Global Insight Perspective | |
Significance | Virgin Mobile's mobile TV service has, so far, proven unsuccessful, despite a massive advertising campaign. |
Implications | The failure to win a substantial customer base in the first three months will append a "failure label" to the service, making it even harder to sell the service when improvements are made. |
Outlook | Even when the operator introduces improvements later this year, Global Insight believes the service will continue to struggle. The future of mobile TV in the United Kingdom is likely to hinge on the collaborative approach adopted by the five mobile operators. |
Virgin Mobile has failed to win significant numbers of customers for its trail-blazing mobile TV service, more than three months after its launch. According to reports in the Guardian newspaper, the service has failed to win up to 10,000 subscribers, despite a £2.5million (US$4.91 million) advertising campaign and a recent reduction in the price of the handset for pre-paid customers from £199 to £99. Alan Gow, chief executive of Virgin Mobile, admitted that mobile TV was still in its infancy and sales had been hampered by the fact that there is only one handset on offer. "Handsets are a fashion device and become unfashionable fairly rapidly and this one is approaching the end of its cycle," he said.
Virgin Mobile TV (VMTV) is available for free to post-paid customers who choose the HTC manufactured Lobster phone and are paying at least £25 per month. Pre-paid customers using the same phone get the TV service free for the first 90 days and then have to spend at least £5 per month on phone services to continue enjoying free mobile TV. Using BT Movio's digital audio broadcasting (DAB) spectrum, customers can watch five channels—BBC1, ITV1, Channel 4, E4 and ITN News (see United Kingdom: 8 September 2006: Virgin Mobile Launches Multicast Mobile TV).
Outlook and Implications
The Problems with Virgin Mobile TV: An inherent lack of interest in mobile TV, coupled with the limited array of TV channels on offer, plus the limitations of only one handset, means VMTV will continue to struggle to win customers. Despite churning out several customer trial results showing interest in mobile TV, the mobile industry has not been able to attain much success with the product. Customer apathy remains high and it remains to be seen whether people will throng to sign up for mobile TV services for any network operator. For those who want to use mobile TV services, choice remains paramount and the availability of a plethora of TV channels to choose could help woo more customers. VMTV limits customers to just five—mainly news—channels that do not include a sports channel or a music channel. Crucially, the options inherently limit the appeal of the service to the youth market, a market that has provided Virgin Mobile with the bulk of its subscriber base. Given the news-centric channels on offer, the service is supposed to target the professional market. However, the availability of only the Lobster phone is a massive hindrance in a society where fanciful handsets from top-brand manufacturers are fashionable (see Europe: 20 January 2006: Competing Technologies Vie for Mobile TV).
Would Improvements Help?: Although Virgin Mobile is lining up several improvements to the service, prospects will remain bleak until the company adopts the approach of other mobile operators. Unlike Virgin Mobile, which is selling the package as a mobile TV service first and a mobile phone second, other operators, such as Vodafone, Orange and 3 are preoccupied with selling mobile phones with mobile TV seen as an add-on. They also have more channels on offer, together with the all-important Sky Sports channel. Virgin Mobile is hoping to offer more handset choices later this year and is considering the option of letting people download and store TV programmes on the device for viewing while in areas that are out of coverage, such as the London Underground. While these will increase the appeal of the service, it will not necessarily create a sharp rise in adoption. Professionals are still wary of MVNOs (which explains why MVNOs target the youth, student and elderly market) and would need more than a few more handsets to convince them. Virgin Mobile's traditional market—the youth demographic—would also need more appealing channels and handsets to sign up for the service. Just as BT is struggling to win customers to its new wi-fi-enabled BT Fusion product because of customer apathy stemming from the Bluetooth-enabled BT Fusion, Virgin Mobile may suffer the same fate when it launches improvements to the service.
Co-operation is the Way Forward: Virgin Mobile, urged on by BT, launched a product when both the technology and market were not ready. DAB remains an isolationist technology and is hardly going to be adopted by many operators. In contrast, the U.K. mobile operators are aiming to form a consortium to bid for a chunk of the spectrum that would become available once the switchover from analogue TV to digital TV begins in 2008. With the spectrum, their inevitable choice of digital video broadcasting handheld (DVB-H)—adopted by the European Telecommunications Standard Institute (ETSI) as the de facto mobile TV technology—is certain to become the technology of choice for mobile TV in the United Kingdom. The other operators are biding their time at the moment, offering streaming video over their 3G networks, while waiting for mobile TV technology to evolve naturally. BT has also promised to upgrade its DAB technology to DVB-H once the spectrum becomes available (see United Kingdom: 12 October 2006: Mobile Operators Team up for TDtv Mobile TV Trials and 6 October 2006: Mobile Operators Plan Joint Mobile TV Network).