Michelle Clancy ©RapidTVNews | 02-09-2011

MobiTV, has filed its intentions to secure a $75 million IPO which could be used to address the problem facing all carrier-based mobile TV providers: a lack of revenue diversity and future viability.

The company provides a $10 per month per user white-label mobile television service for wireless carriers, yets its complete dependence on the U.S.' top mobile operators for the majority of its income could be the most problematic issue for the company down the road. And not too much further down the road, either: MobiTV's biggest contracts are expiring within the next 18 months.

Specifically, Sprint accounted for 54% of its revenue in 2010. But that gravy train could come to a halt in September 2012, when the deal becomes a month-by-month contract that Sprint can terminate any time.

Meanwhile, AT&T and T-Mobile together accounted for a full 42% of MobiTV's income in the first half of 2011. If the proposed AT&T-T-Mobile mega-merger goes through, the T-Mobile portion of that money is certain to dwindle under the integration plans. And as of December, MobiTV's contract with T-Mobile is subject to T-Mo's right to terminate on 30 days notice. MobiTV's contract with AT&T is up in January 2013.

It's all there in the paperwork. In its S-1 filing with the SEC, the company noted that "We are the exclusive national provider of mobile television services for AT&T U-verse Live TV, NFL Mobile on Verizon, Sprint TV and T-Mobile TV, among others." But it also said that "We depend on three customers for most of our revenue and if any of those customers were to limit or terminate their relationship with us, or to replace our service with a competitor’s service or the customer’s own service, it could be difficult or impossible for us to replace that revenue. We depend on our key customers, AT&T, Sprint and T-Mobile, for the substantial majority of our revenue."

Mobile video is on the rise as networks get better and smart devices get friendlier to video, and on the surface the company's financials look stable. But can the carrier video business model sustain itself?

Despite losing $8.1 million net in the first half of the year, that's down compared to $9.4 million a year earlier, and the company has $32 million in cash. It said that managed services revenue grew 40% year-over-year, from $26.3 million to $37.0 million. Total revenue was $66.8 million in 2010 and $37.0 million in the six months ended 30 June.

The usage statistics the company cites are problematic, though: In the filing it offered up the fact that it grew mobile minutes streamed from 264 million minutes in 2007 to 1.4 billion minutes in 2010, which sounds impressive. The YOY growth rates were not broken down, however, and minutes streamed for the first half of the year were not included, making its latest real world performance difficult to gauge, especially considering that 2007 was early days for mobile video to say the least--that, after all, was the year the iPhone made its debut.

The carrier-based video opportunity may become more and more obsolete as over-the-top (OTT) options offer the same type of capability in a more user-friendly way. Apple offers TV episodes on an ad hoc, .99 cent per rental type of basis, not to mention the rise of mobile apps that subscribers to pay-TV service get wrapped into their subscription for no additional cost. In the U.S., where the majority of mobile users carry a living-room subscription TV service, Verizon, AT&T, Cablevision, Time Warner and Netflix all offer mobile apps for TV viewing on the go at no extra charge, with Comcast and other Tier 1s expected to soon follow suit. There's also Hulu Plus and Netflix, which offer TV and movie viewing for $9.99 per month just like MobiTV, but can be used not only on mobile devices, but via PC and STB or gaming console as well.

Taken as a whole, the IPO would seem to be an attempt to raise some cash ahead of the AT&T-T-Mobile merger as well as prepare for the continuing onslaught and cannibalisation of OTT on carrier video offerings. And plugging the money into new service development to prepare for the future could be a plan to assuage any would-be investor fears. It is, after all, a company that appears to be able to create any sort of service to fit the market dynamics.

To wit, MobiTV offers managed services that deliver live and on-demand television and related media content across mobile devices, tablets, personal computers and other Internet-enabled consumer electronics; it is deployed on more than 375 different types of mobile devices, across wireless and broadband networks, and it operates all major operating systems, including Android, Apple iOS, BlackBerry OS and Windows.

It licences content from major television studios, including ABC, CBS, Disney, ESPN, Fox, MTV Networks and NBC, delivering 220+ channels, including over 75 live channels, and in 2010 it delivered over 3,000 live events.