Summary:

Jesta Digital, the mobile content business formerly known as Fox (NSDQ: NWS) Mobile Group and owner of the Bitbop mobile video service and J…

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Jesta Digital, the mobile content business formerly known as Fox (NSDQ: NWS) Mobile Group and owner of the Bitbop mobile video service and Jamba ringtones business, has had some bad knocks of late: it lost two key executives in the last month — and according to sources, could be bracing itself for more bad news.

A source tells paidContent that Jesta Digital, once owned by News Corporation, is considering closing down Bitbop, the company’s effort to create an on-demand, premium-content video streaming company along the lines of Hulu and Netflix (NSDQ: NFLX) but with a mobile-first emphasis, and may be looking for people to buy other parts of the mobile operation. Contacted for this article, a spokesperson for Jesta refused to comment on the claim.

This follows a tumultuous period for personnel changes at the company:

– Earlier this month, Mark Anderson, who had been the company’s COO from before Jesta’s acquisition of the company in December 2011, left the company to join game streaming company Gaikai, where he is now also COO.

– In December, Joe Bilman, who had been chief product officer for Jesta and was also a transplant from its News Corp. days, left the company to start his own consulting firm, Gogofire, which is currently working on two projects, the Isis mobile payments service and a “project B” that it is not talking publicly about yet at the moment. Gogofire is staffed with several people from Bilman’s old team at Fox/Jesta, who also left at the same time as Bilman.

Jesta has confirmed to paidContent that neither Bilman nor Anderson will be replaced. Jason Aintabi, the CEO of Jesta Digital and part of the family that controls the Jesta Group, remains in his role.

The opportunities and challenges for Bitbop, meanwhile, underscore how hard it is to create and sustain a profitable video content business today.

Bitbop was first established in May 2010, when the company was still called Fox Mobile, and drew on content owned by News Corp’s Fox among some 25 media partners for its debut. It made a splash at a time when Hulu had already launched online but had yet to launch a mobile service: “It’s not called Hulu Mobile, but it probably should be,” we wrote at the time. Beyond the content deals, Bitbop also signed partnerships with companies like Verizon to preload the service on to 4G devices.

Since then the competitive field has widened considerably: among them, Hulu has gone mobile, and so has Netflix, and so have many broadcasters offering their own apps to consume their content. Jesta, meanwhile, had ambitious international expansion plans but never went beyond the U.S. and Germany, the first two markets to get the service.

Bitbop is understood to have no more than 20,000 subscribers — a number that the company would not confirm. What’s key is that all of them are paid rather than free: the company charges $9.99 per month for its service.

The content deals that the company signed in its early days are now understood to be up for renewal, but the issue, according to another source, is that Bitbop is weighing up whether it will ever be able to attract enough subscribers to its service to merit the cost of keeping its existing content deals, especially in the U.S., given the “astronomically rising costs of providing content on all relevant platforms in the US market.”

It has an Android app in both Germany and the U.S. but only offers an iPhone app in Germany. It has no tablet rights in either country, which is a particular challenge, since tablets have proven to be the preferred mobile device for many other premium video services.

So what about the rest of Jesta Digital? One source says that Jamba, the ringtones business that News Corp once bought for nearly $400 million — paying $188 million in 2006 for 51 percent; and then in 2008 paying Verisign $200 million for the remaining 49 percent — and formed the basis of its failed mobile effort, is the only viable part of the company remaining. That’s because it is still a decent cash generator, despite the overall decline in ringtones revenue worldwide: “The business will be Jamba again in six months,” the source predicted. “Chopped back to Jamba until ringtones can’t be sold anymore.”

Jesta, responding to that claim, provided the following statement to paidContent: “We are committed to our entire portfolio of products, which is by no means limited to ringtones. We have had great success in reviving our Jamba/Jamster business but have a firm focus on driving growth in new areas. We are developing a variety of new products specifically for smart phones and see a real opportunity to bring entertainment and other products to the Android operating system.”

Other services in the portfolio include the iLove dating service and Mobizzo, a mobile gaming operation.

By Ingrid Lunden

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