Is there a market for feature-length films on the phone? I put the question to Tomas Gewecke, new President of Digital Distribution for Warner Bros., at the MEFCON conference last week.
You’d think, by the audience reaction, that I just confessed to running over his dog.
Warner cut a deal recently with Sprint Nextel Corp., where they’re placing selected films on the Sprint Movies deck. Stopping short of revealing numbers, Tom was enthusiastic about the growth prospects for this category. His colleague, Maria Seidman, said that Warner Bros. has seen “incredible results” from the Sprint deal.
And that’s when the crowd kicked in.
MEFCON had a text-to-screen setup for Q&A, and posts starting going up in the flavor of, “I can’t believe people are still asking that question!” and “Mobile is the biggest platform!”
Well, to the second point, yes it is. As Tom put it, “The installed base of video-capable phones will continue to be the single largest platform on which a consumer can watch video.” But let’s look at the carrier business model.
Mobile operators are in a pickle right now: Voice is a flat-to-declining business, and the growth curve for SMS is flattening out. So naturally carriers are looking to push data services–which aligns well with the emergence of the consumer-focused smartphone (inspired by so many teens texting, and all of the Web surfing happening on the iPhone).
With an a-la-carte model, though, it gets way too expensive for non-business mobile users. So now you’re seeing $99 all-you-can-eat plans (mainly for voice and text, but some now with data), which I think is a fantastic way to package it–fostering necessary growth in key areas like mobile search and location-based services (LBS).
But here’s the catch: In putting a cap–and a low cap at that–on pricing, you need to strictly limit the amount of data that actually gets tapped by users. Otherwise the network will get too “heavy,” and performance everywhere will lag. After a point, in fact, the carriers will start losing money if network operating costs start outstripping the revenue generated by that usage.
Now consider a feature-length film being streamed. That’s a massive amount of data being transferred. To make it work, you need a strong signal and really good network speed. Given today’s mobile infrastructure, how many people can realistically be doing this at once and have the network be able to support it?
Of course, if you can get the movie you want on your phone as part of a plan you’ve already paid for, you’ll forgive the tiny screen. (And even then, I’m still not persuaded there’s enough hour-and-a-half commutes out there for this to really take off). But, to scale up, you’d have to be paying box-office prices, if not more, to get a teeny-tiny version of Speed Racer on the phone. And isn’t half the value of movies today in all of the special effects? How big can a bang really be on a RAZR? (Plus most phone batteries would die well before the last explosion).
No, in the medium- to semi-long term, it’s still going to be all about short-form content. The phone is great for sports highlights, news clips, and little “snack video” features. Heck, that’s still the bulk of video consumption online–where bandwidth is no longer the main issue. And this is the kind of content all these new “micro-networks” are churning out, and where branded entertainment is playing…
Anyway, I think this scenario shows how amazingly complicated the mobile space really is. Trying to get content creators to work with carriers, to align with handset makers, to accommodate application developers, to leverage off-deck publishers… It’s a mess.
But I guess that’s why I still get to ask stupid questions.
