Providers Jockey for Mobile Slots

May 30, 2005  •  Post A Comment

Large and small content providers seeking choice early berths in the mobile video boom have been striking deals over the past five months to deliver their content to cellphones.

MTV Networks, Fox, The Weather Channel, ABC and NBC are among the many traditional content suppliers on the new “third screen,” while smaller players such as Thumbdance, Fashion TV and Two Minute Television are among the new generation of niche providers delivering customized content to Americans’ most ubiquitous device.

Their eagerness to leap into this new space comes as the content industry shifts from skepticism to certainty toward the future of mobile video.

Now the race is on for the best spot on the cellphone screen’s menu. “A lot of media companies have been standing on the sidelines waiting to see if this is a real business,” said Louis Gump, VP for mobile, The Weather Channel Interactive, which offers weather coverage through MobiTV and SprintTV.

Big players are jumping in. Viacom Co-President and Co-Chief Operating Officer Tom Freston predicted during Viacom’s recent earnings call that wireless will be the fastest-growing segment of Viacom’s business over the next four years, expanding on a base of $100 million in revenue today.

Mobile research firm ARC Group indicated that by 2008 more than 22 million Americans will be viewers of mobile video content. Worldwide, 250 million consumers will be watching mobile video, generating $5.4 billion in annual revenue.

Familiar Jostling

The TV industry is no stranger to the idea of a land grab: Diginets jostled for space in the late ’90s, while cable networks looking to launch HD services today also face limited space. Mobile phone providers don’t have the same technical limitations because mobile video is delivered differently, often on a download or on-demand model, but content players do want to get the best placement on the screen.

That’s because content near the top performs better, said Joe Laszlo, an analyst with Jupiter Research. That’s been the case with mobile games and will likely play out with video, he said. “There’s a land grab mentality and it may be important to act rather sooner to establish space in the consumer mind-set and the carrier’s menu,” he said.

It’s most important to stake a claim within a particular genre because most mobile services divide their video offerings into news, weather, sports, entertainment and other categories, Mr. Laszlo said.

SmartVideo aggregates content for cellphones and doesn’t offer any content “below the fold,” so only five to six content providers are offered within each category, said Richard Bennett, SmartVideo CEO. “If you aren’t in [that five to six], then the number of viewers that come in is negligible,” he said.

As SmartVideo adds more content, it will look to further segment its categories so no content falls below the fold. Mr. Bennett added that the company is testing faster navigation to create a “no-wait click experience” that will allow users to scroll through the layers of content more quickly.

But as more layers are added, content players will want to make sure they don’t fall through the cracks.

The Sooner the Better

Verizon Wireless offers mobile video through its new Vcast service from CNN, NBC News, Fox, E!, Comedy Central, ESPN and others. But other high-profile content players, including Discovery, A&E and Lifetime, have yet to strike deals with Vcast.

While they certainly haven’t missed the window of opportunity, early movers do have the advantage of the learning curve, said Jeffrey Nelson, spokesman for Verizon Wireless. “The sooner they are in, the better. Brands matter, but there are things you learn on the programming, technical levels that continue to make your property better and more desirable for the consumer to come back to,” he said.

From an infrastructure standpoint, capacity is theoretically limitless. Consumers download clips they want to view and most phones store 10 to 13 videos at a time. But Vcast won’t carry everything. Verizon’s role is to play the “shopkeeper,” Mr. Nelson said, allocating prime shelf space to high-performing content and giving the boot to brands that don’t do well.

No Resting on Laurels

ABC News Now was an early pioneer in the wireless video space with its 24-hour digital news service, which is carried on MobiTV and SprintTV. But a content provider can’t rest on its laurels, said Bernard Gershon, senior VP and general manager of the ABC News digital media group. “In this business you are always looking over your shoulder,” he said. “Theoretically there could be 500 channels in the wireless world, but the actual number of channels people will be able to find is far smaller.”

Some of that content includes niche material from nimble upstarts such as Fashion TV or Comedy Time that secured mobile real estate early. The advantage a niche player has is that independent content is often what drives buzz, word of mouth and viral marketing, said David Post, founder and chairman of Two Minute Television, which has deals with SprintTV and Cingular to deliver short TV shows that are exclusive to mobile.

But the big guys are offering unique content too, such as Fox with its “mobisodes” of popular series. Scripps Networks plans to offer original mobile video content by the end of this year, said Mark Quinn, VP of distribution and new business development, emerging media. He said the rush to develop mobile content is partly due to the barrier to entry being low. Content providers don’t need to pay “slotting fees” or engage in long-ranging, far-reaching negotiations in this space, he said.

A&E said it is working on a deal to develop mobile video.

An April report from Jupiter Research found that 44 percent of consumers surveyed were interested in viewing mobile videos for free, but only 19 percent said they would be willing to pay for that content.