Reality Check: Economics of mobile video

There’s no doubt that the television landscape today is very different than just a few years ago. The rapid adoption of mobile devices is driving a media revolution, completely changing the content consumption experience and skyrocketing the opportunity for revenue generation. To this end, wireless operators must play where the consumers are in order to keep pace and successfully plan for tomorrow.
Content that was once only available on traditional TV channels is now accessible on any device, anytime, anywhere, creating a new landscape for video consumption — for both individual and collective viewing. The TV experience is becoming more interactive, consumable and sharable in real-time, and there has never been a more prime time for wireless operators to capitalize on this by closely tailoring content to the likes of today’s digital consumers. With mobile devices serving as a natural extension of the in-home TV experience, personalized content is the true driver of usage, rating and revenue and an ideal tool for wireless operators and their advertiser counterparts to capitalize on for monetization.
EMarketer estimates that mobile video currently accounts for about $520 million in advertising spending in the U.S. Personalized content and ads are the key drivers that allow operators to develop a direct line of communication with their millions of existing subscribers. Wireless operators have a major advantage here — they are able to leverage the wealth of data they have on their subscribers to create adverts that are targeted accurately and offer value, instead of spam, which keeps subscribers engaged and active.
A recent report around online video rankings released by ComScore, showed that almost 188 million Americans watched more than 46 billion online videos in March 2014, while the number of video ads viewed totaled more than 28.7 billion. By customizing those 28.7 billion ads to each viewer, advertisers can not only keep viewers engaged, but ensure their dollars are reaching the maximum return on investment.
Beyond identifying with the user — which is imperative in a multi-screen environment — trends like “meshing,” “stacking” and “shifting” have opened the door to new revenue opportunities. Through meshing, wireless operators and advertisers can work together to ensure that the ads are an extension of the program content, so the messaging is relevant, fluid and related. In many cases, advertisers can also capitalize on social media, which is an application of meshing that allows brands to be a part of the social TV conversation. Stacking allows the use of multiple devices for unrelated content, like checking social media while watching the FIFA World Cup game on the main TV. Both meshing and stacking are complementary to shifting, where consumers begin a task on one device and complete it on another. These actions provide operators and advertisers with a deeper understanding of their audience and huge opportunity to better engage with them.
At the end of the day, it is paramount that wireless operators find means for monetizing their investment. This is where technologies propelling network digital video recorder-related experiences as well as second screen-driven, interactive, contextually aware advertising and unified communications can be leveraged to drive higher average revenues per user. By controlling the advertising life cycle and leveraging hard-earned subscriber data, operators can not only develop new revenue-sharing streams but also better engage their customers with relevant and targeted content; resulting in ongoing and mutually beneficial partnerships. The most important element of the equation, though, is flexibility and continued innovation within this ever-changing industry segment. The connected home industry is booming and it’s only going to get bigger in the coming years, leaving plenty of room for wireless operators to demonstrate innovation in their evolving approach to monetization.
Rick Herman serves as chief strategy officer at MobiTV. In his current role, Herman drives strategic planning and execution to grow the footprint of MobiTV’s end-to-end managed service platform. An industry veteran, Herman previously served as SVP of business and legal affairs of Sony Online Entertainment in San Diego. He was responsible for the strategic transactions related to content acquisition, distribution and development worldwide. Prior to his role at SOE, Herman served as associate general counsel of At Home Corporation (Excite@Home). He managed and supervised the negotiation and structure of the company’s significant commercial transactions, including mergers, acquisitions, and strategic alliances, with a particular emphasis on media, entertainment and cable/carrier matters. Herman earned a Juris Doctor from Loyola Law School and a bachelor’s degree from University of Colorado at Boulder.
Editor’s Note: Welcome to our weekly Reality Check column where C-level executives and advisory firms from across the mobile industry share unique insights and experiences.