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Mobile Television in Italy: the Key to Success,Intellect the Cause of Failure Distribute Not ABSTRACT KEYWORDS 1 View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Ghent University Academic Bibliography JDTV 3 (1) pp. 53–68 Intellect Limited 2012 International Journal of Digital Television Volume 3 Number 1 © 2012 Intellect Ltd Article. English language. doi: 10.1386/jdtv.3.1.53_1 TOM EVENS Ghent University BENEDETTA PRARIO University of Lugano 2012 Mobile television in Italy: The key to success,Intellect the cause of failure Distribute Not ABSTRACT KEYWORDS 1. Several years ago, the mobile and audio-visual industry was betting on Digital Video mobile television 2. Broadcasting –Copyright Handheld (DVB-H)Do and mobile television as the newest growth business models 3. opportunity. But today, commercial deployments are scarce and end-user adoption is DVB-H 4. below expectations. This article focuses on developments within the Italian market, 3G 5. known as the best developed market for mobile television services in Europe. Making digital dividend 6. a case study analysis, the article aims to provide an in-depth overview of the Italian case study 7. mobile television market, and a better insight into the business model design issues Italy 8. mobile service providers face with regard to mobile television. Such an understanding 9. of the pioneering Italian mobile market makes it possible to identify the key factors 10. of the initial success and eventual failure of DVB-H services, setting perspectives for 11. future mobile television services and industries all over the world. 12. 13. 14. INTRODUCTION 15. Originally, mobile television raised high hopes of major growth for both 16. the telecommunications and media industries all over the world, but these 17. expectations have not been met for different reasons. Undeniably, still now 18. 53 JDTV_3.1_Evens&Prario_53-68.indd 53 1/13/12 5:22:24 PM Tom Evens | Benedetta Prario the development perspectives of mobile television industries are fundamen- 1. tal. First, for the digital dividend policy, which is at the top of the European 2. governments agenda, and second, because of technological developments 3. that are driving the uptake of mobile Internet and video. 4. In this article, specific focus will be placed on the business model of mobile 5. broadcasting services in Italy. Whereas operators in most European countries 6. were reluctant to invest in building a Digital Video Broadcasting – Handheld 7. (DVB-H) network to convince customers to buy DVB-H-enabled handsets, 8. Italy became known as the main developed mobile television deployment in 9. Europe. However, market growth proved considerably lower than expected. 10. In addition, the main Italian mobile operator, Telecom Italia Mobile (TIM), 11. decided to stop its DVB-H offer in late 2010. The aim of the article is to give 12. an in-depth analysis of the Italian mobile television market and provide a 13. better understanding of several business model design issues mobile service 14. providers face with regard to mobile television. Such a thorough understand- 15. ing of the pioneering Italian market should make it possible to identify the 16. key factors of initial success and eventual failure of DVB-H services, setting 17. perspectives for future mobile television services. The most significant insight 18. provided by the following analysis of Italy is that DVB-H is regarded as 19. less promising than third-generation (3G) and2012 4G mobile telecommunica- 20. tions technology as a way of providing future mobile television services. 21. Assessing this future may not only have far-reaching implications for the 22. mobile industry, but may have relevance for policy-makers as well. Now that 23. analogue terrestrial television has been switched off in (most countries in) 24. Europe, the question as to how to benefit from this released spectrum is at 25. stake. The allocation of these frequencies allows for the creation of new distri- 26. bution networks, such as digital terrestrial television (DTT), and the support 27. of innovative wireless services,Intellect including mobile television and mobile broad- 28. band. As mobile television has failed to deliver added value, it can be ques- 29. tioned whether allocating additionalDistribute spectrum to mobile television eventually 30. leads to the creation of public and private value, and whether this spectrum 31. should be allocated to providing ‘real’ value-added services (Evens et al. 2010). 32. In their analysis of the Notdigital dividend in Austria, Börnsen et al. (2011) have 33. shown that mobile broadband would generate considerably higher economic 34. value than digital television services. 35. 36. CopyrightDo 37. RISE AND FALL OF MOBILE TELEVISION 38. Since the mid-1990s, advances in digital equipment and network technology 39. have encouraged a rapid growth in the individual consumption and personal 40. experience of multimedia content. These developments not only enable view- 41. ers to personalize preferred content they want to watch, thanks to interactive 42. services (anytime) and the multitude of advanced user terminals (anyhow), 43. viewers can adapt their viewing behaviour to their preferences. As part of 44. this trend towards more personalized media consumption, and alongside 45. the growth of the mobile telecommunications sector, ‘the place of viewing is 46. no longer limited to the television receiver at home, but is widened to allow 47. personalised viewing of television by individuals wherever they are located’ 48. (DigiTAG 2005: 5). Thus, mobile broadcasting offers the opportunity to watch 49. regular television and interactive programming directly on one’s mobile hand- 50. set while being ‘on the move’ – in public transport, waiting for an appointment 51. or at work. This idea of watching television on the move is anything but new. 52. 54 JDTV_3.1_Evens&Prario_53-68.indd 54 1/13/12 5:22:24 PM Mobile television in Italy 1. As Trefzger (2005) has illustrated, Sony introduced its first portable television, 2. the Watchman, in 1982, but unlike with its music peer the Sony Walkman 3. consumer adoption remained low. There were several reasons for the failure 4. of the Watchman, e.g. its dimensions (nearly 20 cm high and 9 cm wide), 5. its screen (tiny) and its battery power (too low) (Günthör 2005). However, 6. technological innovations now offer digital image quality and the possibil- 7. ity of reception on a consumer device that provides people with ubiquitous 8. and permanent connectivity: the mobile phone (Castells 2006). Consumers 9. are increasingly using these advanced phones for information and entertain- 10. ment purposes, such as watching video clips, listening to music, browsing the 11. Internet, posting social media status updates, etc. As mobile devices and tele- 12. vision are strongly rooted within people’s daily lives, a bright future has been 13. predicted for mobile broadcasting since the beginning of the century. Being a 14. prime example of the enduring convergence spiral, mobile television has been 15. widely discussed in analyst reports, trade magazines and academic papers, 16. and has typically generated overenthusiasm and unrealistic expectations. 17. Equipment manufacturers and especially mobile service operators had several 18. incentives to invest in the deployment of mobile television services since they have 19. to cope with saturating markets. In most parts of the world, mobile subscription 20. rates are close to or even over 100 per cent penetration (Andersson2012 2005). Faced 21. with falling average revenue per user (ARPU) due to intensified competition, the 22. entrance of low-usage consumers, and regulatory interventions regarding roam- 23. ing fees and termination tariffs, the European mobile industry saw opportuni- 24. ties for additional revenues and began to roll out a dedicated DVB-H network 25. infrastructure. The creation of a new kind of ‘mobile multimedia’ would enable 26. mobile network operators to increase the ARPU by opening up the market 27. potential of media industries. On the other hand, traditional business models 28. of these media industries, and the audio-visualIntellect industry in particular, became 29. highly challenged by audience fragmentation induced by the proliferation of new 30. digital channels and the omnipresence of distributionDistribute platforms (e.g. cable oper- 31. ators and IPTV, but also online video aggregators YouTube, Hulu, etc.). For the 32. television industry, mobile television would mean a new distribution platform 33. for its content (Urban 2007) and for connectingNot with new and existing audi- 34. ences (Södergård 2003). Despite these supply-side expectations, however, there 35. was little enthusiasm on the demand side. In addition, the industry identified 36. (yet unrealized) business opportunities for adding revenue, but willingness to 37. pay among consumersCopyright provedDo rather disappointing since added value of mobile 38. television was far from obvious. These diverging expectations and interests of the 39. supply and demand sides regarding the product in the value chain eventually led 40. to a questionable business model (Jarvenpaa and Loebbecke 2009). 41. 42. 43. METHODOLOGICAL FRAMEWORK 44. The resource-based view of the firm (see Wernerfelt 1984; Dierickx and 45. Cool 1989; Barney 1991) and the institutional theory serve as the theoretical 46. framework for the analysis of the mobile television market in Italy. As argued by 47. Pagani et al. (2005), exclusive resources are considered the main source of sustain- 48. able competitive advantage for a given firm. Collins and Montgomery (1998) 49. distinguish between material and immaterial resources and organizational 50. capabilities. Whereas material resources are tangible and easily identifiable, 51. immaterial resources include reputation, brands, corporate culture and busi- 52. ness intelligence. Organizational capabilities mainly refer to a firm’s ability to 55 JDTV_3.1_Evens&Prario_53-68.indd 55 1/13/12 5:22:24 PM Tom Evens | Benedetta Prario efficiently combine these resources in planning and implementing its value- 1. creating strategy. Whereas these resources should ideally be neither perfectly 2.
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