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Q & A: Ray DeRenzo, MobiTV’s SVP of product, programming and marketing: An update with the company that counts 5M customers, $100M in VC funds

Wireless video services and trials are spinning their wheels all over the world, but MobiTV Inc. somehow continues to gain traction. The Emeryville, Calif.-based firm has parlayed $100-plus million in venture capital into an impressive, 5-million-strong subscriber base. We chatted with Ray DeRenzo, MobiTV’s SVP of product, programming and marketing, about consumer demand for on-the-go video, the threat of bogged-down networks and the potential impact of a widening recession.
RCR Wireless: There’s been a lot of talk about the potential network hazards of increased uptake of data services, particularly multimedia offerings. How big a threat is network overload in the immediate future?

DeRenzo: This is the persistent question in the life of MobiTV: What is the impact on the network when large numbers of individuals tune in? I think we’re very sensitive to that; we’re very aware of that. But the reality is that we have yet to encounter any kind of load issues that have caused any type of service degradation. I think there’s a little bit more of a concern about what could occur, as opposed to acknowledgement about what is occurring.
Granted, when you have a live sports event, you see signal spikes in the overall usage of MobiTV. Our greatest spikes have been centered around live breaking news, live programming of presidential debates, election night coverage – event-driven programming. But at the end of the day we’re still not at the point where we’re seeing the load being hugely impactful on wireless networks.

RCR Wireless: But that’s sure to change if and when mobile video really catches on, especially with increased consumption of Web-based multimedia. How does MobiTV plan to handle network-overload issues as viewership ramps up?

DeRenzo: We’ve actually built capabilities into our platform and clients that make us network-aware. Beginning in the first half of 2009, if you’re in a Wi-Fi area, we’ll be able to shift the traffic seamlessly from in-band unicast over to Wi-Fi (on enabled devices), so you get the benefit of the Wi-Fi network. We also have trickle-casting, which can deliver to a device during off-peak hours (for viewing later). On one hand we’re building technologies that allow us to extend and deepen delivery on 3G networks, and then we’ve created technology that allows us to seamlessly toggle between 3G and 4G (as 4G networks come online).

RCR Wireless: MobiTV recently confirmed that it is a member of the Advanced Television Systems Committee, a nonprofit standards organization that has announced its approval of the Mobile DTV specification as a “candidate standard.” Why back another technology in addition to cellular networks?

DeRenzo: We have a philosophy: Deliver the most compelling user experience. Don’t start with technology; focus on what you believe to be the best user experience. And the natural conclusion is that it requires a blend of technology types. A football game is a time-bound event, and people want to watch that live. In a circumstance like that, the optimal delivery would be broadcast technology. It takes the load off of cellular networks and puts it on ATSC or (Media)FLO. But then a music video with interactive elements where you can get information on an artist, purchase a ringtone, chat with the artist, those types of things are inherently best delivered using the in-band spectrum of wireless operators, because there’s a return path. . We have long been proponents of this hybrid approach.

RCR Wireless: To what do you attribute MobiTV’s success in light of a seemingly tepid demand for on-the-go video?

DeRenzo: We make it very easy for people to discover and engage MobiTV. The MobiTV app is preloaded on the device, the user interface is known and familiar, people know how to watch TV, and we’ve assembled a pretty compelling programming lineup. But what distinguishes us from others is that we are on hundreds of devices. You don’t have to purchase a new device to watch TV.

RCR Wireless: MobiTV’s success notwithstanding, premium wireless video services around the world seem to be struggling – or worse. If there really is a large number of consumers willing to pay for mobile video, why have so many trials and beta services failed?

DeRenzo: I think with some of these trials what happened is that there may have been some false positives. In Europe they basically kind of did these DVB-H trails that were almost encouraging people to view; they were creating a behavior that was an atypical behavior. People had to fill out daily viewing logs, they were sending messaging out to people, calling people on a regular basis and asking how the experience was.
I think they had a lot of false positives around consumer behavior, then when they launched in Italy, for instance, they still required you to buy a new handset. The number of DVB-H-capable handsets were limited, so people had to buy new devices to participate in the TV-viewing segment. That dampened some stuff, and then there was the actual experience itself: networks weren’t fully built-out, so they created almost these islands of viewing. I think all those factors contributed to a less-than-stellar adoption of services.
Here in the U.S., as networks have gotten better, as 3G networks have rolled out, devices have gotten better with higher-resolution, larger screens, and content has gotten better. So adoption and use have kind of grown dramatically.

RCR Wireless: It seems that a lack of on-demand offerings have hindered uptake of video on mobile, where traditional programming schedules may not be practical. Do you agree?

DeRenzo: I absolutely agree, although that’s contrary to what you see on the service today. We do offer both, but the great preponderance is live, linear programming. But I think you’re absolutely right, and that’s a direction we’re heading in.
When we launched MobiTV about five years ago, we kind of learned from the lessons of the mobile Internet. When WAP was being introduced, people went in and engaged with WAP services, and they said, ‘I don’t know what this is, but it’s not the Internet.’ So when we launched we made it just like your cable television experience at home. We consciously did that.
I think the future of mobile video is shifting from a television model to something that is a highly personalized model, where you select the content that’s most interesting and relevant to you. With Mobi4Biz (a new service aimed at specific vertical markets), the innovation is that we combined live, linear programming with video-on-demand. Video-on-demand content is personalized; you create a watch list of companies you’re interested in following. I launch the app and it calls up video-on-demand thumbnails: Here’s three new stories.
You can extend that to a sports app. You can basically be very specific about the types of content that are available to you. We see this transformation going from linear into something that’s much more relevant, personal and immediate.

RCR Wireless: MobiTV’s service is beginning to be included in some flat-rate data plans, eliminating the need for consumers to sign up to receive wireless video. What kind of differences in usage do you see in flat-rate customers vs. consumers who explicitly subscribe to MobiTV?

DeRenzo: I think the hypothesis that we had was, of course, if somebody makes a discernable purchase decision they’ll vie
w MobiTV more. Quite frankly, though, when you take a look at active users under both models, the trends are quite similar on average. But then if you take a look at a device like a Samsung Instinct, customers have a very capable media device, people watch more.

RCR Wireless: As the recession widens, consumers will have less discretionary income and perceived luxuries like wireless TV may no longer be affordable for many users. Do you think you can continue to add subscribers even in the face of the economic downturn?

DeRenzo: We hope so, but we don’t know the answer. There is some macroeconomic weirdness that’s happening right now, and we haven’t seen people disconnecting their MobiTV service at any higher rate over historical norms. If you take a look at the number of subscribers we have, clearly we’ve tapped into early adopters, but for whatever reason we haven’t seen significant pressure on the MobiTV service. If this were to continue throughout 2009, maybe three months or six months more, maybe that would change.

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