Maduf09 The Maduf Prophecies Kris Van Bruwaene

The Maduf Prophecies

2 Incipit  Prophecies, then and now  Structure of the business model  Basic data  costs  revenue  Results and conclusions

3 Then (beginning 2006) ...  Vodafone UK today revealed its surprise at the success of its mo bile TV service and the level of consumer expenditure (Telecoms.com)‫‏‬  Handy-TV sieht ungewisser Zukunft entgegen (Digital Fernsehen)‫‏‬  Mobil e TV Market in Korea to Reach 136.9 Billion KRW in 2006 (ROA Group)‫‏‬  Growing demand fo r video will generate $501 million in revenue by 2010 (JupiterResearch)‫‏‬  Mobile TV nightmare: Win d ow of opportunity smaller than your phone screen (Rethink Research)‫‏‬

4 ... and now  Mobile TV a potential $2bn market (BIA Financial Network)‫‏‬  M obile TV to explode ... 462 million subscribers by 2012 (ABI Research)‫‏‬  Mobile television failed to gain significant traction, with some services ramping down or shutting down entirely due to weak demand. (Deloitte)‫‏‬  Mobile TV: Subscribers but no profits (Screen Digest)‫‏‬  Interest in Mobile TV continues to wane (Continental Research)‫‏‬  Sales of video phones to double by 2010 (Infonetics)‫‏‬

5 The ecosystem Content providers Aggregators Network(s)‫‏‬ Users

6 Components of the model  Market prognosis +  Growth prognosis +  Accountancy and taxation rules +  Company policies =  Result for investors

7 Return for investors Initial capital Investors dividends Ecosystem Residual value

8 Overview  Prophecies, then and now  Structure of the business model  Basic data  costs  revenue  Results and conclusions

9 Networks  Covering Flanders + Brussels  16QAM (= Gent), 10 Mbit/s, ± 20 tv-programmes per mpx  QPSK, 5 Mbit/s or 7-10 tv-programmes per mpx  Twice five scenarios:  Small cells only (780 16QAM / 325 QPSK)‫‏‬  Medium sized cells only (262 16QAM / 114 QPSK)‫‏‬  [Large cells only (49 16QAM / 22 QPSK)]  Existing large and medium-sized cells, s u pplemented with small cells (619 16QAM / 173 QPSK)‫‏‬  Existing large and medium-sized cells, supplemented w ith small and medium-sized (528 16QAM / 101 QPSK)‫‏‬

10 Networks  Two Monte-Carlo simulations (16QAM and QPSK)‫‏‬  Investments normally distributed  Opex and depreciations ~ capex  Economic lifetime ± 15 years  Opex include:  power  sites rental  maintenance  NOC

11 Costs  Content/rights: uniform 30 % to 60 % (?) of arpu (ex VAT)‫‏‬  VAT 12 or 21% (?)‫‏‬  Marketing  Taxation (+ notional intrest, transferable losses)‫‏‬  New user registration  ESG, capex and opex  Conditional Access System  Billing and factoring  Help desk  Labour + overhead  Spectrum licence

12 Demand from MICT Internet survey Adoption classes: Early Adopters, Early Majority, Late adopters Payment classes: Free To Air, subscription, PPV

13 Demand from MICT Internet survey

14 Price from demand curve Number of users Demand curve Max. income €/month Fixed costs Optimal price

15 Growth speed: an example

16 Growth speed: many examples... Platform p (/year) q (/year)‫‏‬ T-DMB (KR) 0,10672 1,47096 Vodafone 3G (DE) 0,09078 1,47192 Belgacom TV 0,02160 0,78840 Vodafone 3G (GB) 0,05652 2,13643 Vodafone 3G (IT) 0,04633 1,54400 TU-Media (KR) 0,25825 0,91588 Vodafone Live (GB) 0,05652 2,13643 Vodafone Live (DE) 0,09078 1,75336 Sirius Sat Radio 0,00171 1,44840 iPod 0,00160 1,42136 Digitenne 0,03782 0,50162 XM Radio 0,01473 1,14243 mp3 Belgium 0,01590 1,09583 TiVo 0,00100 1,32934 Vodafone Live (IT) 0,08168 0,69364 Proximus gsm 0,00102 1,19226 GSM Belgium 0,00192 0,93656 .....

17 Modeling speed of growth q

18 Uncertainties  Model has no proven track record  Internet survey (representative?)‫‏‬  Model b ased on existing tv content, not specialized mobile content

19 Results and conclusions  Success depends on many factors  Return € 6...60 million if success...  ... but failure not impossible.  Government strategies as yet unclear  Strategic motives may be more important: image, quad play, customer retention, squeezing out competition...  Market can evolve positively, killer applications can emerge

Maduf09 The Maduf Prophecies Kris Van Bruwaene

by IBBT on Apr 09, 2010

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