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TV-for-phone content seen as having big future

Knight Ridder - Wednesday, October 05, 2005

Chicago Tribune

By Eric Gwinn and Mike Hughlett

http://www.menafn.com/qn_news_story.asp?StoryId=Cq0npWeicq1bulvrwlu1pqKLmrq

CHICAGO _ Kelly Hoffman wants to make you a video star. The Austin, Texas, entrepreneur will take your funny video short _ as long it's not raunchy _ and prepare it to be viewed by teens across the nation, at no cost to you.

Hoffman's fledgling Varsity Media is not the only company searching for video clips. Media giant Sony Corp., through its AcidPlanet.com site, is running a contest for the funniest short video.

Those companies and a host of others are looking for fresh content to distribute not only on television and on the Internet, but also on video's next frontier: The mobile phone. Analysts see mobile TV, in its infancy, as a major market within a few years.

"You want to look at the type of viewing that a consumer might want a phone for," said Bill Taylor, a director of product management for Motorola Connected Home. "People will watch sports highlights or news. You might not want to watch `The Godfather' on a 3{-inch screen."

The new format's success will depend on whether entertainment companies like Sony, teamed with carriers like Verizon Wireless, are able to generate programming that phone users will be compelled to buy.

News updates, sports highlights, music videos, snippets of jokes _ this will be standard mobile phone TV fare. "Things you can easily dip in and out of and snack on," said Jessica Sandin, a mobile content analyst for Informa, a research firm in London.

Varsity Media hires teenagers to produce short soap operas, travelogues and other shows aimed at young viewers.

"Teens are responsible for influencing over $400 billion a year in consumer spending," said Hoffman, the company's chief executive. "There are 33 million teens in the U.S."

Sports entertainment giant ESPN plans to repackage much of its TV, radio and Internet material for an ESPN mobile phone to be market-tested this year. ESPN will pay Sprint Nextel to lease its network to carry sports highlights, scores and interviews to a phone made by a contract handset manufacturer.

Manish Jha, senior vice president for ESPN Mobile, says repackaging TV and Web content for the phone means resizing graphics for the small screen and using highlights with close-up shots. "On a small screen, the wide shot doesn't work."

The challenge is for "the carriers and the entertainment industry to keep things fresh," said Lindsay Notwell, executive director of Midwest marketing for Verizon Wireless, which launched a video service, V Cast, earlier this year.

Mobile TV is part of a larger transformation of television. The living room will continue playing host to the most-watched TV screen even as the personal computer increasingly becomes a video viewer.

The third screen will belong to the mobile phone. It could become to video what magazines are to print media: a portable way to get news and entertainment in a dentist's office, airport waiting area or anywhere downtime occurs.

Or as Verizon's Notwell put it, "When you are standing in line for lunch, (with mobile TV) you can kill time, instead of waiting in line annoyed."

Verizon unveiled V Cast in February on the VX8000 phone made by South Korea-based LG Electronics. It plays 15 frames per second, a rate less than broadcast television's 24 frames per second.

In a test, the video played smoothly over Verizon's new network, which has been upgraded for faster transport of video and other data. Recently, Verizon replaced the VX8000 with the LG VX8100 and added the Motorola E815.

While Verizon won't disclose how well V Cast has fared so far, a Motorola executive said the E815 _ which is available only through Verizon _ has been a hot seller. "I'm losing sales because I can't make them fast enough," said Ron Garriques, president of the wireless phone division of Schaumburg-based Motorola.

Verizon's V Cast-equipped phones cost $100 to $150, after a $50 mail-in rebate. The service costs $15 per month and includes news from CNN, sports from ESPN and weather and entertainment programming.

All of the content is delivered in snippets of 30 seconds to five minutes. It isn't live, but it's updated about 300 times daily, Notwell said. V Cast subscribers can also buy premium content for 99 cents a pop, including music videos and five-minute "mobisodes" of "24" and other TV shows.

Sprint Nextel, which launched video service in August 2004, has a different model. Subscribers pay $4 to $10 per month for a channel. The carrier offers more than 20 channels, covering news, weather, sports and entertainment.

Like Verizon, many Sprint Nextel channels offer recorded clips. Sprint Nextel's Fox News is live, while MSNBC News channels are recorded.

For the most part, Sprint Nextel service is not available on a faster network like Verizon's. But the company says it will be early in 2006.

A high-speed network is important for success, analysts say. Without it, mobile phone TV "turns into live radio with a slide show attached," said Roger Entner, a wireless analyst at Ovum, a market research firm. With it, mobile video "suddenly starts to resemble television."

Mobile video is further along in Europe, and even more so in Asia. But it's still in its nascent stages overseas too. Most European wireless carriers get at least 20 percent of their revenue from data transmission, but almost all of that comes from text messaging, not video, Sandin said.

Europe and Asia might be more amenable to mobile phone TV than the United States. That's because public transportation is much more popular for commuters in Europe and Asia _ and bus time or train time is prime time for mobile video, said Hugues de la Vergne, a wireless phone analyst for market researcher Gartner Inc.

In the United States, public transit is significant only in cities such as Chicago and New York. "Most people are behind the wheel of a car," de la Vergne said. "They don't have as much down time to occupy themselves with mobile TV."

Thus, de la Vergne sees "mixed" prospects for mobile phone television in this country.

Other observers, though, are more encouraged.

"I think there is a huge market for this," said Albert Lin, an analyst with American Technology Research. "One of the hallmarks of our time is to pay for video content," be it for satellite television, a video recorder or a ticket to a movie.

Still, mobile television will face hurdles. In the short term, Verizon's service will need more video content to keep people occupied, Lin said, and in the longer term, video must prove it can be a profit center.

If carriers can't make much money from video, they will have less incentive to offer phones with TV capabilities. Video is probably producing little if any profit for carriers today, and that must eventually change, Lin said.

He also expects that as mobile video catches on, the technology to deliver it will change. Currently, video signals move through a carrier's cellular network. But eventually, those signals will be broadcast.

Broadcast systems for mobile phones are being developed, including one project from Qualcomm that's aimed at the UHF radio band.

Why the switch to broadcast? Cellular networks are already becoming crowded with voice and data; video will hog even more space, or "spectrum," as it's called in the wireless world.

Broadcasting, on the other hand, uses spectrum much more cost effectively, analysts say.

John Bucher, a telecom stock analyst at Harris Nesbitt Burns, agreed that mobile video's future lies in broadcasting. However, wireless operators like Verizon and Sprint will likely remain the main deliverers of mobile video.

"Carriers will still be a key part of it," Bucher said. "They control the distribution of devices."

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(c) 2005, Chicago Tribune.

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