Are we being lemmings or is video on the mobile phone really hot?

WSJ covers (may require subscription) mobile video startups: MyWaves, Cellfish LLC and 3Guppies (what kind of a name is that?!):

So, what is the thesis here? Are we being lemmings* by chasing mobile video?

Personally, I am not very optimistic in the short run about broadcast or streamed video, at least not in the US. I'm more optimistic, however, about short video segments or mobisodes (user generated or premium). However, I would question the market size for something like this (especially given device fragmentation issues) as well as the willingness-to-pay for video. The standard answer applies here: ad supported business model!! It might work for video. The Telephia survey points to higher recall rates for ads inserted into mobile video clips.

Here's a quick sampling of research and thinking on mobile video:

WSJ is not very optimistic:

But still the services haven't caught on. Of the nearly seven million users who watch mobile video or TV from their phones every month, the vast majority watch clips sent to them from family or friends, rather than video prepackaged by a carrier, according to research firm M:Metrics Inc. Overall just 3.6% of U.S. cellphone users subscribed to a mobile video service in the first quarter of 2007, up from 1.6% in the year-earlier period, according to market researcher Telephia Inc.

Quite interestingly, Telephia in its own press release puts a very positive spin on it, although the focus is on revenue and subscriber growth, not so much on the growth in the penetration of subscribers who use video, which is what WSJ focuses on.

After another quarter of impressive subscriber growth, mobile video is rapidly becoming a significant new media distribution platform. According to Telephia, the world's largest provider of syndicated consumer research to the telecom and mobile media markets, mobile video revenues in the U.S. totaled $146 million in Q1 2007, growing 198 percent year-over-year (see Table 1). There were 8.4 million mobile video subscribers last quarter with penetration doubling to nearly four percent since Q1 2006.

M:Metrics appears quite bullish about video in 2005:

"The fact the more people intend to watch mobile video than the number who are downloading games today is very encouraging for this market"

But, points to slower take up in 2007:



In-Stat points to complexities that are holding back the growth in video:

While Mobile Video Services are a hot topic with great potential, the market is very complicated, and will take quite a few more years to completely sort itself out, reports In-Stat.

Another cautionary note (on Mobile TV) from Analysys.

Michael Mace has an excellent post taking a hard look at the realities of mobile video. The most disturbing part of his post (by his own admission) is the economics of delivering video:

Tilson of Case Western quoted some very sobering statistics on the economics of mobile video. He said one megabyte of data delivered as SMS messages yields £268 of revenue to an operator in the UK. That same megabyte delivered as video yields 20 pence of revenue, roughly 1/1000 the revenue. Of course, a single user of video is much more likely to consume a meg of data than is an SMS user, so the billing per user might still be fairly good. But video quickly exceeds the capacity of a typical 3G data network. He said no more than six viewers per cell can watch video at one time, and if 40% of users on a typical 3G system watched six minutes of video a day, they would saturate the entire network.

Be sure to read the comments down there - there are some optimists cheering for DVB-H.

All that said, it would be nice to look at some data on how many use YouTube Mobile, especially given that the iPhone comes with a YouTube player.

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*Lemming: A short-tailed, furry rodent known for its peculiar habit of committing mass suicide by hurling itself -- along with hundreds of over Lemmings -- over steep cliffs and into the ocean.

*A reference from another WSJ article: "I don't want to use the word 'lemmings,' " says Scott Bonham, a partner with Granite Global Ventures. "But it's sort of like five-year-old kids playing soccer: They all swarm around the ball."