We picked up two news stories this week that again throw into question the viability of subscription-based mobile TV service. One story came from Japan where the Toshiba-backed Mobile Broadcasting Corp., that just last year gained acceptance as Toyota’s "official mobile broadcast tuner" and in-car navigation device, will cease TV broadcasting by the end of March 2009 (that’s the end of Japan’s Fiscal 2008 year.)

Steve Sechrist
Senior Analyst and Editor

The other bad news for mobile pay-TV came from Europe where start-up German mobile TV operator Mobile 3.0 said they will close down. In October, 2007, the company surprised the industry by offering the winning bid over T-Mobile, O2 and Vodafone, looking to provide Germany with a nationwide DVB-H mobile TV platform. Mobile 3 is a JV between Mobiles Fernsehen Deutschland (MFD) and Neva Media that used the DVB-H transmitter network of T-Systems Media & Broadcast.

Perhaps playing "spoiler," a few months after losing the DVB-H bid to Mobile 3.0, Vodafone brought two mobile phones to the market with a built-in DVB-T tuner. This allowed mobile users to receive digital TV broadcasts over the air (OTA) free of charge, potentially breaking the 5 to 10 Euro/month ($7 to $14/mo) subscription fee model proposed by Mobile 3.

Then, the company began publically throwing doubt on the feasibility of subscription-based mobile TV. "The model with a subscription-based offer over a dedicated network is very difficult," Vodafone Germany CEO Fritz Joussen told the Financial Times Deutschland. Joussen pointed at the availability of the new handsets incorporating DVB-T tuners. "These models suddenly appeared on the market and put question marks with the subscription model," he said on the heels of their DVB-T handset introduction.

Meanwhile, back In Japan, the number of satellite mobile subscribers did not reach "required levels," even after 10 years and the number-one car maker Toyota, behind the project. The group said, "Since its establishment, Mobile Broadcasting Corporation has provided diverse services in an attempt to build a subscriber base and enlarge its business. However, the number of subscribers has not reached a sufficient level to sustain operations and, following a thorough review of operations, the company has decided to cease broadcasting."

Satellite delivery of mobile TV services pre-dates the wireless carriers’ attempts to deliver TV signals via G2 and G3 networks to cell phones, or using the dedicated wireless network and chips of Qualcomm’s MediaFLO.

Word on the street in Japan is that the other mobile TV technology, One-seg, helped kill off the satellite based delivery service. One-seg offers local broadcasts for free, while Mobile Broadcast Corp. had its own special line up of content for a monthly subscription fee. One-Seg has proven very popular–especially after handset manufacturers began building recording functions into phones that allowed Japanese consumers to placeshift, record and watch programs whenever they wanted.

Placeshifting allow users to access their home TV through a mobile device from anywhere in the world, again, without incurring a monthly fee. ABI Research (New York, NY; www.abiresearch.com) said the placeshifting market will grow from under $22M in 2006 to $740M by 2011.

Japan’s Nikkei.net reported that domestic sales of cellular phone handsets rose 10.7% to a record 52.34M units in 2007, buoyed by the popularity of products compatible with the One-Seg terrestrial digital TV broadcasts for portable devices. And in February, One-Seg hit the 20M handset mark — less than two years after its launch — again proving the point that in TV viewing patterns (even mobile TV) it’s most difficut to compete with the "economics of free."

So there is a market for mobile TV service, but it’s bifurcating. Placeshifted content is not time sensitive, and can be selected for download on web sites like Apple iTunes. But some mobile TV content is high-value only in real-time or close to it, i.e., changing information like weather, sport’s scores, traffic updates and, of course, NEWS. What better source for this mobile TV content than local broadcasters, who already have the infrastructure in place — not to mention the highly tuned sales marketing and sponsorship machinery that funds traditional OTA local broadcast TV?

The real question now is, can subscription based mobile-TV survive in a world where free OTA broadcasting is beginning to dominate with the Siren’s call of ad-based "free delivery?"