What Keeps Putting Mobile Video on Hold?

What Keeps Putting Mobile Video on Hold?

Wed Oct 3, 5:40 PM ET

NEW YORK The potential revenue from mobile video, given the ubiquity of
cell phones in the U.S., has content providers and carriers salivating.
But progress has been stalled by carrier reluctance, non-existent
advertising standards, technical challenges and questions about the
types of video consumers want to access.

Today, the U.S. subscriber base for active cell phones is
approximately 260 million. In terms of mobile video, the subscriber
base is projected to reach 12 million by year-end and grow to 25
million by 2011, according to Lewis Ward, research manager for mobile
consumer services, entertainment at IDC. Worldwide mobile video revenue
is projected to reach $531.4 million by 2008 and grow to $5 billion in
2011, according to data from eMarketer.

To help advertisers tap into the market, the Mobile Marketing
Association is currently working to develop standards for ad units in
such areas as sizing and format.

"The key is that the advertising shouldn’t dominate the device, yet
remain relevant to the consumer experience," said MMA president Laura
Marriott.

"Having standard metrics and ad units across the different carriers
so the mobile advertising space looks a lot more like on-air and online
would be the biggest accelerator," said Greg Clayman, evp, digital
distribution and business development for MTV Networks. "The carriers
need to embrace that. The good news is, there is a big enough market
out there."

But some say carriers are limiting the growth of mobile media by
adapting technology that curbs cross-carrier distribution techniques
for fear of losing customers. Although there is some agreement among
content providers, agency executives and analysts that carriers need to
open up their systems to stimulate growth of the mobile video platform,
specific solutions remain elusive.

Navigation tools that help users find content on a mobile device are
a critical issue. "No one’s done a particularly good job of making it
very simple for consumers," said John Zehr, svp of digital media for
ESPN. This is partly driven by technical challenges, multiplied by the
fact that there are countless incompatible devices–even within a
single carrier.

Technology aside, all of the constituents involved in the mobile
video space are still trying to figure out exactly what content users
want to watch on their phones. IDC’s Ward said news, sports, comedy,
weather and entertainment gossip top the list. But there are other
factors.

"[Industry participants] are trying to determine what consumers are
most interested in, in what format, how they want it, when, how they
want it programmed," said Ron Lamprecht, svp of digital distribution
for NBC Universal. While the consensus is that ease of use will lead to
greater adoption, not everyone agrees how this should be determined.

Some content providers believe that the wireless carriers should
collaborate to create a single menu structure that would be the
standard across all phone networks and handsets. Those who support that
side of the debate insist carriers are hindering growth because they
have created systems that make it extremely difficult for their
customers to access content other than what is tailored to their
platforms.

"The carriers are very myopically concerned with churn to keep their
customers. Differentiating themselves is part of the way to do that,"
said Linda Barrabee, program manager, consumer research, The Yankee
Group. But Barrabee foresees content owners taking more control as the
market matures and more consumers opt to consume video on their phones.

"I believe that carriers will restrict market development if they
don’t open things up a bit more. Content that’s important for me isn’t
necessarily what you want to watch. And content owners know their
customers and how to reach them," she said.

ESPN’s Zehr noted that, as mobile devices were created to make phone
calls, the content experience has been a secondary aspect of their core
business. However, carriers have realized that the wallet share is
going to shift from a good deal of voice-based average revenue per user
to content and data. "That attention is going to shift, and this is
something we’ll work closely with them on," he said.

But Paul Palmieri, president and CEO of Millennial Media (and former
Verizon Wireless executive director of business development and
programming), said the carriers have come to grips with the fact that
they are a distributor in this environment, as depicted in ringtone
download deals, in which carriers gave the lion’s share of revenue back
to the content provider. "I think the track record for these companies
is actually pretty good in creating markets and understanding their
role as a distributor," he said.

Nevertheless, some sort of cross-carrier solution must be created to
alleviate navigational problems in finding content, said Angela Steele,
vp, mobile activation director for Starcom USA. Steele believes that a
standardized format based on genre (all sports on one channel) rather
than network (ABC on its own channel) would be a good answer. Steele
pointed to what is transpiring online, where most of the video traffic
does not occur on the content providers’ individual sites (ABC.com, for
example), but rather through users seeking out the video they want to
view through a search engine (such as Google).

Steele believes one of two things will happen: "Either the carriers
will work together and make their decks more open, standard and user
friendly. Or, the deck will become irrelevant and there will be
off-deck solutions to provide consumers with what they are looking for.
Aligned with this will be some sort of content portal where users will
be able to go and customize the kind of content that they want without
having to involve the carriers."

John Hadl, CEO of Brand in Hand and strategic advisor to Procter
& Gamble for mobile, said commonality in process is the key. "From
a media buyer’s perspective, if that process is a lot of work–so much
so that it prevents me from doing the rest of my job–then I’m not
going to do it," he said.

By Shahnaz Mahmud

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