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Getting Ready for Primetime: 2006 Mobile Video Year in Review

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Music has become so important to the cell phone industry that Nokia paid $60 million for the music download company Loudeye so they could provide an end-to-end music platform. Contrary to popular belief, Nokia, not Apple, is the world’s leading manufacturer of "digital music players." It sold 40 million music phones in 2005, compared to the 22.5 million iPods Apple sold.

Study after study has demonstrated the minimal appeal of mobile video among consumers. In a survey of 1,000 people by RBC Capital Markets, 75% of those polled said they have no interest in watching video on their cell phones. According to a Knowledge Networks survey of 2,400 participants, half of all cell phone-video subscribers don’t watch any video at all. So what gives?

"The overall perception of the reliability of U.S. carriers’ networks is holding back the adoption of mobile video," says Kay Johansson. Most consumers want better overall call quality before they are ready to ante up for more advanced services. The cell phone carriers themselves repeatedly reinforce this perception by bombarding consumers over and over with commercial messages like "Can you hear me now?" or "The fewest dropped calls."

With the buildout of 3G networks and higher quality mobile video devices, many point to a lack of consumer education rather than flawed technology as holding back the uptake of mobile video. In a speech at the CTIA Wireless show, News Corp. chief operating officer Peter Chermin advised, "There needs to be much more imagination in terms of marketing these services. Much of the marketing that has been done has been confusing, cheesy, and just bad."

There are a host of other reasons as to why the adoption of mobile video has been slow. In a recent Pew Internet & American Life study, 44% of respondents said they waited to make most of their phone calls when it didn’t count against their minutes. This is certainly a hurdle for mobile video, especially when consumers are asked to pay an additional premium for access.

Battery life and storage also compromise viewing video for extended periods of time. Some of the most avid users of mobile video in places like South Korea and Japan reportedly carry two cell phones with them for longer viewing.

While the population of those watching video on the mobile devices is limited, understanding how they use mobile video is worth noting. According to research from Telephia, peak viewing occurs between 4 p.m. and 8 p.m. Even more interesting, the majority of mobile viewing doesn’t occur on the go, but rather at home, followed by while shopping and then while at work. Wiltgen concurs. "Our research at Qualcomm showed that it became the third screen in the house after the main TV and PC were occupied."

Focusing on Personalized Applications
More niche applications and programs seems the best way to go to spur interest in mobile video in the short term. Sprint introduced a concept called MyFoodPhone for $9.99 a month. Subscribers can take photos of their meals and have them sent to nutritionists to be reviewed. Biweekly video feedback from nutritionists is also available as people track their calories, weight, and exercise via their cell phones.

PBS KIDS conducted a study to demonstrate the potential of mobile devices as a teaching tool. Preschoolers were given Sprint-enabled video phones, so they could watch Learning Letters with Elmo on a weekly basis to learn the alphabet. Each child showed improvement in learning their ABCs.

Few disagree that the personalization of mobile devices is key to the adoption of advanced mobile services, but there are different approaches. Mobile virtual network operators (MVNOs) are trying to target very specific demographics with very specific needs. A good idea in theory, but in practice most are struggling, as symbolized by the demise of ESPN Mobile. "I think ESPN Mobile failed for the same reason other MVNOs are struggling: because they are trying to create a new consumer experience rather than amplify existing consumer experiences," says Gene Keenan, vice president of mobile services at Isobar Global.

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