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Wireless Video Sluggish

Dec 4, 2006  •  Post A Comment

By Colin Gibbs

RCR Wireless News

Consider video the wireless industry’s equivalent of Powerball. But nobody’s betting on the content providers.

In these early days of well-heeled venture capitalists and hockey-stick projections, there is no shortage of cash in mobile video in the United States. Handset manufacturers are scrambling to rush high-tech, video-capable phones to market, and infrastructure companies are spending nearly $2 billion to bring dedicated multimedia wireless networks online.

MobiTV, which has gained an impressive following in the last year, recently padded its already-thick wallet with $30 million in a third round of funding. Adobe Systems Inc. and Hearst Corp. became backers with the latest round, which pushed MobiTV’s total investment financing to the $125-million mark.

But content providers could use some help tapping into that surfeit of cash, according to a recent study from Informa Telecoms & Media. Wireless TV will see impressive growth in the next few years, the market research firm predicts, expanding from a $2.46 billion industry to more than $8 billion by 2011.

To help fuel that growth, though, carriers should take a cue from the television and film industries, Informa urged. The revenue-share model that serves as the foundation for today’s mobile content business may serve only to hinder uptake of wireless video.

“While mobile TV and video content is less expensive to produce than film or broadcast TV content, it still requires upfront production costs that typically run several thousand dollars per minute,” said Chris Coffman, a senior research analyst at Informa. “Revenue shares don’t fund the initial creation of content. The mobile TV and video sector would benefit from distributors, such as broadcasters, mobile operators and content aggregators, sharing more of the risk.”

Indeed, traditional video production companies are already wrestling with business models for creating mobile TV content. Producers are struggling to come to terms with writers and actors for made-for-mobile video-contractual disputes have delayed mobile versions of the ABC hit “Lost” until next year-and are hesitant to invest heavily until a viable market for the content has been established.

“Everybody is screaming for content,” said Thom Beers, chief executive officer of Original Productions, which is responsible for TV shows including “Deadliest Catch” and “Monster Garage.” “Nobody wants to pay for it, but everybody s screaming for content.”

That’s unlikely to change anytime soon. Most network operators are notoriously conservative and have no desire to consider alternative business models. And while some carriers are working to be digital music service providers and mobile TV `networks,’ few have shown any interest in playing the role of content creator.

“It is hard for me to think about being original producers of content,” Vodafone Group Chief Executive Officer Arun Sarin said during an earnings call earlier this month. “I can see us buying content, packaging it and passing it on to our customers, but actually originating music or television shows or movies is, from where I’m sitting here today, a bridge too far.”