The Real Future of Mobile Video
By Kevin Werbach, Mon Aug 23 08:00:00 GMT 2004

Video will be a significant driver for next-generation mobile networks. Just not in the ways most operators and analysts are expecting.

Ever since the 3G hype wave first washed across the planet, video has been high on the list of services expected to take advantage of the new capacity of next-generation mobile networks. Research firms churn out projections of a multi-billion-euro market within a few years. Mobile video announcements fly fast and furious. SK Telecom in Korea already offers on-demand video programming, and plans to offer 39 digital video channels delivered via satellite. NTT DoCoMo is in trials for streaming television broadcasts on its 3G FOMA networks. In the US, Sprint PCS launched a streaming video service earlier this month offering television content from stations such as CNN, NBC Universal, FOX Sports and The Weather Channel.

All the noise masks a disconcerting reality: the mobile video market today is vanishingly small. In terms of usage and revenues, mobile devices sending text messages or making ordinary voice phone calls dwarf video, even on 3G networks. Are we simply too early in the emergence of the market, or are the fabulous predictions about mobile video misguided, like the "wireless Web" of WAP before it?

The answer is: a little of both. As on the wired Internet, predictions about video are following the wrong paradigm. Video-enabled wireless handheld devices are neither televisions that fit in your hand nor personal videophones, any more than a television is just radio with pictures. Yet as the announcements above suggest, operators are delivering mobile video services that mimic older media, especially broadcast television.

Sure, subscribers will use mobile phones to watch television programming and streaming video clips of sports highlights and music videos, but neither will be sufficiently compelling to generate massive revenues. While some people will be willing to squint at a small, jerky image of their favorite TV show while sitting on public transportation, that will largely be an application of convenience rather than a primary usage driver.

Back in 2001, Andrew Odlyzko published an important paper titled "Content is Not King," which should have demolished once and for all the idea that one-way video distribution would be a dominant mobile application. Odlyzko's well-documented conclusion was that, despite incessant predictions to the contrary, communications, not content, is what people have always been most willing to pay for. The mobile phone market itself, which dwarfs the revenues of any content-based industry, is a perfect example. People pay to talk to one another, not to listen to pre-recorded programming. The upshot is that handheld devices will never be a major market for one-way distribution of commercial broadcast video.

The good news is that mobile phones are not just video playback devices. They are, increasingly, video recorders. More cameras will be sold worldwide this year in mobile phones (an estimated 150 million) than in digital cameras (50 million) and analog film cameras (60 million, excluding single-use boxes) combined. And that gap will only grow.

Since video is, in essence, just a stream of still photos, the same basic hardware that allows a phone to take pictures allows it to shoot and display video. Many popular cameraphones, such as the Nokia 3650, already offer video capabilities. The biggest difference is the storage required. With increasingly capacious flash memory and miniature hard drives, however, that limitation is easing. And don't forget the millions of laptops with cheap add-on webcams or digital video cameras, online through wireless hotspots or 3G data networks.

Using the mobile device to record changes the video from a form of content to a type of communication. There are plenty of other ways I can watch the highlights from last night's football game. Most of them are more convenient, a better experience and cheaper than my mobile phone. However, if I want to give my wife a virtual walk-through of the apartment I'm looking at right now, or show my parents how their granddaughter is starting to crawl, or show my friends that I was just standing across the street from Madonna, there is no better alternative.

Journalists and would-be journalists will use the same technology to cover news stories live from the scene. Users will share popular video clips as MMS messages, the way they ship them around to PCs as email attachments. People will record how-to guides, recipes, and video tours. And they will share their daily experiences in video weblogs, or videoblogs, which are already springing up. A video-enabled cameraphone with the right software and back-end hosting becomes an instant videoblogging factory.

In short, a video-capable mobile device is an extension of its owner's eyes and ears. It means that you can transmit what you see, anywhere and any time, to nearly two billion Internet users worldwide. Suddenly, we'll be living not just in a global village but a global auditorium. Some of the consequences are frightening and some are trifling -- imagine the audience of mobile users who will share a future equivalent of the Paris Hilton sex video. Too bad; it's inevitable. Similarly, operators won't like the demands that two-way video puts on their networks. Having built and promoted fat data pipes and needing something to replace falling voice revenues, though, they will have little choice but to go along.

All this will take some time to become a reality. Operators today offer a few phones with video capability, but there's no critical mass yet. Four years from now, half a billion people are expected to purchase a cameraphone in a 12-month period, and most of those will have video capabilities. As soon as two-way video is something the user gets without consciously asking or paying for it, usage will start to take off. When the Beijing Olympics and the US presidential election roll around in 2008, the mobile video revolution should be in full swing. By then, the current efforts to recreate broadcast television on handhelds will be a dim memory.