Television and Wireless: A Technological Love Affair
By Dan Briody, Tue Nov 05 13:45:00 GMT 2002

Wireless carriers have found a savior, and you’ll never believe who it is

As if kids these days weren’t already watching enough television, the broadcasting industry has just hooked up with an emerging technology that’s making TV insanely addictive: wireless messaging. A rash of deals between wireless service providers and popular television programs has taken the wireless industry by storm, sticking eyeballs to television screens like glue, and opening eyes around the business world to the potential of the convergence of TV and wireless. And it’s all happening not a moment too soon. The revenues being generated by SMS interaction with TV shows like Big Brother or MTV are significant, and a welcome boon to carrier bottom lines. The surprising result has been the lucrative, and sometimes rocky, marriage of broadcast media and the mobile phone industry.

A Welcome Surprise

Not too long ago, analysts and experts were painting an enticing picture of the future of television, a world in which the Internet and TV would be indistinguishable, seamlessly integrated, one in the same. People would sit back, watch an episode of Friends, and order the sweater right off of Jennifer Aniston’s back, with the click of a remote. But like most of the early promises of the Internet, convergence has been painfully slow to materialize. Not anymore.

The sudden explosion of SMS activity has taken analysts, experts, and industry executives by surprise. Driven mostly by lusty teens eager to profess their love to one another, MTV Europe has been deluged by simple text messages that flit across the bottom of the televisions screen during music videos. Van Dusseldorp & Partners, an Amsterdam-based digital media research firm, did extensive research on SMS and interactive TV, and uncovered dozens of success stories. A German television show, “Jede Sekunde Zahlt” (Every Second Counts), received 1.2 million messages in just a half hour after it encouraged viewers to vote on contestants. And the list of successful implementations of SMS technology in Television goes on and on.

“The media companies are really starting to try some new things out,” says Carl Williams, an analyst at Strand Consulting in Denmark. And there is some serious money involved. “In the weeks that Big Brother ran in England, it generated more than 13 million SMS messages from voting and quizzes. And they were all premium prices.”

The potential from SMS messaging on TV shows is so high in fact, that even the sclerotic U.S. wireless industry has caught on. Sprint PCS ran a promotion during the World Series - America’s baseball championship – in conjunction with Fox that encouraged viewers to use their PCS phones to vote on various coaching decisions. And the company plans to do the same thing for the National Football League. But it all began in Europe, where SMS is a way of life.

According to Van Dusseldorp & Partners, SMS is now accounting for an average of 10 percent of total revenues for European mobile operators. Vodafone, for example, is reporting that 14.2 percent of its revenues in Germany, Europe’s largest mobile market, are being generated through SMS. With that in mind, that boost the company gets from TV programs that encourage SMS, is a welcome addition.

Wireless Crosswords?

Besides voting in reality TV programs, participating in virtual coaching, and sending sickly sweet messages to teenage crushes, there are some truly innovative uses of interaction happening. In Spain, CCRTV Interactiva has integrated a rolling crossword puzzle game into its daily programming, according to the Van Dusseldorp report.Over the course of a day, the TV station flashes six different crossword clues up on the screen in what they call “microspots,” or 30 second screens. Viewers watch and answer the clues, hoping to win 300 euros by the end of the day. The result is one of the stickiest TV gimmicks of all time. Consumers can’t stop watching the TV, lest they miss a clue, and miss out on the chance for the money. Each message costs the viewer 1.04 euros, a fee which is split between the wireless carriers, the TV broadcaster, and a small percentage goes to the platform provider.

Some of the applications are even more simple. Europeans are starting to develop entire channels devoted to SMS messaging, otherwise known as Teletext chat, in which users communicate with each other in chat rooms on various channels. Already popular on the Internet, the Teletext chat gives people a 30-seconds of fame feel when their message is on the air. The various chat rooms are labeled, such as flirt, gay, oldies, etc. One station in Germany, called RTL, has brought in 2.84 million visits each month, 180,000 a day.

There have been some bizarre uses as well. Jorgen Hojbjerg, head of marketing and sales at Nokia Ventures Organization, says the technology is in the “embryonic stage, but it’s starting to generate some serious revenues for wireless carriers. The uses have been unforeseen. When the Danish Principal was having his second son baptized, the audience was sending greeting to him on the screen.” Maybe that’s the kind of divine intervention the wireless industry needs right now.

Love on the Rocks

Like all technology partnerships that burst on the scene, wireless/TV convergence is running into significant challenges. The most problematic is revenue sharing. Like kids on a playground fighting over a ball, the wireless carriers and TV stations cannot agree to acceptable terms for the new revenue that’s being generated. And considering how badly both of them need the money, it’s not entirely surprising.

As it stands right now, the mobile operators are taking a 40 to 50 percent cut of the revenue being generated by the SMS messages. But analysts are saying that television stations like MTV, fully aware that if not for them, there would be no additional revenue, want a larger cut than the 25 percent they are getting. Solutions providers, the companies that provide the technology to make the interaction possible, are earning the balance.

“The television stations are looking to get a higher percentage of the transaction,” says Williams. “They are getting good results from these programs, setting the mobile operators up with the right demographic, and financing all the development themselves. They’re starting to complain that they are not getting good enough deals.” MTV declined to be interviewed for this story.

But the wireless carriers did have a few things to say about the situation. Sprint PCS spokesperson Nancy Sherrer, points out that MTV is getting quite a bit from the arrangements they’ve made. “The TV stations are using it to extend their brand wirelessly, and they are also doing it to get their viewers engaged,” says Sherrer. “These programs extend the interactive capability of watching the show.” In theory, the TV programs could charge more for advertising on a show that keeps viewers glued to their sets. In addition, TV stations are learning more and more about their audiences through the new arrangements. Because the nature of television is broadcasting out to viewers, it has traditionally been very difficult for them to garner data on their target markets. But with the new interaction with their audience, they can gain valuable marketing data and interact in a new way with their viewers. It is a win-win situation for the TV stations and the wireless carriers. But so far, they haven’t seen it that way.

Nevertheless, the wireless carriers could not be happier about the success of SMS interactivity, as primitive as it may be. Experts point out that besides the new premium revenues the carriers are receiving, the SMS explosion is getting the word about next-generation wireless services out to the public. Most carriers agree that in a perfect world, 30 percent of their revenues would come from non-voice services. No one is expecting all 30 percent to come from SMS messages to television stations, but carriers feel that they can use simple services like SMS as a stalking horse for forthcoming services, like multi-media messaging and the like. The key is to first get their customers engaged, one step at a time.

TV is King

What is currently happening between TV and wireless dwarfs anything that other forms of media have been able to accomplish with the wireless medium. Anyone that’s ever tried to read a news story on their wireless phone knows how frustrating that can be. And aside from downloading a catchy ring tone or two, radio stations have yet to really crack the wireless code. For a while, it was looking like the extent of wireless/media interactivity was going to consist of stock quotes and sports scores.

So far, the only stumbling block for TV/wireless convergence is the unexpected success. Besides the squabbling over revenue breakdown, SMS centers have been overwhelmed by incoming messages during peak times in certain popular shows. Those types of sticking points can be quickly solved however by throwing more technology at the problem. Besides, analysts are expecting the SMS wave to eventually give way to MMS and J2ME services.

Television has been a worldwide addiction for decades. And wireless phones are just the latest technological addiction to hit the market. By combining these two world-altering technologies, we’ve created something truly compelling. Most people already can’t imagine life without their TV or their cell phone. Pretty soon, it will be impossible to imagine life without both…together.

After failing miserably at every attempt to become the next great American author, Dan Briody settled in San Francisco and started writing about the technology revolution in the mid-90s. Today he is the author of Red Herring's Wireless Watch column, and he is still trying to write the great American novel.