Mobile Gets Into the Hollywood Picture

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Los Angeles— The annual fall CTIA IT and Entertainment wireless show came to Hollywood last week, but in a larger sense, the three-day convention itself showed that Hollywood has gone wireless in a big way.

With programmers ranging from MTV Networks to NBC Universal, CBS and Fox staffing panel sessions, hot topics at the show included the momentum building for ad-supported content, the need for better navigation systems to help users find their way through a growing forest of multimedia and worries that licensing issues could stifle the flow of entertainment content.

JUST LIKE VOD

If that sounds at all familiar, these are the same issues that bubbled up as the on-demand TV programming market was getting off the ground. And just like cable television’s on-demand services, it also indicates mobile content — particularly video — is moving from novelty to full-fledged, revenue-generating business.

That is backed up by figures from the Cellular Telecommunications & Internet Association, which released data indicating that in the first half of 2006, total wireless data revenue topped $6.5 billion. That was a 70% increase compared to the first half of 2005. Wireless data and content now constitutes 11% of all wireless service revenues, according to the CTIA figures.

Indeed, mobile TV was not just “tiny TV,” according to Paul Reddick, Sprint Nextel Corp.’s vice president of business development and planning strategy. In his keynote speech at the pre-show Mobile Entertainment, Content, Commerce and Applications conference, he pointed to the Sprint TV service, launched in 2003, and its Sprint Movies service, which debuted Sept. 8. The latter is a streaming service that offers 45 movies titles initially from Buena Vista Video on Demand, Lionsgate, Sony Pictures Home Entertainment and Universal Pictures priced at $4 to $6 per view.

ADS ATTACHED

The fact that mobile content looks more like a business is drawing in advertisers, and despite the common belief, Reddick said ads attached to mobile video and other content was not an immediate turnoff for customers.

Auto maker Toyota is now sponsoring Fox Network mobisodes based on the hit series Prison Break, and CNN also has been advertising on Sprint’s PowerVision content service to test how that would play with customers.

So far, “we haven’t seen people run away from the service,” Reddick said.

He might find a ready backer on that score with The Weather Channel, which is in fact transforming the weather network’s mobile content from expensive marketing investment to its own legitimate business, according to Louis Gump, the network’s vice president of mobile.

“Before, basically it was an expense line item for us, and every month I had to roll my eyes and sign the bills,” he said. “And now what we have is significant revenue that is coming in — we are seeing, month over month, double-digit increases in that revenue, and the inventory is very strong.”

THE RIGHTS STUFF

So what’s keeping more content from making its way onto handsets? More often than not it’s the labyrinthian process of securing digital rights.

With content increasingly moving into a mobile environment where it can be streamed and viewed anywhere, there are already signs of conflict with licensing contracts that often limit content to regional distribution. Products including Sling Media’s SlingBox are testing these limits by allowing consumers to watch TV content — for example, a live Major League Baseball game — outside of their original market.

Mobile TV streaming outlet MobiTV itself sees that issue as it expands its live TV service beyond mobile phones to include Wi-Fi and WiMAX-fed laptops. So it is now backing the concept of creating a standardized, blanket content-distribution license that would allow video to be viewed anywhere, but also pay the content provider, network provider and other rights-owners, such as sports leagues, a piece of the resulting revenue.

“For us, the goal is how do you build an infrastructure and license agreement so you can get the content?” said Phillip Alvieda, MobiTV’s CEO. “We are trying to stay ahead of the consumer trends and technology, and it has become a more-complex soup.”

While visiting the show to demo its new mobile-TV application, Sling Media vice president of product management Jeremy Toeman acknowledged his company was stretching the limits when it comes to distributing television content outside of the family room TV set.

SLINGING TO PHONES

SlingMedia’s SlingBox device attaches to a television set or set-top box and a home broadband connection, allowing the user to redirect live TV or any stored TV video on a digital video recorder box to a personal computer outside the home. Sling has recently added a mobile device application that brings that same capability to select Windows Media 5.0 or Pocket PC-enabled cellular phones, including Motorola’s new Q handset.

Toeman, however, said the likelihood Sling faces an imminent lawsuit because of the out-of-market transmission issue is slim.

He argued that past court decisions enforced consumers’ fair use of content to which they have legal access. SlingBox’s service falls in line because it relies on customers having bought and paid for cable or satellite TV service already, so as such SlingBox “doesn’t really break the rules,” he said.

In addition, new time-shifting products hitting the market — such as Time Warner Cable’s “Start Over” service — also enforce the idea of allowing customers to see content on their own terms. Facing all that, any company choosing to field a suit would have to be fairly sure it could win — given the risk of inadvertently setting a legal precedent allowing location-shifted TV services “you wouldn’t want to lose,” Toeman noted.

At the same time the industry wrestles with licensing issues, it appears the perception of what video content works on compact cell phone screens also appears to be changing.

With Sprint’s rollout of a movie download service, and Apple announcement during the show of its new iTunes movie service offering full-length features from Walt Disney Co., there was plenty of talk at the show about the rising concept of long-format mobile video.

In a MECCA panel session, Michael Arrieta, senior vice president of digital distribution and mobile entertainment at Sony Pictures Home Entertainment, cited critics’ argument that no one would want to watch a two-hour movie on a two-inch screen echo those made when broadband services started shipping movies to PC screens several years ago.

MOVIES COMING

Sony has already forged deals to offer about 20 movies in Flash memory format for delivery to cell phones, so “to say it is not going to happen on the phone is crazy,” Arrieta said.

Downloading a full-length movie to view on a mobile phone screen is similar to that of reading a book — people likely won’t finish it in one session but rather in chunks as time permits, noted Greg Clayman, vice president of wireless operations and strategy for MTV Networks.

“I think the demand for solid, long-format content is there,” he said.

Clayman added that MTV engineers have been testing delivery systems for long-format video, and while they have grumbled in the past about how painful a process it was — subject to bad quality and connections that run in fits and starts — “that is changing.”

Many of those issues have been resolved, “and the story about the content is coming out while the technology is fading into the background,” he said.

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