May 23rd, 2008

TV: Do Consumers Want it in Their Cars?

Seems to be a hot topic this week that my colleague Michael Gartenberg and I are discussing.

Whether or not consumers want TV in their cars is a good starting point for a discussion of in-vehicle entertainment, but the other looming question is …is it technically feasible? let alone can anyone make money?

A taxi driver I met in Cleveland, OH had TV in his car. See this blog post from a few years ago. “Mobile Video – Midwest Reality Check”

What is in the news today is UIEvolution’s announcement with MobiTV. MediaFLO made their own announcement back in April at NAB.

What entertainment consumers want in their vehicles is an interesting question – one that I’m not going to answer. They do already have a radio. Those with music collections are taking them with them in the car with their iPods. Anyone can find a list of announcements made by Apple on integration of the iPod into the car on their press pages. Audio is a no-brainer. Video is tough for obvious reasons as it’s not allowed to distract a driver.

One interesting thing I find around these announcements is that they are simply announced plans to “think” about the possibility of putting broadcast video into cars or to “collaborate” or to show that it can be done. We haven’t seen announcements (at least that I’ve read) that speak to OEM interest or consumer interest.

In any case, there are a long list of challenges. Here are a few:

  • Many of the broadcast and 3G networks used to deliver this service do not blanket the country. They are in urban areas or those of high population density. MobiTV doesn’t require 3G, but I’m sure most experiences would be better with more bandwidth.
  • Back seat entertainment likely requires 6-8″ screens (or something like this). My iPhone is awesome when I hold it, and it’s great for watching video when I’m traveling. If you’re going to put the screen 2, 3 or 4 feet from a young child in the back seat, you need a bigger screen – more fps, pixels, etc. will make this a better picture. Noise, slow fps, low resolution, etc. is hidden better on a small screen.
  • Product development time for a car …. long – not in comparison to a new luxury jet plane, but compared to cell phones and consumer electronics, yes. And, then, it’s not going to come standard in a vehicle – consumers will have to raise their hands and be willing to pay hundreds or thousands of dollars. It’s also like buying a PC with built-in cellular connectivity – you have to choose a provider with the hardware. Auto OEM’s subsidize cars, but typically with their own financing arms. They don’t subsidize entertainment systems that don’t provide a payback to them like Telematics services do.
  • Services … selling services to people in cars is hard – ask the Telematics providers or look at the 10K’s of XM or Sirius from a few years ago before they moved into CE devices. You can put it in the car and give consumers free service for a while, but then you need to convert those sales. Also, lots of leased vehicles here in the States – the added challenge is when the vehicle is returned to the dealer or sold after a few years. How to find and see to these used car owners?
  • How many subscriptions for video content can consumers stomach? I think the answer will converge close to one unless some real added value can be provided – e.g., portable – getting it off my TiVo to another device or onto my iPhone. You’d have to assume if the carriers sell the service, that you’d get it on cell phones, at home (if you subscribe to Verizon or AT&T’s video service), cars, computer, etc.
  • DVR capabilities … can I save shows / pre-record shows for my kids to watch? Do I give them a remote to change channels? How do I control what they watch from the front seat?
  • Cellular networks are capacity constrained.

Every carrier continues to add bandwidth, but it’s not THAT big of a pipe when we start talking about entertainment and media.

This isn’t a complete list, but there are really a lot of challenges associated with these propositions. I’d like to see the revenue side of the equation.

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