Posts Tagged ‘SK Telecom’
Mobile TV is being hyped and pushed agressively by the US operators. Both Verizon and AT&T use the Qualcomm MediaFLO technology to show Mobile TV on phones. According to this estimate last year, MediaFLO will need about 3.17 million subscribers to break-even on their operations costs. This does not include the $800 million it spent on setting up its network. This time last year, MediaFLO had 300,000 subscribers which bring in about $90 million in revenue per quarter. As you can see, MediaFLO and its partners need to build up their subscriber-base to recoup their investments. While the numbers are not available yet on the subscriber base, but it is clear that MediaFLO needs to develop its business model to make money.
However, this post is not about one company. Last week, Korea Times reported on the Mobile TV numbers in Korea and they are not pretty. Korea uses the DMB standard which include terrestrial and satellite and there were 13.9 million DMB-enabled devices sold by June 2008 compared to 9 million devices by December 2007. Of these 13.9 million devices, 48% were mobile phones, 37.8% were car navigation and other DMB-enabled terminals used in vehicles, 9.4% were portable media players, USB devices at 3.8 percent and laptops at 0.9%. Of the mobile phones, 6 million handsets use T-DMB while another 1.31 handsets use the S-DMB standard provided by a SK Telecom subsidiary.
While this is encouraging, when you look at the subscriber numbers, it is not such a pretty picture. According to a survey conducted by TNS Media, a local research firm, only view rating was only 1.172 percent, peaking at 3.585 percent during the commuting hours of 6 to 7 p.m. Also, the majority of the audience were males in their 50s, not the tech-savvy youngsters or the rich 30- and 40-somethings. It is clear that users view this service as a ” brief way to relieve boredom on a long subway ride.”
In addition, lack of effectiveness metrics for mobile advertisements is making advertisers wary of spending money on it. It is no wonder, that the advertisement based model is not working in Korea.
Subscription or pay-per-view services are not faring any better either. According to Mobile Burn, Toshiba-owned Mobile Broadcasting Corporation in Japan is shutting down by March 2009 due to increasing pressure from free services. Similarly, in Germany, the DVB-H licensee Mobile 3 is struggling after operators who lost the licensing auction choose to go with the DVB-T standard.
As you can see, Mobile TV is clearly struggling world over (with the exception of Japan maybe). Both the business models, advertisement-based and pay-services have their drawbacks. So, what do you think? Is Mobile TV dead?
US currently has four major mobile phone operators: AT&T, Verizon, T-Mobile USA and Sprint. Clearly, AT&T and Verizon have built up a huge lead over the other two competitors. And with Sprint leaking customers, consolidation in MVNOs (Virgin Mobile merging with Helio) and resellers switching operators, a la Qwest, it is anybody’s guess how long Sprint will survive as an independent company.
On the other hand, T-Mobile International certainly has a strong presence in Europe and is doing well there, thanks to its Duetche Telekom parent. However, in the US market, it is a different story. T-Mobile USA just passed 30 million customers in first quarter of this year. And this quarter, it has made an aggressive move to get additional revenue from its existing customer base by introducing the $9.99 home phone line. It remains to be seen how it affects it bottom line.
So, is the US market headed to be a duopoly with a distant 3rd operator? I certainly think so. It make take a few years to get there, but certainly expect this scenario to play out. I expect Sprint to be acquired by an international operator like SK Telecom or some other and it will focus its efforts on infrastructure and depend on the MVNOs and smaller players to provide the revenue. I don’t expect Sprint to be acquired by either AT&T or Verizon due to regulatory obstacles. A potential scenario could be that T-Mobile & Sprint merge. That could be interesting, however, the operate on two different platforms, GSM and CDMA respectively. That could pose some challenging integration issues. Another scenario that could happen should Sprint not be acquired, would be either Verizon or AT&T propping it up with some sort of investment, similar to Microsoft’s bailout of Apple. This could provide sufficient competition in the marketplace to keep the regulators and Congress pacified.
Samsung Instinct is truly a phone that can give iPhone a run for the money. It is cheaper, $450 without contract as opposed to $599 for iPhone 3G 8GB version or $699 for iPhone 3G 16GB version. Also, Instinct comes with a 2GB microSD card and 2 batteries. Already, it is the best selling phone for Sprint in the last two years and is comparable to Motorola Razr in sales when it was released in 2006. Samsung realizes that and has been made great marketing efforts to push the product. Samsung just released a three-part web series featuring San Francisco, Boston and Chicago ballparks, all shot on the Instinct. In addition, they had previously announced a promotion asking filmmakers to post short videos on YouTube that feature Instinct for $20 each and a chance to win $10,000. Clearly, Samsung knows it has a good product.
Unfortunately, for Samsung, they are stuck with a lousy operator. Sprint has been struggling to integrate Nextel and has been leaking customers since then. As this Engadget post in May, indicates, Sprint lost over a million subscribers in Q1 2008. It is still the third ranked carrier in US with 52 million subscribers. However, I believe its days are numbered. With persistent rumorsabout Sprint being bought by SK Telecom, which the market thinks is unlikely, and potential Nextel spinoff and WiMAX issues, I don’t see how Sprint can focus on keeping its market share.