However, according to a new report from industry analysts ARC, this is going to change, with revenues from mobile video rising to US$5.4bn by 2008. The basis for this optimism is what ARC describes as ' flurry of activity across all elements of the value chain.' Evidence of this activity includes deals between Vodafone and Warner Bros Entertainment, Mobilkom Austria and CNN, and 3 Sweden and Endemol/Kanal. This shows, says the ARC report, 'the growing focus placed on strategic partnerships between operators and content owners to target mobile video streaming, downloading and messaging services.

Obviously the number of 3G operators is currently very limited but apparently a number of European GSM operators are offering video services on their 2.5G networks. Telefonica, TIM and O2, amongst others, have launched early video streaming services by working with the RealNetworks Helix Universal Platform. In the US, Spring PCS is having good results with its PCS Vision service where customers have sent more than 100m picture messaging images and 15-second video messaging clips in the last eighteen months.

The ARC report, 'Mobile Video; Worldwide Market Analysis and Strategic Outlook 2003-2008', identifies the key issues that must be addressed if the mobile video market is to achieve the growth rates predicted. As ever the major challenge is the availability of handsets capable of supporting video. There is also a lack of well defined and established standards in this area, preventing operators from building a full service across the whole value chain. ARC is of the view that ongoing developments in high performance, low power, multimedia application processors, together with improvements in high resolution CMOS image sensors and colour LCD screens, should be sufficient to enable mass market penetration of video-enabled handsets by 2006. Getting the price of these handsets down to a level that is acceptable to the mass market will also be a challenge.

Other issues that must be addressed, says the report, are; the development of viable business models for video distribution which include content protection and; resolving the problems of interoperability, interconnect and roaming for video services.

Even with the early resolution of these issues growth through 2005 will be relatively slow. Thereafter growth will be strong with the market growing to around 250mn users of mobile video services by 2008. Video messaging will be the biggest application, particularly as camera phones in the European market evolve to support video. Video download will occupy the runner up spot in terms of users until 2005, when the higher penetration of 3G will move video streaming into second place. Video telephony, which will only be available on 3G networks, will see an increase in user numbers to 90mn by 2008. ARC says the popularity of this service will rise as more possibilities become available to connect via video calling to enterprise video conferencing and domestic broadband networks.
Ian Channing