Ad-supported TV moves to mobile

RCR Wireless News
A new star is rising in mobile television and it’s all premised on the fact that people don’t want to pay for video on their cellphones. A few standout companies have blazed a path to free mobile content for consumers, but few, if any have grown as quickly as mywaves Inc.

Since the company launched in January 2007, it’s grown like wildfire. The company, which offers an off-deck portal to a vast catalog of licensed and unlicensed video, had more than 5 million unique users last December, just one year after it formed. More than 20 million users downloaded its application in that same period.

Rajeev Raman, co-founder and CEO of mywaves, and his team were convinced that there was a better answer than the $15 per month mobile TV offerings like Verizon Wireless’ Vcast TV and AT&T Mobility’s Mobile TV with FLO. Wireless subscribers are already paying for data usage, Raman said.

“No one should; but we certainly won’t ask them to pay on top of that,” he said last week in an interview at the Digital Hollywood conference.

“If you are a young adult and you are looking to your cellphone to serve a new need … we want to be a way for you to get that,” Raman said. “Mostly we want to be a way for you to get that without any money.”

Pre-roll ads

The Silicon Valley-based startup has licensed content from all the major networks and studios and only began inserting 15 second pre-roll ads into its licensed videos at the beginning of the year. In April, the company clocked more than a million ad impressions.

“You can only do it when you have some scale,” Raman said. “If you can’t move it in the millions of impressions per month, don’t do it. And that’s where we’re at.”

Although the business is entirely advertising based now and relies on those pre-rolls for revenues to share with content producers, it doesn’t shun the vast trove of unlicensed video available online as well.

Users can search for any type of video they’d like and the application will use that query to build an “auto channel,” which categorizes the unlicensed videos and make them available on the application for viewing. There are no advertisements and thus no money to be made, but Raman believes his company’s best step lies in providing a comprehensive mobile video platform, not one that only plugs content it’s making money on.

And by all measurements the approach isn’t eating into its revenue stream. “We haven’t seen any different intake in clips with ads and clips without ads,” he said.

Revenue split

The advertising revenue that’s split with content providers fluctuates depending on each partnership. Premium, popular content demands a heavier fee while mywaves will hold on to more of a piece if it sold the ads that roll prior to the video clip. The company has 21 advertisers on board now and offers a mix of clips that come to them with ads already included and others that allow mywaves to do its own ad sale.

“Some content is better, not all content is created equal,” he said.

Raman suggested there must be some secret club where all the content producers come together to compare how much scale they’re reaching in mobile because his company hears very little from them in terms of how much money mywaves is bringing in for them. They’re clearly more interested in metrics and usage numbers, which have been promising thus far, he said.

“The average user comes back to us eight times a month, twice a week. Their visit duration is about 19-and-a-half minutes per visit,” he said. “It’s true, the average clip length is about three minutes, but they watch an average of five clips.”

FREE PORN!!!!!

As for what type of content is doing best on mywaves (read: anything with the word “bikini” in it), the company is doing everything it can to meet that need, Raman said. But it will undoubtedly continue to fall short in some respects until the market matures and more protective measures are put in place.

“It’s very clear what they (end users) want. They want free porn. We can only do so much,” Raman said.

“I don’t know that we can really get there in terms of helping that group out,” he said. “The farthest we’ve done is we’ve licensed content from Sports Illustrated and their swimsuit issue and that’s done very well.”

The company has drawn the line at that point, and so it has licensing deals with MTV, Playboy and others for “bikini content,” but no nudity, Raman said. “The nude stuff is, quite frankly, problematic. It’s problematic for everyone.”

The category is the most popular on mywaves, comprising as much as 25% of all viewing, he said. Users can find unlicensed adult content on the auto channels, but otherwise mywaves is mostly taking a hands-off approach to that type of content.

Ads in a different frame

Taking a different approach to the ad-supported model, ScanScout has developed a video ad network that helps publishers make money off streaming videos while giving ad agencies a new path for advertisers to reach audiences, said Waikit Lau, the company’s co-founder, president and COO.

Lau, who sat on the same panel as Raman at Digital Hollywood, said his company’s end game is to put control over the ad with the end user. So instead of interstitial ads, which may run prior to, during or after a clip, ScanScout is doing overlay advertising.

“We’re serving ads into hundreds of millions of streams a month,” he said.

Rather than taking up the entire video frame, ScanScout injects a translucent ad in the lower fifth or third of the video frame, which the user can control, Lau said.

He argued that pre-roll ads are more difficult to measure because a user could set the device down while the ad is playing or shut off the clip before it plays, for example. Overlay ads are better for advertisers because companies are able to track duration views, Lau said. But he still doesn’t see a company like mywaves as a competitor because interstitial and overlays can complement a larger bundle offering that companies can make available to ad firms.

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