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Unable To Find A Better Exit, Qualcomm Cancels Consumer-Direct FLO TV

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(Update: Qualcomm (NSDQ: QCOM) has now confirmed our report that is canceling FLO TV)

Qualcomm is shutting down its struggling direct-to-consumer FLO TV operations, paidContent has learned. According to sources familiar with the situation, the staff was informed late last week by Bill Stone, president of MediaFlo and FLO TV, that the mobile TV service will wind down by the end of the year. The company is in discussions with AT&T (NYSE: T) and Verizon about the future of its white-label wholesale service, which continues for now and includes the majority of its TV customers.

Qualcomm CEO Paul Jacobs acknowledged the consumer service’s problems earlier this summer and suggested the company might be better off focusing on using its spectrum and network to distribute other content. This shift places the emphasis on leasing the network, not programming for it.

I reached out to several Qualcomm executives late Sunday and again this morning for comment but have not yet heard back.

Jacobs told paidContent in June that Qualcomm has always planned to sell or spin off MediaFlo but insisted then that a shutdown wasn’t in the plans. In July, Jacobs told investors Qualcomm was exploring options. This move may make it easier to manage a sale or spin of the remaining part of FLO TV.

Jacobs also insisted then that if the service can’t succeed, it won’t be a total loss. “The spectrum itself is worth almost $2 billion based on the latest spectrum auction.”

That may be comforting when it comes to dollars overall but it doesn’t make FLO TV less of a failure or MediaFlo so far less disappointing. Founded in 2004, the costly mobile TV venture attracted Verizon and AT&T as distribution partners but has been hampered by limited availability on devices and an inability to achieve full distribution. It launched direct-to-consumer FLO TV in 2008 but the marketing message was muddy and consumers weren’t as interested as the company thought in acquiring a separate device and paying a subscription for mobile TV.

Access to content wasn’t the issue: FLO has the major broadcast nets, CNN, ESPN (NYSE: DIS), Discovery and more. But Jacobs said the company misjudged interest in episodic viewing compared to snacking on video content. The possible exception to interest in long-form mobile viewing, he said: live sports.

FLO expanded to other devices, including DVD players and a version for cars. But competition also expanded with mobile VOD subscription services like Netflix (NSDQ: NFLX) and Hulu Plus, and access to substantial video on the iPhone, iPad, Android and RIM (NSDQ: RIMM).

The FLO TV store is offline but I saw devices for sale Sunday in Best Buy. I’m told Qualcomm is working out the details now to compensate current customers.

9 Responses to “Unable To Find A Better Exit, Qualcomm Cancels Consumer-Direct FLO TV”

  1. I agree with the first comment. The author (no doubt falling for the evasiveness of the Qualcomm spokesperson) missed perhaps the most important point: PEOPLE WEREN’T WILLING TO PAY!

    • Staci D. Kramer

      @ce1111 — I mentioned the lack of willingness to pay as one of the reasons
      FLO TV failed but I think it has more to do with a lack of desire for
      another $150-200 standalone device that then requires a monthly subscription
      — not with total unwillingness to pay for the content itself. People are
      subscribing to the white-label service and to MobiTV but as an add on to a
      device they use for other purposes. I’m not suggesting the numbers who are
      subscribing are huge but it doesn’t take mass acceptance to make money on
      subscription products done right.

  2. When O when will engineers like Paul Jacobs & paper-shufflers like Stone learn that you cannot “engineer” paid subscriptions? CDMA is NOT boobs, and people pay for Boobs! UG was (rudely) told that “adult content” is not on Qualcomm’s screen; maybe Stone can “order” them to watch News instead…I have 100,000,000 links on yah/goog/utube and “distinguished” video does not; can all of the Netizens who search daily for ugly george (somehow) be ‘lowlifes’? Media Flo. had 3 programming chiefs in 1 year; none of them had any links to their cableTV shows.Is there a lesson here?

  3. Tim Meyer

    What was a manufacturer and IP licensor doing in the operator business in the first place? Qualcomm trying to get into the business of their customers is a doomed strategy. I think you don’t even need business 101 to figure that out.

  4. What a FLObacle. Trying to jam an old TV paradigm down the new platform use. They misjudged how thin consumer wallets are at tolerating yet another subscription plan. Its nice that they have sooo much money at Qcomm that they can blow it this way.

  5. markaitken

    Access to content CLEARLY was an issue! “Where are my local stations?” The problem was that it was not “TV” in the way people have gotten to know “TV”. It wasn’t real. Now, I would agree that it (“TV”) has to BECOME something different, but it can’t start out THAT different – and at a cost that does not warrant persistence. It should be the ‘gateway’ to the content that compliments the access and mobility and opportunities. Jeez…free might be a good starting point! Let me then pay for the ‘other stuff’ I want…and clearly there is a lot of ‘other stuff’ folks want.

  6. What I’m about to say is competitive intelligence but no one listens to me anyway.

    This IPTV implementation by GoogleTV, AppleTV, Flo TV has not/will succeed because they are trying to put an old paradigm model (family room viewing) on top of a new paradigm (dooh/social mobile viewing) and building a advertising/license business model that sounds good to the old media guys in the room.

    IPTV is a more interactive platform that can support more robust paid content/subscription model and allow shorter time span. None of the big players in IPTV get this and they just want to license popular stuff from the big studios. Even Steve Jobs said this when introducing the AppleTV.

    I do not believe based on the past 5 years of “build it and they will come and we will figure out how to charge them” approach to new media models that a larger entity will perfect the IPTV model. I will only say that the IPTV model is not a “couch consumer” model that these major players are keep trying and keep failing at..