July 12, 2006

Phone TV for All, Profits for None

You’re on a train in Tokyo. You’re headed for a symposium on nuclear physics. Three seats away, you notice a local man – early 40s, you would surmise – in a blue suit and a yellow tie, watching CNN on his phone.

Ooh! Check out Ultraman with the hip TV phone!

Ultraman knows you’re watching him. He encourages this sort of thing. A quick dart of his eye in your direction acknowledges, yes, it’s true, I’ve got the latest and the greatest. How do you get business news on your phone? You do get business news on your phone, don’t you? Ah. I see. Text summaries. Good for you! That’s so cute. I’m watching TV on my phone. I’ve got a crystal clear picture and impeccable sound.

Maybe some day, everyone on the train will have a TV phone. But for now, it’s just Ultraman, which is a problem for the people who provide TV broadcasts via cell phones. Because Ultraman, jet-setter that he is, can’t buy enough stuff by himself to allow advertisers a decent return on their investment in Phone TV.

Current shipments of phone/TVs are less than one million, which puts its viewership in the neighborhood of MSNBC on any given night. Pretty miniscule. They don’t call it A Mess NBC for nothing. And since no advertisers are going to pony up big bucks to reach an audience that small – even if it is a bunch of Ultramen – the best-hope business model in development is to find some way to conduct e-commerce via the TV phone.

Especially enticing, at least in theory, is the concept of e-commerce links that would allow you to buy products you see while watching TV.

Say, for instance, you’re watching Laverne & Shirley, and Laverne is drinking her favorite beverage – milk and Pepsi. As Laverne takes a sip, and all the subway-riding world begins thinking to itself “oh how I want that,” three icons appear on your TV phone. Buy Pepsi. Buy Milk. Buy them pre-mixed. Yum!

Or let’s say you’re watching 24, and Jack Bauer is just about to blow away an evil terrorist swine with his Smith & Wesson. Link! You know, honey, we really should have a Smith & Wesson. Order now! E-commerce via Phone TV is so fast, it could be at your house before you are. Then you can start shooting the neighbors with expert precision.

It’s a curious conundrum in the digital age – technology without a business model. You mean, if something is way cool and everyone but everyone would want to have one, I might still not make any money off it? That’s hard to believe. Because we’ve never experienced a phenomenon where people went hog wild investing in technology just because it was cool, then went a considerable distance down that road before some annoying twit at the back of the bus decided to ask, “How are we going to get people to pay for this?”

No. Nothing like that has ever happened. Not this week anyway.

This is why I don’t fear the future emergence of the supercomputer that can monitor everyone’s comings and goings, financial transactions, thought patterns and food intake. Could someone build such a contraption? Sure. I just sort of assume Bill Gates already has one.

But how would you make any money with it? I suppose you could load games onto it, but unless you want to treat the game/mind-control bundling as a loss leader, you’ve got to figure the Xbox market will be tough to crack. You could try to sell it to ruthless tyrants like Kim Jong Il, but his entire economy doesn’t generate enough wealth to pay for a smoothie maker. Besides, there’s probably about enough electricity in North Korea to run a contraption like this for about 49 seconds.

Technology will never take over the world, at least not until it can generate a profit for its creators without the help of cheesy sales reps and buyers with cash to spend.

And I’ll keep getting my sports scores – er, business news – in text form, which does the job quite nicely, and isn’t as obvious during weddings and stuff. Once Ultraman is joined by hundreds of millions of other Phone TV viewers, then maybe advertisers will start driving the concept’s economic viability. Until then, most subway riders will just have to tap on their laptops like their grandfathers used to do.