Annual Report on China's Handheld TV Market 2006

Findings and Recommendations Analysys Findings

Handheld TV still in set-up period in China

The market of mobile TV based on cell mobile network initiated in 2004 and have had 220 thousand users by December 2005, among them 160 thousand were users of China Mobile and 60 thousand of China Unicom.

The market of handheld TV based on wireless digital broadcasting network is still in the experimental phase in Beijing, Shanghai and Guangdong based on government-recommended DAB standard.

Domestic handheld TV market will expand rapidly

The number of users of China’s mobile TV based on cell mobile network reached 220 thousand in 2005. 2006 saw slow market development due to limitation of network bandwidth, content and charge. Analysys forecasts that with the issue of 3G license in the first half of 2007, China’s mobile TV market based on stream-media will grow rapidly. It is estimated to have 7.45 million users by 2010.

China’s handheld TV market based on wireless digital broadcasting network entered large-scale trial phase in 2006. It is estimated that the market will expand rapidly at the end of 2006 after national standards and operation license are issued, and user number will have arrived at 22.19 million by 2010.

Handheld TV terminal market will see differentiation

Mobile TV terminal based on cell mobile network are high end smart phone. It will become high end mobile supporting 3G after the issue of 3G license.

Handheld TV terminal based on wireless digital broadcasting network will see differentiation. Terminal markets like PMP, Navigation and USB will also develop rapidly.

Development of mobile TV based on cell mobile network is restricted by charge

Mobile TV services of China Mobile and China Unicom have began to charge since 2005. As flow-based charge mode makes free online watch rather expensive, it directly reduces user’s interest to use and the market development falls short of expectation.

National policy has huge influence on development of handheld TV market

Influenced by the policy of the State Administration of Radio Film and Television, mobile TV service of mobile operator is restricted when using traditional TV program. Content restriction also affects market development.

Handheld TV market leaded by radio and television operators postponed official business use for relevant national policies not issued. Operators of various regions will wait for the issue of policies of national standards and operation license after finishing earlier network construction and experimentation by the end of September 2006.

National policy will have direct influence on business mode and industry chain structure of handheld TV market. The uncertainty of policy will bring risk to investment of operators of various regions.

The game relation between telecom operator and radio and television operator will influence future business mode of handheld TV

As telecom department and radio & television department operates independently in China, their game relation will have direct influence on business mode development of domestic handheld TV market, especially handheld TV based on broadcasting network.

Satellite and ground broadcasting will coexist in future domestic handheld TV market based on wireless digital broadcasting network

CMMB standard based on satellite broadcasting with our own intellectual property rights gets support from the government and is likely to be long-term development direction. However, as it is still in research and development phase, it will not form large scale market in certain period of time. Therefore, satellite and ground broadcasting will coexist for some time.

handheld TV market based on ground wireless digital broadcasting network will see regional division in a period

Since national policy encourages organizations with operation license to experiment on handheld TV. Radio and television operators in Beijing, Shanghai and Guangdong have adopted different business modes according to their own characteristics. Since they have different CA system providers, and it is difficult to solve the problem of charge and profits distribution across regions in a short period of time, it is forecast by Analysys that Handheld TV market based on ground wireless digital broadcasting network will be operated independently in certain period of time, and it is difficult to realize inter-operability all over the country in the short term.

Analysys Suggestions

Suggestions to radio and television operator

develop multiple business modes

Soly relying on service fee and advertisement charge of handheld TV service can not take back the investment quickly. It is suggested that radio and television operators develop data services such as transportation and life information according to their own condition.

Cooperate with mobile operators and achieve a win-win situation

As mobile operators enjoy innate advantages in user management and charge, which fetch up the disadvantages of radio and television operators, cooperation with mobile operators is inevitable. Therefore, radio and television operators should cooperate with mobile operators according to their own characteristics and achieve a win-win situation.

Cooperate with terminal vendors

At present, handheld TV terminal market based on digital broadcasting network hasn’t take shape. Terminal support will be an important factor for the development of handheld TV service. Radio and television operators should cooperate actively with terminal vendor, have several terminal implementation ways, and adopt business modes of co-marketing and affiliate program or help terminal vendors cooperate with CA to promote market development.

Support various forms of terminals

Handheld TV based on broadcasting network has various terminals. Radio and television operators should develop corresponding business mode according to different features of terminals, and in particular, encourage the development of non-mobile terminals. One one hand, they can achieve market segmentation through different terminals, thus advance the rapid development of thw whole market; on the other, the development of non-mobile terminal market can prevent radio and television operators from excessive dependence on telecom operators and enable radio and television operators to have voice right.

Monitor and guide CA system providers

CA system providers will become an important link in handheld TV market based on broadcasting network. As charged service will be the emphasis of development, the exclusivity feature of CA system determines that the position of CA system providers will rise gradually in industry chain.

In order to ensure sound development of the market, radio and television operators in various regions should monitor and guide CA system providers in coopration and oversee their reasonable charge for terminal vendors.

Innovate business mode and adopt multiple business mode

There are different business modes for various terminals. Radio and television operators should improve corresponding business mode according to features of different terminals in order to advance market development.

Suggestions to telecom vendor

Mobile stream-media will be the mainstream application at the early stage of 3G. Presently its development still falls short of industry expectation due to the limitation of network and terminals and lack of innovative products. Operators should stimulate 3G demand, increase competition power, pay great attention to industry chain construction of relevant business, encourage SP to innovate in products, and accordingly link up the development of value added service before and after 3G.

Operators should innovate on the business mode of mobile TV market, explore the factors for multiple industry application industry development, and design the solution with clear aim.

After the issue of 3G license, competition among operators will get fiercer. Competition centers on two lines. One is of middle and hign end users (in stoc) and increment users; the other is of low end users (in stoc). For those middle and hign end users, the typical application of 3G value added service will be the most effective way to enhance user loyalty and ARPU value.

Close and single business mode has played an important role in in the development of domestic value added service market; however, it faces great challenges. Mobile TV is a good cut-in point for operators to design different business modes according to service application area and user segmentation.

Cooperate with radio and television operators

As mobile operators enjoy innate advantages in user management and charge, radio and television operators must cooperate with mobile operators on handheld TV service based on broadcasting network. Cooperation with radio and television operators will bring mobile operators practical profits, and on the other hand, with the expansion of handheld TV market, the voice right of mobile operators with user interactive interface may increase gradually in industry chain.

Suggestions to SP

The key factor for SP to develop mobile TV service based on cell mobile network is the development and use right of program resource, and the abiliy to develop new application.

Determine exercisable business mode of mobile value added service products based on stream-media technology and the profit mode according to its own content resources. Design relevant product, service, marketing and channel strategy for target users.

Pay attention to second development of content resources. As users have different using habit of mobile terminals, SP should pay attention to second development and digging of content resources according to different profit modes.

Make use of its own content resources, grasp market opportunity under multilayer content distribution system, carry out cooperation among multiple parties, advance and improve industry work division, and build and improve new business mode and profit mode.

3G will infuse new technologic drive for mobile value added service market, but its influence was relatively small in 2005; 3G will bring new opportunity for operator’s competition structure. SP of strength should take initiative according to its medium-term and long-term targets.