News

Wireless carriers expand entertainment offerings

Troy Wolverton
San Jose Mercury News

Cell phones are morphing into all-in-one media devices, but that doesn't mean they're entertaining consumers.

According to a report in the Wall Street Journal, Verizon is in talks with YouTube to bring user-submitted videos from the Web service to Verizon's wireless customers. The move would follow similar ones by Sprint-Nextel and Cingular to offer video, music and games to their wireless customers.

But do people want to watch?

"The phone remains primarily for voice communication. All these other things are secondary features," said Michael Gartenberg, research director at Jupiter Research in New York. As for video in particular, he added, "Consumers consistently tell us that while they are interested in these services, they're not willing to pay a whole lot of money for them."

The wireless providers are among a growing number of players trying to jump into the market for providing portable video.

Apple Computer, for instance, sells TV shows and movies that consumers can watch on video-playing versions of its iPod music player. Sony's PlayStation Portable game device plays movies. Dish Networks is offering a portable player that downloads content from customers' digital video recorders.

For their part, the wireless providers are banking on revenue generated from providing video and other entertainment and data offerings to make up for declining revenue from simple voice services. Over the last several years, Sprint, Verizon and Cingular have been gradually building up their video and other entertainment offerings.

And in pursuing the portable media market they've got some built-in advantages over other competitors.

Cell phones tend to be cheaper than other consumer gadgets, because the wireless carriers typically sell them at or below cost, figuring they'll make up the difference with the services they sell consumers. Unlike many rival portable devices, cell phones by their nature are connected to a network, meaning that it's theoretically easy to get new content on the devices. And, perhaps most importantly, they're nearly ubiquitous these days.

"We've all come to the conclusion that the market wants a portable device for consuming media," said Rob Enderle, principal analyst with the Enderle Group, a San Jose-based technology consulting firm. "A phone that could do all that stuff could force all the other dedicated devices out of market."

But as Enderle and others note, cell phones leave a lot to be desired as entertainment devices.

Part of the problem has to do with the compromises inherent in watching video on a cell phone. Consumers tend to want to watch video on the biggest screen possible. But it's hard to meet that expectation when, at the same time, consumers have been demanding smaller and lighter handsets. Not only do big screens require a lot of room, but they also eat up battery power.

And then there's the problem with how to get video on to cell phones. While the carriers are continually upgrading their networks, service can still be spotty in places. Considering that most phones these days have little if any storage space, carriers are typically streaming videos to consumers. But with a poor connection that can result in a choppy viewing experience - if customers can get to the video at all.

"This may be a case where the device's limitations overcome the advantages," said Enderle. "That all-in-one ideal device may simply be beyond our grasp right now."

To be sure, analysts don't argue that video on cell phones is doomed to failure. In fact, the short clips that are available on YouTube may prove popular among cell phone users who are looking for a quick diversion, they say.

Just don't expect consumers to replace their big-screen TV or even their video iPods with a video-playing cell phone anytime soon.

"It may become some sort of standard feature, but that doesn't necessarily mean that's where consumers will first go to get video," said Chris Crotty, senior consumer electronics analyst at iSuppli.

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