mdtv: business, economics and regulation
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MDTV: Business, Economics and Regulation. MMF in association with AVF and SPI IBEC, Dublin, Ireland 09 February 2006 Dermot Nolan TBS. Available now…. The 30 second TV spot’s future. The 30 second TV spot’s future. ‘ We are facing a cliff edge moment within five to ten years’ - PowerPoint PPT PresentationTRANSCRIPT
MDTV: Business, Economics and RegulationMDTV: Business, Economics and RegulationMDTV: Business, Economics and RegulationMDTV: Business, Economics and Regulation
MMF in association with AVF and SPIMMF in association with AVF and SPI
IBEC, Dublin, IrelandIBEC, Dublin, Ireland
09 February 200609 February 2006
Dermot NolanDermot Nolan
TBSTBS
(C)TBS 2006(C)TBS 2006
Available now…Available now…Available now…Available now…
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The 30 second TV spot’s futureThe 30 second TV spot’s futureThe 30 second TV spot’s futureThe 30 second TV spot’s future
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The 30 second TV spot’s futureThe 30 second TV spot’s futureThe 30 second TV spot’s futureThe 30 second TV spot’s future
‘ ‘ We are facing a cliff edge moment within five We are facing a cliff edge moment within five
to ten years’to ten years’
‘ ‘ We will have to deal with the mobile phone We will have to deal with the mobile phone
as one of the devices to communicate with as one of the devices to communicate with
customers and it will probably be the largest customers and it will probably be the largest
biggest medium in the world’biggest medium in the world’
Maurice Levy, Publicis, November 2005Maurice Levy, Publicis, November 2005
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Ireland: Outlook for MDTV servicesIreland: Outlook for MDTV services Ireland: Outlook for MDTV servicesIreland: Outlook for MDTV services
Many commercial, political and regulatory delays to launch consumer DTT/DABMany commercial, political and regulatory delays to launch consumer DTT/DAB
No clear timescale, apart from DVB-T field trials (system which already No clear timescale, apart from DVB-T field trials (system which already
works!!!)works!!!)
Irish DTT service may be marginalised by UK Freesat serviceIrish DTT service may be marginalised by UK Freesat service
However, second mover advantages BECAUSE:
Spectrum IS available for DTT, MDTV and DAB as services NOT allocated (cf UK)Spectrum IS available for DTT, MDTV and DAB as services NOT allocated (cf UK)
Follow path set by France, Finland and Spain : allocate UHF MDTV spectrum?Follow path set by France, Finland and Spain : allocate UHF MDTV spectrum?
Requires radical rethink vs current assumptions re services, regulation and Requires radical rethink vs current assumptions re services, regulation and
viabilityviability
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Ireland: Outlook for MDTV servicesIreland: Outlook for MDTV services Ireland: Outlook for MDTV servicesIreland: Outlook for MDTV services
ComReg consultation interesting BUT: scale economies, market size, technology ComReg consultation interesting BUT: scale economies, market size, technology
divertissements and licence terms are ALL problematicdivertissements and licence terms are ALL problematic
Who pays for the new MDTV networks: broadcasters, mobile operators or a Who pays for the new MDTV networks: broadcasters, mobile operators or a
consortium?consortium?
External factors complicate the rollout: UK overspill of xG services and DTT/future External factors complicate the rollout: UK overspill of xG services and DTT/future
MDTV services, Freesat makes Irish DTT look very shaky, market preemption etc…MDTV services, Freesat makes Irish DTT look very shaky, market preemption etc…
Reappraise current priorities for wireless systems to support broadcasting, mobile Reappraise current priorities for wireless systems to support broadcasting, mobile
and MDTV servicesand MDTV services
A new business model, Government policy and regulatory framework is needed.A new business model, Government policy and regulatory framework is needed.
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AgendaAgendaAgendaAgenda
Technology transition tippingpointsTechnology transition tippingpoints
IntroductionIntroduction
Mobile vs Broadcast industries: current situationMobile vs Broadcast industries: current situation
A very clear MDTV propositionA very clear MDTV proposition
Economic issues Economic issues
In-band / hybrid MDTV systemsIn-band / hybrid MDTV systems
Platform warsPlatform wars
The Trials GameThe Trials Game
UK national network indicative costsUK national network indicative costs
Business modelsBusiness models
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More AgendaMore AgendaMore AgendaMore Agenda Distinctive content propositionDistinctive content proposition
Service pricing Service pricing
Rightsholders relish rolloutRightsholders relish rollout
Ownership structuresOwnership structures
Regulatory risk reductionRegulatory risk reduction
Spectrum and environmental issuesSpectrum and environmental issues
TV Viewing implicationsTV Viewing implications
TV advertising implicationsTV advertising implications
Ireland: outlook for MDTV services
MDTV Takeup predictionsMDTV Takeup predictions
OutlookOutlook
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Technology transition tippingpointsTechnology transition tippingpointsTechnology transition tippingpointsTechnology transition tippingpoints
PVRPVR Revolutionary, but not mass-market Revolutionary, but not mass-market yetyet
HDTVHDTV Niche high ARPU pay TVNiche high ARPU pay TV
IPTVIPTV Dream solution, serious funding Dream solution, serious funding issuesissues
MDTVMDTV 2.5/3G MDTV now, hybrid MDTV 2.5/3G MDTV now, hybrid MDTV laterlater
PodcastinPodcastingg
3 M TV downloads in first 45 days3 M TV downloads in first 45 days
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IntroductionIntroductionIntroductionIntroduction
Satellite MDTV in South Korea May 2005(c 350k subs)Satellite MDTV in South Korea May 2005(c 350k subs)
xG based MDTV many countries (US, EU, Asia)xG based MDTV many countries (US, EU, Asia)
Global technical trials of hybrid MDTV servicesGlobal technical trials of hybrid MDTV services
Standards wars inevitable (EU & US) Standards wars inevitable (EU & US)
Multiple business, consumer and regulatory issuesMultiple business, consumer and regulatory issues
Emerging revenue models: subscription / advertisingEmerging revenue models: subscription / advertising
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Mobile vs broadcast industries: current Mobile vs broadcast industries: current situationsituationMobile vs broadcast industries: current Mobile vs broadcast industries: current situationsituation
ComparisonComparison MobileMobile BroadcastBroadcast
ScaleScale GlobalGlobal NationalNational
Subscriber ChurnSubscriber Churn 25%25% 10%10%
Device baseDevice base 2.0 billion2.0 billion 1.0 billion1.0 billion
Hardware replacement Hardware replacement lifecyclelifecycle
6 months6 months 5 years5 years
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A very clear MDTV propositionA very clear MDTV propositionA very clear MDTV propositionA very clear MDTV proposition
‘‘Its live TV on your phone, stupid!’Its live TV on your phone, stupid!’
Simple selling proposition, BUT…...Simple selling proposition, BUT…...
Problems: logistic, execution, regulationProblems: logistic, execution, regulation
Numerous regional variations likelyNumerous regional variations likely
End-to-end value chain scrutiny (who gets End-to-end value chain scrutiny (who gets
what?)what?)
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Economic issuesEconomic issuesEconomic issuesEconomic issues
Substantial infrastructure investment costsSubstantial infrastructure investment costs
Onerous coverage requirements Onerous coverage requirements
Handset pricing & subsidy strategiesHandset pricing & subsidy strategies
Content acquisition & rights costsContent acquisition & rights costs
Service pricing & business modelsService pricing & business models
Regulatory costsRegulatory costs
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In-band vs hybrid MDTV systemsIn-band vs hybrid MDTV systemsIn-band vs hybrid MDTV systemsIn-band vs hybrid MDTV systems
In-band MDTV broadcast via xG (=2.5G or 3G) networks In-band MDTV broadcast via xG (=2.5G or 3G) networks
Hybrid MDTV = xOFDM / xG networks integrated in handset Hybrid MDTV = xOFDM / xG networks integrated in handset
xOFDM transmission = DVB-H, ISDB-T, T-DMB, MediaFLO xOFDM transmission = DVB-H, ISDB-T, T-DMB, MediaFLO
Distinct regulatory environmentsDistinct regulatory environments
Separate deployment timescalesSeparate deployment timescales
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In-band MDTV systemsIn-band MDTV systemsIn-band MDTV systemsIn-band MDTV systems
NOW (MobiTV, Orange TV, SkyMobileTV, etc)NOW (MobiTV, Orange TV, SkyMobileTV, etc)
Vertically integrated with cellular operator Vertically integrated with cellular operator
Test bed: consumer behaviour, demand, pricingTest bed: consumer behaviour, demand, pricing
-’s: Picture quality, mass-market scalability, usage caps-’s: Picture quality, mass-market scalability, usage caps
Dominant for next three years…..Dominant for next three years…..
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Hybrid MDTV systemsHybrid MDTV systemsHybrid MDTV systemsHybrid MDTV systems
US / APAC (2006), Europe (2006/7)US / APAC (2006), Europe (2006/7)
Separate mobile TV / cellular networksSeparate mobile TV / cellular networks
+’s: Picture quality, mass-market scalability, services +’s: Picture quality, mass-market scalability, services
-’s: Ownership, regulation, spectrum, access-’s: Ownership, regulation, spectrum, access
Competing standards create consumerCompeting standards create consumer confusionconfusion
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Platform warsPlatform warsPlatform warsPlatform wars
Korea & Japan: Korea & Japan: self-contained standards/marketsself-contained standards/markets
Europe: Europe: DVB-H vs T-DMBDVB-H vs T-DMB
US: US: DVB -H vs MediaFLODVB -H vs MediaFLO
Asia: Asia: DVB-H vs T-DMBDVB-H vs T-DMB
Cellular carriers & vendors will pick winners!!!Cellular carriers & vendors will pick winners!!!
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PAY-TV past lessons in Platform PAY-TV past lessons in Platform warswars
Year Platform war Service RatioAdvantage
Winner
1989 SES Astra vs BSB 3.2 SES Astra2002 SkyDigital vs
ITVDigital6.5 SkyDigital
200? DVB-H vs T-DMB 10.0 ?
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Numerous MDTV field trialsNumerous MDTV field trialsNumerous MDTV field trialsNumerous MDTV field trials
Worldwide trials by cellular carriers / broadcastersWorldwide trials by cellular carriers / broadcasters
‘‘Showcase’ technical trialsShowcase’ technical trials
Economic conclusions: focus group / tame triallists Economic conclusions: focus group / tame triallists
All trials of hybrid MDTV systems All trials of hybrid MDTV systems
AND parallel xG TV rollouts by carriers….AND parallel xG TV rollouts by carriers….
To hone the MDTV service proposition…To hone the MDTV service proposition…
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375 O2 triallists of DVB-H, 18-44, mixed demographics375 O2 triallists of DVB-H, 18-44, mixed demographics
16 channel MDTV service (terrestrials, basic tier pay services)16 channel MDTV service (terrestrials, basic tier pay services)
83% satisfaction levels, 76% would subscribe83% satisfaction levels, 76% would subscribe
Usage profile:36% (home), 23%(work), 21% (bus)Usage profile:36% (home), 23%(work), 21% (bus)
Channel choice drives usageChannel choice drives usage
Key to secure major broadcasting brandsKey to secure major broadcasting brands
Results all in public domainResults all in public domain
Latest trial results: O2/Arqiva, January Latest trial results: O2/Arqiva, January 20062006
(Oxford, UK, DVB-H trial)(Oxford, UK, DVB-H trial)
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UK National Network indicative UK National Network indicative
costscosts UK National Network indicative UK National Network indicative
costscosts UK national network indicative costs (£M)
200500
1200 1000
5000
0
1000
2000
3000
4000
5000
6000
1
DVB-T
DVB-H Low UHF
DVB-H L band
Orange PCN network
Typical 3G network
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Business modelsBusiness modelsBusiness modelsBusiness models
Free-to-air / advertising: Korean T-DMB Free-to-air / advertising: Korean T-DMB
Subscription / advertising: S-DMB, SkyMobileTV Subscription / advertising: S-DMB, SkyMobileTV
Mixed FTA / subscription: regulatory requirement?Mixed FTA / subscription: regulatory requirement?
Wholesale to carriers : BT, CrownCastle, QualcommWholesale to carriers : BT, CrownCastle, Qualcomm
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Distinctive content propositionDistinctive content propositionDistinctive content propositionDistinctive content proposition
Location, personal, time, screen specificLocation, personal, time, screen specific
Mass-market channels & live premium sportsMass-market channels & live premium sports
Viable genres: news, business, comedy, childrensViable genres: news, business, comedy, childrens
MDTV exclusive, ’Mobisodes’, localised servicesMDTV exclusive, ’Mobisodes’, localised services
Adult services key drivers (via xG TVAdult services key drivers (via xG TV services)services)
Graphics, display, picture quality CRITICALGraphics, display, picture quality CRITICAL
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Service pricingService pricingService pricingService pricing
Mixed advertising / subscription modelsMixed advertising / subscription models
Hybrid trials / in-band MDTV services: Flat rate feeHybrid trials / in-band MDTV services: Flat rate fee
Price elasticity not quantified: take-up keyPrice elasticity not quantified: take-up key
Churn mismatch between two segments: Churn mismatch between two segments:
– cellular cellular 25%25%
– pay-TV pay-TV 10%10%
Hybrid MDTV break-even: pricing, takeup, network Hybrid MDTV break-even: pricing, takeup, network
costcost
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Rightsholders relish rolloutRightsholders relish rolloutRightsholders relish rolloutRightsholders relish rollout
New distribution platform for rightsholders...New distribution platform for rightsholders...
Potential global reachPotential global reach
High growth pay-TV platform? - fixed platforms peakingHigh growth pay-TV platform? - fixed platforms peaking
Rights clearance: complex & problematic (see UK…)Rights clearance: complex & problematic (see UK…)
Non-exclusive short-term licensing Non-exclusive short-term licensing
Conditional Access for high value rightsholdersConditional Access for high value rightsholders
Content owners positioned to leverage valueContent owners positioned to leverage value
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Ownership structuresOwnership structuresOwnership structuresOwnership structures
Large upfront investment costs Large upfront investment costs
Various equity ownership structuresVarious equity ownership structures
Advantages / disadvantages Advantages / disadvantages
Competition policy issues: SMP in EuropeCompetition policy issues: SMP in Europe
Environment considerations impact industry Environment considerations impact industry
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Regulatory risk reductionRegulatory risk reductionRegulatory risk reductionRegulatory risk reduction
Licence(s)Licence(s)
Coverage, service, technologiesCoverage, service, technologies
Spectrum availability, authorisation, accessSpectrum availability, authorisation, access
Licence allocation mechanismLicence allocation mechanism
Licence termLicence term
Competition policy requirementsCompetition policy requirements
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Spectrum and environmental issuesSpectrum and environmental issuesSpectrum and environmental issuesSpectrum and environmental issues
Hybrid MDTV requires spectrum allocationHybrid MDTV requires spectrum allocation
Potential bands: VHF vs UHF vs L bandPotential bands: VHF vs UHF vs L band
Issues: antenna size, interference, radios, costs to deployIssues: antenna size, interference, radios, costs to deploy
Critically dependent on national DTV transition strategiesCritically dependent on national DTV transition strategies
Low UHF (E21- E49) is preferable, but..Low UHF (E21- E49) is preferable, but..
HDTV vs MDTV, auctions etc post-analogueHDTV vs MDTV, auctions etc post-analogue
Higher frequencies = greater environmental impactHigher frequencies = greater environmental impact
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TV viewing implicationsTV viewing implications TV viewing implicationsTV viewing implications
Location independence mirrors cell phone successLocation independence mirrors cell phone success
Fundamentally alters peak-time viewing definitions (O2 Fundamentally alters peak-time viewing definitions (O2
confirmed this shift) confirmed this shift)
‘‘Bite-sized’ viewing patterns favouredBite-sized’ viewing patterns favoured
Short attention span formats flourishShort attention span formats flourish
Superior audience research / interactive possibilitiesSuperior audience research / interactive possibilities
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TV advertising implicationsTV advertising implications TV advertising implicationsTV advertising implications
Potentially GLOBAL mass market mediumPotentially GLOBAL mass market medium
From THIRTY second to FIVE second spot!!! From THIRTY second to FIVE second spot!!!
Highly targetted advertising NOW possibleHighly targetted advertising NOW possible
Simulcast existing terrestrial channels ( Italy etc )Simulcast existing terrestrial channels ( Italy etc )
Dream demographics: 16-35 year oldsDream demographics: 16-35 year olds
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Ireland: Outlook for MDTV servicesIreland: Outlook for MDTV services Ireland: Outlook for MDTV servicesIreland: Outlook for MDTV services
Many commercial, political and regulatory delays to launch consumer DTT/DABMany commercial, political and regulatory delays to launch consumer DTT/DAB
No clear timescale, apart from DVB-T field trials (system which already No clear timescale, apart from DVB-T field trials (system which already
works!!!)works!!!)
Irish DTT service may be marginalised by UK Freesat serviceIrish DTT service may be marginalised by UK Freesat service
However, second mover advantages BECAUSE:
Spectrum IS available for DTT, MDTV and DAB as services NOT allocated (cf UK)Spectrum IS available for DTT, MDTV and DAB as services NOT allocated (cf UK)
Follow path set by France, Finland and Spain : allocate UHF MDTV spectrum?Follow path set by France, Finland and Spain : allocate UHF MDTV spectrum?
Requires radical rethink vs current assumptions re services, regulation and Requires radical rethink vs current assumptions re services, regulation and
viabilityviability
(C)TBS 2006(C)TBS 2006
Ireland: Outlook for MDTV servicesIreland: Outlook for MDTV services Ireland: Outlook for MDTV servicesIreland: Outlook for MDTV services
ComReg consultation interesting BUT: scale economies, market size, technology ComReg consultation interesting BUT: scale economies, market size, technology
divertissements and licence terms are ALL problematicdivertissements and licence terms are ALL problematic
Who pays for the new MDTV networks: broadcasters, mobile operators or a Who pays for the new MDTV networks: broadcasters, mobile operators or a
consortium?consortium?
External factors complicate the rollout: UK overspill of xG services and DTT/future External factors complicate the rollout: UK overspill of xG services and DTT/future
MDTV services, Freesat makes Irish DTT look very shaky, market preemption etc…MDTV services, Freesat makes Irish DTT look very shaky, market preemption etc…
Reappraise current priorities for wireless systems to support broadcasting, mobile Reappraise current priorities for wireless systems to support broadcasting, mobile
and MDTV servicesand MDTV services
A new business model, Government policy and regulatory framework is needed.A new business model, Government policy and regulatory framework is needed.
(C)TBS 2006(C)TBS 2006
Forecast MDTV handset shipments 2012(m)Forecast MDTV handset shipments 2012(m)Source: Screen Digest September 2005Source: Screen Digest September 2005MDTV The Coming Handheld RevolutionMDTV The Coming Handheld Revolution
Forecast MDTV handset shipments 2012(m)Forecast MDTV handset shipments 2012(m)Source: Screen Digest September 2005Source: Screen Digest September 2005MDTV The Coming Handheld RevolutionMDTV The Coming Handheld Revolution
CUMULATIVE MDTV HANDSETS SHIPPED BY 2012(m)
82.8
63.2
109.8
USA
Europe
Asia
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OutlookOutlookOutlookOutlook
xG MDTV reigns supreme for next three yearsxG MDTV reigns supreme for next three years
Fragmented growth prospects for Hybrid MDTV Fragmented growth prospects for Hybrid MDTV
Regulatory / ownership hurdles Regulatory / ownership hurdles
Very profitable franchises?Very profitable franchises?
Simple business models highly effective?Simple business models highly effective?
(MD)TV advertising has to be completely (MD)TV advertising has to be completely
reinventedreinvented
MDTV everywhere within a decade ?MDTV everywhere within a decade ?
(C)TBS 2006(C)TBS 2006
Contact usContact usContact usContact us
MDTV: The coming handheld MDTV: The coming handheld
revolution, Screen Digestrevolution, Screen Digest
Ordering Details: Ordering Details:
www.screendigest.comwww.screendigest.com
Contacting TBS: +44 (0)20 7286 5570 , skype: Contacting TBS: +44 (0)20 7286 5570 , skype:
dmenolan, email: [email protected], email: [email protected]