 | Issue: | Latin America 2008 |
| Article no.: | 13 | |
| Topic: | Mobile TV – is there a business in Brazil? | |
| Author: | Alberto Blanco | |
| Title: | Founder and President | |
| Organisation: | Participe TV | |
| PDF size: | 217KB |
About author
Alberto Blanco is the Founder and President of Participe TV – a company focused on developing the mobile TV business in Brazil. The company owns a UHF license in the City of Rio de Janeiro to provide the service. Mr Blanco is a telecommunications sector veteran having worked with such Brazilian mobile operators as Oi, Telemig Celular and TIM. At Oi, Mr Blanco held the position of Marketing VP and was responsible for the creation of the “Oi” brand and its strategy and positioning in the market. Before working in telecom, Mr Blanco worked with Ambev, Johnson & Johnson and Citibank – always involved in the marketing and technology areas. Alberto Blanco earned a degree from Mackenzie University in Sao Paulo, and an MBA from University of North Carolina, Chapel Hill.
Article abstract
Brazil is one of the world’s largest mobile markets and almost all homes also have TVs. The current mobile TV offerings have not done well, because of the cost and the limited programming. Broadcasters, though, will soon roll out free programming for mobile using the spectrum dedicated to mobile broadcasting by the ISDB-t standard Brazil has adopted for digital TV. Developing this market requires ISDB-capable handsets and a cooperative working relationship between mobile operators, mobile TV operators and content providers.
Full Article
Brazil is the fifth largest mobile market in the world. Brazil has 135 million mobile subscribers with more than 65 per cent penetration and 93 per cent of the country’s homes have TV sets. When combining these two indicators, one can easily imagine the potential for Mobile TV. This market opportunity becomes even more attractive when we consider the affinity Brazilians have for their mobile handsets – changing models, on average, every three years – and the significant time spent in front of the television viewing the new interactive programmes that are introduced every day. There is no doubt that Mobile TV will be a big business in this country. The issue at hand is – where will the money come from and how to get started? In the recent past, operators began to offer streaming services, but the penetration of the customer base was very low. Poor content hoped for results. Hence, streaming services have gone back to be used mainly for operator marketing purposes. Broadcasters, on the other hand, are rolling out their digital networks based on ISDB-t with a 1-seg free-to-air transmission. ISDB-t – Integrated Services Digital Broadcasting- terrestrial (Japan’s mobile digital audio/video and data broadcasting service) is the standard adopted in Brazil. ISDB-t channels have 13 segments. High definition digital broadcast occupies 12 segments; one segment (1-seg), the 13th, is reserved for mobile receivers. Free-to-air television and radio broadcasts are unencrypted and any suitable receiver, including ISDB-t equipped mobile phones, can receive and play them. The first handset is already out in the market. Sales are not very high but the service works well and broadcasters are betting on the quality of their content to attract customers. There are expectations of new models in the near future. The truth is that the mobile TV business is in its early stages in Brazil, as in other countries, and there are several issues that need to be addressed before it can truly succeed. One of the issues is the unique Brazilian SBDTV standard (Sistema Brasileiro Digital de TV) based on the Japanese ISDB-t. Brazil is the only country in the world with GSM/3G networks and SBDTV. This could bring some problems in the future, including economies of scale for suitable handsets. Handset cost is one of the key success factors for any mobile telecommunications business and with only one handset on the market – and only in Brazil, can expose operators to major risks. The other issue is how to get MNOs (mobile network operators) engaged in this business since a free-to-air service will not directly help the operators’ decreasing ARPU (Average Revenue Per User). Advertising money is not yet significant enough to increase ARPU and it does not seem likely that advertising expenditures will increase with Mobile TV. The way to go might be Mobile Paid TV and other interactive services along with existing free-to-air services. The ideal would be to encourage mobile TV enabled handsets by using a free-to-air service as a lead-in to paid TV and other premium services. The issue, once again, is technology. SBDTV does not support paid TV, but it is possible to develop hybrid handsets that support SBDTV and other technologies for paid TV such as DVB-h, DVB-SH or MediaFlo. It is important to note that there are at least 15 separate mobile technologies. Although Brazil has adopted ISDB-t for free-to-air TV, it seems likely that paid TV with handsets supporting more than one technology will come about in the near future. Thus, the main issue is to find a business model that makes sense for all players involved in the business. Three main players, each one with a distinct role, form the mobile TV ecosystem: MNO, MTO (mobile TV operators) and content providers. Each player must take advantage of and leverage its own expertise and core business to succeed and to speed the process up. MNOs should focus on developing a marketing strategy which offers and promotes Mobile TV along with other services. Like any other value added service, the MNOs should be responsible for pricing, billing, customer assistance and should package it with their own particular services; the customers should perceive the entire service as owned and offered by the MNO. The ideal would be to have a wide variety of offers consisting of monthly, weekly and daily packages. Highly in-demand content that could be charged by the hour could result in a significant ARPU increase. The availability of a variety of handsets is the other pivotal concern that needs to be addressed carefully as it is important to have a variety of models with a wide range of prices. The MTO will own the TV license; it will build and operate the Mobile TV network and offer a carrier class service. In order to facilitate and expedite the operation, network planning should consider sharing the MNO’s infrastructure such as towers and data centres. As TV service is a highly quality-sensitive service, lost TV signals are even less acceptable than a dropped-call. The MTO will need to focus on building a reliable network operating centre, ensuring the appropriate number of transmitters, providing gap fillers and anticipating problems. Once the marketing strategy has been defined, the MTO will need to find first-rate content providers to offer the appropriate line-up and to develop new, interactive, TV shows. Well-known content will drive the success of the service in the early stages, but fresh innovative programmes should be part of the plan. There should be incentives for new independent producers to differentiate the service from the ordinary terrestrial TV programming. New revenue streams should also be developed, such as: electronic program guides (EPG), triggered advertising, channel change advertising and media asset sales. The MTO will be the mobile TV ‘white-label’ for the MNO. The content providers will have to adapt to the mobile world. The initial free-to-air service will help facilitate the understanding of mobile TV services for consumers, but it will not be enough to keep the customer attached to the service. Consumers will demand newer and faster content as they are already moving away from traditional TV programming. Internet is the new paradigm and the interactive programming taking advantage of 3G network resources is an important feature of the new mobile TV shows. New formats, shorter episodes, as the already known ‘mobisodes’, should be the coming trend in content production. Although each player has its own responsibilities, questions such as technology, regulatory issues, content and launch strategies should be discussed jointly. The MTO and MNO must be strategically aligned in order to develop the business. The MTO should seem to be an extension of the MNO thus bringing speed to the process. The MTO should also advise and provide incentive for content providers to develop and produce new Mobile TV shows. The MTO could also help content providers understand how to take advantage of MNO 3G networks. They will bridge the gap between the MNOs and the content providers. Now, the most important point, how do you split the new business revenues? We believe the best model is to split revenues equally among the three players. The three players should divide paid-TV subscription, advertising and interactive services, each one being in charge of its own investments. However, it is important to establish a minimum customer base guarantee by the MNO in order to keep the interests aligned among the three players. This customer base would guarantee minimum revenues for the MTO and content providers so they could maintain their investments for network coverage and new content production, respectively. By 2012, there will be more than 300 million specialized handsets in the world that can receive one or another mobile TV format. According to an important international research institute, a further 60 million non-handsets devices will be added to that, making 360 million devices that can view mobile TV. Brazil will have at least one per cent of this market, considering a very conservative ARPU increase of only US$5.00 per user. We are estimating a business of at least US$ 200 million a year, in four years time. This is quite an interesting number considering the revenues from other value-added-services. Therefore, MNOs do not have the time to sit and wait, questioning the arrival of mobile TV. It has already begun to take scale in some parts of the world, and inevitably will begin to be understood by consumers. Taking the first step and offering the service in Brazil is a critical one because licenses are limited for this service, and the government is not likely to offer new ones before the TV digitalization process has ended in 2018. At the end of the day, from the customer perspective, success will be the sum of attractive handset offers (quality and quantity) plus relevant content and adequate pricing.
