Thursday is here together with the second part of the interview about mobile TV with Phil Taylor, a director at Strategy Analytics, an analyst and a regular speaker at industry conferences.
Let's welcome Phil :)
Hi Phil, thank you for visiting Xellular Identity :) How are you?
I’m great thanks.
Who are the mobile TV consumers? What is their buying motivation?
At the moment, mobile TV consumers are mostly classic early adopters between the ages of 18-30 and male. In Italy, where DVB-H services were launched in time for the World Cup Tre claimed to have signed up 111,000 customers to DVB-H services in the first six weeks of operation with the demographic primarily men, aged between 25 to 54. The chief executive of 3 was reported in the International Herald Tribune as having said "We didn't expect the numbers to be this high, and we also didn't expect the strong growth trend to continue even after the conclusion of the World Cup.” The buying motivation is largely novelty driven, but the idea that the service can be used to fill so called ‘dead time’, spent waiting around between other activities is the primary value seen in the service.
What do consumers think about current mobile TV offering?
We conducted an end user focus group in London during October 2006, which asked participants to test and compare the mobile TV services offered by Virgin (using DAB) and Vodafone (using 3G simulcast). Virgin Mobile TV achieved the highest rating of services. With an overall score of 71/100, Virgin Mobile TV was rated 21 points ahead of Vodafone Live! (50/100) confirming the expectation of dramatically improved overall user experience on a broadcast solution. Around half the participants said they would consider buying the Virgin Mobile TV service based upon their experiences. However users voiced concerns that the Virgin service is only available on one device, and a pretty ugly one at that!
We have also been comparing, contrasting and testing the DVB-H services in Italy. In an effort that is no doubt designed to put pressure on Tre’s pricing and ROI schedule, TIM has gone cheap. Access to its DVB-H service (albeit with fewer channels available) costs only €5 per month, 6 times less than Tre plans to charge from the end of November 06.
You don’t have to be retailing genius to suggest that, for a service as reliant on novelty value and transient viewing as mobile TV, a price point of €29 per month sounds on the high side. No surprises therefore, that our end user survey work also bears this out with fewer than 4% of survey respondents in Italy stating that they would be willing to pay more than €10 per month for access to mobile TV. Overall though, the quality of TV offered over DVB-H in Milan was pretty impressive and demonstrably superior to the rather scratchy 3G based simulcast services to be found in most European markets currently. As we had expected, coverage issues do need to be addressed to improve the proposition. Weak signals and resulting pauses in transmissions were sometimes experienced either when trying to access mobile TV in-building, or while in built up areas close to tall buildings. Overall however, coverage in the city was satisfactory, although providing access in subways would greatly enhance the value proposition for commuters.
But, despite what we felt was a fairly impressive technical performance given the time since launch, our 36 member focus group panellists were a harder audience to please! The majority felt that Mobile TV would be useful only when travelling and that low levels of monthly usage would not justify the costs. The 6 members of the panel that had subscribed to TuaTV services had done so on the basis of casual daily use rather than the more expensive weekly or monthly plans. On a more positive note, our group did agree that the broadcast services easily beat the 3G based ‘TIM download’ service on almost all satisfaction criteria tested.
What should operators do to overcome barriers to users’ adoption?
Our test experiences have confirmed that DVB-H can provide a compelling usage experience compared with 3G, but that even early adopter consumers are still a long way from being convinced of the merits of the value proposition. This problem seems likely to be compounded (at least in Italy) by that age old challenge, namely weak operator promotions and sales techniques. Mystery shopping around Milan revealed the staff in operator-branded retail outlets to be poorly informed about mobile TV and largely unable to communicate the available offers. Improving here would go along way to helping operators sell more services.
Any examples of marketing best practices?
While Tre seems to be off to a flying start, we believe that the ARPU numbers underlying its user metrics will be less satisfactory. We predict that slow take-up at current prices and the entry of Vodafone will help drive down prices in the coming year and are estimating ARPUs down to €7 per month by 2011. This will certainly place pressure on Hutchison’s ROI schedule for its investment in DVB-H. As TIM’s CEO is supposed to have said recently, "There are reasons to be worried when a Chinese operator starts buying frequencies in our domestic market being ready to lose billions without any business model"! Time will tell.
Thank you Phil for this interview :)
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