Telecommunications, Automotive and Market Research

More than 15 years in the mobile telecommunications industry and an industry analyst since 1998.

Monday, October 4, 2010

The failure of one business plan does not represent the failure of the industry

The website Paid Content and others are shoveling dirt onto Qualcomm's MediaFLO grave after employees were apparently told the operation would be shutting down by the end of the year.

What's important to understand is that the failure of MediaFLO's business plan in the US does NOT represent a failure of mobile video, particularly Mobile DTV.  I count myself among those who foresaw the demise of MediaFLO years ago because of its awkward business model:

  • It had  to be on a cellphone
  • It had to cost $15 per month so MediaFLO USA, the mobile operator and content owner could make enough money on it
  • Consumers had to be  satisfied with 12 channels or so of content you could find anywhere
  • Spotty coverage limited the places you could  view MediaFLO. Downtown was fine, but in the suburbs? Not so much.
MediaFLO's ambitious business plan had so many elements that were working at cross purposes that it's sometime amazing that it worked at all.  Handset vendors, MediaFLO, mobile operators, content owners and, of course, consumers, were expected to do their parts. Some did, most didn't. There weren't many compatible handsets, there was very little marketing support from the operators and as far as content goes.... 14 hours a day of Spongebob Squarepants just didn't do it for me. And apparently, consumers didn't do their part, which was to have been rushing out and snapping up handsets and signing up for a service that would increase their monthly cellular bill  by about 25%. 

However, don't use this setback to paint a dismal picture for the entire industry.  In particular, Mobile DTV seems to be ready to fill the place of MediaFLO, without the complex value chain and, more important without the monthly charge.  If consumers can get mobile television in the way they've been receiving commercial broadcasting for the past 80+ years, it's possible there will be some success in the future.

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