More Koreans are getting TV-enabled handsets, but mobile TV operators are struggling from the lack of business models.
/ Korea Times
By Kim Tong-hyung
The number of mobile television viewers in South Korea has now reached 22 million, according to the latest figures by wireless carriers Friday, as digital multimedia broadcasting (DMB) functions have become conventional in mobile handsets.
Despite the growing audience, however, a sustainable business model remains elusive for television operators who are reeling from declining average revenue per user (APRU) and weak advertisement sales.
According to TU Media, a unit of SK Telecom and the country's sole provider of satellite-based mobile pay-TV services, the number of the company's DMB customers reached 2 million as of Friday, a significant jump from the 1.3 million around the same time last year.
The jump in the number of subscribers is attributable to the company introducing ``Slim Package'' rates, which allow SK Telecom customers to view some of its DMB channels for free.
TU Media has been saying it needs about 2.5 million subscribers to be profitable and believes 2.3 million by the end of the year is an achievable goal.
The country's three mobile carriers ― SK Telecom, KT and LG Telecom ― also sell handsets enabled with terrestrial DMB, which is a free service. The companies have combined to sell about 20 million phones with terrestrial DMB functions.
The combined 22 million mobile television customers for both free and paid+ services account for about 45 percent of the country's population.
TU Media sent its first broadcasting signal in 2005 and is the quickest among the country's pay-TV platform to reach the 2 million customer mark. Cable television, first introduced in Korea in 1995, and the Sky Life digital satellite broadcasting service, which was launched in 2002, both took five years to reach the 2 million customers.
Although mobile television has clearly become conventional among tech savvy Koreans, it remains a money losing business for operators.
TU Media's cumulative deficit reached over 310 billion won (about $240 million) at the end of the first quarter of this year, and the increasing proportion of Slim Package rates means that ARPU levels are continuing to dip.
Things aren't much better for terrestrial DMB operators, who rely on an advertisement-supported model. The country's six terrestrial DMB broadcasters, including the country's three major television networks KBS, MBC and SBS and DMB-specific operators such as U1 Media, Korea DMB and YTN DMB, combined for only 8.9 billion won in advertisement revenue last year.
Sustaining the ad-supported business model has been difficult when advertisers struggle to get a clear idea of how effective their commercials on DMB can be.
A 15-second commercial on DMB costs about 500,000 to 600,000 won in the ``prime time" hours during the morning and evening commuting hours and lunch. In comparison, a 15-second commercial on national television during prime time, which is around 10 p.m., costs at least 10 million won.