The Mobile Content Venture with NBCU, FOX, ION and Pearl Mobile DTV (a coalition of nine broadcast TV groups) announced a management team yesterday, albeit a part-time and interim one. Erik Moreno (SVP, Corporate Development, FOX) and Salil Dalvi (SVP, Mobile Platform Development, NBCU) will be co-general managers.

It “takes a village” to raise a mobile television service. The inhabitants are content, spectrum, enabled devices, client software, middleware, metrics and analytics, ad serving software, wireless carrier partnerships, revenue models, broadcast station and network collaboration, etc., etc. That’s just the start. It also takes a vision, risk capital, a business plan and very capable executives and operations team. And of course it will take audiences and advertisers to fuel the whole enterprise. Does the Mobile Content Venture have it all together yet?

Bringing products and services to market is a brutal lifestyle. As companies ranging from FLO TV to VCast, Sprint TV and Mobicast have discovered, there’s no easy path to success in launching and operating a successful mobile television service designed to be consumed on cellphones and other devices. Even when you try to jump-start things by building and operating the whole thing yourself, you can run into snags as FLO TV has discovered. Even using the Super Bowl as bait has still resulted in an obstinate response by consumers.

The Open Mobile Video Coalition’s Washington Consumer Showcase is creating a mobile television community incorporating most of the elements noted above in a research setting  to see what this market might look like some form or fashion for local broadcasting. BIA/Kelsey is assisting Harris Interactive with the consumer marketing research aspect of this project. Start looking for results from this important project over the summer and into the fall.

Today’s announcement that AT&T is changing the pricing structure for Internet data plans, just like its suspension of iPhone sales last Christmas in NYC, provides insight into the economics of the wireless industry. It clearly indicates that wireless congestion is significant. The point-to-point downloads of large audio and video files for their increasing number of subscribers is choking their system.

AT&T is not alone. Verizon is making similar noises about charging for larger downloads. It raises the whole question of whether the wireless distribution of large video and audio files is the most efficient distribution architecture.

The convenience of watching a particular video or listening to a specific audio performance whenever you want it is attractive and desirable. Yet, it comes at a price — use of the wireless spectrum. In contrast, watching a program on a local television station or listening to a local radio station — while not “on demand” — has the benefit of the point-to-multipoint architecture that allows unlimited numbers of viewers/listeners.

The ability to reach multitudes of listeners/viewers in mobile environments is also possible with the broadcast model of distribution. A new mobile digital television system is presently being tested in the Washington, D.C.- area that may soon provide several alternative video program streams. Of course, radio programming has always been available in mobile environments, and efforts to include an FM chip in cellular handsets may expand that capability even more.

In sum, the convenience of downloading what you want when you want it on your mobile device is truly remarkable. As the popularity of devices has recently grown, however, the ability of the network to deliver that level of service always and everywhere has been severely strained.

AT&T’s plan indicates that the resources to provide that level of service are not unlimited. Those actions, and the possibility of similar actions by other wireless service providers, also suggest that the most efficient method of distribution of these video and audio services may not be via the point-to-point architecture but instead may be the traditional point-to-multipoint broadcast architecture.

“WAP is more widely available to a larger consumer base,” she said. “The iPhone makes up 2 [percent] to 4 percent of devices and our developers were spending 80 [percent] to 90 percent of time reaching this smaller share of end users.”

This flies in the face of News Over Wireless’ Sam Matheny’s point yesterday about greater growth and rich media capabilities of iPhone apps. There is also the argument that what the iPhone lacks in device share, it makes up for in engagement share, holding the vast majority of mobile Web traffic in the U.S.

The mobile products and features that Gray has focused on include WAP sites for each of its stations and SMS alert service for weather, news and sports alerts (monetized with sponsored messages). Next up are coupons, local search functionality (working with Local.com) and social sharing features.

Also somewhat of a contrarian take from Gray was its recent decision to go it alone when it came to building and managing its WAP product. This was a risk at first because it lost on-deck traffic it previously enjoyed by virtue of the carrier relationships held by the vendors it worked with.

But given more smartphones in the market, Bishop argues there are more users going off deck to search the mobile Web, thus mitigating this lost traffic. Bringing the platform in-house has also allowed Gray to have better control over the dynamic nature of its content, site design, ad serving and perhaps most of all, cost.

“Selling mobile [advertising] was difficult because costs were so high,” said Bishop. “We were selling $20 to $25 CPMs for our WAP sites. But we’ve been able to lower that and see greater returns.”

The results speak for themselves: Gray has cut mobile costs by $0.5 million and increased revenues by 90 percent over the past year. With SMS, it has seen a 20 percent increase in sponsored alerts and has run 130 SMS campaigns in the past month alone — more than it did all of last year.

While the choice of whether to drop Internet or TV may not be a likely choice faced by many people, it is not entirely theoretical. As we discussed in an earlier post dealing with the growing OTT trend; more households, especially those run by younger heads, are opting to forego video subscription services and rely soley on Over-The-Top (OTT) streaming video over their broadband connections.

Local television broadcasters have an interesting opportunity now to capitalize on this trend toward picking Internet over TV. For most Americans, that may actually come to a choice of managing their expenses and lifestyles between spending on broadband connectivity versus other choices. Broadband is essential and consumers are organizing their lives and value sets around this fundamental reality.

What local television broadcasters can do is start promoting OTA+OTT as the hottest new package on the street. Some younger consumers are honestly amazed that you can get free, wireless, HDTV service from local broadcasters. And coming soon, broadcasters will be adding mobile TV back into their offerings (analog TV could be received on mobile platforms, e.g., Sony’s Watchman, but not so for the first version of the digital TV standard selected in the U.S.).

We see all those cable and satellite commercials. Wouldn’t it be smart for local broadcasters and their networks who increasingly rely on OTT services like YouTube, Hulu and TV.com to reach audiences to start their own promotional campaign on the OTA+OTT value proposition? Networks like CBS and ABC are promoting their shows on the new iPad. How cool would it be to start branding the OTA+OTT experience as as consistent part of these deals. This would help tie networks and their affiliates in a tighter and sustainable relationship long into the future.

OTA+OTT could be this year’s killer app for local television. By binding the notion of what local television is in the minds of consumers to both OTA and OTT platforms, the stronger their bond with the Internet, the better it is for broadcasters. It becomes OTA+OTA versus “those pay services.” Working with innovative firms like Sezmi, broadcasters can even be part of a new type of pay television service to augment advertising revenue with recurring subscription revenue. Sezmi’s CEO, Buno Pati, will be discussing this more at our Digital Strategies for Broadcasting 2010 conference next May 17-19 in Jersey City.

According to new research released by the Pew Internet and American Life Project, news is personal, portable and participatory:

• Portable : 33% of cell phone owners now access news on their cell phones.
• Personalized : 28% of Internet users have customized their home page to include news from sources and on topics that particularly interest them.
• Participatory : 37% of Internet users have contributed to the creation of news, commented about it, or disseminated it via postings on social media sites like Facebook or Twitter.

About 92% of Americans get their news from more than one platform; 46% use 4-6 platforms. The most popular news platforms are:

• 78% – local TV station
• 73% – national network such as CBS or cable TV station such as CNN or FoxNews
• 61% – online
• 54% radio
• 50% local newspaper
• 17% national newspaper such as the New York Times or USA Today

This study provides a lot of granularity to how local television and radio audiences are not only getting their news but how they are interacting with it. Users are much more active in personalizing their own experiences with the news and in sharing this with others. Seeing how the broadcast audience extends its experience across platforms in an integrated and active fashion argues for more multiplatform advertising campaigns by local businesses if they really want to make an impact. Local broadcast sales managers would be well served to take a look at this report and see what they can apply to their own sales initiatives.

Rainie compared 2000 and 2010 Internet profiles. In 2000, the Internet experience was “slow, stationary and built around my computer” but in 2010 it is, “fast, mobile, built around the cloud (outside servers and storage).”

Rainie commented on an
  online
 survey
 of 
895 
technology
 stakeholders’ 
and 
critics’ 
expectations 
of 
social, 
political
 and economic 
change 
by 
2020, 
fielded 
by 
the 
Pew 
Research 
Center’s 
Internet 
& 
American 
Life Project 
and 
Elon 
University’s 
Imagining 
the 
Internet 
Center. According to those surveyed, some key changes expected by 2020 include:

• Search improvements in relevance, relatedness and real time search.
• This will extend to an expansion of “local awareness” including  augmented reality on mobile devices where local, mobile searches which will “augment” cell phone video displays with contextual information overlays (e.g., local stores offering coupons, discounts including pedestrian directions).
• Moving from keyboards to touch screens to conversational interfaces, complete with much better language translations.

The survey presented “tension pairs” of forced choice statements with opposing viewpoints for the sample to consider. For example, in considering whether “Google makes us stupid” by making it too easy to find things on the Internet, 81% of the experts said no, the Internet will make us smarter. In fact, Rainie elaborated on this by presenting the concept of “shifting cognitive capacities.” Essentially, this means our brains will adapt to the new powers of the Internet and integrate these into how we deal with the world. Rainie spoke of the fourth “R” of retrieval added to the traditional 3 Rs of ‘rithmetic, reading, ‘riting.

Mark Walsh in the follow-up panel shared his great concern that unchallenged “lying happens on the Internet.” Even with tremendous and unprecedented access to information, he fears that people increasingly are choosing not to accept data contrary to their viewpoints.

There is a strong role for local traditional and digital media in the future of the Internet. Business models premised on trusted content, location-aware and contextually relevant advertising, reputation management, social networking and user generated content will leverage all the key trends foreseen out to 2020.

On the media side, key issues include finding viable business models; understanding the mobile ecosystem well enough to make informed decisions regarding content, revenue models, technologies, services, partners and market opportunities.

On the advertising side, brand managers, agencies and small and medium business (SMB) operators are trying to be smart with their media plans and spending allocations among multiple media platforms to drive the purchase funnel. Making the mobile platform even more challenging in the consumer environment is the fast pace of evolution not just in technologies but also in how consumers and businesses are adapting to the mobile environment.

BIA/Kelsey has conducted three waves of “Mobile Market View” (“MMW”) which is a consumer study of U.S. adult mobile phone users in the fall of 2007, 2008 and the latest results released in November 2009. One of the key emerging trends we see in the latest research is a solid consumer movement toward using the mobile platform for non-voice communications including search, text messages, email, video, social networking and mobile web browsing. We see fast growth continuing in adoption of smart phones (29% of consumers now have smart phones) and data packages (37% of mobile users now have data plans).

Based on consumer trends, we see revenue growth for content, search, directory, ad networks and of course mobile service providers. BIA/Kelsey sees the fastest revenue growth occurring in local search and mobile video services. The high trajectory revenue growth model will be advertising but we also see subscription and content on demand services as strong components of mobile revenue mix.

For advertisers, agencies and brand managers, this growing use of mobile has significant implications for their media strategies. From 2007 to 2009, consumers have essentially doubled their use of the mobile platform for non-voice communications. This represents a fundamental and rapid shift in media use which needs to be considered in determining the appropriate mix and spending levels among local media platforms. Media companies that do not currently offer a differentiated mobile advertising option increasingly will find it difficult to satisfy advertisers drawn to mobile’s ability to drive brand metrics such as increased awareness of advertising campaigns and messaging. Ad messaging can include not just search and mobile web but also video as we see nearly a fifth of mobile consumers have received or sent videos each month.

The mobile platform is becoming integrated into consumer habits in a more pervasive and sticky manner than any other medium in history. It is fast becoming a mission critical part of the media industry for publishers and advertisers.

Article prepared by Rick Ducey, Ph.D., Chief Strategy Officer, BIA/Kelsey

First published in ShowSmart, a publication by NABShow, which can be read at:
http://www.nabshow.com/2010/email/ShowSmart/LandingPage/ShowSmart_issue2.html#3

One thing that stood out as a theme throughout today’s sessions was mentions of the mobile opportunity. This was mostly discussed in terms of how the mobile device can extend the viewing or listening audience in an incremental fashion

“Building on a mature media platform, mobile has the ability to extend home-based viewing,” said NBC Universal VP of Technology Standards and Policy Glen Reitmeier.

This comment reminded me of data I saw recently from MobiTV, indicating that 85 percent of mobile video viewers report watching more TV. In principle, its also similar to comments made later by Arbitron Exec VP Pierre Bouvard that online radio listeners aren’t reporting any detraction from the amount of terrestrial radio they’re listening to.

Back to mobile, its opportunities with broadcast media are further supported by looking at the fact that both are delivered over the air. Regulatory and technology barriers stand in the way of mobile devices receiving broadcast signals, but we are starting to see some companies such as MobiTV (carrier delivered subscription service) and uStream (iPhone app) move in that direction.

“When we talk about mobile, for once, here is an industry that is a plus for [broadcast],” said Dick Wiley, Partner at D.C. Law Firm Wiley Rein. “We’re going to continue to see improvements in storage capacity for immediate viewing and playback. Getting content wherever and whenever will be something that is well tailored to younger viewers.”

We’ll pick up the discussion tomorrow in a session devoted to many of these topics:

How Broadcasters Can Get the Local Edge in Mobile

What are the opportunities for broadcasters in local mobile media? Well start with the BIA/Kelsey forecast of the advertising revenue growth in local mobile media to 2013. Well identify specific opportunities for broadcasters in new parts of the advertising pie. This includes local content, mobile video, messaging and even interactive applications for mobile devices. In addition to advertising revenue models, subscription revenue models are also explored. Broadcasters can leverage local content, local sales forces and develop cross platform media campaigns to add unique value to their sales and marketing solutions.

Speakers:

Sam Matheny, General Manager, News Over Wireless
Ivan Braiker, CEO, HipCricket
Michael Boland, Program Director, Mobile Local Media, The Kelsey Group