Commentary: Mobile Handset Penetration and Overall Video Consumption—A Correlation?
At the end of last year, I was part of a study on mobile video penetration in key global markets. As part of the analysis, we looked at whether 3G GSM (the same technology that the new iPhone 3G uses) penetration levels might have bearing on the amount of video consumed.
One of the most active markets we identified was Italy, where mobile handset penetration tops 140%, meaning more than one mobile device per person. Another was Spain, where the GSMA Mobile World Congress is held each year in Barcelona. We wondered if those who own 3G devices were more likely to watch not only mobile video but more online video in general.
It appeared that Italy and Spain were indeed primary growth markets for all online video, as were other high-penetration markets like Korea, Japan, and the United States, although we avoided a heavy analysis of the U.S. market given its limited competition for 3G GSM service providers.
Christine Perey, an industry consultant in video delivery to the handset who was also a part of the analysis, wasn't surprised at the apparent connection between 3G mobile device penetration and overall online video usage.
"While you’re sitting there marveling at the unprecedented resolution on the latest HDTV display, remember that the smallest 'big thing' happening in the streaming media industry today is in your pocket: a cellular telephone handset," she'd said in a report a few years prior.
"The mobile device lacks resolution, processing power, a remote control and a persistently high bandwidth, quality-of-service-guaranteed network," she said, "but the opportunities to deliver new media experiences to users on the move far outweigh these current constraints."
A new survey, released by Strategy Analytics, shows that the correlation may be stronger than we thought. The company's new report dubbed "Internet TV: Southern Europe Leads the Way" notes that these markets consume a high proportion of Europe's streaming media.
"The Strategy Analytics survey of 3,500 Internet users found that 22% of Spanish respondents are regular users of streamed video from broadcaster websites, compared to only 8% in Germany."
Even more interesting, though, was the fact that Europe—the world's leader in 3G GSM mobile penetration—now is leading the way in the use of streaming video overall, with more Europeans watching streaming video from broadcasters' sites than their U.S. counterparts.
"Internet users in Southern Europe are clearly making the most of the internet's capacity to deliver programming choice," notes Martin Olausson, director of Digital Media Strategies. "The success of web TV in these countries is in contrast to the relative lack of interest in traditional multichannel TV services from cable and satellite providers."
The new research also seems to show that the group most likely to have faster and newer handsets—young adults—are also more likely to consume streaming video.
"30% of 15-29 year-olds in Europe claim to watch TV shows or movies on their PCs at least on a weekly basis," noted David Mercer, who runs the StrategyAnalytics blog, in a posting last month about student web video demographics, "with a peak of 35% for 20-24 year-olds."
By contrast, only about 25% of the U.S. population in this same age group also using internet streaming to replace their TV viewing habits.
With the advent of a mass-appeal 3G GSM product in the U.S., such as the iPhone 3G, which appears to be breaking even the vaunted records of its original 2.5G successor, does this mean we'll see an overall rise in the use of internet streaming?
Microsoft seems to think so. In its most recent 10-K filing with the Securities and Exchange Commission, it noted that the market share of Apple's 3G iPhone is nearing 1.1% of worldwide mobile phone sales.
"A competing vertically-integrated model, in which a single firm controls both the software and hardware elements of a product," said the filing, "has been successful with certain consumer products such as personal computers, mobile phones, and digital music players."
With Apple pushing its vision, even though it's many percentage points behind the major handset players, and with those handset players responding with like-kind features, as well as tighter integration with media delivery methods across service provider networks, the uptick in mobile video usage in heavily subscribed countries may very well translate into a direct benefit for those who stream content across the web.