Challenges and Implications
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Jochen Trefzger Mobile TV-Launch in Germany – Challenges and Implications Working Papers of the Institute for Broadcasting Economics Cologne University No. 209 November 2005 Arbeitspapiere des Instituts für Rundfunkökonomie Working Papers of the Institute for Broadcasting Economics ISSN der Arbeitspapiere: 0945-8999 ISSN of the Working Papers: 0945-8999 ISBN des vorliegenden Arbeitspapiers 209: 3-938933-07-0 ISBN of the Working Paper at hand 209: 3-938933-07-0 Schutzgebühr 16,-- € Price 16,-- € Die Arbeitspapiere können im Internet eingesehen und abgerufen werden unter der Adresse http://www.rundfunk-institut.uni-koeln.de The Working Papers can be read and downloaded from the Internet URL http://www.rundfunk-institut.uni-koeln.de Mitteilungen und Bestellungen richten Sie bitte per E-Mail an: [email protected] oder an die unten genannte Postanschrift Messages and Orders to the Institute can be sent via Email to: [email protected] or to the mailing address mentioned below. Hohenstaufenring 57a D-50674 Köln Telefon: (0221) 23 35 36 Telefax: (0221) 24 11 34 Jochen Trefzger Mobile TV-Launch in Germany – Challenges and Implications* List of Tables...................................................................................................IV List of Figures .................................................................................................IV Abbreviations ................................................................................................... V 1. Introduction .................................................................................................. 1 2. The Concept of Mobile TV - Two Basic Approaches................................. 3 2.1. ‘TV on the Mobile’ ................................................................................... 3 2.2. ‘TV for the Mobile’ ................................................................................... 4 3. End-User Expectations and Demands for Mobile TV................................ 7 3.1. Necessary Features and Functions for Mobile TV to be Accepted by Consumers......................................................................................... 7 3.1.1. User Acceptance and Acceptance Models ................................... 7 3.1.2. The Compass Acceptance Model............................................... 11 3.1.3. Critical Acceptance Criteria ........................................................ 13 3.2. Consumers’ Interest in Mobile TV Services .......................................... 17 4. Technological and Regulatory Prerequisites for Mobile TV................... 19 4.1. The Different Bearer Technologies and Their Particular Advantages ... 19 4.2. Development Status and Spread of the Various Technologies............. 25 4.3. Content Coding (Video Codecs), Data Rates and Quality of Video ...... 27 4.4. Handsets............................................................................................... 29 4.4.1. Coverage, Quality and Availability of Handsets .......................... 29 4.4.2. Handset Prerequisites such as Battery Life and Quality of the Display........................................................................................ 31 4.5. Licenses – Broadcasting Allowances.................................................... 33 * Slightly modified version of a thesis that was accepted by the economic faculty of the University of Cologne in summer term 2005. II Table of Contents 5. The Mobile TV Value Chain........................................................................ 35 5.1. The Different Mobile TV Value Chain Activities ..................................... 35 5.1.1. Content Provider ......................................................................... 35 5.1.2. Content Aggregator..................................................................... 37 5.1.3. Application and Service Provider ................................................ 38 5.1.4. Portal Operator............................................................................ 38 5.1.5. Datacast Service Provider........................................................... 39 5.1.6. Broadcast Network Operator....................................................... 39 5.1.7. Mobile Network Operator ............................................................ 40 5.1.8. Payment Agent............................................................................ 41 5.2. Revenue Split between the Different Value Chain Members ................. 41 6. Services and Pricing Models ..................................................................... 45 6.1. Services................................................................................................. 45 6.1.1. Available Mobile TV Services at Present .................................... 45 6.1.2. Possible Future Services ............................................................ 46 6.2. Pricing Models....................................................................................... 48 6.2.1. The Main Pricing Models for Mobile TV ...................................... 48 6.2.1.1. Pay per View (Time/Volume/Event Based) .................... 49 6.2.1.2. Subscription ................................................................... 50 6.2.1.3. One Time Fee ................................................................ 51 6.2.1.4. Financed through Advertisements – Mobile ‘Free-TV’ ... 52 6.2.2. The Pricing Model Best Suited to Mobile TV............................... 53 7. Economic Implications of Mobile TV for the Value Chain Members with Focus on Mobile Operators and TV Broadcasters.......... 55 7.1. Present and Future Market Potential for Mobile TV............................... 55 7.2. Opportunities for Network Operators..................................................... 58 7.2.1. ARPU Increase ........................................................................... 59 7.2.2. Increasing Customer Retention and Reducing Churn ................. 63 7.3. Opportunities for TV Broadcasters ........................................................ 65 7.3.1. Mobile TV as an Additional Source of Income............................. 65 7.3.2. New Forms of Advertising and Cross Media Marketing and Distribution ........................................................................... 67 7.3.3. Positive Effect of Mobile TV on TV Advertising Prices ................ 69 Trefzger: Mobile TV-Launch in Germany – Challenges and Implications III 7.4. The Problem of High Data Traffic and the Resulting Low Revenue per Mbyte.............................................................................................. 70 7.5. Does a First-Mover Advantage for Mobile Network Operators or TV Broadcasters Exist? .............................................................................. 73 7.6. Mobile TV – a Disruptive Technology? ................................................. 75 8. Conclusion and Outlook............................................................................ 79 Reference List ................................................................................................ 81 IV Table of Contents List of Tables Table 1: Acceptance Criteria for Mobile TV................................................... 14 Table 2: Overview of the Different Bearer Technologies............................... 25 Table 3: Willingness to Pay for Pay-TV Packages ........................................ 51 Table 4: Revenue per Mbyte for Different Mobile Services ........................... 72 List of Figures Figure 1: Mobile TV-Only versus Interactive Broadcast Approach ................... 4 Figure 2: Four Dimensions of the Compass Acceptance Model..................... 12 Figure 3: Mobile IP Datacasting Solution ....................................................... 22 Figure 4: Forecast: Western European Mobile Subscribers by Technology, 2004-2009................................................................... 26 Figure 5: Data Rates of Different Bearer Technologies and Their Suitability for Mobile TV................................................................... 29 Figure 6: Nokia 7700 – Prototype DVB-H GPRS Handset ............................. 30 Figure 7: The Value Chain(s) for Mobile TV ................................................... 35 Figure 8: Distribution of Revenue along the Value Chain, by Service, 2003 and 2009 ................................................................................ 42 Figure 9: Revenue Share Assessment for Broadcast Mobile TV (IPDC-solution)................................................................................ 43 Figure 10: Selection of Available Mobile TV Services ...................................... 45 Figure 11: Overview of Pricing Models for Mobile TV....................................... 49 Figure 12: Penetration of German Households with TV, Telephones and Online Access .......................................................................... 56 Figure 13: Forecast of Mobile TV and Video Streaming Revenues in Germany, 2005–2009...................................................................... 57 Figure 14: ARPU Development in Germany..................................................... 61 Figure 15: Data Consumption of Typical Mobile Data Services........................ 71 Trefzger: Mobile TV-Launch in Germany – Challenges and Implications V Abbreviations 1G First Generation 2G Second Generation 2.5G The enhancement of GSM (2G) which includes technologies such as GPRS 3G Third Generation 3GPP