Writers’ strike highlights need for Hollywood-mobile partnerships

Editor’s Note: Welcome to Reality Check, a feature for RCR Wireless News’ new weekly e-mail service, Mobile Content and Culture. We’ve gathered a group of visionaries and veterans in the mobile content industry to give their insights into the marketplace. In the coming weeks look for columns from Tom Huseby of SeaPoint Ventures, Mark Desautels of CTIA, Mark Donovan of M:Metrics, and more.
The Mobile Entertainment Forum recognizes the mobile platform as the fastest growing and most highly personalized medium for the delivery of entertainment, including music, movies, television shows and games. The current breakdown of communications in Hollywood, highlighted by the writers’ strike, over new media distribution residuals underscores the importance of mobile as a viable, long-term partner for content owners and creators. MEF forecasts explosive growth for mobile video and with Hollywood as a key driver, healthy relationships within the content communities are as essential to mobile as they are to traditional media.
As a strong advocate for the development and proliferation of our industry, MEF believes that all players in the mobile entertainment value chain-operators, mobile technology providers, aggregators and content owners-should share in the revenues to be gained from the delivery of entertainment on the mobile platform. While mobile video usage is in developing stages compared with other entertainment options, it is the most rapidly growing segment of mobile entertainment. Surprisingly, mobile video isn’t just about short bursts of entertainment-growing numbers of carriers offering movies are seeing upwards of 40 minutes of viewing per paying customer.
There is a massive market for mobile video in the U.S. MEF member M:Metrics found that 8.2 million mobile customers watched any form of mobile video in September 2007, a 36% increase over the number of users in January of the same year. A recent study concerning the quality of experience of mobile entertainment services conducted by MEF and LCC revealed the true potential for mobile TV services: While just 17% of mobile customers surveyed in the U.S. had ever viewed mobile TV, another 66% were aware of it, and mobile TV had the highest rate of satisfaction (37%) among all mobile entertainment offerings, including ringtones, games and chat.
But, what does the mobile platform mean in real dollars for the content creators? Television shows are usually offered on mobile devices through a subscription that costs between $7 and $10 per month, and movies typically sell for $5-$7 each, both of which are billed through the carrier. If a content aggregator (such as MediaFLO or MobiTV) is involved, the content owner takes around 30% and the rest is split between the carrier and aggregator. If there is no aggregator, the carrier and content owner may split the revenues evenly. Either way, the content owner is responsible for paying for the development of the show, inclusive of production costs and fees and residuals to writers, actors and directors. MEF member Nielsen Mobile estimates that the market value of all mobile video revenue, both independently and as part of larger content packages, reached $241 million in the third quarter of this year. While these revenues sit at just 4% of overall mobile content revenue, it marks a 153% increase over the third quarter of last year.
Clearly, Hollywood is correct to be factoring mobile into contract negotiations. Mobile customers are discovering and watching video on their phones in increasing numbers. Content owners and aggregators are delivering an ever-growing catalog of television shows and movies to a public who may not otherwise have been viewers. Additional revenue streams are emerging through mobile VOD, subscriptions, and advertising as entertainment moves beyond the home and theater. Mobile video holds great promise to all in the value chain, and MEF believes those who contribute to its creation and delivery should also share in its success.