4G will unleash UK consumers' willingness to view video over smartphones. But are content rightsholders ready to exploit this revolution?
The UK’s 4G spectrum auction raised £1.2bn less than the government expected, but media reports of doom and gloom are missing the mark, as the far more sensible prices paid by mobile operators (10 times less than that paid for 3G spectrum back in 2000) will underpin more rational 4G business models, rather than a panicky race to win revenue at any cost.
At the heart of 4G business models will be video content – and this time the hype over the potential for content delivered via phones may be underestimated, compared with the wild and rash predictions of the impending success of content over mobiles that arose in years gone past.
As Screen Digest pointed out in a briefing recently, that’s primarily because 4G offers much faster speeds: typically 12-30Mbs in the “actual real world”. But that’s just the start - 4G will deliver even faster speeds than that in a few years time, and the impact of this on consumers will be startling.
Crucially, the true potential of 4G will be unleashed by hardware – already in Q4 2012 more than 60% of smartphones sold had screen sizes of at least 4 inches, and close to 10% were 5.2 inches or larger. Combine that with pin-sharp HD images, lightening fast streaming and low latency, and the contrast with the abysmal video services that exists on 3G will be so great that consumers’ willingness to consume content on smartphones will increase exponentially – as long as they are not priced out of doing so.
In the 4G pioneer markets of the US, Japan and South Korea, almost all operators have given consumers large or very large data caps, and that strategy has significantly increased overall usage for viewing content and video calls, leading to higher ARPUs for the mobile companies.
The available evidence is that people love consuming video over 4G, and as UK operators will promote video as the core of their 4G offer, that presents a huge opportunity for content owners and brands to earn additional and even significant revenue from 4G. In addition, content delivered over 4G has much less need to be “dumbed down” technologically, as it has to be when delivered over 3G, and this will allow for greater innovation, with significantly enhanced interactivity with content and a far richer/immersive user experience.
While there will not be one dominant business model for video over 4G, few mobile operators will depend solely on their own content, and most are already looking at bundling content from 3rd parties in with their 4G tariffs and bundles. Rightsholders need to be talking to operators right now in order to ensure their video is bundled in with 4G packages for consumers.
Still not convinced of the potential for 4G? How about this statistic: mobile devices accounted for 31% of all BBC iPlayer requests in December 2012, up from 22% in August, and 13% in December 2011. One analyst tells me that once 4G is launched he expects that figure to hit 80% very quickly.
If that doesn’t convince content rightsholders of the massive potential of 4G, then nothing will.
Nick Moreno, Head of Market Intelligence