I have done an interview with Evan Ramstad from Wall Street Journal several days ago.
We talked mainly on Video related services using mobile network.
Today, the article which includes my interview quote has been published.
Coming to a Tiny Screen Near You
Will consumers watch movies and TV on their cellphones? South Korea offers some compelling evidence.
By EVAN RAMSTAD
SEOUL — Watching TV and movies on cellphones is so common in South Korea, people no longer think twice about it.
Since 2005, South Koreans have been able to buy cellphones and other portable devices that pick up TV broadcasts sent on a special frequency, a system created here and known as digital multimedia broadcasting, or DMB.
And last year, two of the country’s three cellphone-service providers upgraded their networks to third-generation, or 3G, technology that enables big improvements to video streaming and downloading services.
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The result: an explosion of video usage on cellphones and other mobile gizmos, including car navigation systems and iPod-like portable media devices.
With almost an entire country able to watch video just about anywhere it wants, South Korea’s experience can provide valuable lessons for companies in countries still on the threshold of the mobile-video revolution. Among those lessons: what kinds of programs bring in the most viewers, how advertising has had to adapt — and how difficult it is to make money from the new services.
So far, there is no clear winner among the different technologies being used here. About 14 million devices equipped for DMB signals have been sold, including 6.5 million cellphones. Of some 45 million cellphone subscribers, 15 million or so have upgraded to 3G, and of those, carriers say about two million watch some video via clips they download to their phones.
Room for Two
For the moment, service providers here are betting that the two technologies will coexist for years to come. SK Telecom Co., for one, the nation’s largest cellular company by subscribers, offers video in both 3G and DMB. The two complement each other, says Ki Jeong-kuk, a manager in the company’s movie and media business-development team. “DMB service provides real-time video content,” he says, like the main TV networks, while 3G “will position itself as a video-on-demand provider as it enables interactive two-way service.” The company’s 3G option includes on-demand service for archived TV shows and 300 movies.
From the beginning, many South Koreans have embraced the possibilities of mobile video. When Han Kyung-san bought a cellphone three years ago, she splurged on a $700 model that could receive then-new DMB signals. (The average cellphone costs about half that much. But models with DMB have come down in price.) She pays about $15 a month in extra fees for 16 channels.
“When I bought the phone, no one had it,” says Ms. Han, a 28-year-old secretary in Okcheon, a small town in central South Korea. “I would turn it on and place it on the table just to show off. These days, many people have it.”
In rush hour, any random subway car in Seoul is likely to have a handful of people watching video on their cellphones. Cab drivers can buy systems that combine street navigation with DMB reception of TV signals. At night, it’s becoming common to jump into a cab where the screen on the driver’s dash contains a split image — half is a 3-D map of the city and half is a live TV broadcast, usually news or sports.
But so far, mobile video hasn’t produced big revenue gains for its providers. The free DMB signals from the country’s four main TV broadcasters draw the most viewers, yet none of these ad-supported services is profitable. Nor are the pay services that offer cable-like menus of channels in either DMB or 3G for $10 to $30 a month, nor 3G pay-per-use options, which cost about 35 cents plus data charges — generally about $10 a day. Some people find early on that those get to be quite expensive and quickly cut back their usage.
Industry observers generally agree that mobile-video services for both 3G and DMB have been financially disappointing. “We are very good at making technology and new services,” says Chung Yun-ho, a telecom industry consultant and managing partner of Seoul-based consulting firm Veyond Partners. “But considering the business model wisely is not something we are good at.”
At SK Telecom, executives recently told analysts they’re willing to accept a short-term decline in a key metric, average revenue per user, because they believe new marketing activities, including joint sales with the company’s fixed-line services, will yield gains next year. At KT Freetel Co., South Korea’s second-largest wireless carrier, a spokesman noted that revenue from video is substantially higher on the company’s 3G system than on earlier networks. The companies didn’t comment about the profit outlook.
Cellphone carriers here, as in other countries, spent billions installing their 3G networks, and planned to make that money back with services, like video, that encouraged customers to spend more time on the phone and boost their data usage. But after an initial jump in all data usage after 3G’s introduction, growth in data-related fees has slowed. So far, data usage as a percentage of revenue has remained at around 20%.
“The incremental return [on 3G networks] hasn’t exceeded the incremental cost of rolling them out,” says Matthew Jamieson, head of Asia Pacific telecom-media practice at international credit-rating agency Fitch Ratings.
South Korea isn’t the only country with mobile video, but it’s ahead of most. Japan has had digital broadcast service for phones and other portable gizmos since late 2004. Germany, Italy and Finland got in the game in 2006. The U.S. has two services available, both of which use 3G: V Cast, from Verizon Wireless, owned by Verizon Communications Inc. and Vodafone Group PLC, is available in about 50 cities; AT&T Mobile TV, from AT&T Inc., works in about 30 cities.
South Korea got a jump on other countries partly because its small size and dense population made building high-speed wireless networks more affordable. In addition, the country was racing to catch up with efforts in the European Union to establish international standards in digital-television broadcasts. The South Korean communications agency in 2003 introduced DMB, the first standard for making digital video signals work in portable devices. Samsung Electronics Co. and LG Electronics Co. created the format, with university and government help. The next year, the agency put a satellite in space to provide nationwide coverage. The country’s carriers and TV networks then did the rest.
Since the launch, those companies have learned a lot about the viewing habits of their customers, and have adjusted their offerings accordingly.
Short and Simple
For instance, surveys show the typical DMB user watches about 15 minutes of video a day. As a result, advertisers have adjusted by shortening commercials — which are interspersed throughout programming — to 15 or 30 seconds from the typical 60-second spot. Commercials are also simpler for a small screen. Tschaik Lee, director of global interactive business at Cheil Worldwide, South Korea’s largest ad agency, says that it routinely produces separate versions of TV ads for mobile video systems like DMB and 3G. “The usage behavior and mobility has to be carefully considered when we plan for mobile ad campaigns,” Mr. Lee says.
He adds that DMB presents a unique opportunity for advertisers because it takes a few seconds for the receivers to change channels. DMB-equipped cellphones and receivers receive and display a “switching spot ad” when the device is changing channels, he says. “It masks the switching process.”
Lots of DMB viewing occurs during rush hours, when commuters on buses and trains watch to pass the time. But the heaviest use starts around 11 p.m. and peaks close to midnight, when people watch in bed before going to sleep. Ms. Han, the secretary in Okcheon, says that’s when she tends to watch the most. “It helps me wind down,” she says.
The most popular broadcasts are short news updates, live sports and rebroadcasts of serial dramas that aired on the main TV channels a day earlier. “Content is time-critical,” says Mr. Chung, the consultant. “News or sports events, or something you are fond of but cannot view at the traditional time.”
Waiting for a train in Daejeon recently, Park So-hyeon, a 21-year-old college student, hunched over her DMB phone with a friend to watch a rebroadcast of a comedy show from one of the networks. Ms. Park says she doesn’t own a regular TV, relying instead on her computer to watch DVDs and downloaded videos. “When my computer was broken,” she says, holding up the phone, “I watched this.”
–Sung Ha Park contributed to this article.
—Mr. Ramstad is a staff reporter in The Wall Street Journal’s Seoul bureau.Write to Evan Ramstad at email@example.com