BBC: Current Mobile Video Business Models Not Sustainable

Barcelona—With the keen interest in content for mobile video, now that many of the technology hurdles have been addressed, some speakers at the Mobile World Congress this week have focused on uniformity of content creation, licensing and technology models.

The BBC's Peter Mercier, who heads the mobile arm of BBC Worldwide’s Digital Media Division—the new media arm of the British Broadcasting Corporation—warned that the current business models for licensing of content for mobile video aren't sustainable.

BBC Worldwide's sales in the 2007 fiscal year were around $1.6 billion, but mobile services, including web sales and video on demand, accounted for only $2.4 million of total revenues.

"As a content owner," said Mercier, "we have significant costs in terms of rights and production to cover the provision of mobile video content. As long as the market is expecting us to do deals based on no-guarantee revenue share, and expecting to use widely known content brands in order to build these new [mobile video] platforms without adequate compensation for the value that these brands bring to the table, then it's just not going to be economic for us to really invest in this market."

Another attendee, who asked not to be named, told me that BBC Worldwide is also exploring ad-funded content models, in part because the previous model—prior to Mercier coming on board—required deals to be a minimum of $400,000 and there weren’t many takers.

"That minimum dollar amount just wasn’t sustainable for early mobile TV and mobile video startups as they sought to build platforms," said the attendee. "There has to be some middle ground between high guaranteed revenue to the content owner and no guaranteed revenue."

Possible EC Mandate
From the government's standpoint, several issues are at stake here. Viviane Reding, the European Commission’s commissioner for information society and media, accepted an invitation to speak at this year's Mobile World Congress as a follow-on to her comments last year at CeBIT in Hannover, where she said that if the industry did not agree on a standard mobile TV and mobile video delivery model, she would impose one for them. Reding said she feared that Europe risked losing a chance to be a global player in the burgeoning mobile TV market.