Dial M for Mobile

October 2006

As more and more viewers in Europe are watching TV shows and other content on their computers and mobile phones, a slew of companies are taking advantage of this trend.

By George Winslow

Mobile phones, computers and TV remotes all came together in the U.K. this summer, with the launch of MTV Flux. The online site, which MTV is billing as the next generation of cross-platform interactive content, allows users to build their own personalized avatar, an animated figure with the ability to walk, talk and even show emotions. The animated figure, which becomes the user’s online identity, can then be controlled with a mobile phone, computer or TV remote. Over time, as avatars interact with each other, the online community will develop into a new kind of TV channel—one that is completely controlled by viewers.

“In launching MTV Flux, MTV is challenging the status quo in TV programming and transferring control directly to its audience,” claims Angel Gambino, the VP of commercial, strategy and digital media at MTV Networks, U.K. and Ireland.

Such pronouncements are increasingly common these days as media companies work overtime to push their content onto as many platforms as possible, creating a new generation of content for mobile phones and the Internet that will allow users to access television programming whenever and wherever they want.

In Europe, a lot of the action has been focused on mobile devices, thanks to their ubiquitous presence in the region. In the first quarter of 2006, Europe had more mobile handsets in use than people, with about 455 million mobile handsets in Western Europe and 287 million in Central and Eastern Europe, according to World Cellular Information Service.

The online world is far smaller. About 59 million Western European households (that’s some 37 percent of all homes) and 6.8 million households in Central and Eastern European (a mere 7-percent penetration rate) are currently connected to a high-speed Internet service, PricewaterhouseCoopers estimates.

But Internet advertising is growing rapidly, as are broadband connections, and both broadcasters and content holders are also pushing rapidly into the broadband-video sector. PricewaterhouseCoopers estimates that in 2010 there will be nearly 95 million broadband homes in Western Europe, a 58-percent penetration rate, and Internet advertising will top $14.1 billion.

VOTING FOR MOBILE

The push into mobile and Internet applications is, of course, nothing new. For years, format companies have been pulling in large revenues from mobile users calling on pre-mium phone lines to vote on reality shows. Many reality shows have also featured live feeds on the Internet.

Endemol, for example, streams a live feed for Big Brother over the Internet and on mobile phones in a number of markets, and it has offered reruns of some of its soaps on mobile phones. “This has worked very well for mobile operators because they can use famous TV brands to drive users to new devices and their mobile TV offerings,” says William Linders, the executive director of digital media at Endemol International.

Likewise, FremantleMedia offers a wide array of content for mobile devices and Internet users for its big formats like Idol. “Applications that allow users to interact with our formats by voting, playing games or texting have long been important,” notes Claire Tavernier, the senior VP of interactive and senior VP of licensing for the U.K. and Germany at FremantleMedia Licensing Worldwide. “What’s new is that we are now working to extend the entertainment experience beyond the broadcast window so that people can watch the show on TV and then access additional footage on mobile or go online and participate in communities. We want them to be interacting with our shows on other platforms and not just passively watching them on TV.”

Many broadcasters, cable networks and major studios have also been making a major push into the mobile and broadband space during the last two years.

Channel 4 rolled out a WAP (Wireless Application Protocol) site in May of 2005, and in November the broadcaster created a channel for mobile. It features programming from Channel 4 that has been edited to fit on the smaller screen and cut down to 3- to 7-minute episodes, notes Riccardo Donato, the head of telephony and business development at Channel 4 New Media.

The channel is available by subscription in the U.K. on such operators as Vodafone and Orange, but Donato hopes that it will eventually be able to develop a more robust advertising model to finance the operation. “There is a huge amount of interest in mobile among advertisers, but it is early days,” he says. “There is very little reporting of usage and we don’t want to do things that will upset the user.” As a result, Channel 4 only shows a brand logo from a sponsor for three or four seconds before a 90-second clip.

ITV is also getting more aggressive in the mobile space. In August it announced that ITV1 and ITV Play (a digital channel that allows viewers to play interactive games) will be streamed on mobile operator 3, allowing 3.5 million U.K. customers to watch the services on their mobile phones beginning sometime this fall.

Granada, too, has also been experimenting with original con-tent for mobile phones, according to Martin Blakstad, the head of new media at Granada International. To promote the ITV comedy All About George, it created a series of original mobisodes. “It was a very effective brand extension,” Blakstad says.

The market for downloading clips, however, is still relatively small, notes Blakstad, and revenues from calling premium numbers to vote on game shows and reality shows remain much larger. “The majority are still using mobile phones for voice and data,” he says. “The level of usage for video isn’t as big as it was forecasted to be a few years ago.”

SBS Broadcasting, which already has extensive mobile and web offerings in Scandinavia and the Benelux, is also expanding its mobile and online operations, says Thomas Houge, the head of new media at TV Norge.

In Norway, for example, the company is making both the entire channel and specially edited clips available to mobile-phone users. The first episode of Big Brother was watched by about 15,000 people, which is approximately 8.8 percent of the 170,000 users who can watch the channel on their 3G phones, Houge notes. “It shows that if you have the right content, you can attract users,” he argues.

The clips are typically sold on a pay-per-view basis, but SBS has also offered a sponsored two-minute mini-episode of its most popular show, 71 Degrees North, for free. The experiment generated ten times more revenues than the clip would have if SBS had charged users on a pay-per-view basis, Houge says.

“It demonstrates the potential of ad-supported mobile content,” he states. “As a broadcaster, we know how to give people what they want to see and how to maximize audiences for advertisers. That will make ad-supported mobile content very important in the future.” Already, he adds, “all of the major Scandinavian companies are very active in mobile marketing.”

On the Internet, SBS is also offering all of the shows for which it has online rights in Norway, Sweden and Belgium. The company’s biggest initiative, however, is an effort to coordinate all of its new-media activities. It is currently revamping all of its mobile and Internet offerings to facilitate that cooperation.

One key advantage of a coordinated strategy, Houge argues, is that SBS could negotiate company-wide deals for programming or carriage on mobile operators. Sponsorship opportunities in several markets could also be bundled together, allowing it to offer major advertisers like Coca-Cola or Pepsi larger audiences. “In some countries we are already reaching a critical mass and we’re starting to see revenues really start to pick up,” Houge says. “Most of the SBS stations are seeing their mobile revenues double each year.”

But getting high-profile content from the major studios and other big content owners remains an important issue. “I understand that the big studios are saying that the market is so small that they want revenue guarantees to cover their costs,” Houge says. But all too often that means the deal doesn’t get done. “If we can’t get the right content, the market will develop much slower than all of us hoped,” he says.

The Hollywood studios, for their part, seem much more willing to license their content than they were even a year ago. Just this summer, several studios announced major deals to make their films available on broadband. In Germany, for example, maxdome, an Internet portal that offers film and TV content on a subscription or pay-per-download basis, has inked deals with NBC Universal, Buena Vista International Television (BVITV), Sony Pictures Television International (SPTI) and Paramount Pictures. The site is owned by ProSiebenSat.1 Media, and also contains content from the company’s various networks. As part of the deal, BVITV has even agreed to make popular series like Lost and Desperate Housewives available on maxdome up to one week before they air on broadcast TV in Germany.

Sony has also been ramping up its mobile and broadband Internet sales. Jason Wells, the senior VP of mobile entertainment for SPTI, notes that the company has launched its AXN channels on mobile in Portugal and Germany and has done a number of content deals, including one in Italy in which the mobile phone operator 3 offers entire movies on a pay-per-view basis.

The idea that viewers would want to watch an entire movie on a mobile handset goes against the conventional wisdom that mobile users only want to watch short clips. But Wells says that he’s seen “a huge amount of usage.”

“It is all about the context,” Wells says. “There are times when a person just wants to see a three-minute clip and there are other times when they might be sitting in a train and want to watch a whole movie they’ve downloaded.”

Sony is also very active in using mobile clips to promote the release of movies and DVDs. With The Da Vinci Code, for example, it developed a wide array of ring tones, wallpapers and games. “For theatricals we are now producing a full complement of mobile content that we take out to the market as a package,” he explains. “It gives the mobile operator something to promote and it helps us drive consumer interest.”

Mobile properties tied to existing theatrical or TV content are also playing a big role in Twentieth Century Fox’s strategies. In addition, the company is planning on making some of its channels in Italy available on mobile. Currently, however, most of its activities are tied to theatrical or TV content.

“The carriers want known brands,” says Leighton Webb, the former VP of international wireless at Fox Mobile Entertainment, who in September became the senior VP of content strategy and licensing at the mobile entertainment company I-Play. “They are less interested in something that doesn’t have a film or TV tie-in. When a big film comes out, they want games, wallpaper, ring tones and custom content that they can really get behind and promote.”

For the upcoming film Eragon, for example, Fox has licensed to Vivendi Games the rights to produce games connected to the film. When the film is released simultaneously around the world in December, users will be able to play those games, buy wallpaper and ring tones and view a trailer.

No decisions have been made yet on what kind of custom content or video clips will be used, but in the past, Fox has sold premium content tied to such films as Robots and Kingdom of Heaven. The company is not just looking to promote the product; where possible, it aims to bring in some additional revenues.

Fox is also aggressively licensing original web content that has been created around the studio’s television series. It has licensed 24: Conspiracy mobisodes—based on the TV series 24—to such carriers as Vodafone.

And Fox is exploring the idea of selling the mobisodes based on Prison Break that were launched last year in the U.S. The Prison Break mobisodes were sponsored in the U.S. by Toyota, and the company expects to be lining up more sponsors for both mobisodes and games.

The popularity of games tied to television programs is helping power the mobile-entertainment outfit InfoSpace’s expansion into Europe. Stephen J. Davis, who was named president of mobile media at InfoSpace last fall, notes that the company already has one of the world’s largest mobile libraries of music, games, graphics and information applications, and that it has “45 percent of the ring-tone and mobile-game market in the U.S.”

Given the relatively small market for streaming mobile video, InfoSpace will be concentrating on those categories in Europe, drawing on the fact that it owns three game studios. But, Davis says, “there has been a tremendous proliferation of 3G devices” in Europe and it is also building alliances with broadcasters. “We will have some major announcements around the time of MIPCOM,” he says.

Several pay-TV operators are also getting into the game, becoming potential partners for content players trying to expand their mobile businesses. Working with Vodafone in the U.K., BSkyB has set up its own mobile service, Sky Mobile, which offers a variety of TV channels. And in France, Canal+ has inked deals with several operators to supply content.

More could be on the way, as cable operators begin offering their own mobile services. Earlier this year, NTL in the U.K. acquired Virgin Mobile, and this fall it will be offering a “quadruple play” of video, Internet, phone and mobile-phone services. Recently, NTL also acquired broadband rights to clips from football matches and has indicated that it will be aggressive in acquiring sports and movie rights to more broadband content.

NETWORKS GO MOBILE

These wireless plays are opening up opportunities for cable and satellite networks. Discovery Networks Europe, for example, has launched mobile versions of its channels in seven markets in Europe, including the U.K., where it is on Sky Mobile. The mobile channel, which consists of a two-hour loop of edited content, is consistently the number-one factual channel on Sky Mobile, notes Melanie Honnor, the VP of new-media business development for Discovery Networks Europe.

In addition, Discovery has rolled out broadband-video services in Europe, where full-length episodes can be downloaded to a PC for a monthly subscription fee. Typically, at any one time, users can access 160 to 200 hours of content selected from about 3,000 hours of programming.

“We’re using it as a way to help viewers get a better experience and to give them access to programming that isn’t necessarily on the channels,” Honnor says.

E! is also expanding its mobile and broadband activities. This year at MIPCOM, the company will be launching its “E! Everywhere” cross-platform initiative, says Kevin MacLellan, the senior VP of international at E! Networks.

MacLellan notes that the company is already in several mobile markets, including New Zealand, Australia and the U.K., where it offers a two-hour loop on Sky Mobile. E! has also been a major online player in the U.S. with The Vine, a broadband platform.

In recent months, E! has been investing heavily to edit its content into forms that would work well as DVD extras and on mobile and online. “We’ve decided to bite the bullet and invest in it,” MacLellan says. “We have 60 people working on this effort.” Initially, E! plans to have two hours a week of new content, and will eventually expand that to four hours a week.

MTV has been pursuing similar cross-platform strategies for some time. “Our target youth audience spends a lot of time on computers, the Internet and mobile phones, and we want to reach them where they happen to be,” says Gary Ellis, the VP of content and operations for MTV Networks International’s Digital Media group.

To that end, the company has deployed mobile-phone versions of its channels in a number of markets and has a production team in London that produces about 20 short segments for an hour-long loop that is available on Vodafone, T-Mobile and other operators in the region. “We are consistently one of the Top 5 on every operator,” Ellis says.

In the U.K., MTV has two mobile channels: MTV Snax, which features shortened versions of original programs, and MTV Trax, which has music and music videos. In the rest of Europe they are called MTV Shorts and MTV Music, respectively.

In Germany and the U.K., MTV has also launched a broadband product called Overdrive, with plans to expand its reach to the Nordic territories and the Netherlands in upcoming months. It has also experimented with some original mobile content, including a show called Head & Body that was sponsored by Motorola and Wulffmorgenthaler, a series of 20- and 30-second cartoons that launched in June.

Zonemedia, which offers a number of cable and satellite channels, set up its own mobile division earlier this year and now offers Zone Reality and Zone Horror, both as TV channels and as clips to operators, according to Tanya Gugenheim, the chief business-development and new-media officer for Zonemedia. The company is also in the process of commissioning a series of horror mobisodes that should be ready for Halloween this year.

But the big established TV brands aren’t the only ones developing mobile channels; companies such as the TV programming and formats provider ohm:TV have, too. Hans Spielthenner, the managing director and co-owner of ohm:TV, has worked with content creators to launch four different channels for mobile-phone operators. These include Shortz!, which features short films, and mango TV, a gay and lesbian lifestyle channel. Content for both channels is produced by a Barcelona-based company, mango TV mobile, and distributed exclusively by ohm:TV.

Spielthenner expects to launch five or six more channels in the next couple of months, including ones that target specific immigrant groups in Europe. He believes that there is a promising future for operations like his that are not tied to traditional TV brands because all of their content is specifically targeted to mobile TV audiences. “If you have content for TV and just cut it down, it will not work on mobile,” he argues. “It is important that you have content that has been created so that the story can be told in a minute or two. Mobile is a separate medium. You have to offer something that will work in that medium.”

So far that strategy has paid off. The company acquires content from outside companies and then puts together channels for operators. Typically, ohm:TV gets a flat monthly fee from the mobile providers. It splits subscription revenue with them and keeps all of the advertising revenue it can get. Currently, all of the channels are profitable, and all of the ones it launched last year have been renewed.