Nicolas Choquart, NDS Director of Mobile and New Business, EMEA and South America, tells Keith Dyer how the mobile TV market can reinvigorate itself after a slow start
Keith Dyer:
Nicolas, with so few commitments to mobile broadcast rollouts in Europe, how would you characterise the market right now?
Nicolas Choquart:
The global picture today is that mobile TV still requires a business model that can be profitable to the entities that have to finance the infrastructure, and deploy the services. Right now, and I don’t mean to sound negative, you’d have to say success has been very limited. The results of all the hard work so far by all the players involved, the MNOs, broadcasters, handset vendors, head end equipment vendors and regulators, are disappointing. There’s nothing else I can say.
But, to balance that, we must not forget that this market has only been trying to reach commercial sustainability for around six years now. So although that sounds like a long time, it is the minimum time that’s needed for a new service with new technology to find a position. So it’s not a complete surprise that we are where we are today.
Keith Dyer:
So why do you think growth has been on the slow side?
Nicolas Choquart:
I think there are a number of reasons. Number one, and most important, is that operators and those who have invested in content, and to install and maintain a network, have to get their money back. That means that either they have to attract subscription revenues for the services, or they have to develop an advertising-based revenue model.
And mobile network operators (MNOs) have to do this against a background where their core revenues are driving down every year, and yet all the while they are adding more and more services. This means that they are in a position where they need to change around €10 per month per subscriber for mobile TV, with about 10% market penetration, just to cover their costs.
But the typical reach for the service is currently at about 2-4%, and out of that 26% are using the service once a day. And when they do watch it is for 5-25 minutes. So how do you develop either a subscription or an ad based model out of that? So that is the issue.
The second big issue is the cost of the investment required. For a large European country it is going to take €500-700 million to deliver a DVB-H network. That’s a lot of money and is causing MNOs to think twice – especially as they are considering LTE investments at the same time.
Third, there are the technical issues. You have the broadcast standards war, DVB-H, MediaFLO and so on, which has been well covered. But also there has been a war around the standards required to control the content and interactivity of the system. At the start, the conditional access system (CAS) vendors followed mainly the OSF path. Then, for good or bad reasons, there was a decision to find a uniform standard so everyone could go the same way. This resulted in the adoption of OMA BCAST Smart Card Profile (SCP), driven very much by the MNO community.
But although CAS vendors have adopted OMA BCAST SCP, some handset vendors have not – for their own reasons. They produced wide ranges of handsets supporting a different variant of standard.
The issue with this is that people want a wide range of handsets to choose from. At the end of the day the subscriber, when you sell IPTV, Pay TV, or a subscription to BSkyB, doesn’t care about the brand of the set top box. But when it comes to a mobile phone, it’s your identity and image so you want to choose the phone you want. People don’t choose their phones based on the services.
Keith Dyer:
These seem like some fairly major issues. How can the industry address them?
Nicolas Choquart:
The main message that NDS likes to highlight, and it’s a message we have delivered since day one, is that mobile TV cannot be a stand-alone business. We think that mobile TV should be just one way of amortizing the cost of the content acquisitions that operators have made. An MNO can add mobile TV if it wants to do IPTV, the set top box at home, or TV on PC, so it can package a clear content offering to subscribers.
This means that subscribers can justify that €10 per month because they do not only have access to that content on their mobile.
If you are a subscriber to BSkyB or Orange UK, and tomorrow that provider offers you high speed internet, and 200 channels at home, plus 25 broadcast channels and video on demand on your mobile phone, and the total package is cheaper than buying three independent services, then that’s much more compelling.
It makes sense for you, because the content is where you need it, and it’s a real service so you can say, “Look, for your £40 a month, mobile TV becomes a part of a multi-network content delivery offer.”
That’s why we have invested in developing all the technology people need to have to be able to do that. We have unified head end software that sits between the subscriber management system, the billing operation, and the broadcast head end.
The software recognises the subscriber and knows what content to attribute to the subscriber, for all his devices. By interfacing between the billing system and the broadcast head end, it knows which devices are attributed to me as a subscriber, and which packages I have bought on those devices. It can then instruct the broadcast head end to carry out the encryption of the content in the correct way, automatically generating the appropriate rights for each device.
This allows mobile TV to become part of content bundling without having to invest in a parallel CAS infrastructure, or mobile-specific head end.
Keith Dyer:
Do you think this model applies to the majority of operators, or are we talking about the incumbent operator in each country that has the multi-platform capability?
Nicolas Choquart:
Convergence will take time. If you look at the PVR, we started to talk about it in 1995, and only by 2007 did 35% of people with pay TV have a PVR. Today people are approaching the mobile TV market individually in each market, trying to find €10-15 a month per subscriber, and you are not ever going to reach this level. Success will come when operators adopt a multi-platform approach and are realistic about their investment positions. But if you look at the plans of most operators, there’s no doubt that convergence is the end goal for many.
Keith Dyer:
Does the slow development of this market create problems for those in the value chain?
Nicolas Choquart:
Speaking for NDS, we are well positioned. We are taking part in the first commercial trial in Singapore with MobileOne, Mediacorp and Singtel, working with Alcatel on a complete solution. We’ve also been selected in Russia for a DVB-H launch with Sistema Mass Mediaworking, working with Thomson.
As for other markets, France is moving forward, and the government wants to make it happen, and we will probably now see DVB-H being adopted before the end of the year.
NDS came a little later than others into this market, and in 18 months we are now considered a major player in the mobile business. We look forward to supporting the continued expansion of operators into a multi-platform environment.