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Vodafone and Telecom will this Christmas be pushing mobile phones that allow high-quality video streaming, but executives from both companies admit they are struggling to make the mobile video business model work.
The head of Vodafone's Live and data business, Tim Nichols, said mobile users were only willing to watch video clips on their mobiles that were three or four minutes long.
"Beyond that, you test people's willingness with the size of the screen and the concentration [required]," he told attendees at the AnimfxNZ film industry conference in Wellington last week.
Vodafone's content services, which Nichols is responsible for, generate annual revenue of about $40 million, but Vodafone has been unable to find a way to make money from delivering video to mobile handsets.
"How do you commercialise this stuff? How do you turn it into cold hard cash? The willingness to pay for video is surprisingly low, but the willingness to consume is high," he said.
Miki Szikszai, the head of Telecom's Emerging Technology Services group, said some short-length video services such as out-takes from New Zealand Idol and Telecom's own Rubbish Film Festival had been popular as 027 downloads to mobiles.
"It went fine until [TV show] Rockstar blew it away. Unless you've a really big marketing campaign around it, it's going to struggle," said Szikszai.
The approach by both mobile operators so far has been to repackage the highlights of popular shows for replay as mobile episodes.
Highlights of the animated TV series bro'Town were made available through Vodafone Live and both operators deliver video news bulletins on a pay-per-view basis.
But now the operators are considering a funding model that would see advertising or sponsorship support the service rather than fees charged to mobile users.
Nichols said mobile operators in larger countries had an advantage, because their customers had to endure long train and bus commutes that left them "inherently bored".
"There's a market for long form content. The thing that holds us back in this country is that we don't commute," he said.
Overseas examples of where mobile video had been successful weren't applicable to New Zealand, Nichols added.
"English football games are shot twice for TV and for mobile phones. Asking someone to shoot Super 14 twice is not realistic," said Nichols, who admitted that the high cost of using mobile data services was a factor in low uptake.
"Data charges are excessive, but you're trying to run a wireless, cell-based network that has some heavy duty costs," he said.
A host of new phones that support video download services were released by Vodafone this month and Telecom is also making new video-capable handsets available. Vodafone recently upgraded its mobile data network to allow for faster data transfer speeds that will aid the delivery of high-quality video. Telecom is working on a similar upgrade for its network.
