By Kim Tae-gyu
After years of negotiations, TU Media finally scored a major victory last week as the Korean mobile broadcaster reached an agreement with MBC, one of the nation’s terrestrial TV stations.
TU Media, which operates satellite digital multimedia broadcasting (S-DMB), signed a contract on July 17 with MBC regarding the airing of the latter’s audio-visual content.
Under the deal, TU Media can feature video clips from MBC on a real time basis through S-DMB, which is transmitted to end customers via mobile phone monitors.
The move is expected to act as a silver lining to TU Media, which has struggled to stay afloat due in no small part to a lack of popular terrestrial programs.
“We already launched a pilot run with MBC content for our clients in Seoul and its vicinity. The responses are pretty good,” TU Media spokesman Heo Jae-young said.
“As soon as the authorities give the green light to the agreement, we are planning to start full-fledged commercial services with MBC footage,” he said.
Heo predicted that the Korean Broadcasting Commission (KBC) will okay the contract in accordance with its announcements a couple of years ago. “In 2005, the KBC promised to approve any agreement between any TV station and us. Subsequently, we expect it will be okayed in the near future,” Heo said.
“We are in talks with other TV outlets such as SBS. Hopefully, we will also be able to team up with the broadcaster to show the best content available through our services,” he said.
Should TU Media hook up with SBS on top of MBC, the company will air programs from two of the country’s three major TV networks, excluding only the recalcitrant KBS.
KBS has refused to let TU Media use their programs over concerns that the emerging S-DMB will undercut their ratings.
The terrestrial program is the Holy Grail for domestic broadcasters. Its clout was amply demonstrated by Skylife, which suffered setbacks when TV networks were reluctant to provide their programs.
Skylife is a multi-channel digital broadcasting firm, which debuted in 2002 and has offered hundreds of video and audio channels and 10-plus pay-per-view ones.
TV stations provided their programs in 2004 only after Skylife became moribund due to a dearth of the content.
Two Versions of Mobile TV
Another reason why TV stations have not offered their programs to TU Media is that they run their own wireless broadcasting platform _ terrestrial DMB (T-DMB) _ as an alternative to S-DMB.
DMB is a mixture between telecom and broadcasting that enables people on the move to enjoy crystal-clear video, theater-like audio and data through in-automobile terminals or handheld gadgets.
As mentioned above, there are two types of DMB _ satellite and terrestrial. The former is powered by signals beamed from a satellite while the latter is based on over-the-air waves.
S-DMB came to town first in May 2005 when TU Media embarked on the go-anywhere TV service while T-DMB followed suit in December that year.
S-DMB has a competitive edge in content since it includes 10-plus channels while T-DMB has a maximum of six due to its narrow over-the-air frequency.
Although T-DMB is outfitted with a small number of video channels, it has savored faster growth thanks to its content of popular terrestrial programs.
Plus, T-DMB is free of charge while TU Media, which has invested hundreds of millions of dollars in order to debut and run S-DMB, charges monthly fees.
The result was that T-DMB attracted more than six million users while the number of S-DMB subscribers remained at a mere 1.17 million as of the end of last month.
Yet, there are flip sides for T-DMB. Its six business undertakers have failed to create a sustainable business model _ they cannot make money through free services.
In this climate, T-DMB broadcasters cannot provide high-quality video content and their channels are mostly filled with re-runs of terrestrial programs.
In addition, a lack of investment has generated wide shadow areas for T-DMB _ people cannot watch videos in underground regions and inside some buildings.
TU Media decided to leverage the situation to make the pendulum swing in its favor.
It revamped its channel lineup late last year by increasing the number of video broadcasts to 15 from 12 while reducing audio channels by six to 20.
It also sliced monthly fees from 13,000 won to 11,000 won and those who promise a one-year subscription can savor the video-on-the-go services for 9,900 won a month.
Two Big Advantages
TU Media, an affiliate of the country’s foremost mobile operator SK Telecom, gained two more advantages to remain ahead of its rivalry with T-DMB.
First of all, TU Media has gained access to terrestrial programs from MBC and the Seoul-based company is in talks with SBS.
Secondly, the company unveiled S-DMB terminals that can double as T-DMB devices.
In other words, people can enjoy the two versions of DMB with a single gadget made by Samsung Electronics, the world’s No. 3 mobile handset producer.
The so-called dual DMB phone, codenamed the SCH-B710, sells for about 600,000 won.
Such versatile models were released for car navigation earlier this year but this is the first time that a mobile handset embraces both functionalities.
The launching of the dual TV phones is expected to help boost the bottom line of TU Media, which has suffered from operating losses over the past years.
TU Media posted 71.2 billion won in operating loss last year following a 90.4 billion won loss in 2005.
Their reasoning: the hybrid phone will encourage people to sign up for S-DMB services, who have been reluctant to do so due to the lack of terrestrial programs _ the dual phones will provide T-DMB free of charge.
“We hope to reach a break-even point in 2008 by raising our user base to as many as 2.2 million. Toward that end, we will go all out,” Heo said.