Video a coming attraction for wireless-savvy masses
It might not be long before the Verizon Wireless pitchman asks: “Can you see me now?”
With 89% of U.S. adults signed up for cellphone service, carriers are trying to boost revenue by getting customers to receive more data on their phones -- and nothing contains as much data as video.
The big carriers have done little to promote video, in part because most handsets can’t show moving pictures.
But that may change soon, industry executives said. Sales of video subscription services jumped to $308 million in the last quarter of 2007 from $112 million a year earlier, according to Nielsen Mobile.
“It will ultimately see pretty good adoption,” said industry analyst Charles Golvin of Forrester Research Inc. “When I go to the supermarket, and sometimes gas stations, there are screens there. We’re Americans -- we likes our video.”
Some major hurdles to widespread video services have fallen in the last year, raising hopes for a boom to match those in Asia and Europe.
Among the changes:
* the introduction of Apple Inc.’s iPhone, which features a brilliant screen and links to videos for sale, and phones trying to replicate its success
* recent pledges by major carriers to grant network access to more devices and software
* new, all-you-can eat data plans that don’t penalize viewers for getting hooked on mobile video.
Phones introduced at the recent CTIA Wireless trade show here suggested that the number of mobile video subscribers would keep going up. The latest crop includes the LG Vu, one of two handsets capable of carrying a broadcast service that No. 2 carrier AT&T; Corp. will start offering next month, and the forthcoming Samsung Instinct, which will be sold in the stores of No. 3 Sprint Nextel Corp.
Although the wireless carriers won’t say how many video subscribers they have now, Golvin puts the figure at 7% of the customer base.
“We’re just starting to get handsets in the hands of average consumers,” Gartner Inc. analyst Mike McGuire said. “There’s still the open question of how much to charge and what people want to watch.”
A schism is emerging between subscription services, which bring carriers a cut of the profit, and free video.
The major carriers typically charge about $15 a month for video plans, which analysts said reduces the potential number of subscribers.
The most popular is managed by privately held MobiTV Inc. of Emeryville, Calif. Nearly 4 million mobile customers have access to it, but some probably don’t know that they can watch television. Sprint offers eight MobiTV channels free as part of a service package attached to its high-end phones.
MobiTV also appears on AT&T;’s network, while Verizon offers a rival service called MediaFlo, which is owned by cellphone chip maker Qualcomm Inc. AT&T; plans to add MediaFlo’s programming to its mobile video lineup in May.
MobiTV and MediaFlo mainly repackage broadcast television, and users can’t skip commercials.
Before such plans take off, Nielsen analyst Nicholas Covey said, “content providers and operators need to cooperate on a mutually beneficial advertising business model” that makes those offerings cheaper or free. Landing more exclusive programming, through deals such as AT&T;’s recently announced agreement with Sony Pictures Television for old movies, would also be a big help.
But the larger issue, said MobiTV Vice President Ray DeRenzo, is getting consumers to realize they can watch TV on the go.
“Our biggest impediment is not technology or content or performance, it’s awareness,” DeRenzo said.
Perhaps the most compelling reason for the big carriers to start pushing video subscriptions: If they don’t, more customers will figure out where to get free video on phones with Web browsers.
Already, most mobile video consumers don’t pay extra to watch, according to a recent Nielsen survey. That’s especially true at AT&T;, the exclusive U.S. network for the iPhone -- which generates heavy use of video from websites such as YouTube and Mywaves.
More than 30% of iPhone users watched video in January, compared with 14% of users of all so-called smart phones, according to research firm M:Metrics Inc. News and weather are the most popular content categories.
Millions of worldwide cellphone users a month are going to such sites as Mywaves, which is geared toward mobile Web surfers and offers ad-supported news, music and user-generated video channels for free.
Mywaves works on 68 different phone models, exhibiting a dedication that is likely to gain importance as Verizon and perhaps other carriers move toward letting any type of device attach to the network.
Verizon is expected to begin promoting Mywaves within weeks, people briefed on the negotiations said.
Major television networks might soon follow suit and bypass the carriers to offer content through the mobile Web, analysts said.
The chief drawback is that searching for anything -- especially videos that won’t necessarily play on a phone -- is much slower and more frustrating than searching on a personal computer.
Adult content might jump-start mobile video, much as it did for the VCR, the DVD and video-on-demand services. Phone porn found a market in Europe, but no major U.S. carrier has expressed interest in endorsing anything of the kind. Users intent on taking porn with them must download videos to a computer, then transfer them to the most sophisticated phones.
Playboy Media recently started its own channel on Mywaves, but the fare is similar to preexisting Sports Illustrated swimsuit shows.
This struck Alex Fowler, the 19-year-old second runner-up for the title of Miss Playboy Mobile, as unfair. “Why just limit it to sports?” she asked. “They ought to be able to see women as well.”
Tom Hagopian, general manger of the company’s digital effort, said Playboy and others would bring adult content to American phones, either as the wireless carriers seek to maximize revenue by making direct deals or as they loosen control of the airwaves.
“Mobile should be about the destination, not the journey,” Hagopian said.
“Nobody says: ‘There’s this great website, but I can’t get there because I have an Acer computer.’ ”
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