2nd Million for TU Media - 2nd country for SK Telecom - Citi JV
June 25, 2009 ? Apparently a good day for SK Telecom PR :
- subsidiary TU Media signs its 2,000,000 th customer
- JV with Citigroup launches mobile banking services in the Philippines, a few months after Hong Kong
The SK Telecom - Citibank Philippines JV (Mobile Money Ventures LLC) is definitely good news : in Hong-Kong, services were more about portfolio management than actual personal banking and transactions - what Citi Mobile Banking (CMB) is all about in the Philippines. These browser-based services shall soon be implemented in other countries, and confirm the operator's international ambitions in mobile finance (see recently "SK Telecom's Wild Hana Card").
But is TU Media really a success ?
Many European players would love to boast 2 M mobile TV paid users, but 2 M is not even equivalent to 10% of SK Telecom's customer base and for this operator, a 10% penetration after 4 years doesn't seem very impressive.
Besides, to claim its second million customers, SKT's S-DMB unit took more time than it did for the first : TU Media was launched in May 2005 and reached the 1 M mark in December 2006.
Indeed, TU Media was in a very poor condition last year, both financially (mounting debts) and commercially (it claimed only 1.3 M subs in June 2008, a gain of 300,000 in 1.5 years). The 700k customers gained over the past 12 months are the result of what appears to be a make or break move by the owner : SKT went up in the company, injected KRW 55 bn more, and offered massive discounts to its own mobile subscribers... to the point that an undisclosed proportion of its "paid subscribers" don't have to pay to enjoy the service* !
As a consequence :
=> TU Media becomes more competitive with terrestrial accesses (T-DMB), which have been free since the beginning (launched in December 2005) : as we saw ("3M DMB subs - SBSM on its way"), that's the reason why they are much more popular. T-DMB claims the bulk of Korea's 20M+ DMB-enabled devices (every other handset is OK for mobile TV).
=> At the corporate level, TU Media is now more a MNO's Business Unit than the initial stand alone operator. The very few people who didn't use SKT as their mobile phone operator are encouraged to join the leader, and for the rest, TU Media looks almost like an option among others.
=> TU Media has been burning a lot of cash, and a sustainable TU Media requires more differenciation, and even greater efforts :
- Technological differenciation is not necessarily positive : in covered areas, terrestrial has theoretically an edge over satellite for indoor. SKT does enjoy a truly nationwide coverage, and propose an in-car access offer (TU Rideon - KRW 11,000 / mo - 3 yrs offered for Basic) as well as a real time traffic service (TU TPEG - KRW 3,000 / mo), but T-DMB is very popular for buses and coaches.
- Content and added value services remain key, and SKT will not always surf on such events as the Beijing Olympics, a major boost for subscriptions last year (the whole population was hooked and literally always on one way / media or another)... but not very differentiating since several broadcasters offered the same images (SBS clinched the exclusive TV rights for the next Olympic Games). The only "paid service" operator could try and lock some key rights to pimp up its own premium channels TU Entertainment and TU Sports (both available through the TU Select service : 1 channel for KRW 2,000 / mo, 2 for 3,000, 3 for 4,000). Other premium services feature TUBOX (movies PPV for krw 1,000 or 1,500 apiece) and PREMIUM 19+ (adult for krw 3,000 / mo or 1,200 for 2 days).
Still now, SKT seems to be as much pushing the service as trying to pull it out of a ditch. The technological landscape keeps evolving and in 2012, fixed and mobile broadband will reach respectly 1 Gbps and 10 Mbps. Typically, SKT is investing massively in optic cabling (from 5,000 km to 88,000 km) through SK Networks.
But mobile TV has found a public anyway, and SK Telecom is not the kind of player to abandon leadership easily. Particularily in such a key vertical.
So it brought along TU Media in its trials in Thailand, so...
... not to be discontinued yet.
But stay tuned.
* With TU Media, you pay only for subscription charges. Neither for traffic nor for content, except for movies on demand (NB: these days, KRW 1,000 is about USD 0.78) :
- Basic rates are KRW 6,000 for TU Slim (9 TV channels + 16 audio), idem for TU English (10 TV + 16), and KRW 11,000 for TU Basic (unlimited 21 TV + 16 audio)
- SKT customers enjoy a 6,000 discount on basic rates, which sets Basic at 5,000... and Slim and English services at zero
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