Saturday, February 21, 2009

Sirius XM satellite radio almost went bankrupt. A lesson for paid cellular mobile video?

Satellite radio seemed like a good idea. Crystal clear, ad-free, broadcast distance-agnostic , high-quality audio content for those long commutes, all for about $10 per month. But apparently Sirius-XM, the 800-pound gorilla of US satellite radio, is in dire straits. It avoided Chapter 11 bankruptcy after Direct TV propped it up with funding, probably at the price of being taken over by Direct TV.

But what does this say about users' appetite to pay for content while they are on the move? If paid radio did not fly, then will paid mobile video not fly either? We have a simple analogy here

free FM : paid Satellite radio :: free Digital TV (e.g. DVB-H) : paid cellular mobile video


Its tempting to write up the requiem for paid cellular mobile video based on the satellite radio example. But here are some things going for cellular mobile video
  1. Mobile VoD allows users to select what they want to see, unlike satellite radio, which is a broadcast medium.
  2. Cellular video is truly untethered because it is consumed on the mobile device. On the other hand, satellite radio is not carried in the pocket - it is usually built into car entertainment systems. No extra equipment is needed for cellular mobile video unlike satellite radio.
  3. Video is inherently a richer and more engaging medium than radio.
  4. Telecom companies are going to sink a lot of marketing effort into making mobile video a success. Paid mobile video service is one of the most significant use-case for high speed wireless networks. And perhaps, the best escape pod from the dumb-bit-pipe scenario that telecom companies want to avoid.
Still, users' tepid response to satellite radio should worry cellular mobile video hopefuls.

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