The great 3G gamble
Last night's goals and the latest news footage are coming to mobile phones thanks to a new model that can show video. It cost millions to develop but will anyone want it, asks Richard Wray
Monday February 10, 2003
The Guardian
Chances are if you have been to the cinema or watched commercial TV in the past month you will have seen an advert for a new mobile-phone service. It shows hairdressers, beauticians, salesmen and decorators trying in vain to re-enact a killer goal from the previous night's Premiership game; the message being "wouldn't it be great if you could just show them the goal on your mobile phone - well with 3 you can". The launch of the country's fifth major phone operator, 3, may be a big gamble, but if it fails it won't be for lack of advertising presence.
Exactly when you can display those goals is still a closely guarded secret - 3 will only say that a launch will be "within weeks" although logic suggests it will go live on March 3 (03/03/ 03) - but these adverts play to what 3 believes will be its greatest strength. It will be the first mobile phone company in the UK to use so-called third generation - or 3G - technology that enables customers to view video footage. Suddenly the mobile phone becomes a multimedia device, and what that multimedia content will be is key to its success.
The company has signed deals with more than 100 content providers, ranging from the FA Premier League to Emap, ITN and Reuters. It has spent thousands of man hours working with technicians at the BBC's technology unit to create a unique content management system that will be able to take video, audio and text from across the world and squeeze it on to a mobile phone.
"What we are really majoring on is video content because that is what our research and trials show everyone is excited about," explains Lisa Gernon, 3's director of strategy and marketing. "On the current technology you can get still photographs and text, but what really brings us into a new world is video content."
That will include edited highlights of Premiership matches accompanied by text and still photography provided by Reuters and a host of small sports news agencies. 3 has a three-year exclusive deal with the Premier League, but delays to the service mean that it is already half way through the contract before anyone other than a select few and family have actually seen a goal.
The promise of video over a mobile phone meant that when 3 was awarded its licence to run a service, back in April 2000, TV companies saw it as a possible threat, a new channel rather like a new digital TV platform. But the technological constraints of mobile phone networks mean that 3 has been forced to abandon any hopes of showing video in real time. It has opted instead for video clips that can be downloaded and watched at leisure - which explains why the TV adverts show people watching highlights from the previous night's game rather than watching it live.
Lisa Gernon believes that 3 will actually be complementary to TV, not a substitute. "When we started it was postulated that we were a threat to TV but we are about 'snacking' on relevant information that people are passionate about and really interested in while they are on the move," she says.
Which may explain why TV companies have started talking to the company. Under a deal to be announced shortly, ITN has been brought on board to provide video content in the form of short news and weather updates. "People will still watch the news on TV when they get home at night," Gernon believes. "But when they are out and about they will be able to get news clips and highlights of things they are interested in."
Alongside news and sport, 3 will offer a host of film clips and trailers while Emap is letting the company loose on its stable of music and lifestyle magazines, including Q, Mixmag, Empire and FHM. Customers will be given access to video content from awards ceremonies organised by Emap titles, such as the Q Music Awards and the Empire Film Awards.
"The service will allow users unrivalled access to Emap's leading entertainment brands," explains Mandy Key, commercial director of Emap Performance Interactive.
But the greatest strength of the company may also turn out to be its greatest weakness. Insiders at 3 freely admit that getting good quality video on a mobile phone has been very difficult.
"Everybody has underestimated the complexity of doing tremendous amounts of content that need to be delivered very quickly," says one former senior 3 employee. "There is no point finding out that your team has scored a goal 20 minutes after your mates have found out by text message on a normal phone."
When the press were allowed to see the video service for the first time two weeks ago it was roundly criticised for being poor quality. Any hopes of seeing the equivalent of TV over a mobile phone were dashed as the image turned out to be more like the internet of five years ago than a new digital channel.
"People always underestimate the technical risks but 3 has been under pressure from its investors," says a former 3 technician. "If 3 had been realistic about the technological risks in the first place it is unlikely they would have let the business plan through."
The company was created by the Hong Kong-based conglomerate Hutchison Whampoa, which also backed Orange. Over the years, Hutchison has generated huge profits from building and then selling brands, a trick which industry observers believe it is hoping to repeat with 3. Orange was floated on the London stock market and then sold to France Telecom, while just last week the company sold its PowWow office water-cooler business to Nestlé for £370m, or five times what the business makes in annual sales. That sale came just four years after PowWow was formed.
Charles Wright, managing director of the brand consultancy Wolff Olins, which worked with Hutchison to create the Orange brand, admits that Hutchison is gambling with 3, but its track record should not be ignored. "It could be that we all need to send video and pictures using our handsets and we do not know it yet. My hunch is that they are on to something."
3 certainly thinks it will fill a consumer need. It has carried out more than 16,000 consumer interviews since it was formed in 1999, and over the past few months the software it uses has been rewritten almost 120 times.
But 3 has set itself a huge task. When Orange arrived there were just two mobile companies to choose from in the UK, and the mobile phone was far from the ubiquitous device it is today. The market is now mature, with most people owning one. If it cannot deliver top-notch content, 3 could find itself lost in the crowd.
media.guardian.co.uk
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LOL!
Pity Li backed the wrong horse... he could be video doing along... |
