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4 March 2021

Vultures await MobiTV fire sale after temporary TMO bail out

There are more questions than answers following confirmation that mobile video pioneer MobiTV has filed for bankruptcy, including whether its top clients can afford to allow the vendor to go under? Or what on earth happened to the $50 million MobiTV raised less than two years ago that brought total investments to over $200 million?

The former question has been answered already as T-Mobile, together with a gaggle of cable TV customers of MobiTV, rallied together to raise $15.5 million in funds for emergency restructuring. However, we cannot see any clear way out for MobiTV in the long-term without a fire sale of assets – and we can identify a shortlist of companies that could be in for some bargain deals from the MobiTV disaster auction.

MobiTV’s bankruptcy documents have revealed the extent of its debt problems, running much deeper than a few outstanding arrears to financial lenders – in fact owing $millions in unpaid bills to technology vendor partners including Ateme ($1.1 million), Elemental ($558,000), Xperi ($512,000), and Amino ($75,000).

The inclusion of an unsecured claim by Amino is interesting, which could be interpreted as evidence of a failed partnership between the two, some 18 months since offering a joint product merging the MobiTV Connect app-based TV platform with the AminoOS Enable software, to upgrade legacy set tops with next-generation features such as OTT video apps, to complement existing linear channels.

Amino could possibly use this position to its advantage, as bargaining chips to acquire MobiTV assets, should they eventually be put on sale.

MobiTV’s third biggest bill is owed in patent royalties to MPEG LA, to the tune of $3 million, behind the $4 million it owes to cloud technology vendor Rackspace and $3 million to Silicon Valley Bank. MobiTV’s debt mountain includes broadcasters too, listing Fox News Network, Globecast America, ABC Cable Networks Group, A&E Television Networks, Comcast Cable Communications, and Discovery Communications.

MobiTV earned its stripes upgrading video delivery from traditional QAM to IP and blending on-demand, live TV, catch-up TV, network DVR and recommendations – all on a TVaaS basis. However, running this TVaaS business on a pay-as-you-go basis, without minimum subscriber requirements and commitments, has reportedly been one of the biggest weaknesses in the MobiTV model, according to sources speaking to LightReading.

In other words, MobiTV has struggled to make any money from sweeping up tier 3 cable TV contracts, of which it has numerous. While MobiTV found fame at US cable and mobile operators, namely T-Mobile USA, its inability to attract deals outside the US pay TV market – or possibly its reluctance to pursue overseas revenues – was clearly a contributing factor to its fall from grace.

That said, new deals haven’t completely dried up for MobiTV, winning a deal at US pay TV operator CableOne in the early days of 2021, to develop an all-IP video offering called Sparklight TV. This was seen as a possible precursor to CableOne phasing out its legacy TiVo-based platform.

A few months earlier, in October 2020, MobiTV landed a deal at MCTV, another US operator, serving Ohio and West Virginia. It deployed the MobiTV Connect technology to power the new MCTV Stream applications on smart TVs, mobile devices, and other streaming devices. MobiTV says its SaaS technology makes room for new technologies including 4K, HEVC, cloud DVR, replay TV and voice control.

While we cannot be sure what is going on behind the scenes, our gut feeling is that MobiTV has stood still while competitors have arrived hard and fast, targeting fully managed video streaming platforms at tier 2 and 3 operators to replace legacy QAM infrastructure, even offering dedicated infrastructure in some cases. Unlike MobiTV’s offerings, rival systems provide multicast together with best-in-class compression for legacy feeds, to replace legacy head-ends. Competitive services also offer customers pre-integrated choices for components including DRM, CMS, and apps from select partners, which is not an area MobiTV has been active, according to rivals.

Only a day or so before confirmation of MobiTV’s bankruptcy filing, we were exploring the death of a Japanese OTT video service called BBTV Next, which was launched by SoftBank in 2014 and quietly closed in 2017.

MobiTV supplied its end-to-end multiscreen software platform to deliver the cloud-based BBTV Next service to devices, as well as its NetDVR (nDVR) technology for catch-up services.

BBTV Next was hosted by MobiTV, using the MobiTV CMS to ingest clips and metadata, transcode and encrypt video for storage on a SAN (storage area network), manage playlists, and finally publish the prepared content.

MobiTV’s Analytics system also monitored and reported on live, catch-up and DVR content across multiple devices, analyzing metrics such as behavior, usage, engagement, QoS, subscription reporting, and real-time visualization of log data and KPIs. We believe the closure of BBTV Next three years after launch was a contributing factor in MobiTV’s subsequent financial struggles.

MobiTV CEO Charlie Nooney has tried to allay concerns in a client letter. “Please be assured that this action does NOT mean the Company is going out of business. We will continue to provide live and on-demand video to our customers and will continue to review our services through the case proceedings. In connection with the Chapter 11 filing, the Company has secured important bridge funding commitments which will allow MobiTV to continue business as usual operations during the pendency of the proceeding,” he wrote.