STRICTLY PRIVATE AND CONFIDENTIAL Ofcom Participation TV: market overview FINAL REPORT March 2007 Mediatique Limited is a registered Limited company in England and Wales. Company No. 4575079. VAT registration 830 3436 57 Contents 1. Executive summary ................................................................................. 5 2. Introduction............................................................................................ 7 Purpose of this report ................................................................................ 7 Methodology............................................................................................. 8 Disclosures and disclaimer.......................................................................... 8 3. Definitions and context ........................................................................... 9 Background.............................................................................................. 9 Definitions................................................................................................ 9 4. Industry value chain ............................................................................. 11 Voice value chain .................................................................................... 11 Mobile text value chain ............................................................................ 13 How the value chain operates ................................................................... 14 Originating network operators.................................................................. 14 Terminating network operators ................................................................ 14 Network transaction operators ................................................................. 14 Channel operators and producers ............................................................. 15 Vertical integration in the industry ............................................................. 17 5. Participation TV services: overview by category ................................... 18 TV quiz services ...................................................................................... 18 Key characteristics ................................................................................. 18 Operators ............................................................................................. 19 Business model...................................................................................... 20 Operating strategy ................................................................................. 22 Profile of the user base ........................................................................... 24 Size of sector......................................................................................... 25 TV chat services...................................................................................... 26 Key characteristics ................................................................................. 26 Operators ............................................................................................. 27 Business models .................................................................................... 28 Operating strategy ................................................................................. 28 Profile of the user base ........................................................................... 29 Size of sector......................................................................................... 29 TV dating services ................................................................................... 30 Key characteristics ................................................................................. 30 Operators ............................................................................................. 30 Business model...................................................................................... 31 Operating strategy ................................................................................. 31 Mediatique Limited is a registered Limited company in England and Wales. Company No. 4575079. VAT registration 830 3436 57 2 Contents Profile of the user base ........................................................................... 32 Size of sector......................................................................................... 32 6. Market size............................................................................................ 33 Revenue analysis: by sector ..................................................................... 33 Revenue analysis: by value chain component .............................................. 35 Margin analysis ....................................................................................... 36 Originating network operators / Terminating network operators .................... 36 Network transaction operators ................................................................. 36 Channel operators and producers ............................................................. 36 7. Industry development........................................................................... 39 Drivers of the industry ............................................................................. 39 Increasing penetration of multi-channel TV ................................................ 39 Consumer interactivity ............................................................................ 39 Pressures on core revenues ..................................................................... 39 Future development ................................................................................ 40 Improving quality of services ................................................................... 40 Industry consolidation............................................................................. 40 Technological developments .................................................................... 40 Content developments ............................................................................ 41 Payment mechanisms ............................................................................. 41 Regulation............................................................................................. 41 8. Glossary ................................................................................................ 42 9. Appendix A: Profiles.............................................................................. 43 Cellcast.................................................................................................. 43 Optimistic Media ..................................................................................... 44 Telecom Express ..................................................................................... 45 Eckoh .................................................................................................... 46 mBlox.................................................................................................... 47 YooMedia ............................................................................................... 48 10. Appendix B: Universe of participation TV services................................. 49 Chat..................................................................................................... 49 Dating .................................................................................................. 49 Psychic ................................................................................................. 49 Quiz ..................................................................................................... 49 Programmes, channels and weekly transmission hours ................................. 50 Chat..................................................................................................... 50 Dating .................................................................................................. 51 Mediatique Limited is a registered Limited company in England and Wales. Company No. 4575079. VAT registration 830 3436 57 3 Contents Psychic ................................................................................................. 52 Quiz ..................................................................................................... 52 11. Appendix C: Analysis detail ................................................................... 53 Schedule................................................................................................ 53 Number of viewers .................................................................................. 53 Revenue models ..................................................................................... 53 Quiz (call) ............................................................................................. 54 Quiz (text) ............................................................................................ 54 Chat..................................................................................................... 55 Dating .................................................................................................. 55 Mediatique Limited is a registered Limited company in England and Wales. Company No. 4575079. VAT registration 830 3436 57 4 Participation TV: market overview 1. Executive summary Mediatique Limited, a UK-based research and advisory firm, was asked by Ofcom to provide a review of certain sub-sectors of the interactive TV market in the UK, in the context