MobiTV, which streams TV signals and digital radio to wireless phones and other devices, said on July 12 that it had raised $70 million in venture financing from Oak Investment Partners. As part of the deal, Bandel Carano, a managing partner at Oak, will join MobiTV's board of directors.
The money will be used to help fuel the company's already-fast growth. MobiTV, based in Emeryville, Calif., had 1 million paying subscribers in April, twice as many as it claimed just six months earlier. "We plan to use these funds to provide even more television content on more devices, across more networks, and in more countries around the world," said Phillip Alvelda, chief executive, chairman, and co-founder of MobiTV, in a statement.
The seven-year-old, privately held firm distributes its products by working with wireless phone companies such as Sprint Nextel (S), Alltel (AT), and Cingular, which is owned by AT&T (T) and BellSouth (BLS). The company also has distribution agreements with Canada's Telus (TU), Canada's Rogers Communications (RG), and Latin America's America Movil (AMX). In Europe, it has deals with three, a wireless service owned by Hutchison Whampoa (HTX), and Orange, which is owned by France Telecom (FTE). The service can be distributed over WiFi networks as well.
GETTING OUT IN FRONT? Subscribers typically pay a monthly subscription fee of $9.99 for a selection of 50 channels. They can choose from news channels such as MSNBC and C-SPAN to entertainment channels such as iFilm and student-produced video at Varsity TV. Special-interest programming ranges from comedy to anime, the Japanese style of animation.
Bruce Gilpin, chief strategy officer and acting chief financial officer, says the market for mobile TV and video, while significant, is still in its early stages. He says MobiTV plans to use the money from Oak to help develop the market, by ramping up its investments in research and development and by hiring additional sales and marketing people. "History shows that early leaders in tech markets often establish a long-term niche," he notes.
MobiTV has plenty of competition in trying to take the early lead. Cingular also offers its own service, Cingular Video, which is designed for faster 3G networks. It's a download service that includes full-length episodes of TV shows such as HBO's Entourage. "Mobile TV is finding acceptance in the market," says Jennifer Bowcock, a Cingular spokeswoman. "Our customers are really excited about the content." Cingular video includes Disney (DIS) programming and made-for-mobile video content, such as a miniseries developed by the Entourage producers.
GROWING CONSUMER DEMAND. MobiTV's Gilpin says the demand for mobile TV is growing faster than some might have expected. That's because faster networks and new devices with better screens and more powerful processors are making the experience of mobile TV more compelling (see BusinessWeek.com, 5/16/05, "Multimedia Phones").
The medium has a long way to go, though. The percentage of wireless phone customers who use their devices for watching TV or exchanging video is miniscule. By and large, people still prefer to use their cell phones to make calls or send short text messages (see BusinessWeek.com, 5/16/05, "GQ Magazine Sends a Message"). And watching longer-form video can be tricky, because it's broken into shorter clips.
Still, the interest in viewing video on small mobile devices appears to be growing. The video iPod from Apple Computer (AAPL) has found acceptance among consumers, who download video at iTunes. It's increasingly common to see commuters viewing video on phones, iPods, and other small devices as they ride the train in cities such as New York (see BusinessWeek.com, 5/23/06, "Motorola's Zander Looks Beyond the Q").
The most important part of the Oak investment may be the boost it provides to research. "Now we're really positioned to make a serious technology investment," Gilpin said. That investment, leading to continued improvement in the customer experience, will be critical to the mainstream adoption of mobile video.
Rosenbush is a senior writer for BusinessWeek Online, based in New York
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