• by Erik Sass  @eriksass1, February 14, 2006

The penetration of cell phones capable of receiving and playing TV programming will boom over the next four years, according to new estimates released Monday by a highly regarded technology research firm. But Madison Avenue is less than sanguine about the burgeoning TV phone marketplace. Top media agency executives say cellular carriers still need to partner with TV programmers to make the market a reality. The good news in the new report, Strategy Analytics' "TV Phones: Integration and Power Improvements Needed to Reach 100 Million Sales," is that TV phone sales will rise from $5 billion currently to $30 billion by 2010, and will achieve critical mass penetration in the United States in the next four years.

The bad news, says Tim Hanlon, senior vice president and director at Publicis Groupe Media, and one of Madison Avenue's foremost new media platform experts, is that cell phone service providers and hardware manufacturers still need to overcome technological problems that have stymied delivery of video to cellular phones. The main problem - serious limitations on transmission capacity - has already been solved, he pointed out, citing systems like MediaFlo, which separate delivery of phone and video data streams. By enabling handset receivers to pick up conventional TV broadcast signals, TV phone manufacturers avoid the data transmission bottleneck altogether.

However, Hanlon says it's still unclear what kind of content cellular carriers will actually feed the new TV phones. Programmers are often leery of making their top shows available for on-demand delivery, fearing it will lessen their ability to attract ad dollars. And if programmers and cellular carriers fail to hammer out an agreement, Hanlon predicted a repeat of the weak start experienced by the cable industry's video-on-demand (VOD) marketplace, which suffered from distinctly mediocre content in its crucial rollout phase: "VOD has unfortunately been stalled as a robust advertising program by the obstinance of cable operators not working with programmers."

By the same token, Hanlon also warned against wrongheaded pairing of cellular carriers and programmers, creating "walled gardens" of small areas of TV content - for example, exclusive partnerships between HBO and Cingular or MTV and Verizon. "I think we're in danger of cellular companies over-reaching to become media companies when they're not experienced in being such."

For his part, Mitch Oscar, executive vice president of Carat Digital, was more optimistic about the future availability of TV phone content, asserting simply: "Everyone will carry everything. As far as content, you have to be ubiquitous, and I don't see people out there cutting exclusive deals." When presented with the HBO-Cingular scenario, Oscar was dismissive: "I could never imagine them teaming up with Cingular exclusively, because if they didn't allow other carriers to have [the content], they wouldn't have as much sampling, and couldn't support their other enterprises."

Oscar and Hanlon did agree on one thing: the limitations on clip length imposed by the nature of demand (with viewers wanting short clips to watch on commutes and during breaks) mean that advertisers will have to come up with entirely new approaches to ads.

Here, Hanlon imagined a combination of ultra-short ads--"not a 30-second ad, but maybe a 5-second ad"--leading to longer-form ad-messaging for consumers who are interested enough to follow up. Such a system would seem to promise measurability similar to Google's tracking of ad "click-throughs" online, an exciting possibility for TV advertising.