Mobile video business model is "upside down"

Scale Venture Partners' Wienbar recaps Digital Hollywood discussion

If wireless carriers want to make a profit on the expected explosion in mobile video, something will have to change about the economics of how they deliver it.

That was the conclusion of a panel of mobile and video content executives at this week's Digital Hollywood event in San Jose.

With wireless carriers paying as much as 30 cents per megabyte to deliver data traffic over their networks, and in many cases able to charge consumers less than 20 cents per Mb to download video, "the business model for mobile video is upside down," said Bill Stone, CEO of Handango.

Sharon Wienbar of Scale Venture Partners, who moderated the panel, agrees.

"It's why carriers are moving to deliver content over other channels like DVB-H, MediaFlow and WiFi," says Wienbar, whose previous investments include GoodTechnology, which was acquired by Motorola.

Since technologies like Qualcomm's MediaFlow and Nokia's DVB-H can broadcast data to many users at once, they can help lower per-megabit delivery costs for carriers for live video streaming.

But that still doesn't address the costs of delivering separate, large video files to individual subscribers at different times. 

Eventually, the carriers will find ways to lower their network costs or squeeze more money out of video advertisers to generate profits on mobile video.

One member of the panel, Motorola's Dave Ulmer, predictd that all wireless networks will eventually send data over peer-to-peer WiFi networks so that carriers can offer their customers access to the broadest range of popular applications.

"Consumers will get what they want," Ullmer says.