Mobile TV is not profitable yet, and its industrial structure and business model are still at the theoretical level and laboratory stage. As supporters of mobile TV, all interest groups are not weak, so how to make profits from this business and how to establish the mobile industry chain in the game of interest groups will become the focus of the industry, and whether all parties are satisfied with their own interests will also become the focus of whether the mobile TV industry chain can be maintained.
A truly effective business model requires that content providers, broadcasting and television operators, mobile operators, and terminal suppliers in the entire industry chain be relatively independent, focus on their own areas of expertise, and be able to connect with each other, so that all links in the industry chain can develop smoothly, open up new profit models, and all parties can benefit from it. However, this process requires long-term coordinated efforts from all parties to achieve.
At present, there are two main business models for mobile TV in China, namely, the business model based on mobile communication network with telecommunications as the core launched by Nokia and the business model based on broadcast communication network with radio and television as the core launched by Shanghai Media Group.
1. Nokia Mobile TV Business Model
Nokia's mobile TV service system includes three parts: mobile terminals, service providers and networks, covering all interest groups in the industry. The network standard uses DVB-H technology, which has been approved by the European Telecommunications Standards Institute.
The DVB-H technology used in this model is said to have power saving, soft switching, anti-interference ability in mobile environments, and flexible networking capabilities. The IPDC solution based on DVB-H provides an end-to-end, open, and standard solution for mobile TV applications, creating a global, horizontal market, making the providers of services, terminals, and network infrastructure a multi-vendor market. Around 2005, countries such as Finland, the United Kingdom, Germany, France, Switzerland, and the United States have carried out mobile TV service tests based on DVB-H, among which Finland's mobile TV service has entered the commercial trial operation stage. According to the test results, DVB-H is the most mature mobile TV technology standard so far.
In addition to the technical advantages, Nokia's mobile TV solution based on DVB-H technology also has certain characteristics. This business model makes the content providers, broadcasting and television operators, mobile operators and terminal suppliers in the entire industry chain relatively independent and focused on their own areas of expertise. For example, content providers are responsible for content production and provision, broadcasting and television operators are responsible for the construction and support of broadcasting and telecommunications networks, mobile operators can be responsible for ordering, business monitoring and billing and other return channel services due to their rich experience in value-added services, and terminal suppliers develop terminal equipment suitable for the network, etc. In this way, all interest groups can benefit from it and give full play to their own advantages. From a policy perspective, it does not violate the relevant regulations of the State Administration of Radio, Film and Television and the Ministry of Information Industry. This solution should be inspiring.
In 2005, Nokia has cooperated with Finnish broadcasting operator Digita and mobile operator Sonera to conduct project testing at its headquarters. At the same time, Nokia officials announced that Nokia will take the opportunity of the Beijing Olympics in 2008 to complete the commercial application steps of mobile TV.
It can be seen that the mobile TV business model launched by Nokia not only has advantages in technical standards, but also can be used as a reference for relevant domestic interest groups in terms of solutions, so as to build a business model that is suitable for China's national conditions and can promote the development of the mobile phone industry.
1. Profit method
In the mobile TV business model proposed by Nokia, each interest group can earn considerable income by relying on its own advantages, but if they really negotiate with Nokia to fully adopt this model, the biggest beneficiary will be Nokia itself.
This is because Nokia is the builder of this model. It has the final say on the technical standards, protocols and structures adopted by this model. In addition to paying patent royalties, various interest groups will also buy various solutions from Nokia and provide Nokia with a certain share of business profits. In addition, Nokia's mobile phones will also occupy a dominant position as the terminal identity and business model provider that best meets the standards. Therefore, it can be said that if Nokia's business model is fully adopted, the development of China's mobile phone industry will be controlled by Nokia at least in the early stages. This is also an important reason why my country vigorously researched its own mobile TV technical standards in 2005.
Of course, in addition to this, Nokia's mobile TV business model provides a good way to make profits.
First, in terms of content providers, mobile TV has added new prime time for viewers to receive broadcast entertainment programs and information, such as commuting time and lunch time. In addition, mobile TV content is basically free of advertising harassment and is moving towards interactivity. Users will be happy to pay for the programs they watch, even interactive information fees. According to Nokia's market survey results and commercial trial operation results in 2005, users are very willing to pay for mobile TV. It is believed that content providers should be able to obtain considerable rewards.
Secondly, for terminal manufacturers, Nokia's mobile TV technology is completely open, and it should not be a problem to manufacture corresponding terminal mobile phones according to the standard. This business model is conducive to terminal entry and provides a foundation for industrial development.
Finally, the biggest obstacle to the development of my country's mobile TV business since 2004-2005 is the entry of radio and television operators and telecom operators. Since DVB-H uses the radio and television network, the network should naturally be the responsibility of the radio and television party. Network leasing management can bring a lot of profits to the radio and television party. However, since the radio and television lack experience in value-added service operation, the industry norms can be jointly agreed upon by the radio and television and telecom parties, and the mature billing and customer service systems of mobile operators can be used for charging, and value-added services such as MMS and SMS can be used for promotion and expansion of entry channels. The profits created are divided by the radio and television and telecom parties according to their contributions.
2. Operability
Theoretically, Nokia's mobile TV business model is very feasible, whether in terms of technology, specific business content preparation, or industrial structure. However, in reality, there are certain problems in its implementation.
First, this business model is based on Nokia providing solutions, technical support and network standards, and China's telecommunications and radio and television departments are both monopoly industries. They will not be willing to hand over industrial profits to Nokia in the form of licensing fees or purchasing solutions, and they are even less likely to be willing to be controlled by a foreign company for a long time. Therefore, it is unlikely that this solution will be fully implemented in China for a long time.
Secondly, this model is built with Nokia as the core. Content, charging and network provision are all carried out around this system. However, Nokia, which is not familiar with this industry, cannot establish practical operational steps such as how to incentivize content providers to provide more content and how to establish charging standards. Therefore, the inability of the model center to support the construction of the entire model is also a problem with this model.
However, the solution proposed by this model has a certain reference value, and provides a way of business cooperation between radio and television and telecommunications operators, that is, the radio and television departments manage the network, and the telecommunications operators are responsible for charging and business management.
At the same time, the overall situation is jointly presided over by radio and television and telecommunications operators, with radio and television responsible for content production and telecommunications responsible for SP management and terminal ordering and promotion, which is conducive to the rapid formation of the industrial chain.
In addition to the above-mentioned balance of interests in various industries, DVB-H technology can fully support mobile TV services in terms of technology; in terms of content, it has also initially formed a pattern of interactive, short and concise storylines. Therefore, except for the fact that Nokia's mobile TV business model is not suitable for China's national conditions and does not receive policy support, it is feasible in other aspects.
3. Policy risks
Judging from the domestic situation, China does not want Nokia's mobile TV business model to become mainstream in the country, mainly based on the following reasons.
(1) China is actively developing its own standards, such as DMB. Before the new standards are released, it directly adopts streaming media technology and obviously does not want to adopt the DMB-H standard.
(2) Nokia's high-profile mobile TV network testing activities were mainly carried out overseas, and the operators providing support were also European and American operators. Even domestic giants such as China Mobile and China Unicom did not cooperate with it. It is true that there were factors such as unclear policies and telecom operators were not willing to make arrangements easily. However, judging from the harmonious cooperation between domestic operators and radio and television departments such as SMG, it is not difficult to understand that domestic telecom and radio and television giants did not want to be at a disadvantage by adopting the Nokia model.
(3) In terms of content, Nokia obviously does not have the power to organize SPs or CPs to produce and provide content, and has no business operation experience. It is very difficult for it to become successful on its own.
From the above situation, it can be seen that the vested interest groups in the industry can only learn from the Nokia model but not completely adopt it. Because the Chinese government will not give policy support to Nokia for industrial and economic reasons, the Nokia model is subject to greater risks in terms of policy.
2. Shanghai Media Group’s Mobile TV Business Model
On September 28, 2005, Shanghai Media Group and China Mobile jointly announced the official launch of the mobile TV "Dream Vision", which provides mobile TV programs in the form of downloading on-demand (VOD) and live broadcast. This is the only business in the country with a mobile TV operating license. Its launch means the birth of a mobile TV platform for users across the country, and China's mobile TV business has also been upgraded from "testing level" to "operation level". In terms of supporting terminals, in September 2005, the number of models supporting this function has increased from 9 at the beginning of the test to 27 at present, mainly provided by four brands: Nokia, Sony Ericsson, Motorola, and Panasonic. In terms of charging model, although there has been no outstanding progress, a content platform under Shanghai Mobile's "Dynamic Shanghai" charges 10 yuan/month for watching mobile TV programs, which should bring some inspiration to "Dream Vision".
In terms of specific models, the core of the mobile TV business model led by Shanghai Media Group is the alliance between Shanghai Media Group and China Mobile, supplemented by terminal preparation. Shanghai Media Group is responsible for content, while China Mobile provides platforms, charging channels and business operation models, and upstream SP/CP and terminal manufacturers all serve the management of these two units. Its model is similar to a "duopoly" structure.
However, whether this model can exist in the long run is still a question. In the early stage, Shanghai Media Group and mobile operators may have compromised with each other because both sides were optimistic about the market, or because of their lack of experience or lack of content or policy support, to form a cooperative relationship. At the same time, there is competition in this cooperative relationship. For example, Shanghai Media Group has cooperated with equipment suppliers such as Funian, and China Mobile is also actively using terminals and SP/CP to build content platforms.
1. Profit method
From September to the end of 2005, the mobile TV trial business launched by Shanghai Media Group and China Mobile was temporarily free of charge. Shanghai Mobile users only need to pay 20 yuan per month for the WAP package to enjoy the service for free. In addition, in Shanghai, mobile users can watch mobile TV programs through another content platform under Shanghai Mobile's "Dynamic Shanghai".
If the mobile TV business model currently established by Shanghai Media Group can continue, its costs will consist of two parts: WAP fees and service fees. Considering the affordability of users, it is more likely that the service fees will be charged on a monthly basis than on a traffic-based basis.
The profit point lies mainly in the content, that is, whether the content is attractive enough, and can even create a cultural atmosphere that makes people willing to pay. In addition, advertisements can also be given in the form of information, that is, all animated advertisements can be listed by product classification, which can not only obtain advertising fees but also meet the users' life needs.
2. Operability
The Shanghai Media Group model is centered on Oriental Dragon and China Mobile, which are subsidiaries of Media Group. It unites the two major departments involved in the business and has advantages in content and operation experience. Most SP/CP and terminal manufacturers have some experience in cooperating with operators, so there are not many difficulties in establishing an industrial chain. Since the mobile TV business was put into commercial operation in 2004, the biggest obstacle to the development of the business has been the game between radio and television and telecom operators. Although this model is hosted by radio and television, telecom is also the leader. The two parties have made peace and created possibilities for business development.
In terms of content, we can see that the function of radio and television is to manage radio and television programs, and the content resources are quite rich. Even if they need to be adapted to the nature of mobile TV services, it is relatively easy. China Mobile has a large number of CP and SP resources, so this model can be realized in terms of content.
In terms of terminals, mobile operators have the ability to organize terminal orders. In September 2005, Nokia also launched related supporting terminals, so there is no problem with terminals.
Therefore, this model should be the most feasible business model in China.
3. Policy risks
The policy risk of Shanghai Media Group's mobile TV business model is weak. Shanghai Media Group belongs to the radio and television department and has policy support, especially in the mobile TV business, which has received strong support from the central government. China Mobile has operational advantages and has regulated this business in previous laws and regulations. If the two departments insist on doing their own thing at the beginning of the business, it will have a huge impact on the business industry, especially whether the business can be carried out smoothly. However, in this model, it takes into account the interests of radio and television and telecommunications. The two parts can work together to jointly develop and manage this business. Therefore, from this perspective, its policy risk in China is very low.
III. Development Stages of China’s Mobile TV Market
In 2005, the global mobile communication network was in the transition stage from 2.5G to 3G, and mobile data services were developing towards multimedia. As one of the main services of 3G, mobile TV has received sufficient attention.
The mobile TV business, which started in 2004, is now in the market preparation stage and faces many development obstacles in terms of content, terminals, technology, standards, rates and users.
First, in terms of content, although China Mobile and China Unicom have cooperated with various TV stations and news organizations and actively promoted content development, the types and quantity of program content on the market at the end of 2005 were mostly entertainment short films, with few life information services, and basically no business applications and interactive programs. In addition, the monotonous content and small quantity are a major obstacle for mobile TV business that relies entirely on media content to attract users and earn money.
Secondly, in terms of terminals, mobile terminals launched in 2005 basically all have media playback functions. However, their high prices, small screens, limited support for media formats, and short battery life also hinder the development of mobile TV.
Thirdly, there are defects in network technology. China Unicom's CDMA and China Mobile's GPRS can both support mobile TV in theory, but in reality, CDMA's claimed 384kbit/s can only reach about 100kbit/s, and GPRS's claimed 144kbit/s is only a theoretical value. Smooth and uninterrupted playback is simply not realistic. As for DMB technology, terrestrial DMB has just started and its penetration rate is not high. Satellite DMB charges are expensive. In addition, the actual profitability of mobile TV is still unclear, so there are still certain difficulties.
In addition, there are disputes over technical standards. Although DVB-H has won the favor of many businesses, it is still a standard launched by Nokia. If China directly adopts this standard, the patent fee will be high, and the development of mobile TV in China will also be restricted by it, so it is necessary to carefully consider whether to use it or not. And the standard developed by China itself is not mature, so it is still a question of where to go.
Finally, in terms of charges and users, the current mobile communication charges are too expensive; and user habits have not yet been formed, which is also an obstacle to the development of mobile TV.
Based on the above judgment, China's mobile TV business will still be in the preparation stage in 2006. See Figure 1 and Figure 2 for details.
Mobile TV is a business that requires long-term operation. 2005-2006 will be the period for users to develop their habits, and by 2007 the number of users will grow significantly. After that, the 2008 Olympic Games held in China will play a positive role in promoting people to watch TV on their mobile phones.
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