Eden Zoller and Jonathan Doran/Ovum
23 May 2011
Another emerging category of applications allows a mobile device to act as an interactive communications channel to comment on what is being viewed on the PC or TV screen, with minimal intrusion on the main viewing experience. While mobile social TV apps have a novelty value that can attract consumer interest, services are still fairly basic and undifferentiated. They need critical mass to really fly, and at present most have a modest active user base, with the need to sustain consumer engagement remaining a key challenge.
TV and video viewing on mobile is growing fast but revenues lag stubbornly behind usage and the bottom line is that it is still difficult to make significant direct revenues from mobile TV and video.
Standalone subscription offerings are still the dominant model, but beyond sports, movies, and key event viewing, these don’t resonate with consumers. Service providers are therefore exploring freemium models that combine free and paid elements as well as advertising, although this is still at an early stage in the mobile-TV context.
The reluctance of consumers to pay much (if anything at all) for the bulk of mobile TV and video means that advertising by necessity is a critical component of the business model. Mobile is attractive for advertising because it has the potential to support high levels of targeting, personalization, and engagement – all qualities lacking in traditional television.
The personal nature of mobile devices and the constraints of smaller screens have previously been considered a show stopper for mobile-TV advertising.
However, this isn’t necessarily the case as long as adverts are produced with mobile in mind, are well targeted, and provide something of value in the form of the message itself or free services. When this is done properly, consumers respond well to mobile advertising and the conversion rates can be higher than other media.