Need more value‾ Just add video

10 Jun 2008

For as long as there's been such a thing as 3G, video has always been branded as the differentiating app - if not the killer app - for next-gen mobile services. Traditionally, this has meant video calls and mobile TV - the former of which flopped early and the latter of which exists in various forms but is too new to be generating serious numbers outside of South Korea and Japan. But mobile video may triumph yet in other forms, from ring-back tones and SMS to user-generated content.

That's the pitch from a number of companies offering video-enabled solutions. At a Dialogic partner/customer conference in Malaysia in April, Dialogic CEO Nick Jensen declared video the "next major communications value driver" - not just obvious things like mobile TV, but video in numerous other forms, such as video greetings and ring-back video. NMS Communications has seen its video SMS solution deployed by Maxis in Malaysia and Smart Communications in the Philippines, while companies like Dialogic, Dilithium, Telenity, Openwave and Vringo have been touting video ring-back tones as a hot item. At this year's Mobile World Congress in Barcelona, Dilithium showcased other new video-based mobile apps, including video micro-blogging and video surveillance (i.e. home monitoring).

Interestingly, most of these video-enabled mobile apps have been on the radar for the last couple of years. Even video SMS, which is relatively newer, is essentially voice SMS with a video element. But that's also part of the attraction, says Jim Machi, senior marketing VP at Dialogic - the value-added services game is not just about creating all-new mobile services, but also adding value to existing ones.

And as the open-systems building blocks behind the scenes in media servers and gateways become more cost-efficient and flexible enough to allow cellcos to build and tear down new services quickly, service providers face considerably less risk in trying out video-enabled versions of tried-and-true services, as well as supporting emerging user-generated content services such as video blogging services like MeTV from M1.

More personal

How well video-enabled SMS, voicemail or ring-back will fare remains to be seen, of course. As a sort of mile marker, audio ring-back tones have been a runaway success to the point that by 2010 they'll be pulling in even more revenue for cellcos than conventional ringtones, according to IDC. Video could add to the personalization factor that made audio ring-back tones a hit.

Another element working in favor of video value-add, according to Dialogic, is that it doesn't depend on 3G-level bandwidths to work, which means a much wider potential customer base, especially in non-3G markets like China and India.

Whether video is the secret ingredient or not, says Yankee Group analyst XJ Wang, cellcos are under greater pressure than ever to find new value-added services to offset not only declining voice ARPUs but also revenues from their biggest non-voice cash cow to date - good old fashioned SMS.

"The number one challenge for operators is that both voice and SMS are becoming a commodity, which means more price squeezing," says Wang.

Wang adds that video could indeed be a key element of value-add strategies going forward, "provided it's not too expensive."

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