MBC Subscriber Numbers at Less than 10 Percent of Expectations

[Satellite News 08-05-08] It is little surprise that Toshiba Corp. decided to shut down Mobile Broadcasting Corp. (MBC), its satellite digital multimedia broadcasting business, considering the subscriber numbers have been massively below expectations.
    Mobile Broadcasting will stop mobile digital satellite broadcasting services at the end of March. The S-band service was launched in October 2004 under the brand name Mobaho, but its eight video channels, 40 audio channels and data information services gained only a fraction of the numbers of subscribers Toshiba had hoped for.
    “We had initially envisaged the subscriber base reaching 1.4 million in the first three years, but as of July 2008 the number of subscribers remained at 100,000,” Keisuke Ohmori, group manager, international media relations group, for Toshiba, told Satellite News. “Despite its efforts, the number of subscribers has not grown to reach a level sufficient to sustain continued operations, with [Mobile Broadcasting’s] sales for the fiscal year ended March 2008 remaining at 2.7 billion yen ($25 million) against an operating loss of 8.2 billion yen ($76 million).”
    Toshiba estimates that it will incur a loss of 25 billion yen ($231.8 million) for the year that will close March 31, Ohmori said.

Competition Too Much
There were a number of factors that helped since Mobile Broadcasting, said Ohmori. “There are a number of content services available in Japan via mobile phones or the Internet, and the subscriber base for [Mobile Broadcasting] did not reach a level sufficient to generate the revenue and profitability necessary to continue the services,” he said. “We think 500,000 subscribers would have been the watershed to maintain the service on a long-term basis, compared with the actual result of 100,000.”
    Other market factors also contributed to service’s downfall, but perhaps the killer blow for the service came in 2006. “We think one of the major factors that prevented the originally forecasted subscriber boost for [Mobile Broadcasting] was the proliferation of one-segment digital terrestrial broadcast services, which were provided free-of-charge to mobile phone users in Japan,” Ohmori said. “One-Segment services started in Japan in April 2006 and rapidly expanded nationwide as major Japanese TV broadcasters made the transition to high-definition, digital terrestrial broadcasts.”
    Toshiba spent nearly 10 years from development through operations and does not believe that failure of the project can be blamed solely on the satellite delivery system, said Ohmori. “We still believe the system provided advanced, attractive mobile services for users, but as it turned out that was not enough to garner the needed subscribers in Japan,” he said. “We regret that the advanced mobile broadcasting concept, where we initiated development over ten years ago and which won garnered support from major Japanese corporations, including automobile companies and device manufacturers, did not win enough understanding and support from general consumers.”