Panel: Mobile TV Execs Embrace Hybrid Revenue Model
That was the prevailing--if unsurprising--view among a panel of mobile executives gathered at the Media Summit New York Thursday to discuss the "The Mobile Platform 2.0: Establishing the Personalized Video, Music, and Communications Experience."
While expressing enthusiasm for spreading content across as many digital platforms as possible, mobile division executives from major media brands including NBC Universal, Disney and MTV Networks also left little question that they want to get paid through upfront fees as well as advertising revenue against mobile programming.
"NBCU is a place where we make money from distribution partners and advertisers," said Chip Canter, vice president, wireless platform development at NBC Universal Digital Distribution. "What we're trying to do is drive dual-revenue stream models: fees for distribution and supplement that with advertising."
NBC, for example, has a deal with mobile broadcast service MediaFLO USA, to distribute "The Office" and other network shows through the subscription-based mobile video services of Verizon Wireless and AT&T.
With mobile advertising still in its infancy, subscription revenue is especially prized at this stage. Tim Connolly, vice president for mobile distribution, ABC, Disney and ESPN Media Networks, explained that Disney isn't about to offer cable programming for free (ad-supported only) on mobile when it charges cable operators a licensing fee for the same content. "The ad infrastructure in mobile is incredibly immature," he said. "It's not anywhere near the point of making it freely available today because the ad structure isn't there to support it."
Disney, however, hasn't had much success launching its own paid mobile services. In 2006, it shut down its ESPN Mobile venture, and the following year shuttered its family-oriented Disney Mobile offering. It now distributes content though wireless operators or other partners such as MobiTV.
Connolly emphasized that a hybrid subscription-advertising business model will provide the revenue necessary for Disney to reinvest in programming and offer more and better mobile content in the years ahead.
In addressing the impact of the iPhone, Canter pointed out that the popular Apple device has created a third mobile revenue stream for media companies via a-la-carte sales through iTunes and the App Store. "That's nirvana to us," said Canter of the direct-to-consumer market in mobile.
Connolly wasn't quite as bullish because he said Disney prefers to distribute content bundled as part of a subscription package. "We don't believe in a la carte," he said. We like to have broad-based multichannel bundles...the iPhone hasn't been able to address that need for us as a content provider."
With its forthcoming iPhone 3.0 announced this week, however, Apple said it will allow application developers to charge subscriptions for their programs.
Jeremiah Zinn, senior vice president, syndication and operations for MTV Networks, welcomed the ancillary revenue flowing from the App Store in addition to the subscription-based TV content it provides on mobile. He likened the $1.99 laughing Sponge Bob app it sells, and other apps, as the mobile equivalent of items sold at the check-out counter. "The App Store is merchandising," he said. "But we also serve MediaFLO with custom channels with advertising built into it."
MediaFLO's own Jonathan Barzilay, senior vice president of programming for the QualComm unit, highlighted the halo effect the iPhone has had on mobile media consumption broadly. "We're seeing people watch 20 minutes of video a day. That's pretty sticky," he said. "What you see is the validation of the reason we're all here.
Beyond video, mobile experts also see much promise in social networking on cell phones. "Social media is really taking off on mobile phones," affirmed Jesse Goranson, senior vice president of mobile media at Nielsen. "So the idea of people connecting to share video or other things is something that is definitely part of the future of mobile."
How that activity gets monetized is another question. For now, MTV's Zinn said he views activities such as Twittering and mobile messaging as providing the viral "spark plugs" to help drive video viewership. "But if we focus on them too much, we get away from our core business, which is video," he said.