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Subscription Fees Lose Out to “Free”

August 6, 2008 | Author: Ibex Marketing

My friend and colleague Steve Sechrist at Insight Media wrote a great piece in that company’s free “Display Daily” newsletter about problems facing two subscription-based mobile TV services. Mobile Broadcasting Corp. in Japan will shut down next spring after failing to sign up enough subscribers in spite of 10 years of trying and Toyota’s endorsement. In Germany, Mobile 3.0 is throwing in the towel as well. In both cases, free access to broadcast television on competing services seems to have dealt the fatal blow; consumer seem to prefer free over paying a monthly fee. Go figure!

But this raises the question of who will pay for these free video services. It looks as though the answer may be advertisers, because cell phones have some unique characteristics that could make them ideally suited for a specific form of advertising. MultiMedia Intelligence has just released a new research report on mobile TV and advertising, focusing on what they call “Call to Action” ads. While you’re watching video on your cell phone, you can press one button and get instant interaction with the ad on the screen. This could trigger a text message listing the closest Starbucks to your current location so you can get the advertised coffee special, or it could send a request to a car dealer for a brochure about the car being advertised.

The key here is that the two-way communication features of the cell phone make it ideally suited for interactive advertising. And getting a tangible response from the consumer is an essential first step for any advertiser. Not only does mobile TV make this easy and appropriate, it also means that the advertiser gets hard data on how many people are responding to the ads. And this makes the mobile TV service provider happy because it means that this data will justify the advertising costs.

“If it’s free, it’s for me.” That seems to be the dominant theme in technology today, from open source software to Web sites. Outside of the movie rental market, it looks as though any subscription-based service from telephones to television is at risk of competition from no-fee alternatives. And I’m not so sure that someone won’t come up with a system that could even make the movies free. As always, stay tuned….