The next big thing: videos on mobiles

As Hollywood shrinks its films and television shows for the small screens of cellphones, its assumptions about mobile viewing are being upended by surprisingly patient consumers.
“We all thought they’d be watching video clips in the checkout line or between classes,” said Vivi Zigler, the president for digital entertainment at NBC Universal, summing up the industry’s conventional wisdom. But owners of iPhones and other smartphones are actually watching long episodes and sometimes complete films, so a growing number of media companies are vying for people’s mobile attention spans.

Marginal revenue

Measured against TV ratings and box-office receipts, the mobile video audience is tiny today, but a range of companies, from Hollywood studios to local TV stations, all foresee an increasingly wireless world. Some TV shows, like ‘The Office’ on NBC.com, are streamed at no charge now, but there is a gnawing fear among media companies that they may be leaving money on the table by relying solely on revenue from advertising. And there is always the concern that the new platforms could cannibalize the companies’ core businesses.

Accordingly, much of the mobile TV experimentation is happening on the paid side, through packages sold by individual carriers like AT&T and Verizon and through subscription services that will be coming soon.

Joining the wireless equivalent of a land rush, last month some of the biggest local TV station owners in the United States announced a joint venture to transmit their content to viewers on the go. It is most likely years away from operation.

Channels invest in mobile

The stations would transmit to phones over the airwaves, much like Flo TV, a unit of Qualcomm, which has invested about $1 billion in mobile video distribution. The service sends channels like ESPN, Fox News and MTV to phones.

“Putting the concepts of mobility and watching video together is a natural, and we’re seeing it really grow right now,” said Flo TV’s president, Bill Stone. Stone says the average Flo user watches 30 minutes of video a day. So far, though, few people are ponying up $10 a month or more for the service. Beginning later this year, Bitbop, a product of the News Corporation’s Fox Mobile Group, will stream TV episodes to smartphones for $9.99 a month.

Along with all-you-can-watch plans like Bitbop, there are à la carte stores for mobile viewing popping up. Blockbuster, the beleaguered movie rental chain, started selling movies for phones in the last month. The Oscar winner “The Hurt Locker” costs $3.99 for a 24-hour rental period.

Eric Berger, the senior vice president for digital networks for Sony Pictures Television, said the increase in mobile-viewing minutes correlates to the surge in smartphone sales. Sony has found that mobile visitors to its online video site, Crackle, watch movies for around 26 minutes of which 20 percent finish the movies.

Many media researchers still maintain that viewers gravitate toward the best available screen, defending TV as the medium to beat. If a parent is watching on the living room TV set, a child may choose to watch something else on his or her phone. “It’s becoming more mass market than it was, say, two years ago,” Berger said of mobile TV.

Chief concerns

But bandwidth constraints are a big concern. Blockbuster’s streaming service, for instance, does not yet work on the iPhone, which is sold by Apple, with service by AT&T.
The iPhone is “a little challenging,” said Scott Levine, vice president for digital at Blockbuster, citing the heavy bandwidth demands the phone places on AT&T’s strained network. “We have to think about how to make 3G work with the carriers. Above all, we want it to be a good experience for users.”

Carriers say they are gradually introducing next-generation networks that will be better suited for widespread video viewing. And Kay Johansson, the chief technology officer for MobiTV, said his company and others kept finding ways to squeeze more data through the existing lines.TV at home is just going to be a bigger screen,” Kay said.

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