Mobile DTV Businesses Showing Progress, But Skeptics Want More

LAS VEGAS -- It was easy to find NAB show attendees skeptical about mobile DTV’s prospects, asking around at the Las Vegas convention that concluded on Thursday. Some said they're frustrated about what they perceive as the lack of progress toward starting a viable business. Executives working on just that said they remain optimistic and that doubters need to be patient. “In less than a year, there have been some truly concrete steps to move the ball forward,” said Fox Senior Vice President Erik Moreno. Along with NBCUniversal’s Salil Dalvi, he runs the Mobile Content Venture (MCV), a joint venture between Fox, NBC and several top station groups. “It’s going to be incremental progress for some time, but it’s real progress,” Moreno said.

Sentiment about the future of mobile DTV broke down along three lines. In one camp, boosters say they're working hard to build a business with the potential to alter the TV station business. In another, some executives who have been at work on mobile DTV technology for years are frustrated and had expected to see a more-developed product by now. Those not directly involved in developing mobile DTV remain skeptical it can succeed, given the speed at which Internet-based mobile video usage has grown. They worry consumer behavior may leave mobile DTV behind, even if it offers advantages over the Internet in delivering video to mobile devices.

"Multiscreen delivery across a variety of networks is absolutely where the industry is going,” said David Allred, chief marketing officer for Sezmi, a company that builds integrated broadcast and broadband set-top boxes. “Even if you have a better mousetrap to deliver some video to some devices, it’s not really enough to satisfy what consumers want.” Consumers already have several options for watching video on small, portable devices, said Gannon Hall, executive vice president of global marketing for Kit Digital, an IP video technology vendor. “You already have Netflix on your devices,” Hall said. “You have Hulu and you have Amazon. There’s no need for it.” Consumers aren’t going to adopt a stand-alone mobile DTV device in large numbers, he said: “Then it’s not a mobile device anymore; it’s a cumbersome device."

Mobile DTV proponents say their service can coexist with online video, and they're starting to build business models around that idea. The Mobile 500 Alliance held its first full membership meeting at NAB this week, and the group approved a plan to develop a business model around a hybrid mobile DTV-online video service, said Executive Director John Lawson. The group voted to work to create a joint-venture with a private equity-backed company National Content Network to help develop the business, he said. The idea is to aggregate a certain amount of spectrum in each market and introduce a range of new channels and programming, he said. “We anticipate the devices that will receive mobile DTV will be connected devices and it would all be integrated into a seamless consumer interface."

Now that the group has a solid business plan, Lawson said he expects more stations to turn on mobile DTV signals. When he surveyed the alliance’s members in December to find out how many planned to upgrade their facilities for mobile, he learned that 10 percent of its 400-plus stations had made plans. “They need something to justify the capital investment,” Lawson said. “We had a sense that 2010 had been a good year and that they had the funding in their capital budgets, but there is always competition for those dollars, and they needed to see something more than a defensive strategy to impress the policy makers."

It’s unclear how integrated the alliance’s planned service will be with MCV’s. Both groups say they are open to working with each other and both are planning businesses around a partially free, ad supported service, with a premium subscription component. MCV has adopted a conditional access technology from Nagra, while Mobile 500 hasn’t picked a content protection vendor. “We agree with the MCV that conditional access should be standards based and software based,” Lawson said.

Once the broadcasters have their business together, it will be easier to convince carriers and manufacturers to put mobile DTV receivers in their devices, said Dalvi. “It’s very important we demonstrate we're serious by lighting up our stations and offering our content out there,” he said. “Those are the steps that are going to bring distributors such as cable operators or telcos on board with this type of service.” The Open Mobile Video Coalition meanwhile is working with vendors to improve mobile DTV technology.

Technology vendors would like to see a unified front from broadcasters in terms of a business model, said Sehoon Son, director of Pixtree’s marketing department. In Korea, where Pixtree is based and mobile DTV is very successful, the industry early on standardized around a technology and business model. “The United States is a very big country and broadcasters have a variety of business models,” said Son. “Variations can be acceptable,” but he said he hopes the industry aligns behind a leading business model. “In the United States, we've had a technology standard for two years. Now we are waiting for a mature market.”