT spying on me.” Mobile video usage in the US is now big enough to measure and analyze, and we are starting to discover what the mobile video audience looks like. The challenge now for the industry is to combine what it can learn about mobile video users with technological and business process innovation to grow the overall market.
According to the latest mobile video research from Telephia, there were 6.2 million mobile video subscribers in the US at the end of last year (see Chart 1), with 15% of new handsets sold having video capability. The audience is young (mostly 18-34 years of age and skews 70% male. Mobile video consumers also have higher incomes and are more ethnically diverse than the overall mobile population. Interestingly, these users are not all-watching mobile video where you might expect. Many people actually watch mobile video at home. Almost half of mobile video subscribers live in a household of four or more people, so during certain periods of the day, the phone may be their primary screen. We have seen a similar pattern in mobile Internet usage.
Although the mobile video market grew by 188% since Q4 2005, it still represents only 2.7% of wireless subscribers in the USA and 3% in the UK. How will the market reach penetration levels of 30 to 40%, such as those in Korea? That would suggest an addressable market in the USA of 80 million viewers. One means may be via mobile advertising. In Korea, five of the six mobile broadcasters are advertising-supported.
Chart 1: U.S. Mobile Video Subscriber Growth
There are early signs that the ad-supported model can work. Last year, Endemol’s mobile version of its “Big Brother” program transitioned from a paid mobile download to ad-supported and the audience grew by a factor of 10. "We are big believers that you can't fleece consumers for too much money. You have to get the advertisers to pay," says Peter Cowley, Managing Director of Digital Media at Endemol UK. His counterpart at Endemol USA, John Vlassopoulos, agrees. “We want the largest possible audience and we see again and again that there is no better price point than free.”
Of course, a real advertising market will require good audience measurement, as well as acceptable formatting. Telephia’s research suggests a high tolerance for mobile video ads in exchange for lower prices. In fact, consumer action in response to ads on mobile is encouragingly high. As can be seen from the chart below, more than one quarter of current mobile users have sent a text in response to an ad they saw on their mobile phone. Moreover, one in five have gone to a mobile internet site or sent an email in response to an ad they viewed on their mobile phone. These enviable response rates mean that mobile video ads may be able to command higher CPM’s (cost per thousand views) than other platforms.
Chart 2: Responses Towards Ads by Mobile Ad Viewers
Finally, the growth of mobile video is also dependent on technological innovation. Presently, mobile video is still a lean-back, passive and linear viewing experience, whether users are watching downloaded clips or scheduled programming. Telephia’s research suggests that mobile video subscribers are active users of other services too. Nearly all (96%) of the current mobile video users surveyed at the end of last year said that had accessed the wireless Internet recently (see Chart 3). Nearly two thirds were uploading data to the internet, compared to only 3% wireless users as a whole. Is there room for a more interactive mobile video offering that reflects more closely the multi-tasking habits of these wireless mobile consumers?
Chart 3: Use of Wireless Data Applications
Mobile video is at an exciting crossroads. The industry can replicate the linear TV experience and continue to grow at a reasonable rate. Alternatively, the industry can explore fundamental innovations to the viewing and pricing format that could lead to giant leaps in mobile video adoption, and while doing so, transform the television experience.
By Levi Shapiro, Director of Mobile Content, Telephia
This article will appear in an upcoming issue of Wireless Week
