Business Model for Broadcast Mobile TV

What has this to do with Mobile TV? Plenty. People are irrational, loss-averse and effort-averse so Mobile TV operators need to figure out how to transform the young David into the adult David as fast as possible © BNS Ltd, all rights reserved

The Mobile TV technology landscape so far… Traditionally, Mobile TV is the broadcast of live TV to an adapted mobile phone handset (Broadcast Mobile TV) or the streaming of an on-demand programme to a 3G phone (Cellular Mobile TV). • Broadcast Mobile TV: – Truly ‘broadcast’, the same signal is broadcast across a large area regardless of whether anyone is watching, similar to watching TV, thus inexpensive to scale to large audiences • Cellular Mobile TV: – Cellular service, just like voice – Streaming approach - similar to watching a movie clip on the Internet (buffering issues) – Direct relationship between the number of people watching and the bandwidth of the mobile phone networks’ streaming servers means expensive to scale to large audiences © BNS Ltd, all rights reserved

Some statistics.. • People today consume 70.6 hours of media a week, but only 23% of that content via a traditional television device. Source: IDC • 3 out of 10 adults now watch TV content on alternative devices such as the mobile phone, PDA or PC. Source: Accenture • Total mobile TV revenue across cellular and broadcasting platforms will jump from US$1.9 billion in 2007 to $25 billion by 2010. Source: Gartner • Mobile broadcast TV subscribers will total 155.6 million worldwide by the end of 2012, up from 4.4 million in June 2007 Source: Datamonitor • The Asia-Pacific region is set to have the highest number of mobile subscribers, followed by Europe and North America Source: Source: eMarketer Datamonitor © BNS Ltd, all rights reserved

But will customers want it? • Complementary to traditional TV • Mobile TV combines two features: 1. TV on the go, offering familiar content 2. multimedia functions with features such as radio, music player, camera and video recorder for a personal viewing experience • Why people will use Mobile TV – Flexibility and Independence – Enhanced personal viewing experience – Obtaining time and location-dependent information – Filling idle time – People in Asia commute more often and longer than anywhere else in the world © BNS Ltd, all rights reserved

…and is it happening? • Europe – Slow uptake as operators charge premium, keen to recoup 3G licence money – Regulation restrictive, not supportive • USA – Steady growth with all major players launching broadcast Mobile TV services (mainly MediaFLO) • Asia – Embraced free TV service model early / built up subscriber base fast – Fastest growing mobile TV markets are Japan, China and Korea • Over 25 million TV-enable handsets sold in Japan last year • In December, half of all mobiles shipped in Japan were TV-enabled – Strong regulatory support • in Japan and Korea the governments mandated that mobile operators had to support free-to-air TV services. • Chinese government actively supporting Mobile TV in lead up to Olympics © BNS Ltd, all rights reserved

Broadcast Mobile TV Technologies Overview • LG's \"Mobile-Pedestrian-Handheld\" and Samsung's \"Advanced VSB“ recommended as general standard by Open Mobile Video Coalition • CMMB (China Mobile Multimedia Broadcasting) • DAB-IP (Digital audioreal issueMobile But the broadcasting transmits TV via Internet protocol) is not technology, • DMB (Digital Multimedia Broadcasting) but the cost to the user • DVB-H + DVB-SH (Digital Video Broadcasting – Handhelds and Satellite to Handhelds; endorsed by EU) • ISDB (Integrated Services Digital Broadcasting) • MediaFLO © BNS Ltd, all rights reserved

Factors impacting Broadcast Mobile TV • Spectrum Competition – Traditional broadcasters vs telcos – Regulatory obstacles and support issues • Content rights issues – Media rights holders wary • Commercial terms between handset manufacturers, software companies, content creators and network owners unclear • Standardisation attempts – Multiple broadcast Mobile TV standards helpful, not hindrance to industry growth – Market will decide technology most appropriate for individual deployments • High-performance single-chip mobile TV solutions providing free terrestrial TV © BNS Ltd, all rights reserved

Enter the Single Chip Wild Card • Single-chip Mobile TV Potential of FTA Mobile TV receivers enabling By Country free-to air TV in cellular phones and other portable media devices • No network built required • High potential to be disruptive in markets with low cable/pay TV penetration • Telegent is one of the pioneers in this area © BNS Ltd, all rights reserved

For example: China • Relatively low pay TV penetration – terrestrial channels rule • More than three million users of free-to-air mobile TV • 74% of survey respondents to Telegent survey watching television on their handset for thirty minutes or more at a time, and 54% watching five times a week. • For 85% the primary influence driving their handset purchase decision was the built-in free-to-air TV feature Source: Telegent Telegent interviewed more than 400 consumers who purchased Telegent-enabled handsets, half of which were interviewed in February 2008, and the other half of which were interviewed between July and September of 2007. © BNS Ltd, all rights reserved

Potential issues with the Next Gen Single Chip Model • Grey area for content licensing – What happens to existing licensing deals? – Does free to air TV include re-carriage on mobile phones? – Which regulatory body will regulate? • Moving up the value chain – Solely a customer retention feature, no ARPU gains – Operator still have to build out either 3G or broadcast Mobile TV network if they want to expand the service, introduce own channels, advertising etc. © BNS Ltd, all rights reserved

Towards a successful Business Model PHASE 1 •Make it free: start with a basic free TV and audio channel offer as part of handset package to drive initial consumer adoption •It’s TV: keep it simple and easy to start – Simple navigation to replicate the familiar TV viewing experience – Interactivity of lesser importance for Mobile TV initially •Educate customers about merits and value of the service PHASE 2 • Add premium content gradually (mobile commerce, gambling, etc.) • Adopt advertising funded vs paid for service • Open new revenue streams through affiliations such as concert tickets, merchandise • Make it unique and create a memorable, easy to use and ultimately ‘sticky’ service © BNS Ltd, all rights reserved

Conclusion: Creating the Tipping Point • Free to air content to start with • Fool-proof choices: opt out, instead of opt in • Wide handset variety • Handset capability (resolution, battery life) • Connectivity • Content variety • Ease of access and navigation …. give customers a nudge © BNS Ltd, all rights reserved

Business Model for Broadcast Mobile TV

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