This year, for the first time, consumers will buy more video-enabled smartphones than TVs.

According to forecaster Research and Markets, sales of such devices will tip 300 million in 2008, which trounces the expected sales of tellies.

And since there’s been a global financial meltdown since then (which should affect sales of plasmas far more than handsets) the difference could be even more marked.

So will families be gathering around their LG Secrets to watch American Idol? No, of course they won’t. Don’t be stupid. But the point is that they could if they wanted.

Why? Because handsets are big, screens are bright and, most important of all, data tariffs that make such high bandwidth activity tenable are breaking out all over the place. It’s these underlying factors that make the market watchers so excited about the future of mobile video.

To pluck one of many forecasts out of the air, MultiMedia Intelligence says revenue from the sector will soar from $3.5 billion in 2008 to $15 billion by 2012.

Every week seems to bring with it a dramatic new service launch. In the last few months, for example, Paramount and Motorola launched a service offering users access to full streamed or downloaded movies.

At around the same time France-based Actimagine gave broadcasters and second tier operators an easy route to the mobile video market with Mobiclip, a storefront that lets users stream or download DVD-quality video via sideload, wi-fi or 3G. Weeks later Nokia confirmed that its flagship N96 would not only link to a made-for-purpose mobile TV channel, but also run BBC’s iPlayer video replay app.

The latter is fascinating. BBC iPlayer has been wildly successful on the wired web, with more than 20 million programmes watched through the service in August alone. This has put huge pressure on broadband networks and caused some tension between the Beeb and ISPs.

What kind of aggro could a mobile iPlayer be storing up? Jeremy Flynn, a former Vodafone exec now heading up the video-calling specialist D2See, has a view. He believes the limits on data allowances will ensure that the billshock issue doesn’t go away – and that this will inhibit the market.

“The fundamental hindrance to growth surrounds the actual and perceived cost of data. Most data plans allow at least 200Mb of data per month, and that’s about three hours of IP streamed data. That’s okay for video usage, but the cost of exceeding the bundle can be very high.

On Vodafone UK’s prepaid tariff, you get charged £1 for up to 15Mb in a day, but the run-on rate is £2/Mb. So while watching 15 minutes of video would cost £1 in data charges, watching 30 minutes would cost £31 in data charges. Then there are contractual issues – T-Mobile reserves the right to block off-portal video streaming, and on Orange contracts it’s specifically excluded from the plan.”

These issues are clearly still holding the market back. Matthew Feldman, CEO of Versaly, which runs the video aggregator Vmbc.tv, says: “Although I see the number of mobile video services and destinations increasing, our average number of views per service has been flat.

As with any content, its all about marketing and promotion. Many video services have too much content and less than optimal navigation. Thus, only the featured or top video programming get all the views. We don’t see a big different between branded and unbranded, provided they are featured/promoted equally.”

Most insiders would agree with Feldman. In the UK, Saffron Digital, which runs video on demand services for T-Mobile and Vodafone and is powering the Motorola/Paramount store, is witnessing steady growth – into the tens of thousands on the most popular clips. But it too recognises the need for promotion.

CEO Shashi Fernando says: “I look at the made-for-mobile content available and I think some of it is genuinely fantastic. But it’s never been properly marketed to consumers. I still believe that the biggest demographic among mobile video watchers is people in the industry. They’re the ones watching. Still, by spreading the word this group can reach millions.”

Fernando is not alone in believing that the Apple iPhone/App Store is transforming the mindset of everyone that uses it – and focusing the minds of everyone else. He adds: “Motorola, for example, is being brave and wise to take on Apple with its own store. It had to put a marker in the sand.”

Damian Mulcock, CEO of video services specialist Mobix, agrees that Apple is raising the game. “The iPhone has gone a long way towards creating greater awareness amongst consumers of mobile media services. The industry needs to learn from this and make propositions that focus on value and not jargon,” he says.

Still, not everyone is of the opinion that video is just for the future. At MTV, the current numbers are truly impressive, with the broadcaster reporting nine million streams in the US in August, up from five million in January.

Greg Clayman, EVP of digital distribution and business development at MTV Networks, has no doubt that the simplicity of the operator offer is what lies behind this success.

He says: “We don’t really have pay-per-download over here. You sign up for a simple subscription for VOD clips (as well as other mobile services) and pay one price for all you can view. That’s what VCast on Verizon and CV on AT&T are. And it’s working wonders for adoption.”

MTV’s success has been achieved on the back of paid-for clips (albeit within a subscription) but the company is now set to explore ad-funded video too, with the US Air Force already signed up to provide pre-roll ads on made-for-mobile series The How To Show.


Many believe this model will provide the bulk of video revenues to the business in years to come, even though there are still doubts about the level of demographic targeting possible and the quality of metrics returned to advertisers. These factors seem to have done for provider Rhythm New Media in the UK despite high profile deals with 3.

Still, others are tackling the issue head on. Users who subscribe to services delivered by Velti's enhanced Mobile Marketing Platform (MMP) are asked to provide personal data the first time they sign up. This information, combined with carrier and network characteristics provided by Vantrix, is used to target consumers with more relevant material.

Of course, there’s more to video on mobile than the downloading/ streaming of short clips. Take video ringtones, for example. The ringtone remains the foundation of the entire mobile content biz, so its video successor represents an intriguing proposition. Israeli firm Vringo is trying to make it work, but developing the concept around user generated rather than commercial content.

Andrew Perlman, Vringo’s SVP of content and community, says: “The ringtone is still the most consumed form of mobile content… and now sophisticated users are using their own clips and inserting them as ringtones.”