Eastern Europe has mobile to go.

Currently there is [great utilization] of SMS in Eastern Europe," said Inbar Wolanski, vice president of Israeli content provider Chooz, which "is a pity, as this is the technology with which you can do the least." Nonetheless, the Eastern European market for SMS and mobile content is strong enough for Chooz to have attended the inaugural "TV Loves Mobile" event at DISCOP 2004, the market for Central and Eastern European and central Asian TV territories. DISCOP, Wolanski reported, "was a useful market for us generating good, on-going discussions in Romania and Poland."

Maria Rakhmatullina, general manager, Central and Eastern Europe and Scandinavia at Screentime Partners Inc. said that the development of SMS/Mobile Content in Eastern Europe is patchy, "citing just Poland and Hungary as good markets. Rakhmatullina said that, in these countries, "broadcasters have discovered vast back-end opportunities with interactivity, and now routinely wish to negotiate these rights even for shows which do not necessarily provide for interactivity." And with the rolling-out of shows such as Big Brother, Idol and The Bar in the region, Rakhmatullina reported that, "more interactive shows are appearing in Russia, the Czech Republic, the Baltic and the Balkans."

Mark Newton, senior vice president, branding and licensing at Fremantle International Distribution, said it is "the Czech Republic, Poland, Slovakia and Serbia and Montenegro that have allowed us, over the past two years, to stick our toe in the water in Eastern European mobile content with Idol, where,"said Newton, "we work closely with our partners on content that follows the development of the on-air storyline."

Hans Spielthenner, managing director of Germany's Ohm:TV, pointed to another reason why "Eastern Europe is one of the most developed regions when it comes to the exploitation of mobile content." It is the result, he believes, of two developments. "Firstly, networks have been set up later in Eastern Europe than in other regions and, as a result, they are often more technologically advanced and capable of doing more with the technology. Similarly, the handsets are newer, and therefore far more of them have color screens and video players."

Although Heidi Klocker, senior international sales manager at German distributor Telcast, warned that, "the high cost of new mobile hand-sets, coupled with low per-capita income, might act as a drag on the market."

Since smaller companies cannot afford high-priced content such as Idol, and the technology needed for mobile service is deemed too complicated to carry out for just one small company, aggregate companies have been formed. Mikhail Malyshev, director SMS TV service and network communications department at leading Russian aggregator Soyuztelecom said that since they entered the aggregating market in January 2003 the number of operators with whom they now work has risen from zero to 30, in addition to six Russian channels for whom they also provide SMS/Mobile applications. Indeed Malyshev is sufficiently bullish to predict that in Russia the mobile content business will grow in value, "between three and five times in the next five years." But it must be stressed that these two markets dominate Eastern Europe's mobile landscape. Indeed, The Yankee Group recently estimated that by 2007 there will be 125 million mobile users in Eastern Europe, half of whom will reside in either Poland or Russia.

With a large and growing market, there is a fairly wide demand for content. Companies such as France's Fashion TV and Germany's Telcast provide entire channels. Fashion TV's business development manager, Xavier Leclerc said, "we have a ready-to-be-used offer with three categories, and operators am free to select the content they want to use and promote." Telcast's Klocker said, "we offer three channels: WeatherLIVE, TravelLive and a video MMS service, PlanetLive," adding, "these are off-the-shelf content services that are conceived as turn-key solutions." Both see content demand evolving, and both predict a significant importance for sport, with Leclerc predicting a significant demand for adult services and Klocker for, "news and location-based applications."

"Three years ago," recalled Chooz's Wolanski, "we looked at the market for SMS and mobile content and realized the content that was out there was almost exclusively aimed at a male audience; so we decided to develop content aimed at girls." In fact, they liked the idea so much, they called it Girlz! Wolanski dubs this a "cellular novela" because like the telenovela Girlz!, "is an ongoing drama telling the day to day lives of three girls, describing their concerns and interests."

While there exists a wide variation in content, the business model under which content is provided to the operators seems to be pretty standard. "It's always a flavor of revenue share," said Newton, explaining that the premium rate "is shared between F.I.D, the operator, Idol's host channel, and sometimes an aggregator if they are involved," adding, "recently, as competition between operators has increased, we have seen the emergence of minimum guarantees and up-front payments."

"The minimum guarantee is essential," insisted Ohm's Spielthenner, explaining, "it ensures that operators are really willing to work with our content."

However, Screentime Partners' Rakhmatullina insists that "revenuesharing applies on both license fees and back-end revenue," adding, "back-end revenues are normally collected on a monthly basis, and it is usual for our contracts to set a minimum cost for the SMS call."

Using such a model to report revenues is fundamental and, said Fashion TV's Leclerc, "the relationship is ultimately based on trust, but under-reporting is a common problem in the cable and satellite industry and we will probably face similar problems with operators." Newton added that they expect the aggregator to supply a weekly "traffic report," telling the company which phones have accessed which service on which billing plan. This report is then followed by a more detailed and formal accounting record, sent about every eight weeks. The frequency of this later and more comprehensive report depends on the operator's billing cycle.

Clearly, problems exist in this new and rapidly growing market and the market is still evolving. That said, for those who want to get into the business of supplying mobile content, Eastern Europe could prove a good place to start. BJ