Considering that
recent market turmoil may delay the initial public offering of even a hot property like Zynga, this isn't the most auspicious time for an unprofitable mobile company to go public. Nevertheless, MobiTV
Wednesday filed for an IPO to raise up to $75 million.
Launched in 2000, the mobile TV provider had a net loss of $8.2 million on revenue of $37 million in the first six months of 2011.
For all of 2010, it had a net loss of $14.7 million on revenue of $66.8 million. Extending the first-half year results to the rest of 2011, MobiTV would have a loss of about 16 million on sales of
about $72 million.
That would match the roughly 10% average increase it's had in the last couple of years -- steady, but not the kind of explosive growth investors might be looking for
in an emerging media/technology company. There are also continuing losses, and MobiTV's operating expenses are on pace to increase from $32 million to $37.7 million this year.
That
growth in expenses in driven in part by increased content licensing costs paid to partners including ESPN, ABC, CBS, MTV Networks, and NBC for live and on-demand programming. As the number of end
users grows, so do the company's licensing costs.
MobiTV is also highly dependent on deals with the major carriers to resell its service under their own brands. AT&T, Sprint and
T-Mobile account for the vast majority of its revenues, with Sprint alone responsible for 54% of its sales last year. If AT&T's merger with T-Mobile were to go through, despite the Justice Department
suit filed Wednesday to block it, that would eliminate one of MobiTV's three key customers.
But even if its carrier partners stick with it, MobiTV's IPO filing acknowledge the company
faces growing competition from the likes of Amazon, Hulu and Netflix, which are increasingly extending their video offerings to mobile platforms. "These developments may cause the demand for, and the
prices of, our services to decline," states the MobiTV filing.
To help counter the incursion of new mobile TV rivals and diversify its business, the company is looking beyond the mobile
phone. "We plan to collaborate with our customers on their roadmaps to extend television and video offerings beyond the screens they have traditionally serviced within their networks, to include
personal computers, set-top boxes and Internet-enabled televisions," it explains.
So MobiTV is counting on increasing convergence by extending its services across a variety of devices,
both in the home and on the go, to provide a sort of seamless TV experience wherever a user happens to be. But given how fluid and fragmented the mobile TV and broader Internet video market is,
MobiTV's place in that shifting landscape is hardly assured.
Keep in mind that even more than a decade after MobiTV was started, the mobile TV audience is still small. Nielsen estimates
that about 10% of U.S. mobile users 13 and older watch video on their phones. That proportion will continue to grow as more and more people upgrade to smartphones.
Already, MobiTV says
the mobile minutes stream through its service increased from 264 million to 1.4 billion between 2007 and 2010. But as mobile users access more content on their handsets, they'll also discover more
video options than the carrier-based, subscription offerings powered by MobiTV. The deep-pocketed media and technology players the company's contending with could make it increasingly difficult for
MobiTV to compete as an independent company, IPO or no IPO.