Mobile TV In Korea: Lots of Users, But Little In The Way Of Profits

Informative feature in BusinessWeek detailing some of the progress and back-story of DMB-based mobile TV providers in South Korea. The country pioneered mobile TV services in 2005–largely with a push from the government, which established DMB technology, mandated it when it auctioned spectrum to state-owned broadcasters (and their private rivals), and then leaned on vendors to make devices. Bottom line: currently some 7 million people are watching mobile TV–that equates to one in every seven residents of the country–but none of the operators offering DMB services has yet to make any money.

–Each of the six terrestrial DMB operators has piled up an accumulated loss of between $22 million and $33 million. At least one of them now seems to regret how they have all gone about building up its customer base–by offering the services for free: “I don’t think low-priced monthly fees or a one-off initial charge would have made that much difference. An initial charge of a few dollars would have speeded up network development,” said Eom Min Hyung, DMB project leader at Korea Broadcasting System (KBS).

–The only mobile TV operator that charges for its service is SK Telecom-owned TU Media, which offers its DMB service over a satellite-based system. It has 1.2 million paid subscribers, but TU says it needs at least 2.5 million to break even in operation. That’s before it can even start to recoup its $435 million investment in satellites and networks.

–Collectively, the license holders made about $1.8 billion in advertising revenue last year. Not a great signal for those mobile content providers hoping to make revenues from advertising over subscriptions.

–The knock-on effect is that broadcasters are trying to work more closely with mobile operators like SK Telecom and device makers to offer content over rival technologies like S-DMB, and to share revenue for premium services such as VOD (which requires a back-channel over the cellular networks) or viewing content while on the subway.

–Standards body ETRI (which was behind DMB) expects the number of Korean mobile TV users to rise to 24 million, or half the population, by 2010, when the service will generate $3.2 billion worth of production in handsets and other equipment. Currently mobile handsets account for over half the number of TV-viewing devices but portable media players, navigation devices and mini-PCs are growing in popularity.

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