Founded in 1999 as a technology, content aggregation and IP media delivery company, privately held MobiTV Inc. now provides popular mobile TV and digital music channels from top labels, networks and cable providers to more than a million subscribers. Its service is available in the U.S. through Sprint, AT&T Wireless and Alltel; in the U.K. through 3UK and Orange; in Canada through Bell Canada, Rogers and TELUS Mobility; in Latin America through América Móvil, Claro and Telcel; and through other regional carriers internationally.
Now the company is applying its pioneering work in licensing, formatting, hosting and programming video for mobile distribution to other Internet-based distribution outlets, including fixed-line broadband for AT&T Broadband TV and the emerging WiMAX market.. It also is leveraging its relationships with mobile operators Cingular (now AT&T Wireless) and Sprint to play a key role in developing seamless, any-network, any-device access to video fare.
MobiTV co-founder and president Paul Scanlan recently sat down with ScreenPlays senior editor Peter Lambert to discuss the past, present and future of the company and the redhot marketplace for IP-based rich media.
ScreenPlays: The online content value chain is growing increasingly crowded and complex with sometimes overlapping roles that can be a bit confounding: owners, encoders and formatters, content management services, publishers, aggregators, portal storefronts, broadband channel programmers, ad sellers and brokers, CDNs, P2P networks, broadband distributors. Where does MobiTV fit in the chain? And how do you see it evolving in the next year or so?
Paul Scanlan: We would agree with your assessment. I think in any kind of new space that’s showing a lot of promise, there’s always going to be a flurry of activity and a bunch of people trying to stake their claims. One of the things we’ve found is that our partners and the industry as a whole respond very well to a provider of a combination of those things. If I’m an operator like Sprint or Boost, I’m going to be looking for an end-to-end service.
We look at it as a recipe. We are a technology company. We were the first to be able to deliver television to mobile and to deliver live TV over general broadband. That required us to develop some technology in a pioneering way, and we are developing additional, innovative technology. But then we coupled that innovation in technology with hosting and management and operations, running the NOC [network operations center] and building the expertise to operate a service. And in the brand new market, we also are a content aggregator.
So a lot of people look at the market and say you’re either a content aggregator or a technology provider or a hosting provider. We think the right answer is to be the right amount of all three. When I say we’re doing content, that’s not to the exclusion of our partners also doing it. We have ready at our disposal and ready to launch a collection of content, and then we’re very collaborative with our partners to work with content that they’re aggregating themselves, creating a combined product lineup that allows them to differentiate.
SP: So if a Cingular or other operator has a deck of video content, for example, that it has negotiated and licensed, then you can pull that into your technology platform.
Scanlan: Exactly. That’s precisely what we do in a lot of our relationships. And selling local ad inventory is another service that we offer. So it’s really an end-to-end service.
SP: Is your ad service focused on banner ads or video ads as well?
Scanlan: It’s less banner and more video advertising. Pre- and post-roll, and even more than that. In a lot of the live signals we’re placing the local inventory. We’re also creating standalone, branded advertainment channels, which is a big area for us.
SP: Trying to tease out the things you don’t offer, I imagine you go to a content delivery network for transport and distributed caching of your video?
Scanlan: Not necessarily, and in particular not in mobile. For broadband we’d consider that. We have our own hosting centers, and a lot of our relationships are directly with the broadband provider, so that gives us access as well to their networks.
SP: So you might cache content out to their headends or central offices.
Scanlan: Yeah, theoretically. In the mobile market, all the operators we work with have datacenters, so they’re not a distributed Internet-like system. They use the Internet, but once they get to their data center, they use their own backhaul to get it out through their network. For example, if I’m a Cingular or Sprint subscriber using a data application, I’m going to be going through the mobile operator’s network to its data center, and that data center uses high-bandwidth connectivity out to the Internet.
So for us, as an end-to-end mobile television service provider, we focus on having very high connectivity between our center and their data center.
SP: Okay. So going back a step, you noted the gold rush to a promising new market, and one ramification of that usually is new terminology that takes a while to get normalized.What is a term like “publisher” or “aggregator” or “distributor” ultimately going to mean as this market matures? Do you see the industry getting a handle on the definitions of basic function sets like “publishing”?
Scanlan: You bring up a good point. From our perspective, there will always be companies doing aggregation; there will always be companies that are distributors; there will always be technology providers and application service providers or whatever. But we tend to look at it as a whole system. What our partners are looking to us to help them deliver is a service, so we tend to avoid pigeon-holing our company into any one definition.
There’s not really a definition for what we do, because I think it’s actually very unique. It’s even challenging for us sometimes to talk about who our competitors are. We’ll have people who do one part of what we do and another company that does another small part of what we do. We don’t see any other significant players doing this end-to-end solution as well as we do.
SP: So on that note, would you expect to see some movement toward consolidation among your point-solution competitors to match the turnkey offering? Are you persuaded that that is what your operator partners and your content partners prefer?
Scanlan: I don’t know. There are two different perspectives on the marketplace. Over time, if we’re right, that will happen. Knock on wood, we think we’re right, because that’s what we’re seeing in demand. Early on we saw a lot of operators – I’m talking mainly about the mobile space, but I think the broadband providers are probably going to be very similar – trying to build a homegrown end-to-end platform by buying the ingredients and putting it all together themselves. In general what we’re seeing is those operators who sought to grow their own are starting to retreat from that and starting to realize the value of having a company that manages and is responsible for a larger selection of the deliverables and is able to innovate faster that way.
Any time you tease a system apart and disassemble it and purchase-order it out to multiple partners, it’s not the fastest way to get an innovative platform. Right now this marketplace isn’t so mature from a technology standpoint. We’re all looking at commoditized, standardized components that all work well together. In that scenario, you can often end up dumbing down what your product will do and the pace of innovation on that system.
SP: So going back historically, how long did it take you to integrate the delivery chain and all those functions?
Scanlan: This goes back four years. In the early days, we developed some infrastructure delivery products that were fairly successful, and then we were a technology company trying to license a mobile television technology to the operators. The operators really guided us there through their feedback. Since we launched MobiTV, the end-to-end solution has always been what we’ve done. We did all the technology development because there was literally nothing out there we could go buy to do it. We built the NOC and did all the hosting and operations, and at the time, none of the operators wanted to get involved in any of the content aggregation. They literally wanted an end-to-end service from the start.
So all of those three core components of our business have grown and matured as we’ve grown as a company. We’ve gotten even better on the technology and the pace of innovation. We’re better at hosting and managing and operating. And we’re also, with our growing subscriber base, becoming more successful and effective at aggregating content. We believe that means that an operator looks at us now and says, not only do you have the best technology, and not only do you have the most experience at hosting and operating, you’re also really good at acquiring content, because you have a subscriber base.
SP: Going to the other end of the value chain, what values does MobiTV bring to the table for content owners and developers?
Scanlan: That’s as important, if not more important, than what we offer to operators and the marketplace as a whole. We’ve helped the content community uncover and monetize new distribution methods.
When we first started the effort in mobile television and first went to all the big studios and content providers, you can imagine the reaction we got was pretty much, ‘That sounds stupid. We’re not interested.’ The blinders were still on to a degree. ‘Well, we’ve got our cable and satellite outlets. We don’t want to disrupt that money-making machine.’ The eye wasn’t on the future so much. Now people have started to realize this mobile TV thing really is taking off, and there are subscribers, and it’s incremental revenue for us. A whole industry has erupted around it, and whole new divisions within the content companies have been formed to take advantage of it.
The same thing is happening with broadband. Now that broadband access has proliferated, I would say there’s pent-up demand for consumption of truly high quality video. I still don’t think the broadband space, ironically, is quite there yet. There’s a lot of video content out there, but it’s mostly promotional or user-generated. That’s one of the things that MobiTV intends to change.
SP: How concerned are content providers now about cannibalization? They’re really persuaded that mobile and broadband fixed line is primarily additive?
Scanlan: Oh yeah. People aren’t going to stop watching television in their living room. They might change how they watch TV, like with TiVo and other forms of on demand. There are a lot of people focused on evolving and adding features to the living room television experience, and that’s great, and I applaud them. I’m looking forward to that.
But the biggest growth opportunity for television viewing is going to come outside the living room. You reach people at times of day or in locations where they just can’t get access to a television. Even with a lot of people adding more TVs to their homes, and you’ve got them in airports and other public venues, TVs are not really that widely deployed. Cell phones now – everyone will have one in their pocket. I would also argue that PCs are more readily available in whatever environment people inhabit than TVs are.
Now that you have all this wireless broadband access, with IP delivery of television to PCs and phones and anything else, and as operators like Sprint begin to deploy their 4G networks, we’ll see Wi-Fi broadband access anywhere to any device. I can watch TV on my laptop – that is TV, not the lean-in, clip-by-clip experience – while I pack to go away or wait at the doctor’s office or work in my garage. I don’t keep a TV in my garage.
I spend a lot of time in my house when I’m not in my living room, bedroom or family room. And often people want TV to be something that they do while they’re focused on eating lunch or doing something else, and broadband television today doesn’t offer that. There are no remote controls, and you’re required to be constantly engaged with it. Where can you go and watch live television right now for more than two minutes at a time on your PC? And then you have to search and start another clip.
I don’t want to wire every single room with cable, and usually my laptop is with me everywhere I go, and my cell phone is always with me. So there’s a huge growth opportunity in that realm. And I think most of the television industry believes it is additive, not cannibalization.
SP: And with truly mobile 3G and 4G we’re already starting to see some versions of the new portable TV devices that can get reception.
Scanlan: Right. It can be any kind of device. Last year, when we introduced our product for PCs, some people understood it, and a lot of people said, ‘What are they doing? I thought they were focused on mobile.’ And our attitude was that we really don’t see a big distinction between mobile and broadband. The reality is that by the end of this year, and for sure next year, you’re going to be looking at phones, PCs, laptops – all these different devices – and you’re not going to be able distinguish that one is wired broadband or wireless broadband. It doesn’t really matter. They’re all broadband connected devices. They’re all going to be connected to a network somewhere. They’re all going to have full color displays. And they’re capable of watching TV.
SP: In most cases, are content owners looking to you to digitize, encode and format for the mobile screens, and how will that carry over when you’re covering multiple screens?
Scanlan: That’s what we do today. For example, with any of our channels, say, Fox News, we take their feed from the satellite just like a cable or satellite operator would do. Then we ingest it and we transmit it out to probably over 150 different formats. That could be anything from a really old, slow phone on the old network to a broadband PC connected over a cable or DSL modem at more than a megabit per second, and everything in between. So as you start to see a proliferation of devices and screen sizes, that’s what our platform does, and that’s why we’re a valued provider for the content industry and for those carriers who have to support all these different devices.
SP: So you’ve had to work with dozens of handset makers and other consumer electronics industry folk.
Scanlan: Oh, yeah. Oh my God. It’s interesting, when we started looking at PCs, the market was like a cakewalk for us compared to the phone market. Porting to all the different phones and manufacturers, and they all have Java, but none of them are consistent. It’s a mess. Porting to every phone can produce a huge amount of overhead and investment. Now, thankfully, with Microsoft, for better or worse, for the most part you’ve got Macs and Microsoft. You hit those two, and you’ve pretty much got the laptop market.
SP: Also on the ingest front, you’re normalizing metadata across all the content from all your partners?
Scanlan: Yeah, on the ingestion side we do a number of things. One, as I noted, is picking off the satellite feed. We also go a lot further beyond that. We have our own playout facility where we create channels for our partners. For example, with NBC Mobile, they create the programming schedule, and we’re ingesting automatically all day, and we play it out creating the linear feed for them.
But there are a lot of rights issues for the content suppliers as they look at these new distribution mechanisms. So often they say, ‘We can’t give you our whole 24-hour feed; we can give you these 12 hours and these two hours and that hour. So we say, ‘Let’s create the new 24-hour channel. In some cases we may be recording it from the satellite, but also replacing parts of it with content we take through FTP or some other mechanism. So you may end up with a hybrid channel where, for parts of the day, it’s live, and for other parts it’s still playing out as live but we’re replacing, maybe, a live sporting event that they don’t have the rights to with some other content.
SP: So, as SAG and other Hollywood unions start to redraw the way they develop contracts to embrace these alternate distribution methods, would you expect that proportion of those 24 hours to grow as contracts work in mobile or PC rights?
Scanlan: We’ve already seen the trend in that direction. In our very early days, the amount of content that we could get for mobile television through cell operators was a sliver compared to what is available today. We’ve gone from trying to fill out a lineup with whatever we could get our hands on to literally not having enough budget to handle everyone and having to make tough decisions between really great channels. We’re seeing the same thing in the PC space in the early days. The type of content we’re going after, which is the live feeds, the crown jewels – not the promotional stuff they put on the Web site – we’re seeing the same evolution happening, and clearly a strong trend toward clearing more rights.
One of the other things we do, in mobile for example, we were very challenged to get rights for music videos through the traditional outlets like MTV, VH1, Fuse. We spent over a year working with them trying to help them get the rights from the music labels who were making it very clear that they hadn’t given anyone rights to deliver mobile videos. Ultimately, we went directly to the music labels, because mobile is our core business and was secondary to those guys with a huge business focusing on cable and satellite and lots of non-music video programming. We’ve now got all three of the major labels and a huge video library that is as big, if not bigger, than anyone else’s. So we program our own music video channels by genre with new brands that we’ve created for each genre. Those channels have been very successful for us.
SP: And by the way, any thoughts on Steve Jobs call for dropping DRM [digital rights management] on music altogether?
Scanlan: Fine with me.
SP: Since November, you’ve won investments from Adobe and Hearst. Why those two companies? And what are you doing with your war chest?
Scanlan: Adobe is very interesting for us because of the technologies that will help us in broadband and in mobile with their Flash services. With their deep involvement in new media, we’re looking forward to a great partnership there.
Hearst obviously is a very big, diverse conglomerate of media companies and media brands, several of which we’re already partnered with and want to deepen our partnerships with. So that was a logical fit.
As far as what we want to do with the money, we’re in the fortunate position of having been in the right place at the right time. We’ve found ourselves in a leadership position in a market that’s growing like wildfire right now. There’s an overwhelming amount of demand for what we do, and in just about every circumstance where we’ve pursued something, we’ve been able to create success from it, and we’re building on that success. Our operator and content partner expectations continue to get higher, so we need to grow and staff so we can deliver on those expectations.
We’re a pretty conservative company. We always have been. We started in the single worst time in the history of man to start a technology, telecom startup. We’ve always had the mindset, ‘Let’s keep it lean and mean,’ and we’ll continue to be lean and mean, but at some point in time we felt we were probably under serving the opportunity, and a lot of the market was agreeing and saying, ‘You guys are batting a thousand, so let’s keep investing in that.’
SP: So you’re scaling up a largely whole, or complete, technology platform and operations. It’s not so much new invention at this point?
Scanlan: Yeah, the $100 million that we raised isn’t going to be invested in some new avenue that we haven’t already addressed. It’s really kind of doubling down on the core business and continuing to deliver where we’re seeing massive amounts of demand. A portion will continue to go toward standards and other technology research to help us keep ahead of the curve. A big initiative is obviously securing our position as the leader in delivering WiMAX television.
SP: As your company name implies, you pioneered mobile on-demand video, and Cingular – soon to be AT&T Wireless – is a customer. Now you’ve fashioned an agreement with AT&T Broadband TV. How are user interfaces and user experiences going to get normalized across all those screens and environments? Do you supply some of that experience-normalization or consistency?
Scanlan: We invest a lot in the UI. We think UI is really, really important, for mobile, PC etcetera. We tend to think about TV viewing, including online video consumption, as browsing and watching TV. Our model and our UI are designed to mimic that experience. It might not be the same content. We may change the content for a particular experience, but our idea is to mimic the TV UI that people are familiar with at home. Our goal over time is to create a UI that might even be connected and networked with your TV experience at home, so that can have this uniform experience.
SP: So when I leave my home TV and roam with my portable device, I feel some continuity.
Scanlan: Exactly.
SP: You mentioned AT&T/Cingular. There’s also Verizon FiOS/VCast and the Sprint/cable MSO Joint Venture all pushing toward fixed/mobile convergence of not just connectivity, but applications and content. How can you facilitate that trend?
Scanlan: We announced our participation in the MSO JV with Sprint, so we are delivering the television content to their mobile subscribers. Verizon is a big target customer for us that we’d love to have. We currently don’t do any business with them, but we believe in this vision of television’s future, and there are a lot of big companies out there that share that vision. A lot of the reason we’re investing so heavily is that having deep, strategic partnerships with operators has been our model, and a lot of cool projects are coming in the future from that.
SP: Where you have a fixed/mobile convergence situation like AT&T/Cingular or the Sprint/cable Joint Venture, are you having to invest in IMS [IP Mulitmedia Subsystem] architecture for your hosting center for things like a Home Subscriber Server or Diameter-compliant application servers – the standards-based smarts to understand that Subscriber A is now moving from his TV to his mobile device or his broadband PC? Will your infrastructure need to talk to the networks to know where the subscriber is?
Scanlan: Our CTO would be a better guy to answer that question, but IMS is a term that we do talk about internally. Whether it’s IMS or some other derivative of IMS, there are a number of technologies that we’re developing and/or partnering with to create the unified TV experience where you would have that subscriber identification and you’d know where and what device they’re on. You’d be able to pick up and pause and resume what you’re watching on different devices. So that definitely is a part of what we’re planning to deliver to the marketplace.
SP: Given that you’ve gotten into live, as well as on-demand, TV over 3G and now 4G networks, what is your experience telling you these days about mobile broadcast versus on-demand and long- vs. short-form video and re-purposed vs. original video?
Scanlan: We believe there’s still a huge, huge horizon before broadcast is really going to be required. So we’re not in a panic mode for broadcast. What we do today is entirely unicast over mobile and over broadband. We see the industry moving in that direction long term. That’s fundamental. That will happen. I think that there’s a place and some unique opportunities for broadcast.
Primarily what we’re looking at is more of a multicast on demand. We showed this at CES as well in our WiMAX demo. We were unicasting content, but also through the same network showing broadcast. You would end up with some hybrid channel lineups that may vary throughout the day. During the Super Bowl, you obviously broadcast it, because everyone is watching that, and you’re still getting the advantages of unicast with everything else – unlimited channel capacity, interactivity, targeted advertising. In this vision, for the really high peak-usage type content, you have a way to deliver that to subscribers in an efficient manner, so that if there really is a huge concentration of subscribers on a single cell or part of the network, you have the multicast option.
You’re switching between the two seamlessly. You may deliver a newscast in unicast, and if a major news event happens and more and more people are tuning to that channel, then it can seamlessly switch to multicast.
SP: With programming like the Super Bowl, there’s an expectation of high quality, and we’re seeing broadband video quality benchmarks advancing, with more and more claims of DVD- and even HD-quality distribution. How do you see that evolving? And how important is to MobiTV as a competitive offering?
Scanlan: What we’re able to deliver today over a 3G network today is a pretty high frame rate – 20 to 24 frames per second – at a Q-VGA resolution. Now when MediaFLO launches, they’ll be able to deliver a slightly higher quality over their broadcast network, but because they’re going to be limited by their spectrum, any increase in resolution or picture quality means a decrease in channel variety. They have to create that balancing act.
If you look at WiMAX, which is right around the corner, launching late this year, if not early ’08, then we take a huge leapfrog beyond what they’re doing, where we can deliver HD quality TV over WiMAX on a per-subscriber basis, and it doesn’t affect our channel breadth at all. So we think there’s a slight advantage to broadcast in the near term, but then a huge leap to multicast on demand once you have bandwidth.
When you look at what AT&T and FiOS and others are doing, if you have enough bandwidth into the home – and obviously there are still some technology components that need to be resolved there – once you have it, there really is a very powerful tool. You can use all that bandwidth for whatever the user chooses. If they want to use it to power an HD screen on a laptop or download a 15-Megabyte DVD they’re going to watch later, you have this single network that is multi-faceted in what it can do. We think that’s powerful for network operators.
SP: You also showed interactive advertising, commerce and community applications at CES. How crucial is interactivity to success for your partners?
Scanlan: Interactivity engages the subscriber, and it’s particularly powerful for us for advertising and e-commerce or m-commerce. We’re looking at more subtle forms of advertising. Imagine you’re watching one of our music video channels. We program those channels, so we know exactly what video we’re playing. We can offer to sell you the full track download, the ringtone, screensaver – whatever it is. With single clicks, you can purchase that content from either the operator or a third party.
SP: And on the advertising front, there’s a strong push for new, more precise kinds of measures that, in a lot of cases, would be predicated on interactions by the user.
Scanlan: Yeah, and think of how compelling it gets when you combine it with location-based information. One of the applications we’re talking about is you’re watching a fast food restaurant commercial, and in the space below it tells you where the nearest location is, and you can click to get a coupon for a sandwich or something. We run that during the dinner hours and make it instantly redeemable. That can be pretty powerful.
We have a demo in our headquarters that extends that to multiple networks and screens. You may have showed interest in a Jeep ad through your mobile phone, and when you return to your PC, we’ll remind you of that and offer you a long-form video showcase of that vehicle over broadband.
SP: One last question: Any particular trends or tripwires especially keeping you vigilant?
Scanlan: I don’t see any tripwires. Just staying ahead of the content licensing game and being smart there, and thinking multiple platforms, rather than one is important. Trends: I think we can expect to see people consuming more television. Not less television in their living room, but more television outside their living room.