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Mobile technology lacks cohesion

Video formats can't transfer between devices

Consumers are snapping up millions of video-capable cell phones like the BlackBerry Storm and Apple iPhone – so why isn’t there a robust business in delivering video content to those small screens?

At the 2009 CES, the problems are the same as they were last year and the year before: There’s no single video format that works across all phones and carriers, and no one’s found a reliable way to make money doing it.

Those media companies with some measure of success in this arena rely on lucrative deals with mobile carriers willing to pay up-front licensing fees and guarantee minimum annual revenue. Those deals are becoming rare as more phones gain the ability to pull video directly from the Internet and consumers hunt for a broader range of content than carriers could ever offer.

“I like to say that mobile video is like a crab,” says Frank Barbieri, chief executive of Transpera, a San Francisco-based start-up that works with media companies to deliver video to phones. “It’s hard to crack and it has all these little compartments, but once you get into it, you find all this really sweet meat.”

Some media execs at CES have the sense that the audience for video on phones isn’t big enough yet. “The numbers aren’t there,” says Bill Bradford, chief product officer at Fox Digital Media, who also expressed concern that content protection, or digital rights management, isn’t yet strong enough on mobile phones. “It’ll take a few years.”

But working directly with mobile carriers, MTV Networks served up “nearly 100 million video streams in 2008, and that was double the number from the year before,” says Greg Clayman, MTV’s executive vice president of digital distribution. But Clayman acknowledges that carriers want to move away from subscription-based content in favor of more ad-supported content and “there’s no agreed-upon ad formats yet.”

Samir Ahuja, a vice president at QuickPlay Media in Toronto, says his company is experimenting with 5-to 10-second ads in mobile video delivered as pre-roll, post-roll or interstitials. Similarly, Transpera serves up 15-second ads before videos play; the company’s media clients include Disney, Sony Pictures, AccuWeather and CBS.

Most mobile video execs envision a mix of premium and ad-supported content. “Consumers will pay for some content, like live sports, series they get into, and feature films,” says Barbieri. “Music videos and, of course, sexy content, too. But you’ll also see the rise of free, ad-supported content on phones.”

But an ad-supported world has its perils; the phrase “earning digital pennies instead of analog dollars” was tossed around at the Digital Hollywood conference, which runs in tandem with CES. With video on the Web, media companies are vexed that viewers won’t tolerate much advertising, making it hard to earn as much as they do from traditional TV broadcasts. They fear the situation could be worse on mobile phones, where consumers – for now, at least – seem even less tolerant of advertising than they do on a PC.

“What the right model is for mobile video is still T.B.D.,” says Clayman.

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