MediaFlo seeks to jumpstart mobile-video market

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When Verizon Wireless launched its new service, VCast Mobile TV, earlier this month in 20 U.S. markets, it was like nothing American consumers had seen before. Eight crystal-clear 24/7 channels are broadcast to wireless handsets via MediaFlo, a subsidiary of cell-phone technology firm Qualcomm Inc. At the touch of just one button, VCast Mobile TV delivers current full-length primetime programming -- including some live simulcasts -- from the nation's biggest TV brands, including CBS, MTV and NBC.

But there is one prominent channel missing: ABC. While another Walt Disney Co.-owned network, ESPN, is part of the MediaFlo lineup, the conglomerate didn't reach an agreement for the broadcaster. Albert Cheng, executive vp digital media at Disney-ABC Television Group, isn't exactly upset about that.

"It feels so old media in new media," Cheng says of MediaFlo. "We are interested in on-demand and local-insertion opportunities, which this platform does not provide. We're disappointed in the inability to serve those needs."

Consensus is hard to come by in the idling U.S. mobile-video market, which could be in for a jump-start from a new approach like MediaFlo. As the mobile industry converges in Orlando for the CTIA Wireless 2007 convention, running today through Thursday, carriers and content firms alike will be debating what it will take to get a critical mass watching television and film on increasingly sophisticated devices like Apple's upcoming iPhone.

Hollywood wants an answer to that question. In November, Disney Media Networks co-chair (and president of Disney-ABC Television Group) Anne Sweeney deemed the development of mobile video "critical" to the industry. Peter Chernin, president and COO of News Corp., anticipated that players in this space could see $5 billion in new revenue if 20% of the 220 million wireless subscribers in the U.S. can be encouraged to cough up $10 a month for video.

That's easier said than done, however. Only 2.5% of U.S. mobile subscribers use mobile video, according to technology research and consulting firm Yankee Group, and barely 10% of the market will even have third-generation, or 3G, phones by year-end. What's more, study after study has found little demand for or satisfaction with mobile video; a study conducted by research firm Telephia shows 41% of users find fault with mobile picture quality.

Enter MediaFlo, which doesn't require 3G networks and has the image clarity and seamless channel-switching of a typical TV set. The hope is that by using linear channels instead of on-demand clips, MediaFlo will broaden the mobile-video market beyond early adopters.

"I think it's very important," CBS Mobile executive vp Cyriac Roeding says. "I would go so far as to say this is one of the most significant developments in mobile entertainment in the last five years."

But as Cheng's reservations reflect, MediaFlo is no sure thing. Will the 30- and 60-minute increments of linear TV work for a medium consumed on the go -- and without TiVo-like abilities to pause or store programming? Will it be worth $15 a month for mobile access to broadcast channels that subscribers already receive for free in standard sizes? MediaFlo is just one of many experiments that will be tested amid uncertainty over what pricing, packaging and content resonates with American viewers.

"The jury is still out in terms of there being any clear winners or whether there is mass-market demand for these services yet," says program manager Linda Barrabee, Yankee's resident mobile-entertainment analyst.

For all the hundreds of millions that carriers have poured into 3G networks, the viability of video has lagged behind their core offering, voice, or text-messaging and ringtones. Because 3G functions in what is known as a unicast model, which transmits a separate signal to each user, sustaining a mass video audience is considered logistically untenable.

In contrast, MediaFlo operates on a multicast model, occupying the 700MHz spectrum once reserved for UHF channel 55 on analog television. Adapting old technology for new media is relatively uncharted  territory, even in other parts of the glove such as Asia and Europe, where mobile development is more advanced. Only Italy, Japan and South Korea have deployed multicast efforts.

"What's interesting about linear mobile digital video is that it's new everywhere," MTV Networks Mobile Media senior vp Greg Clayman says. "We'll all be watching each other."

In cities including Chicago, Dallas and Denver, Verizon is allowing subscribers with select handsets to try MediaFlo in different channel packages that range from $15-$25 a month. Rounding out the list of those channels are Comedy Central, Nickelodeon and Fox (NBC programs two different channels). MediaFlo is capable of programming up to 20 different channels and plans to add 20 cities each year.

"We're looking to target different segments so everyone gets what they want," says Gina Lombardi, president of MediaFlo, into which Qualcomm has sunk $800 million over the past few years.

MediaFlo offers a parallel but slightly different channel universe than what viewers can get on television; only MTV is a straight simulcast.

Other networks are altered in numerous ways, from CBS, which time-shifts the previous afternoon's "The Young and the Restless" to 9 a.m. the next day, to Fox, which inserts programs from sister channels like Fox News Channel and even its library, including "Ally McBeal." ESPN plans to air selected college sports events live.

There are a few reasons for the jumbled schedule. Mobile-viewing patterns are quite different than those of traditional television. Telephia found that just 9% of mobile viewing occurs during the traditional primetime hours of 8-11 p.m., whereas 30% of viewing occurs between 12-4 p.m. In addition, programrs aren't going to be able to get the mobile rights to all of their shows. Also leaving scheduling gaps are programs like CBS' "The Early Show," which have local inserts MediaFlo can't yet accommodate.

Verizon isn't the only entity deploying MediaFlo stateside; the country's only larger carrier, AT&T, will follow suit later in the year. Sprint Nextel, T-Mobile and Alltel have all conducted MediaFlo trials, but none have yet committed further. MediaFlo also has a rival technology, Modeo, being tested in New York by Crown Castle International Corp., but hasn't struck any deals with carriers yet. And then there is Time Warner Cable, which is allowing subscribers in three markets to get mobile simulcasts in partnership with Sprint.

In the age of YouTube and VOD, there is something counterintuitive about offering linear programming. But Salil Dalvi, gm of wireless platforms at NBC Universal, believes it allows carriers to promote a simpler, more mainstream-friendly product.

"The technology aficionado will navigate through 20 menus to get to what they want," Dalvi says. "But how are we going to get the 40-year-old soccer mom to do something they've never done?"

Another presumption often made about mobile viewing that MediaFlo seems to contradict is that video consumption comes in brief sneak peeks. While there is clear evidence that there is an audience of "snackers" digesting just minutes of content at a time, more and more research points to segments of longform viewers. A recent Telephia study found that 82% of mobile viewings last longer than five minutes.

Mitch Feinman, senior vp Fox Mobile Entertainment, cited research from European trials that shows that a sizable portion of mobile viewership comes in anywhere from 20 minutes to two hours. "That led us to believe maybe there is an audience that isn't using this as a time-filler," he says.

There is an irony to the prevailing strategy of MediaFlo at this embryonic stage of the mobile-video market: By relying on traditional viewing habits such as linear and longform consumption, they want to move the market forward by taking a step back. But Phillip Alvelda, chairman and CEO of MobiTV, an aggregator of linear and on-demand content for carriers including Sprint, argues that the clock already is ticking on the interim strategy.

"The majority of traffic today is linear feeds, but that's not going to make sense for too many years," says Alvelda, who recently inked a deal with NBC Universal to make the first broadcast primetime series available on-demand. "The inevitable trend that everyone but Qualcomm and Modeo has recognized points to on-demand."

MediaFlo recognizes that linear alone won't cut it in the long haul. In the fourth quarter, the company plans to deploy 3G-enabled features that will complement the live signal, such as data streams of stock prices and sports scores. "The combination of services will be quite compelling," Lombardi predicts.

"Qualcomm has a grand vision for MediaFlo, and it's more than what you're seeing today," says David Bluhm, CEO of GoTV Networks, a mobile-programming producer. "They know it's not just about putting broadcast TV on handsets."

"We don't have all the answers about what consumers want," Clayman says. "Do they flock to linear or on-demand? We don't know. We'll probably find that both have a place."
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