Mobile firms hunt for content

Compelling, economical programs hard to find

TIP SHEET
What: 3GSM World Congress 2007
When: Feb. 12-15
Where: Barcelona, Spain
Keynoters: Bill Roedy, prexy, MTV Networks Intl.; Edgar Bronfman Jr., chair and CEO, Warner Music Group; more

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Among the flurry of U.S. wireless service providers and entertainment companies striving to get into the mobile TV and video business, all agree that the key to sparking lukewarm consumer interest in the States is compelling content.

One such aspirant is MobiTV, an Emeryville, Calif.-based mobile content company that provides packages of TV programming to major wireless carriers, including Sprint and AT&T/Cingular in the U.S.

The quest to acquire this content is never-ending, says Erik Smith, who up until last week, served as MobiTV’s VP of content and programming. “There’s not a channel out there we haven’t had some kind of discussion with,” he notes.

Currently, only 5.1 million of the 221 million wireless users in the U.S. subscribe to a mobile TV/video service, according to research firm Telephia. Despite reports indicating tepid interest for mobile entertainment in the U.S., that number has doubled in the last year.

As with any emerging platform, the ability to supply consumers with compelling content will be crucial to sustaining — and accelerating — that growth.

In many cases, the major carriers are directly negotiating rights deals with the studios, networks and sports leagues — Sprint, for example, recently signed mobile video pay-per-view pacts with Disney, Lionsgate, Sony and Universal to gain access to a range of full-length motion pictures, including “Eight Below,” “Spider-Man 2” and “The Mummy Returns.”

Sprint also signed a major pact with the National Football League, allowing the carrier to deliver exclusive stats and scores, as well as audio and video highlights to its subscribers.

While carriers like Sprint negotiate a number of these big-money licensing deals themselves, mobile virtual network operators like Amp’d Mobile and content aggregators like MobiTV and GoTV also supply them with the bulk of their streaming TV programming.

For the most part, these companies seek to acquire short-form content, optimized for a 2-inch screen and targeted toward a particularly youthful aud — 14-25, in many cases. Musicvideos, news, weather and sports data and audio/video highlights, as well as cartoons and comedy bits, make up the bulk of mobile TV/video product thus far.

“Things that have a resolution do well for us — a musicvideo, for example, runs three to five minutes,” says Smith, who departed MobiTV earlier in the month to join online video site Metacafe.

Acquiring this content is challenging. Two years ago, when MobiTV approached entertainment companies seeking rights deals, they usually encountered officials with traditional media backgrounds and little vision for the mobile medium. “They didn’t understand what we were trying to do,” Smith explains.

Today, however, most of the big entertainment companies have dedicated staffs for dealing with digital issues — many of them have drilled down to the point where they specifically deal with mobile.

“Many media companies have a P&L specifically for mobile now. That wasn’t the case two years ago when we were starting out,” Smith says. “Two years ago, we really had to convince people that this was a real business.”

“In another two years, every media company will have a fully baked mobile strategy,” adds David Bluhm, chairman and CEO at Sherman Oaks, Calif.-based GoTV Networks.

With all this has come a better understanding among content licensees of mobile’s current revenue potential.

“A cable bill is maybe $50, but (a MobiTV) subscription is about $10,” Smith explains. “Our content acquisition budget isn’t the same as cable TV’s.”

Andrew Perlman, VP of digital media for Classic Media — from which MobiTV licenses a number of venerable toon series, including “Rocky & Bullwinkle,” “Casper” and “Mr. Magoo” — conveys an understanding of these real-world market dynamics.

“Like any new technology, it’s still a medium that needs to be worked out,” he says. “The challenges are endless.”

MobiTV’s broad-skewing business model — which encompasses not only programming cell phones, but computers and TV sets, too — presents yet another such challenge. MobiTV must negotiate mobile, broadband and broadcast rights simultaneously, in many cases. This can be difficult when dealing with big media conglomerates, which divide rights negotiations for different platforms among entirely different units.

Further complicating the equation is the fact that many cable and broadcast networks haven’t gotten into the habit yet of securing mobile rights for all of their content.

For example, MobiTV has negotiated a rights deal with Fox News so that it can pull the channel’s feed directly off its satellite.

But that same kind of arrangement can’t be made with ESPN, since the cabler doesn’t have the rights to present many of the various leagues it covers outside of a “location-based” environment.

In the case of ESPN, MobiTV purchases licensed clips, which the company re-produces for the mobile platform.

MobiTV faced a similar situation while trying to obtain content from MTV, which doesn’t have mobile rights for all of its programming, either. To work around that, MobiTV hired a content acquisition executive familiar with the music industry to go directly to the labels and secure musicvid rights.

Meanwhile, there’s also plenty of killer-ap programming — such as content that services the needs of fantasy sports denizens — that’s just too expensive for many mobile business models to support.

“The (major) sports leagues definitely overvalue their content,” Smith notes. “They have lucrative television deals, and they want a lot of money for their content.”

To keep licensing-costs down, MobiTV and others are experimenting with new ad-supported business models. By teaming with branded-content firm Intersport and Chase Bank, for example, MobiTV last year created a seasonal stock-car racing channel for Sprint, Smith says, without having to pay NASCAR’s steep fees.

Further complicating the negotiations are the dynamics of a rapidly developing business — it’s for that reason that none of MobiTV’s program licensing deals are set in stone.

“We’re not doing 10-year cable deals by any means,” Smith says.

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