After years of infrastructure building and billions of dollars of investment, the United States is finally ready to join the ranks of our Eastern neighbors who have long had watchable streaming TV service. CES announcements by companies such as MediaFlo and Verizon made as much clear, and competing services aren’t that far off.
However, standing in the way of these corporate Goliaths is Sling Media, a tiny California-based David with the potential to completely cripple the mobile TV industry before it gets off the ground. The one-two punch of the company’s Slingbox (which, while Tokyo won’t admit it, is already almost single-handedly murdering Sony’s Location-Free TV division) and Sling Player Mobile software, which can deliver your TV, DVR, or even DVD content straight to your cell phone for (shockingly) no monthly fees, are scaring Big Media shirtless. The multi-billion dollar question is: If somebody can get all of their home content on-the-go for free, why would they ever pay for a fee-based service?
Big mobile TV providers might survive the Sling Media onslaught, but it’ll take a lot of luck and even more muscle, and it’ll be a war that plays out on a number of battlefields. And, the way I see it, there are exactly three ways the big players can crush Sling Media.
Click the jump to see exactly what scenarios will allow the new mobile TV industry to survive the Sling threat, and how likely each is to happen.
LAWSUITS, LAWSUITS, LAWSUITS
Throw Sling Media in a legal ring with Verizon, MediaFlo, and the major networks and it almost doesn’t matter who is right—if Verizon decides Sling Media is Public Enemy #1 and turns it into a war of attrition, it’ll be very, very difficult for Sling Media to survive. After all, Sling Media’s entire annual revenue is about equal to the fuel costs of the Verizon CEO corporate jet. In order to win this battle, the mobile TV providers don’t need to win a single court case, just keep Sling Media tied up with enough legal fees to keep them out of contention. Although the fact that Sling Media has survived lawsuits so far is a good sign for them, it may only be because the mobile TV industry hasn’t had much to lose yet—after all, their services have barely launched in a few test markets. Once MediaFlo goes nationwide, expect the legal pains to begin.
LIKELIHOOD OF THIS HAPPENING: High
THE DEATH OF NET NEUTRALITY
Verizon, the first US carrier to bat with MediaFlo’s service, is also one of the biggest opponents of “Network Neutrality”–the idea that Internet service providers shouldn’t be able to throttle the speed of content providers who don’t pay them off. If Network Neutrality dies, first on the slow-down hit list of any ISP will be guys like Sling Media, who not only piggyback huge amounts of bandwidth for their service, but also cut into the carrier’s business plan by delivering something for nothing. What happens with this is ultimately up to Congress, but Sling can breath a little easier due to the recent election victory of the generally more tech-friendly Democrats.
LIKELIHOOD OF THIS HAPPENING: MEDIUM
GOVERNMENT SUBSIDIES
In Korea, where mobile TV has saturated subways and sidewalks for years, early adoption can be chalked up to a number of factors: local CE giants Samsung and LG turning the country into their electronics petri dish, and a mentality that encourages early adoption are foremost on the list, but there is one other crucial factor: the government subsidizes Korean mobile video. While premium and pay-per-view services can beef up any Korean’s channel line-up, the basic networks are delivered free to handsets thanks to the Korean government.
While it would be extraordinarily out of character for the US government to fund any such infrastructure (unless the Pentagon suddenly decided it needed streaming sitcoms to boost troop morale), you can bet the mobile carriers are trying to get something for nothing from Uncle Sam to fund their new ventures. If they succeed, this government influx of cash (or, more likely, tax breaks), could give the mobile TV industry a stay of execution for at least a few years. But will this happen? Probably not.
LIKELIHOOD OF THIS HAPPENING: LOW
In the end, it is necessary to keep in mind just how small Sling Media is, and how big the companies they are likely making enemies with are. Their survival isn’t just important for people who want cheap mobile TV–it’s important to the idea that any start-up with a good idea can survive in a landscape dominated by lawsuit-happy giants who usually value bean-counting over innovation. For that reason, we should all be rooting for them.
Seth Porges writes on future technology and its role in personal electronics for his column, The Futurist. It appears every Thursday and an archive of past columns is available here.
would love to know what we are going to be getting sued for. any tips would be appreciated ;-)
i guess one more possibility would be for the mobile operators to embrace the technology like Hutchison/3 did.
on a more serious note, the threat to Net Neutrality is a serious one and something all of us should at least be cognizent of at this point. I am optimistic the Net will remail “neutral”, but good to have everyone educated in the case things start to get crazy.
interesting perspectives Seth. thanks.
keep on slingin’ in a free world,
blake
From everything I’ve seen to date from Sling, they are a smart company and are looking to partner with the operators who “get it” and this is very differernt from the negative viewpoint you’ve portrayed. It’s also important to not that it doesn’t have to be an absolute “either or” with respect to MediaFlo / DVBH vs. the Sling/Orb type models. Some customers will prefer one approach and others will prefer the another and there is plenty of room in the market for a couple of different players and options. Look how many folks make big screens - it will be the same for mobile TV I think.
Mobile TV is going to be a big market (the pundits will eat there words over time) and there’s plenty of room for a company like Sling to thrive along with the other players like MediaFlo. The fact that Sling is working with carriers already and that some carriers actually are embracing this model is something the pundits should take note of.
Remember too that folks like MediaFlo and Modeo have huge infrastructure outlay costs to deal with. Building a new network nationwide is very expensive and time consuming. Sling’s model on the other hand seems a bit less risky to me if your looking at the reality of how you get to profitability.
Everyone forgets that US carriers paid billions in spectrum licensing fees and then billions more to build out THEIR networks, they have every right and responsibility to protect those networks and monetize them as they see best. While 3 UK has indeed embraced services like Sling (and Skype) it comes with a data plan that has the associated data access fees already built in - anything Sling can do to motivate subscribers to purchase unlimited data plans is welcomed by all carriers. On content however, phones are not small television sets but rather more like small PCs and the ultimate user experience needs to reflect that. Watching 44 minute prime time dramas will not be what most consumers want most the time.
dbb
dbb hit the nail on the head–that anything to “…motivate subscribers to purchase unlimited data plans is welcomed by all carriers.” The only way carriers are making money these days is thru DATA. So any application that drives data usage is good for them. The carriers need stop pouting and get over their self-induced paranoia about being a dumb pipe (”We’re not an ISP…We are a content company!!”). I’m personally a fan of Orb, but the bottom line is that consumers will indeed revolt when they finally get fed up with paying “content fees” to the carriers. Just give me a good phone and data plan and leave me alone!
Re: “anonymous”.
In case there was any ambiguity about it, I didn’t mean to portray Sling in a negative sense. I agree that they are a very, very smart and nimble company, and, as I say at the end, their survival is important for making sure other such companies have a chance down the line in a pool increasingly dominated by a few big fishes.
T I V O
Hold on everyone! Lets split ‘mobile TV’ into 2 distinct categories…
You have broadcast (simulcast) full-length TV on mobiles - as provided by Sling or via DVB-H, MediaFlo etc and you have uni-cast on-demand mobile TV.
Research already shows that full-length broadcast TV on mobiles is a ‘nice to have’ application whilst on-demand unicat mobile TV is something people will be far more likely to pay a premium for, going-forward.
Why? Because people are willing to pay to watch what they want to watch when they want to watch it - not when it’s broadcast.