So if TV cord cutting is really all the rage, how to explain FLO TV? This unit of Qualcomm, the big telecoms chip provider, announced recently that it would halt all sales of its “mobile TV” devices. Those that opted to get FLO TV piped through their smartphones will continue to get service “until Spring 2011,” and then, well, who knows?
A year ago, as consumers were still chewing over the FLO TV offering, a research firm called TeleAnalytics forecast that “broadcast mobile TV” would become a $2.8 billion industry by 2013, with 50 million U.S. users. I wonder what it thinks now.
FLO TV scotched this whole thing from jump. It was so far ahead of cord cutting, it didn’t know to position it as such. Instead, it tried to build a complement to in-home TV viewing. A consumer could purchase a small device for $250 or so, and pay a three-year contract of $9 a month ALL UPFRONT with no chance of refund, for the pleasure of watching a handful of stations “on the go.”
What killed it? The smartphone explosion and the lock that programmers have on content. Once again, as we saw in Part 2 of this series, no prime time in prime time.
So mobile TV goes back to being, for the most part, a carrier opportunity. But as we noted a few days ago, don’t expect Sprint or AT&T to get rich on “smartphone TV,” since demand is low.
But we don’t know. There is no data yet to suggest that these new “Netflix streamers” don’t also still subscribe to cable. And a Netflix-streaming-through-the-Xbox scenario sounds like a typical cable household to me. Plus, the cable/satellite critical average-revenue-per-user metric keeps rising through it all.
One thing to keep an eye on is Netflix’s churn rate, which has always run twice the rate of cable and satellite. Why pay $9 when you can get it on Hulu for free?
And that’s where we take this tomorrow – a look at the logic of the cord cutting decision. Or lack thereof.