Big news for mobile TV pioneer MobiTV: the company has filed for an IPO worth up to $75 million, as it looks for funds to expand internationally, develop its products and potentially size up acquisitions.
MobiTV has been around since 1999 — well before the wave of smartphone and tablet-focused video entertainment from players ranging from Netflix (NSDQ: NFLX) and Hulu, to Amazon (NSDQ: AMZN) and Apple (NSDQ: AAPL). Starting out as a real-time TV streaming service for mobile handsets, it now offers VOD as well, and streams its services to smartphones, tablets, PCs and connected TVs.
Unlike Netflix, Hulu and the rest, MobiTV’s main business has been powering other companies’ mobile TV services. Current customers include all four major carriers in the U.S. — Verizon, AT&T (NYSE: T), Sprint (NYSE: S) and T-Mobile, and it licenses content from major broadcasters including Disney (NYSE: DIS) and affiliated companies like ABC and ESPN; CBS (NYSE: CBS), Fox (NSDQ: NWS), MTV Networks (NYSE: VIA) and NBC (NSDQ: CMCSA).
It may have a lot of partners potentially covering millions of users, but MobiTV has never given out any numbers on exactly how many people are using and paying for its services. It does note the volume of content going over its network: it currently delivers more than 220 channels, including over 75 live channels, and in 2010 delivered over 3,000 live events. Total mobile minutes streamed in 2010 was 1.4 billion, compared to 264 million minutes in 2007.
Revenues have steadily grown at the company. It made $37 million in the first six months of 2010, versus $31.5 million for H1 2010.
Risks and clouds. Although MobiTV’s revenues have been rising — and there has definitely been more attention on cloud-based video services of late — it has yet to make a profit as a company. Net losses are declining, but slowly: in the first half of 2011, MobiTV reported a net loss of $8 million, compared to $9.3 million in the first half of 2010.
The company says in its S-1 that it currently relies on three customers for most of its revenue: AT&T, Sprint and T-Mobile. “We depend on our key customers, AT&T, Sprint and T-Mobile, for the substantial majority of our revenue. Sprint represented 56%, 69% and 54% of our revenue in 2008, 2009 and 2010, respectively,” it writes in the S-1 filing.
It also has preemptively combined the business it gets from AT&T and T-Mobile, which, combined, represented 24 percent, 17 percent and 24 percent of our revenue in 2008, 2009 and 2010, respectively, and 42 percent of revenue in the six months ended June 30, 2011.
Those big deals, though, look significantly less secure in the future — whether or not may depend on how many subscribers are actually using the service.
MobiTV notes that in September 2012, the terms of its deal with Sprint converts to a month to month basis. The T-Mobile agreement will automatically renew in December 2011 for a one-year term, but T-Mobile can cancel with a 30 days notice. The AT&T agreement expires in January 2013.
Given the emphasis on these three customers, it says, “If we are unable to renew our agreements with these customers on favorable terms, or at all, or if any of these customers were to terminate our agreement for any reason, our revenue would decline and our operating results and financial condition would be harmed. If any one of these Tier 1 customers chose not to continue to use our services, or limited its use of our services, or if it replaced our services with a service provided by another company or by the customer itself, it would be difficult or impossible for us to replace that revenue because there are a limited number of such Tier 1 customers.”
With that in mind, it’s no wonder that MobiTV is looking to diversify its activities with more operators abroad, as well as new products and potential acquisitions of adjacent companies.
Below is an interview we did with the CEO of MobiTV, Charlie Nooney, earlier this year on all things mobile television, in which he hints of the kinds of expansion that he hopes to do with the funds raised in an IPO.