MoboVivo - What's the tipping point?

by Duncan Kinney | Startups

If you take a moment to listen to Trevor Doerksen, the CEO of MoboVivo, he makes a lot of sense. 

Don't limit consumer choice. 

A novel idea I know but this Calgary based company is making its bones on this very concept. They licence and distribute television shows, movies and music for delivery on portable devices (Apple TV, laptops, iPods Nintendo Wii, XBox, iPhone, Sony PSP etc.)

Consumers download what they want and then consume what they've downloaded on whatever screen they want.

They're convincing producers and networks that this is in fact a good idea. An idea where everyone profits. The producers and networks get an ancillary revenue stream while Mobovivo gets its slice as well.

Doerksen sees the licensing of programming for mobile devices as the new DVD. Originally everyone was reluctant to put their shows on DVD fearing loss of revenue. The people behind X-Files put their show on discs, made a pile of money and now everyone else has jumped on the bandwagon. The home entertainment division of independent studio Lions Gate generated $528 million in revenue in 2007 shipping nearly 100 million discs. (Source

Doerksen's schedule sees him flying all over North America and evangelizing and networking with the people who make your favourite television programs. While he reports he's making progress Doerksen is sad to say that some people are hell bent on repeating their DRM mistakes.

The paid download format meshes nicely with customer habits. By downloading the program the consumers avoid the ads. They're skipping them anyways via PVRs or buying the DVDs.

Mobovivo's bandwidth costs are low because they're only serving the people who are interested enough to plunk down the cash for a show. This is opposed to a service like Hulu which streams content to many users and pays for it all with advertising. For an analysis of Hulu's profitability check Henry Blodget's excellent article on the subject here

In our model, even with a $30 CPM, Hulu's gross margin is a meager 15%.  It's hard to be profitable with this low a gross margin, and with our SG&A assumption, Hulu isn't (in fact, it's operating loss is -35% of revenue).

Importantly, these economics doing change much as bandwidth costs decline.  We've run a "future" scenario in which bandwidth costs are 50% less, and the company still has a hard time making money.  Thus, even if Hulu implements a low-cost P2P distribution platform, the economics are tough.  Unless the content contributors are willing to settle for a very low royalty, it's just hard to be a middleman.

Say what you will about Blodget and his past but this kind of analysis is right in his wheelhouse. 

The company is setting itself up for success as they position themselves to take advantage of the next generation of media consumption. The next 2-3 years will be the tipping point for Mobovivo. It's the time to see if they can turn a solid idea into a worthwhile business. I'll be watching.  

Mobovivo Inc.
Calgary, Alberta, Canada

Mobovivo is a team of TV producers and talented software engineers that turn the TV industries biggest threat - mobile devices pulling audiences away from TV - into their greatest asset - ad revenue. more

blog comments powered by Disqus

Duncan Kinney

Duncan Kinney

Duncan is the founder of yycBlogs, a local blog aggregator and the main force behind the yycPhotobook, a crowdsourced photobook. Duncan is a recent grad of Mount Royal College's Journalism program and over the past several years has reported, shot and edited for the Castlegar News , the Reflector, the Calgary Journal, the Edmonton Sun and the Calgary Sun. Duncan has since seen the error in his... more

Who's Hiring

Recent Comments

Powered by Disqus