Mobile TV: audiences get younger, Cellcos get richer.

Despite the fact that phrases such as, "can you hear me now?!" remain commonplace in the world of cell phones, the next big thing--video streaming--is being rolled out, and TV executives and "Cellcos" are targeting a new demo audience--children. The newest targets for TV-for-Mobile's technological advancements are kids under the age of eight. "A lot of parents of young kids buy video phones for sports and news and then find themselves downloading rubber ducky for their kids," said Paul Marcum, vice president and general manager, Interactive Media Group at Sesame Workshop.

Until now, TV content on mobile phones has been most popular amongst tweens, who opt mostly for ring-tones and wallpapers. Wallpapers represent serious licensing opportunities for kids' TV companies (and in the case of animation studios, they may be a good source of revenue from younger kids as well), as they allow users to download their favorite characters and TV show logos onto their phones.

Bill Volk, CEO of Bonus Mobile, a thoroughly integrated company which produces, builds, publishes and distributes content via mobile phones, explained that ring-tones, the other popular manifestations of TV-for-Mobile technology, "are moving more and more to master tones." Volk described master tones as real downloadable songs (ie. pop songs and other commercial music), rather than the typical beeps that phone companies provide for free with the purchase of a phone. "That is something that is really going to take off in the near future," he insisted. This will create real opportunities in terms of personal theme songs.

While the popularity of customized wallpapers and ring-tones is undeniable, video clips seem to be the wave of the future. At the Licensing Show in New York in June, Canadian kids' TV company Nelvana was publicizing its various mobile applications. According to Doug Murphy, executive vice president of Nelvana, the company--which distributes many titles for young kids--is starting to seriously explore mobile opportunities in an attempt to "diversify revenue." He said, "The way I see it, there are three ways of working with emerging mobile opportunities: re-purposing library content into 90-second clips; creating new shows with a vision of mobile content in mind; and looking to make content specifically with mobile in mind. We plan to do all of these things," he said. Murphy explained why younger kids are the perfect audience for video streaming technology: "Moms will learn to use cell phones as portable babysitters in the car and on-the go--the way the VCR is at home." He also added, "Mobile phones are really becoming more than just phones, they are now the TV in your pocket." A true testament to the fact that cell phone "babysitters" have begun to catch on, the term "pass-back" has already entered into industry jargon. It describes the act of an adult driver handing the cell phone to the kids in the back seat of a car.

Sesame Workshop's Marcum added: "We see mobile as a great opportunity for reaching both parents of young kids and users themselves." In the U.S., subscribers to Verizon's V Cast service can view two-to-five-minute Sesame Street clips for a $15 monthly fee (the feature falls under V Cast's Entertainment clip section--there are also Sports, News and Weather choices). Marcum explained that for Sesame Workshop, "mobile technologies achieve the same goal as our programs--they turn ordinary moments into educational ones." He also pointed to the convenience of mobile phones as a major plus for parents. "Parents don't have to worry about carrying around books and games, all the entertainment they need is in the cell phone they are already carrying." And when it comes to older audiences, "fans of any age like to watch past celebrity segments, which they remember from their childhood," he said. In fact, an older Sesame Street segment featuring Ray Charles remains the most-watched clip, despite newer ones being available via the V Cast service.

DIC Entertainment, a distributor of many young kids' properties, is also beginning to take stake in the mobile business. "We won't acquire any intellectual property without acquiring the mobile rights as well," said Heather Fuscellero, director of Domestic Licensing at DIC. "We didn't used to do that, but I think that's just proof of the growing importance of mobile technology to DIC," she said. "I don't think we are ever going to see four-year-olds walking around with cell phones, but I do think we are going to see a major boost in younger kids around the age of eight." Fuscellero added that two years ago, "no one wanted to do any mobile initiatives directed at an under-18 demo, but that's changed--now tweens are a major target audience." She predicted mobile phones will begin aging even further down. One specific property that DIC is preparing for a mobile explosion is Strawberry Shortcake. The company has streaming videos, full episodes, wallpapers and ring-tones available with the property. But Fuscellero admitted that it might take a while before streaming video catches on the way ring-tones and wallpapers are doing now. "The target market [for video on cell phones] is very low, there's no doubt about that." However, she mentioned that if a couple of years ago someone had predicted that camera phones would be as popular as they are today, no one would have believed them either. According to Fuscellero, one day video streaming will become just as ubiquitous as camera phones have become. Many execs pointed to the success of camera phones as proof that the world is ready for advanced portable technologies.

Sandi Isaacs, vice president of Interactive at Paramount, commented: "[Today] video is still quite limited to consumers on most phones, and is a jerky and mediocre experience. In the long term, we know this will improve, and it will be critical that we are prepared." She added that although "mobile technology is still in the early stage with video, five years ago, cynics would never have imagined [that] they could view a movie trailer, or take a picture with a cell phone. So, in my opinion this is just the beginning."

Generally, TV and video content providers enter into deals with mobile content providers, who then make deals with phone carriers. The carriers can charge their users a monthly subscription rate for streaming technologies; when it comes to wallpapers and ringtones, the consumer pays per download; but generally all charges go to the phone bills. DIC's Fuscellero, however, said the payment systems could still use a bit of tweaking. "Carriers are the ones who are benefiting the most and it's frustrating. They really need to share the revenue, and the business model is going to have to change," she stressed.

Paramount's Isaacs is a bit more optimistic about the current situation, insisting that, "Mobile technologies have already provided a significant revenue stream in licensing royalties." Nelvana's Doug Murphy pointed to further financial benefits: "It's great being involved with the mobile phone companies," he said. "Unlike broadcasters, they aren't as tight for cash at the moment, and the billing system is pretty easy."

Bill Volk of Bonus Mobile insisted, "If you want to be successful in this business you have to have a direct relationship with carriers." He said that since carriers often take 25 percent of the cut, they are happy to be involved. "They offer such services in hopes that their users will upgrade to better and more expensive phones that support these technologies," said Volk.

Paramount's Isaacs pointed out that the financial benefit for the carrier can be even greater than Volk indicated: "The content providers may end up with 30-60 percent of revenue from the consumer. This depends on the carrier, third-party distributor, aggregator, territory, etc."

Bill Volk cast some light on a possible hurdle involved in gearing video streaming toward kids: "Many kids are using older, outdated phones which their parents are getting rid of, so in order to appeal to younger kids you need to have more basic programs that work on all phones." For this reason, Bonus Mobile sticks to many text-messaging programs for tykes. "We want kids to be able to share these things with their friends, we want everyone to be able to use them," said Volk.

Not surprisingly, North America is behind everyone else when it comes to mobile television. Volk explained, "In Asia the technology is so far advanced. In Korea you have kids and tweens making their own videos and sending them to each other via their cell phones." He continued: "In North America, and even in Europe, video streaming is still early in its lifecycle, but I would urge cynics to go out and buy a SmartVideo [phone] and see what it looks like--it's amazing, just as clear as a GameBoy Advance."

Volk predicted that just as Internet animation has spawned TV and movie hits, it won't be long before TV-to-Mobile technologies switch directions and "animations and cartoons that start out on mobile phones actually become TV shows." As for the future, Marcum also predicted that advancements in technology will help the kids' mobile business: "Greater screen sizes, custom devices, and hybrids of audio and visual will lead to younger audiences. Also, the prevalence of emerging PDA [Personal Digital Assistant] technologies will target, and capture, younger audiences."