Unable to find a buyer for the consumer mobile TV service, Qualcomm is shutting down its struggling FLO TV operations. Bill Stone, president of MediaFlo and FLO TV, reportedly told staffers the service will wind down by the end of the year, says PaidContent. In July, Qualcomm CEO Paul Jacobs told investors Qualcomm was exploring options. Qualcomm was looking to sell or find a partner for its FLO TV mobile television business in the U.S., which launched over three years ago but has struggled to build critical mass.
Qualcomm reportedly spent $683 million acquiring the wireless spectrum to run FLO TV. A couple of years ago, it predicted that it would invest $800 million in all — including spectrum, network build-out and marketing costs — to get the network up and running.
The service offers about 20 channels of live mobile TV, including ESPN, ABC, Comedy Central and CNN. Coverage is not nationwide, but FLO TV is available in most major cities and several smaller ones, covering 68 million potential subscribers.
FLO TV powers the Verizon and AT&T mobile TV offerings for cell phones that contain a Qualcomm chip that enables the service. Qualcomm sells its own personal TV device for about $150 on Amazon.com. Subscriptions range from $10 to $15 a month. The company is now in discussions with AT&T and Verizon about the future of its service, which continues for now and includes the majority of its TV customers. The FLO TV store is offline. Qualcomm is reportedly working out the details now to compensate current customers. FLO had expanded to other devices, including DVD players and a version for cars.
Despite a marketing effort, including advertising as part of last year’s Super Bowl, FLO TV doesn’t have a large subscriber base, according to analysts. Qualcomm won’t release subscriber numbers.
Qualcomm acquired the spectrum when broadcast television switched from analog to digital. The company thought the spectrum has significant value as a way to ease data traffic that’s clogging existing 3G networks.
David Schutz of Hoffman Schutz Media Capital commented to RBR-TVBR about the development: “Monday’s announcement that Qualcomm is shuttering their Flo TV service marks the silencing of the first streaming video service for handheld devices. It also represents failure for Qualcomm’s preemptive attempt in the early part of the decade, to effect an early conversion of former analog channel 55 (716-722 MHz) to non-broadcast purposes. Several channel 55 stations around the country were financially compensated by Qualcomm for early conversion to DTV. With the blessing of the FCC, these stations surrendered their channel 55 analog licenses, and Qualcomm got an early jump into mobile video. Despite its initial lead, Flo TV Didn’t finish the race.”
Jacobs also acknowledged last summer the company might be better off focusing on using its spectrum and network to distribute other content. This shift places the emphasis on leasing the network, not programming for it. Jacobs also noted if the service can’t succeed, it won’t be a total loss, as the spectrum itself is worth “almost $2 billion based on the latest spectrum auction.”
RBR-TVBR observation: As stated before, we perceived a flaw in the subscription mobile TV business model. First of all, most consumers are already paying for TV in the home, post-DTV transition. The ones that aren’t are not likely to pay for it on a mobile device; the ones that are, are likely not willing to pay more monthly than they already are. As well, much of this content, whether it be delivered live or not, is already available via mobile VOD subscription services like Netflix, Hulu Plus, and apps on the iPhone, iPad, Android and RIM. Its also often available from broadcaster’s/content providers’ own website or app. Likely AT&T or Verizon will absorb the service and call it their own – and try to get as much ROI as possible through advertising insertions. But they’ll have to compete with the free-to-consumer ad-supported mobile DTV now being rolled out by broadcasters.