Good News, Bad News for Mobile Video

The good news for mobile service providers: according to data from Mediamark Research & Intelligence, more than one-fifth of US mobile phone or PDA users are interested in watching live TV on their mobile device.

The bad news: Only 13.5 percent of all respondents said they would pay a subscription fee for mobile TV, and even among respondents who said mobile was a source of entertainment, the figure was just 34.5 percent.

The best news: people once scoffed at the very notion of consumers paying for TV, but that belief has been proven dramatically wrong. Most U.S. consumers get their TV from a satellite, cable or telco video provider.

The challenge: differentiated programming not available on broadcast networks was what drove the interest. Simply making existing content available on mobile networks might not move the needle much.

The current thinking by distributors is that making mobile video a feature available to fixed line video services is one way to drive business value from mobile video. That is helpful to an extent, but doesn't address the more fundamental problem, which is that video will put an order of magnitude or two greater strain on mobile networks, largely without benefit of revenue lift to compensate for the required network investment.

If a business--any business--faces a magnitude or two of incremental cost, it stands to reason that those costs simply must be covered, one way or the other. If advertising is insufficient--and it clearly will be--then paid viewing or higher direct bandwidth charges are the most-likely revenue generators.

TV Leads Sub Growth in Second Quarter 2009

Broadband Internet access grew the fastest of a range of 10 video, voice and other consumer services in the second quarter of 2009, an analysis by Silicon Alley Insider suggests. About 3.3 million more net new broadband subscribers were added in the second quarter of 2009, compared to the same quarter of 2008.

VoIP subscribers also grew, adding 2.5 million cable subs. Overall, though, video services added twice as many subs as did broadband Internet access or VoIP services, among the 10 services tracked.

Digital cable, telco TV (FiOS from Verizon and U-Verse from AT&T), and satellite combined for 4.8 million net new subscribers in the 12-month period ending this June, more than the number of new broadband Internet subscribers. Meanwhile, Netflix added 2.2 million new subscribers.)

Internet Displaces Newspapers, TV Next?

More people now get their news from the Internet than from newspapers, the Pew Research Center for the People & the Press reports.

The percentage of people who say they get most of their international and national news from TV has been dropping slowly.

But the vast majority of Americans (71 percent) continue to cite television as their source for most national and international news, and there is yet no dramatic shift on the order of what has happened to newspapers.

Not many would bet against that state of affairs continuing forever. The bigger question seems to be over timing: How long will it be before something like the 2005 inflection point for newspapers occurs?

The newspaper experience suggests the change, whenever it happens, will be abrupt. There seems to have been some significant shift of user behavior around 2005 that caused an sudden shift in market share for newspapers.

Since 1999, the percentage of people who report getting their international and national news from television has fallen from about 82 percent to 71 percent.

What the chart does not capture is the shift of TV news from "broadcast" to "cable news," though.

While 42 percent of Americans rely on the internet for national and international news, just 17 percent say the Internet is their main source of local news. Americans are about equally likely to say radio is their main source for national and international news (21 percent) and local news (18 percent).

While 70 percent of those younger than 30 say they get most of their national and international news from television, nearly as many (64 percent) point to the Internet. Among those ages 30 to 49 a similar pattern is evident; 62 percent get most national and international news from television, while 54 percent cite the Internet.

Mobile Handset Features Strongly Affect User Engagement

As you might expect, less-developed handset features make ease of mobile Web navigation a key issue for feature phone owners, while smart phone owners are less concerned. That said, speed of page loading is the top issue for both smart phone and feature phone users.

On the heels of a study that suggests less ad engagement with mobile advertising by smart phone users, another study suggests nearly-identical levels of engagement with Internet activities. The studies do not contradict each other, but merely suggest that high levels of engagement with mobile content do not necessarily lead to high levels of engagement with mobile ads.

A study by Chitika, a Massachusetts-based online advertising network, suggests mobile users are approximately half as likely to click on an advertisement as non-mobile users. The findings are based on a sample of 92 million impressions.

The new InsightExpress study found that 68 percent of smartphone users reported feeling positively engaged while using the mobile Internet, second only to the 70 percent of users who were positively engaged while on a computer.

Only 47 percent of feature phone users reported positive mobile site engagement, as you might expect, given the more-limited capabilities of feature phones, compared to smart phones.

These results indicate that smartphone users are as engaged with mobile Internet content as those who are browsing the Internet on their computer. The Chitika results suggest that, for any number of reasons, mobile advertising is not yet optimized.

When mobile Internet users were asked to identify the top three elements that most influence their decision to return to a mobile Internet site, they said the top three issues were the speed at which the site loads, the ease of navigation on the site and the quality of the content on the site itself.

Service providers largely control the first variable, site designers and handset manufacturers the second variable and content providers the third.

Among mobile Internet users, several small but telling differences were revealed when comparing smart phone owners to feature phone owners. While both groups prioritized the speed at which a mobile site loads, smart phone users looked next at the quality of the content, ranking ease of navigation as less important.

In contrast, feature phone users found ease of navigation almost as essential as their number one concern, how fast the mobile site loads.

These differences can be explained by the limited navigation capabilities available with feature phones, making simple interfaces an absolute necessity. Smart phones, with their advanced browsers and inputs, allow for more complex page navigation.

Mobile Web site features that had the least impact on a users decision to make a return visit were the absence of advertising, the ability to personalize, and the number of links, videos or images on the site.

70% of Marketers Shifting Spend to Online Media, Survey Finds

Leading companies have stepped up their emphasis and focus on marketing accountability practices, according to a new survey by the Association of National Advertisers and Marketing Management Analytics.

About 75 percent of respondents reported a decrease in their marketing budget in 2009 while 67 percent said they were expected to drive more sales with the same or lower budget.

Fully 92 percent of respondents said they are taking steps to improve marketing effectiveness without spending more in 2009. That is leading to a shift of spending away from legacy channels and towards digital media, as 70 percent of respondents indicated they are doing so.

Respondents say their firms also are shifting advertising investment from brand-building initiatives to promotional marketing. About 53 percent of respondents indicated their firms are doing so.

Firms also are shifting their spending to lower-cost media. This means use of local instead of national TV ad buys, or 15-second instead of 30-second ad buys. About 38 percent of respondents said they were taking such measures.

Another direct result is greater emphasis on accountability and more collaboration across marketing, finance and research teams.

Some 32 percent of respondents said their teams included representation from marketing, finance and research, up from 22 percent in 2008.

About 17 percent of respondents said they use "what if" scenarios, up from eight percent in 2008.

Some 43 percent of respondents also said they use customer lifetime value models as an accountability technique, up from 27 percent in the prior year's study.

Avaya Buys Nortel Enterprise Solutions

Avaya is acquiring Nortel Enterprise Solutions for $900 million in proceeds to Nortel and an additional pool of $15 million reserved for an employee retention program.

The deal vaults Avaya clearly into the number one position in the enterprise telephony market, with a combined market share of 25 percent. Cisco, after battling Avaya for years for enterprise telephony leadership, now finds itself number two with 16 percent in market share, and facing a significantly more challenging competitor with the combined Avaya-Nortel, says the Yankee Group.

To the extent that the "unified communications" market overlaps directly with the "business phone system" market, the deal also affects market shares for unified communications solutions as well.

Global Bandwidth Demand Grows 79% in 2009

Few things in life are as dependable as annual increases in Internet traffic globally.

2009 has been no exception, in that regard. So far this year, global bandwidth consumption is up 79 percent, higher than the annual increases of about 60 percent in most prior recent years, according to TeleGeography.