Sep 17 2008

Naspers’ German excursion threatens to derail

Published by at 12:45 pm under Companies

First published on my old blog on 20/6/2008.  

In January the consortium Mobile 3.0 (of which Naspers is a member) was allocated the sole rights to launch and operate mobile TV in Germany, but bureaucratic red tape and market developments have prevented the venture from getting off the ground as planned. Now there is talk the consortium might hand its licence back to the German government and walk away. 

This much was reported in the Financial Times Deutschland (FTD) this morning. Mobile 3.0 is a joint venture between MFD Mobiles Fernsehen Deutschland  and NEVA Media.

Naspers is the majority owner of MFD. (Note: NEVA has no website.) Here is a (quick) translation of the article as it appeared:

Time runs out for Mobile 3.0

By Volker Müller in Düsseldorf

No frequencies, no sales channel and no business model – the second attempt to introduce mobile phone TV in Germany is facing failure. 

Four of the sixteen provinces in Germany have still not allocated sending frequencies and the licence holder Mobile 3.0 is making no progress in its negotiations with local TV stations. In addition, no sales channel has been found yet. Inside sources say the chances that mobile TV will be launched by the first quarter of 2009 have dropped below 50%. 

Originally, it was planned to have mobile TV (based on DVB-H technology) up and running in Germany by the time the European Football Championships started (early in June this year). To enable that, the provincial media association allocated the mobile TV licence to Mobile 3.0 already in January this year. 

The consortium consists of German media houses Burda and Georg von Holtzbrinck and the South African media group Naspers. The allocation of frequencies by the provinces has, however, been delayed and until today Bremen, Saxony, Saxony-Anhalt and Thuringia have not allocated anything. Due to the continuing delays, it is possible that the licence might be handed back. 

With every further delay, the chances for commercial success get smaller, say experts. Especially the free reception of the normal TV signals (DVB-T) by ever-stronger mobile phones, holds serious dangers for Mobile 3.0. Due to the fast-rising power of mobile phone chips at ever lower energy-use, mobile TV on the basis of DVB-H faces redundancy. The first phones are already in operation, which can receive the DVB-T signal. 

“For almost all technology there is a window of three to seven years for market success,” said Philipp Humm, German head of the network operator T-Mobile. The first attempt to get mobile TV going in Germany was already made two years ago. That means the critical border for the technology has almost been reached. 

According to lobbyists the German government is very annoyed by the delays in the four provinces. The national minister for the economy Michael Glos, is said to be especially disappointed. In March 2007 he publicly called mobile TV Germany’s “new market and growth engine” and appealed to companies to utilise the opportunities offered. In January this year all was still on course for licences and frequencies to be allocated in time for the European Football Championship. 

There is also no clarity about the business model of Mobile 3.0, the sales channel and the additional services to be deployed. “We are still developing our products and sales strategy,” a spokesman of the consortium said. 

The search for a suitable model is, however, complicated. “All studies show the willingness of clients to pay for such a service to be low, especially for the simple reproduction of normal TV. Five euro is probably the most that can be charged,” said Arndt Rautenberg of the consulting firm OC&C Strategy. Profits are only to be made when paid-for extras can be found. 

Only 17% of mobile clients would use mobile TV, according to a study of the consulting firm Accenture. “Mobile TV will come, but it will only be a niche product,” said Accenture head Nikolaus Mohr. That was also the experience of other countries. In Italy the Hutchison subsidiary “3” only managed to sign up half a million users for its mobile TV service in the first 18 months. In the UK the company BT Movio took its product off the market after a year. 

The sales channel question also gives Mobile 3.0 a massive headache. It has not had discussions with the local mobile network operations yet and without the sales support of T-Mobile, Vodafone, E-Plus or O2 no success can be expected, said sector experts. These four net operators bring the majority of all new phones on the market. They would, however, not subsidise TV phones without a cut of the income. 

A consortium insider fears the worse: “If no clear business plan is on the desk by the third quarter of this year, there will be huge pressure from Berlin on Mobile 3.0 and the four provinces.” The licence might then even be handed back.

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