You may be excused for thinking that MobiTV is a company that had gone into profit many years ago, but although the company keeps trying and to some extent dominates mobile video in the US with deals at Verizon, Sprint, T-Mobile and AT&T, it has had to go for another round of funding. So far it has taken down $163.8 million of funding in around 8 rounds since 2001. The last was $16.5 million in 2013, involving one of this round’s investors Oak Investment Partners. Before that it had no money since 2008.
This round is for $21 million and the cash came from Oak Investment Partners and Ally Corporate Finance and it is saying that funding is to accelerate the expansion of MobiTV Connect.
While Oak Investment is a multi-tiered investor, Ally Corporate Finance tends to do asset backed deals for refinancing and turnarounds – which suggests that this is the last chance saloon for MobiTV and that its current product set is too weak to see it through.
MobiTV Connect was launched in July last year and is an IP video delivery system targeted at helping smaller US cable companies to offer OTT video on smartphones and other portable devices, but also especially to streaming media adaptors deployed already in many US homes. The plan is to help cable operators upgrade video delivery from traditional QAM to IP and blend on-demand, live TV, catch-up TV, network DVR and recommendations.
This suggests at least a name change, as the company’s future no longer rests on mobile TV, but on targeting both mobile and home based platforms. This is because MobiTV is unlikely to retain the four core relationships it has had for years at the tier 1 US MNOs.
When MobiTV was looking to go public in 2012, it filed finances at the SEC, and these showed that in 2010 Sprint and AT&T represented 54% of the company’s revenue and by 2011, Sprint, T-Mobile, AT&T and Verizon represented 42%, 26%, 19% and 10% of its revenue, respectively. That’s 97% of all revenue. If you add the deal that it cut at Deutsche Telekom in Germany that just about brings it up to 100%, and while there have been deals announced since then, MobiTV announced a deal with C Spire, the 6th largest MNO in the US last year, and it claims one at Reliance in India, and one with TV Bank in Japan, with an nPVR deal – but those deals are not plentiful, and mostly with smaller operators or in Reliance’s case companies that pay very little.
Sprint has no coherent strategy for video as yet, but it needs one desperately so its video offering is sure to change organically over the next 12 months or so, and that’s if it is not merged with one of the other US MNOs. But T-Mobile, having signed 100 OTT video suppliers to its Binge-on service, along with the recent launch of DirecTV Now, and the older launch of Verizon Go90, suggests that MobiTV is losing all of its mobile customers, hand over fist and its services there are unlikely to survive.
Deutsche Telekom launched its own OTT service around Huawei technology a year ago, although MobiTV insisted that the Network DVR element of its solution was maintained. In May 2014 MobiTV landed a contract with Reliance in India to deliver its Jio mobile TV service. India is one of a handful of global markets where there are very few broadband lines or WiFi, and a lot of video is delivered directly to phones. This has been a huge success with millions of customers coming on board, although Reliance has just made a decision to make this paid for, and that may slow its usage.
We suspect this funding round is tied to a lower valuation, and some share claw-backs through price protection will have occurred, and in the event of failure the company will end up as an asset on the books on these investors by 2018, unless some tier 1 players sign very publicly for MobiTV.
But while MobiTV complacently over-focused on 3GPP streaming, other companies have emerged who have tied up almost all the technology contracts at these majors, with AT&T buying Quickplay Media, and in Verizon’s case, it has acquired multiple technology providers. MobiTV is left with a declining percentage of US MNO customers subscribing to older style services which yield it revenue, which have not changed in years.
The CEO Charlie Nooney remains in charge after the investment, although it is unclear if the founders, such as Paul Scanlan, who used to be CEO is still there in an executive role, although we know that the long-term CTO, Kay Johansson, stood down in 2013.
MobiTV offers almost every step in the technology chain for end to end OTT delivery from CMS, DRM, the Media Player, nDVR, content policy, identity management, billing and authentication and aggregates content too.
In that 2012 filing MobiTV said it has licenses to content from ABC, CBS, Disney, ESPN, Fox, MTV Networks and NBC – in total over 220 channels, including 70 live channels. But it also revealed its numbers for the first time, showing that it never made a profit certainly since 2007 and that its cash burn was around $10 million to $11 million a year, and that it had just $25 million in the bank.
It may well have cut costs since then, but with most of its traditional revenues evaporating, it is likely that this round of funding could last it perhaps 2 years, certainly no more.